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ADAPTING
INNOVATING
DELIVERING
Annual Report 2021
Global Ports Investments PLC
GLOBAL PORTS
AT A GLANCE
CORPORATE
GOVERNANCE
CONSOLIDATED
FINANCIAL
STATEMENTS
PARENT COMPANY
FINANCIAL
STATEMENTS
ADDITIONAL
INFORMATION
STRATEGIC
REPORT
8
ABOUT US
PERFORMANCE
61
CORPORATE GOVERNANCE
MANAGEMENT REPORT
AND CONSOLIDATED
FINANCIAL STATEMENTS
MANAGEMENT REPORT
AND PARENT COMPANY
FINANCIAL STATEMENTS
19
CHAIRMAN’S STATEMENT
11
KEY MILESTONES
FOR 2021 ANNUAL REPORT
67
BOARD OF DIRECTORS
20
CHIEF EXECUTIVE OFFICER’S
STATEMENT
15
STRONG PRESENCE
IN RUSSIA’S KEY
CONTAINER AND BULK
GATEWAYS
79
EXECUTIVE MANAGEMENT
82
TERMINAL DIRECTORS
85
RISK MANAGEMENT
27
DELIVERING QUALITY
AND LEADERSHIP
28
STRATEGY
29
BUSINESS MODEL
31
BUSINESS REVIEW
47
ENVIRONMENTAL,
SOCIAL AND GOVERNANCE
GLOBAL PORTS
AT A GLANCE
Global Ports features best-in-class
operational management, excellent
logistics expertise, an outstanding asset
base, and innovative IT systems.
OUTPERFORMING
EXPECTATIONS
+17.4%
GROWTH
IN ADJUSTED EBITDA
ruAA
RATING UPGRADE
FROM RA EXPERT
GROWTH
INFREE CASH
1
FLOW
1
Free Cash Flow definition and calculation were
changed, for details and reconciliation please see:
Reconciliation of Additional data (non-IFRS) to the
consolidated financial statements in Business Review,
and Definitions.
Global Ports
Today
Information (including non-IFRS financial measures) requiring additional explanation
or terms which begin with capital letters and the explanations or definitions thereto
are provided at the end of this report. Certain financial information is derived from
the management accounts.
No.1
container terminal operator
in Russia
2
0.71 LTIFR
for 2021 well below
7y-average
KEY STRENGTHS 2021 RESULTS
The only player with
a network of terminals in key
container gateways of Russia
GDR listed on the Main
Market of the LSE
(free-float of 20.5%)
Sustainable and responsible
business: MSCI ESG rating
at BB level, Sustainalytics
estimated Global Ports risk
of material financial impacts
driven by ESG factors
at medium level
+46.9%
Free Cash Flow
7 marine container
and multipurpose terminals
in Russia and Finland
+2.8%
Consolidated Marine
Container Throughput
2.0x
Net Debt to Adjusted EBITDA,
long-term deleveraging target
achieved
+17.4%
Adjusted EBITDA
to USD
246.2 million
to USD
129.1 million
Global Ports proved that its business is fundamentally stable, sustainable and cash
generative, despite an extremely volatile operating environment and disruptions
toglobal supply chains in 2021.
In 2021 the Group continued to deliver excellent quality of operations launching
arange of new services and supporting its clients in this uncertain time, consolidat-
ing itsmarket share and achieving long-term deleveraging targets.
TheGroup produced strong financial results in2021 achieving Adjusted EBITDA
growth of17.4% coupled withexceptional Free Cash Flow growth of46.9%.
The Group continued its deleveraging strategy and decreased Net Debt / Adjusted
EBITDA from 2.9x to 2.0x, allowing for the possibility of revising its capital allocation
approach in the future should we see a more predictable environment with greater
visibility.
Improved credit profile confirmed byrating agencies: Moody’s upgraded rating
oftheCompany andGroup’s financial instruments by1 notch toBa1, RA Expert
by2 notches toruAA, Fitch Ratings affirmed atBB+
1
.
1
In March 2022 Moody’s and Fitch credit ratings were withdrawn at the initiative of the agencies.
2
In terms of container throughput and container handling capacity, based on ASOP data for FY 2021.
7 8
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
About us/ Performance
In 2021, on the back of an extremely volatile operating
environment and disruption across global supply chains,
wenot only enhanced our leading market positions
inboth basins of presence but also delivered solid growth
inAdjusted EBITDA growth and Free Cash Flow.
2020
2.9 x
20 21
2.0 x
Selected IFRS Financial Information, USDmillion
2021 2020 Change Change, %
Revenue 502.8 384.4 118.4 30.8%
Cost ofsales andadministrative,
selling andmarketing expenses
(303.8) (225.0) (78.8) 35.0%
Gross profit 226.0 184.1 41. 9 22.8%
Operating profit 19 7. 1 157.4 39.7 25.2%
Net profit/ loss 143.9 50.0 93.9 187.8%
Selected non-IFRS financial information, USDmillion
2021 2020 Change Change, %
Like-for-like Revenue
1
376.7 321. 7 55.1 17.1%
Total Operating Cash Costs (257.9) (176.0) (81.9) 46.5%
Like-for-like Total Operating Cash
costs
1
(131.8) (113.2) (18.6) 16.4%
Adjusted EBITDA 246.2 209.7 36.5 17.4%
Like-for-like Adjusted EBITDA Margin
1
65.4% 65.2%
Free Cash Flow
2
129.1 87. 9 41. 2 46.9%
Net Debt 491.4 612.1 (120.7) (19.7%)
Net Debt toAdjusted EBITDA 2.0x 2.9x (0.9) (31.0%)
Balance sheet andcash statement, USDmillion
2021 2020 Change Change, %
Total assets 1,443.5 1,327.2 116.3 8.8%
Cash andcash equivalents 296.7 207.0 89.7 43.3%
Net cash from operating activities 226.0 190.9 35.1 18.4%
Selected operational information
2021 2020 Change Change, %
Consolidated Marine Container
throughput, mln TEU
1.58 1.53 0.0 2.8%
Consolidated Marine Bulk throughput,
mln TEU
4.3 5.1 (0.7) (14.6%)
Ro-Ro, thousand units 25.2 20.3 4.9 24.4%
Cars, thousand units 104.9 82.0 22.8 27.8%
1
Like-for-like figures aregiven toprovide historical consistency withthedata before theaccounting change in2019. Asaresult ofthenew
terms ofcertain sales agreements, in2020 and2021 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thefirst
half of2019 full revenue andassociated costs have been gradually recognised inconsolidated revenue andtransportation expenses
accordingly. This Adjusted EBITDA neutral change resulted inadditional USD126.0million toconsolidated revenue (USD62.8million
in2020) andUSD126.0million tothecost ofsales in2021 (USD62.8million in2020).
Information (including non-IFRS financial measures) requiring additional explanation or terms which begin with capital letters and the
explanations or definitions thereto are provided at the end of this report. Certain financial information is derived from the management
accounts.
2
FCF definition andcalculation werechanged, fordetails andreconciliation please see Reconciliation of Additional data (non-IFRS)
totheconsolidated financial statements in Business Review and Definitions.
1
On11March 2022, APM Terminals announced its intention tocommence aprocess todivest its shareholding intheGlobal Ports
Investments PLC. Please see thepress release dated 11March 2022 onwww.globalports.com.
2
According toDelo Group data.
Key consolidated financial
andoperational data
30.75 Delo Group
30.75 APM Terminals
1
9.0 Ilibrinio Establishment Limited
9.0 Polozio Enterprises Limited
20.5 Free-float
29.99 Delo Group
29.99 APM Terminals
1
6.1 Ilibrinio Establishment Limited
6.1 Polozio Enterprises Limited
27.8 Free-float
Ownership Structure, %
Ordinary Voting Shares, %
Net Debt/ Adjusted EBITDA
1.53
1.58
2.8%
2020 2021
5.1
4.3
–14.6%
2020 2021
82.0
104.9
27.8%
2020 2021
65.2
65.4
2020 2021
20.3
25.2
24.4%
2020 2021
87.9
129.1
46.9%
2020 2021
Consolidated Marine Container
throughput, mln TEU
Consolidated Marine Bulk throughput,
mln tonnes
Cars, thousand units Like-for-like Adjusted EBITDA
Margin, %
Ro-Ro, thousand units Free Cash Flow, USDmln
Delo Group istheleading Russian integrated container logistics player
2
operating
marine terminals inall major basins ofRussia, anetwork ofinland terminals andafleet
offlatcars andcontainers.
APM Terminals operate aglobal terminal network of22 thousand professionals
with76 operating port facilities. APM Terminals isapart ofA.P.MollerMaersk,
theworld’s largest integrator ofcontainer andports logistics.
9 10
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Key Milestones
for2021 Annual Report
VSC’s two newly commissioned RMG
cranes start operations, enabling containers
tobe stacked in14rows, doubling thetier
capacity tosix. This installation, alongside
upgrades tothearea inMarch, increases
VSC’s container storage capacity
to27thousand TEU.
JANUARY
Moby Dik starts handling Ro-Ro
cargo, followinga successful pilot trial
involving aRo-Ro vessel laden withcars.
Theterminal handles 4thousand cars
and270thousandtonnes ofbulk freight
during2021, confirming thesuccess
oftheterminal’s transformation.
AUGUST
Global Ports launches project tooptimise berth allocation atFCT andPLP intheGreater Port ofSt.
Petersburg. Based onthePortchain intelligent online platform, thesystem increases thevisibility
ofoperational processes andmakes resource planning more efficient, providing customers
withreal-time monitoring ofberths andcargo handling status.
TheGroup redeems its FCT-03rouble bond, completing therefinancing ofRUB15billion
ofexpensive debt issued in2015–2016 (FCT-01, FCT-02 andFCT-03). TheFCT bonds are
refinanced onbetter terms orfully repaid, lowering interest costs andfurther reducing debt.
MARCH
VSC andFCT register the100th container
train oftheregular transcontinental
intermodal service Maersk AE19,
organised inpartnership withGlobal
Ports andthetransport company
Modul.Thecontainers arrive bysea
fromChina, Korea, andTaiwan toVSC,
where they are loaded ona train
andshipped toSt. Petersburg, loaded onto
aMaersk vessel atFCT, delivered toPoland
andthen onto theUnited Kingdom.
PLP installsa video surveillance system
onits ship-to-shore (STS) gantry cranes.
Theequipment will improve theoperator’s
visibility andenhance thesafety ofcontainer
handling.
JULY
VSC starts its service forthenew
transcontinental service Maersk AE77.
Containers are transported fromAsian
countries via theRussian ports ofVostochny
andNovorossiysk onto theBlack Sea
andEastern Mediterranean.
APRIL
VSC successfully places RUB7.5billion
ofnon-convertible 5-year interest-bearing
bonds witha fixed interest rate of9.55%
per annum. Theproceeds fromtheissuance
help refinance theGroup’s existing debt,
reducing interest payments andminimising
foreign exchange risks byaligning thedebt
portfolio withtheGroup’s FX currency
composition ofrevenue.
VSC andSolvo complete testing ofits
new terminal operating system (TOS).
TOS enables real-time tracking ofall
ship andcontainer handling procedures
attheterminal andcritical functions like
operational accounting, warehouse
management, railway container
handling andplanning, vehicle handling,
andoversight ofcontainers during customs
clearance.
NOVEMBER
Moody’s Investors Service upgrades Global Ports’ credit rating toBa1 fromBa2.
PLP is chosen tohandle transit cars fromChina toEurope as part ofa new railway-sea service,
organised bya consortium, consisting ofRussian Railways, NYK Auto Logistics Rus, aleading supplier
offinished vehicle logistics inRussia, andSino-Worlink Special Cargo Railway Logistics Co (SSCR),
aleading Chinese rolling stock operator.
DECEMBER
Therating agency RAEX (Expert RA)
upgrades Global Ports’ credit rating bytwo
notches, from‘ruA+’ to‘ruAA’ withstable
outlook.
VSC monthly container throughput exceeds
51thousand TEU settinganew record
inmonthly performance oftheterminal.
MAY
VSC halts coal handling services tofocus
onmore environmentally friendly andrapidly
growing container cargo.
SEPTEMBER
MLT-Helsinki, aJV between Global Ports
andCMA Terminals, begins working
withCMA CGM. Anew scheduled
call atMLT-Helsinki provides weekly
container transportation between Helsinki
andNorthern European ports using
Unifeeder vessels.
OCTOBER
11 12
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
STRONG PRESENCE
IN RUSSIA’S KEY
CONTAINER AND BULK
GATEWAYS
1
The Far Eastern Basin is the fastest route
for transporting containers from Asia to
the European part of Russia and many
CIS countries and transit to EU. The
shorter transit time is a key advantage
for customers shipping high-value and
time-sensitive cargo.
The Baltic Sea Basin’s container terminals are close
to key transhipment hubs for Russia’s inbound
and outbound containers, such as Hamburg and
Rotterdam. The basin has a strong customer base
due to its economic development, access to
Russia’s most populous regions and cost-effective
transportation of containers to major Russian cities.
1. First Container
Terminal (FCT)
St. Petersburg
Containers
1.25 mln/0.9 mln
TEU per year
88.6 ha
100%
2. Petrolesport
(PLP)
St. Petersburg
Containers, Ro-Ro,
bulk cargo
1 mln/0.55 mln TEU
per year
120.7 ha
100%
3. Vostochnaya
Stevedorings
Company (VSC)
Vrangel, Nakhodka
Containers,
general cargo
0.7 mln/0.7 mln TEU
per year
77.1 ha
100%
4. UST-LUGA Container
Terminal (ULCT)
Ust-Luga port cluster
Containers, bulk cargo
0.44 mln/0.22 mln
TEU per year
54.0 ha
80%
5. Moby Dik (MD)
Kronstadt, St.
Petersburg
Ro-Ro, bulk and
general cargo
13.0 ha
75%
Baltic Sea Basin
6. Yanino (YLP)
St. Petersburg
Containers, bulk
cargo
0.2 mln TEU per
year
51.3 ha
75%
7. MLT Kotka
Kotka, Finland
Containers, Ro-Ro,
bulk cargo
0.15 mln TEU per
year
4.3 ha
75%
8. MLT Helsinki
Helsinki, Finland
Containers, Ro-Ro,
bulk cargo
0.27 mln TEU
per year
7.0 ha
75%
8
7
2
6
1
4
5
46%
Baltic basin share
of Russia’s marine
container traffic
Far Eastern Basin
St. Petersburg
Moscow
Novorossiysk
Murmansk
Ekaterinburg
Nakhodka
Fully consolidated in IFRS JV accounting
Russian Ports segment:
PLP, VSC, FCT, ULCT, Yanino, MD
Finnish Ports segment:
MLT Kotka and MLT Helsinki
OUR PARTNERS:
Entity: Moby Dik, Finnish Ports, Yanino
Partner: CMA Terminals S.A.S.
Share: 25% in each
Entity: ULCT
Partner: Eurogate
Share: 20%
Location
Cargo handled
Container throughput berth/
yard capacity
2
Land total
Ownership
3
35%
Far East Share
of Russia’s marine
container traffic
1
Numbers for the Group are presented on a consolidated basis.
2
Company estimates are based on annual potential berth and yard throughput capacity.
13 14
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
STRATEGIC
REPORT
In the context of an unprecedented
demand for container processing, Global
Ports’ ability to significantly outperform
theRussian sector is a testament to its
position as the market leader.
Because of the company’s foresight and
quick response to market trends, it has
been able to reap maximum benefit from
this situation, stemming from its desire
toimprove constantly.
EXPANDING
BEYOND BOUNDARIES
+17.4%
ADJUSTED
EBITDAGROWTH
+46.9%
GROWTH INFREE
CASH FLOW
LIKE-FOR-LIKE
ADJUSTED EBITDA
MARGIN
Chairman’s Statement
In last year’s report, I said that the Group had emerged from the
COVID crisis stronger thanks to its resilience and adaptability.
Against a backdrop of market growth, our excellent 2021
results underline the quality of the Global Ports business model.
Operationally, the Group’s performance was very solid, ending
theyear with increased market shares in each of its basins of
operation. This result is noteworthy as for part of the period, we
were upgrading the asset base and withdrawing from coal-handling
atVSC to focus on our container activities.
The Board is also encouraged by the Group’s resilient financial
performance. In a highly competitive market, Global Ports reported
a robust set of results, growing the revenue base, maintaining high
levels of profitability, and generating increased cashflows whilst
keeping costs firmly in check Customer service also improved.
Soren Sjostrand Jakobsen
2021 was a yearofsolid recovery fortheworld
economy. However, pressing therestart button
onglobal trade proved anything but smooth,
creating extraordinary logistics conditions,
especially formaritime freight, assurging
global demand created huge imbalances
inglobal supply chains. This produced boom
conditions forthemaritime logistics sector,
asdemand forvessels andcontainers exceeded
supply anddrove shipping andfreight rates
torecord levels. Asaresult, 2021 proved
tobeanexceptional period forRussia’s
maritime infrastructure andlogistics sector;
theindustry delivered strong single-digit growth
andachieved record-high container volumes
accompanied byhealthy utilisation rates.
Chairman of the Board of Directors
17 18
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Events over the past two years have demonstrated the
importance of having adequate financial resources to
address operational challenges. Rebuilding a strong capital
base has been a strategic priority for several years, and in
2021 we achieved the leverage target first set in 2013. This
accomplishment is an important strategic milestone in ensuring
our long-term financial stability and supporting our future
development.
It is also pleased to report that good progress has been
made on the Group’s sustainability agenda, as the Board and
management team continued to develop new sustainability
objectives as part of our overall corporate strategy.
Global Ports is only as strong as the people that work here. On
behalf of the Board, I want to thank all our colleagues for their
hard work and dedication over 2021.
Strategy
In recent years, we have made considerable progress in
repositioning Global Ports as a premium container ports
business. In 2021, the Board continued on that path with the
decision to cease handling coal at VSC and focus entirely on
our core container cargo operations. As well as simplifying the
structure of our business, we have continued to improve our
facilities, develop our client offering, and increase productivity
through innovation and automation, helping to grow our market
position and generate added value for our customers.
Our 2021 results were a testament to the success of our
approach: continuous reinvestment in our ports builds world-
class infrastructure, high service levels build customer loyalty,
and efficiency improvements drive productivity. In volatile
markets like those we encountered in 2020 and 2021, these
factors have helped reinforce the scale-effect of our leadership
position in the industry. And as the maritime logistics sector
increasingly thinks in terms of developing sustainable logistics
corridors rather than merely loading and unloading cargo,
the beneficiaries will be companies like Global Ports that own
modern gateway ports and who can eliminate complexity and
add value to customers’ supply chains.
The Board
Strong governance is fundamental to any successful company
in an era where businesses are judged as much by their integrity
and reliability as by their financial performance. As Chairman,
one of my key responsibilities is to ensure that Global Ports
adheres to the highest governance standards. In this regard,
I have been ably supported by all the members of the Board.
With their diverse backgrounds, they bring a balance and
richness of skills and experience to the Group that complements
the talents of the management team. I would like to thank all my
colleagues on the Board for their invaluable contributions over
the last year. More details of our governance activities can be
found in the Governance section on pages 61 to 84.
Last year, I had the pleasure of welcoming three new members
to the Board. Vladimir Bychkov, Andrey Lenvalsky, and Andrey
Pavlyutin were elected to the Board at our AGM in May.
ESG
Being a responsible business has long been part of the culture
at Global Ports. Increasingly, ESG considerations are no longer
viewed as an add-on but rather as part of the fundamental
decision-making for the business. The Board recognises that,
as a provider of critical infrastructure, the development of
environmentally and socially responsible business practices is
crucial to our long term success. We believe that businesses
do well when they behave well, and the Board and leadership
team are committed to embedding this ethos across all our
operations and at all levels of our workforce.
Although the Group has a consistent record of complying
with all relevant legislation and regulations, the Board and
leadership agree that we need to accelerate our ESG activities
and move beyond compliance. As a result, in 2021, we
began work on developing a comprehensive ESG strategy,
in collaboration with a leading sustainability consulting firm,
to set long-term ESG objectives for the Group. Sustainability
will be built into every aspect of our operations, our corporate
strategy, and how we do business. We are at the beginning
of our Sustainability journey, but the Board is pleased with the
progress to date.
Safety remains the Board’s top priority. Ensuring the safety and
wellbeing of our employees and all those who work on or visit
our terminals is a core part of our culture. In our industry, safety
is also of critical commercial concern because the safe handling
of cargo is essential to our performance as a company. In
2021, we continued to make progress toward our target of zero
fatalities and zero injuries. We focused on safety culture and
improvements to our safety system, with a special emphasis on
contractor safety. The Group continued its successful roll-out of
its Fatal 5 safety campaign, focused on five high-risk activities.
The hard work that has gone into our safety programmes
is reflected in our Lost Time Injury Frequency Rate which
maintained its low level of recent years.
We also recognise the need for more ambitious action on the
environment and on addressing climate change. The Group
made good progress in advancing our environmental agenda
in 2021. We discontinued all coal-handling activities at VSC
in the third quarter, which will significantly reduce the terminal’s
environmental impact. We also committed more investment
into various environmental protection schemes at our terminals,
alongside continuing initiatives to decarbonise our activities by
reducing our energy intensity.
The Board also continued to reduce organisational complexity
and improve governance and decision-making. In May, the
Board approved an inter-group merger, whereby Global Ports
Investements PLC absorbed its 100% owned investment holding
company National Container Holdings Company, with the aim
of simplifying the Group’s structure, reducing overhead costs,
and improving governance.
Summary
Global Ports delivered anexcellent set ofresults in2021,
andI am proud ofwhat theteam accomplished last year. We
have awell-defined strategy inplace that has proven highly
successful andenabled theGroup tocement its leadership
oftheports sector inRussia. I am confident that Global Ports
has theright assets, theright people andtheright strategy
tocontinue todeliver sustainable long term growth forits
stakeholders intheyears ahead.
Outlook 2022
The market outlook for 2022 in the North West basin is well
below 2021 given the recent events. For the Far East the market
is expected to be more stable. It is too early to give any
indication of when a market stablilization will occur, but we do
expect a result well below that of 2021 despite the adjustments
we are making for cost and CAPEX.
19 20
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Chief Executive Officer’s Statement
2021 marked ayear ofstrong performance forGlobal Ports
inasecond successive year ofvolatility forthesector. Once
again, we faced unpredictable trading conditions brought
about bysupply chain disruptions, container shortages,
andtheongoing repercussions ofCOVID-19. However,
we successfully leveraged our market leadership position
toimprove our market share inboth basins ofpresence
anddeliver strong financial results across all our target
metrics. Atthesame time, we made progress onour
strategic objectives, achieving our long-term deleveraging
target, which isasignificant milestone, andstreamlining
thebusiness tofocus onour core container operations.
Throughout this time, our people responded withagility
andenormous commitment tohelp deliver this solid set
ofresults, forwhich I thank them.
If 2020 wasdominated bythepandemic, then
2021 wastheyear when its after-effects really hit
home fortheglobal economy. COVID-19 caused
considerable disruption toworld trade in2021,
asystem designed andbuilt ontheconcept ofefficient
rather than resilient global supply chains, stretching
them tothelimit aseconomies reopened anddemand
spiked. Theaccompanying shift from ‘just intime’ to‘just
incase’ logistics, put even greater strain onglobal
supply chains andtransport logistics. This phenomenon
caused widespread issues forthemaritime ports industry,
Albert Likholet
Chief Executive Officer
characterised byserious port congestion; high container
dwell times; shipping shortages; empty container
shortages; record high freight rates; andrecord container
volumes atvarious gateway terminals around theworld.
Thecombination ofthese unique supply anddemand
dynamics created trade imbalances inmany parts
oftheglobal economy.
Despite these difficulties, thecontainer market inRussia
performed very strongly in2021, benefitting from continued
export growth which wasmatched bystrong increase
inimports. Global Ports, astheowner oftheleading
portfolio ofpremium ports, wasamajor beneficiary
ofthedemand trends intheeconomy.
21 22
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Our Markets
International maritime container trade rose by 6.5% in 2021,
the highest level since 2009, reflecting the exceptional
market conditions of last year. Global demand gathered
pace as the year progressed but the supply of ships and
containers remained highly constrained leading to a
significant increase in container freight rates. As a result, the
shipping industry experienced exceptionally strong trading
and profitability thanks to strong volumes and freight rates,
which in turn boosted the performance of container port
operators.
The Russian marine container market enjoyed very strong
momentum throughout 2021, delivering growth across all
key segments. As a result, the container market achieved
record container throughput volumes of 5.4 million TEUs,
a year-on-year increase of 7.1%. Demand continued to be
very resilient and underpinned by growth in world trade
and global GDP, capacity overall utilisation rates climbed
above 80%. Full container imports climbed above pre-
COVID levels, rising 11% year-on-year. Structural growth in
export cargoes maintained its positive trajectory of recent
years. However, that growth was constrained to 4% due to
the global shortage of empty containers. The other salient
feature was the geographical shift in markets, with growth
mainly concentrated in the Far Eastern and Southern basins,
as high freight rates focused container traffic on those basins
with the fastest container import and export supply chains
and the shortest sea legs.
Our operating performance
Against this volatile backdrop, Global Ports not only
protected its position as the leading player in the country
but improved its market share in all its basins of presence,
as the investments made into our ports and wider logistics
services continued to attract strong backing from customers.
Put another way, we were able to capture market share by
virtue of owning the right assets in the right locations and by
being quick to adapt our terminals to meet our customer’s
needs. In total, our Consolidated Marine Container
Throughput increased by 2.8% to 1.58 million TEU in 2021.
Container throughput at VSC our Far Eastern basin terminal
improved by 14.8% year-on-year, ahead of the market,
while throughput volumes in the Baltic Basin centred on
St. Petersburg declined by 2.3% year-on-year, less than the
overall market fall of 3.7% in this sub-market.
Our performance in the bulk cargo segment was inevitably
impacted by our decision in the third quarter to cease
coal handling at VSC, in order to concentrate on the
Group’s core strategic container business and reduce
the negative impact of our operations on the surrounding
environment. Asaresult, the Group’s Consolidated Marine
Bulk Throughput declined by 14.6% to 4.3 million tonnes
in 2021. Our Ro-Ro and vehicle handling operations
demonstrated very strong performance in 2021; the
Group’s car-handling volumes rose by 27.8%, an impressive
turnaround after the difficulties of 2020 when volumes fell
by 20% as a result of the pandemic. Heavy Ro-Ro also
recorded a strong double-digit improvement in unit volumes.
The pandemic has exposed the vulnerabilities of existing
global supply chains, a fact that became painfully evident
in 2021. What recent events have emphasised is that supply
chains need to become more resilient, responsive and agile.
Strategically, we were arguably ahead of others in this
respect, having steadfastly reconfigured our own business
in recent times to make it more resilient, customer-focused,
and agile.
We continued totake steps tosharpen our operational
efficiency in2021, investing inour container terminal
portfolio andoptimising our asset base. Our strategic
decision tostop coal-handling atVSC andconvert
theterminal intoadedicated container handling facility,
wasinline withour drive tofocus onour core competencies,
support our clients, bemore agile, andbecome amore
sustainable business. We also continued toupgrade
our ports andinvest indigitalisation andinautomation,
forexample installing anew terminal operating system
atVSC that increased our cargo handling efficiency. We
also focused onour customers andcontinued toimprove
our value proposition andinvest inour employees
andprocesses todeliver it.
Financial results
Our financial results werevery solid, aswe grew revenues
strongly, delivered high levels ofprofitability, maximised free
cash generation, controlled costs, andmet our long-term
deleveraging targets.
Consolidated revenue increased by30.8% toUSD502.8
million, while like-for-like revenue grew by17.1% asa25%
increase incontainer revenue more than offset a5.2%
decline innon-container revenue caused bytheend ofcoal
handling atVSC. Asaresult, theGroup enjoyed very strong
profitability overtheperiod, benefitting from growing
volumes andsolid pricing. Adjusted EBITDA increased
by17.4% toUSD246.2million, andlike-for-like Adjusted
EBITDA Margin wasslightly ahead oftheprior year
at65.4% up from 65.2%. Aswellashigh margins, one other
feature ofour business isits ability toproduce consistently
strong cash flows. In2021, thebusiness delivered
overUSD129.1million ofFree Cash Flow, up byalmost
47% on2020, asstrong markets andlower financing costs
together drove cash generation.
Strategically the most important financial metric isrelated
not to our P&L but to our balance sheet. For the last seven
years, the Group’s principal financial objective has been to
reduce indebtedness and deleverage. We finally met our
long-term target Net Debt to Adjusted EBITDA of 2.0x in
2021, reporting Net Debt of USD491 million. Throughout
this deleveraging period, we kept focused on strict financial
discipline and, as a result, we have now reached an
important inflection point. Our efforts have been noted by
the credit markets, and two of the three ratings agencies
that cover us, upgraded the Group’s credit rating in 2021.
Our strengthened capital base gives the business greater
strategic flexibility and offers the prospect of a resumption
of dividend payments to shareholders should the Board
decide the timing is right on a more predictable environment
with greater visibility.
Outlook
Over the past few years, we have successfully restructured
our business and reconfigured our asset base around our
core expertise of container handling so that we have the
right infrastructure, in the right locations, serving the right
customers and end markets.
The outlook for 2022 is clouded with uncertainty because
of heightened geopolitical tension, which has reduced
market visibility, and rendered forward looking comments
particularly uncertain. However, our business has proved
successful under different market conditions and we will
continue to work hard for our stakeholders and focus on
delivering in these challenging conditions.
23 24
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Delivering Quality
and Leadership
Strategy
To be the partner of choice for shipping lines and freight
forwarders in our role as Russia’s best-connected
independent container terminal operator offering
unparalleled access to international and domestic trade flows.
Professionalism Respect Cooperation
Our strategy aims to produce value growth by offering unparalleled access to interna-
tional and domestic trade flows through our network of terminals sited at Russian key
marine locations.
We will achieve our fundamental Strategic goal by:
To increase long-term value for all our stakeholders by shaping and determining the
trends in the container segment of the Russian transportation and logistics market,
thereby driving international trade.
GLOBAL PORTS
MISSION
VISION
VALUES
Strategically we remain focused
on expanding our business through
both organic growth and investment
projects that offer tangible opportu-
nities to the Group.
Providing the best services to our clients
Maintaining operational excellence
Using technology effectively
Attracting and retaining a workforce with the right skills
PREFERRED PORT IN EVERY
LOCATION, PARTNER OF
CHOICE FOR ALL PARTIES
INVOLVED
Our strong knowledge and
ability to add value to the
Russian container market
sets us apart.
ASSURED HEALTHY,
SAFE AND EFFECTIVE
ORGANISATION
We provide our clients
with first class port and
related logistics services.
INTEGRAL PART OF
IMPORT/EXPORT AND
TRANSIT LOGISTICS
CHAINS
By connecting and simplifying
supply chains, we enable
our customers to grow their
businesses.
SOLID BUSINESS
PROFILE AND
PRUDENT CAPITAL
ALLOCATION
Our non-container
operations diversify our
revenues and increase our
terminals’ utlisation rates.
O
u
r
k
e
y
m
a
r
k
e
t
:
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s
s
i
a
TO SUCCEED,
WE REMAIN
FOCUSED ON:
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u
r
k
e
y
c
li
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n
t
s
:
s
h
i
p
p
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:
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25 26
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
OUTCOME | GLOBAL PORTS RESULTS IN 2021
+1.4%
Full export containers
throughput
+2.8%
Consolidated Marine
Container Throughput
+12.3%
Full import containers
throughput
2,900
employed
1
USD 72.5 mln
paid to all employees
in 2021
RUB 20 mln
spent on charity
(Equivalent of USD 0.3 mln)
2.0
×
Net Debt /
Adjusted EBITDA
–0.9
×
Decrease in Net Debt
to Adjusted EBITDA
RUB 38 mln
spent on environment
protective measures
(Equivalent of USD 0.5 mln)
LTIFR 0.71
low stable LTIFR
RUB 900 mln
of tax paid
(Equivalent ofUSD12.2mln)
+27.8%
Cars
long-term deleveraging target
successfully achieved
THE ONLY PLAYER
WITH A NETWORK
OF TERMINALS
IN KEY RUSSIAN
CONTAINER
GATEWAYS
marine container
and multipurpose terminals
in Russia and Finland
7
Unique asset base
323
HA
OF LAND
5
KM
OF QUAY
WALL
Port infrastructure and perfect multimodal
hinterland connections
Advanced IT system
2,900
professionals
1
Robust operational
and financial performance,
strong cash flow generation,
high EBITDA margin
Unique partnership of
strategic shareholders: global
player, APMT Terminals, and
local leader, Delo Group
Access to local and
international capital markets
INPUT OUTPUT
We create value
By providing our clients (shipping lines and freight forwarders)
with first class port and related logistics services and ensuring
efficient interaction with our partners, by forming an integral
part of import/export and transit logistics chains.
1. Handling of
containerised cargo | bulk | Ro-Ro
2. Cargo storage
3. Additional services
customs inspection, dispatch of
container trains, depot of empty
containers, tracking of cargo,
cargo documentation, stuffing
and unstuffing, container repair
and other services
RUSSIAN RAILWAYS
When providing
services and interacting with clients
we aim to be:
› a preferred port in every location, partner
of choice for all parties involved
› healthy, safe and effective organisation
Business Model
Our port
is a platform
of efficient
interaction
between
all parties
SHIPPING LINES
CARGO OWNERS
FREIGHT FORWARDERS
FEDERAL AUTHORITIES TRUCKERS
RAILWAY OPERATORS
Clients
Employees
› Smart, swift, efficient logistics hub
› Efficient and effective stevedoring
andvalue adding services
at competitive prices
› Infrastructure to facilitate
import/export and transit flows
› Reliable and safe work environment
› Competitive salaries
› Opportunities for professional growth
and development
› One of the biggest employers
in the region and sizeable
contributor to local economy
› Satisfied customers and communities
› Sustainable business that limits
environmental impact and delivers
positive change
› Shareholder value
› Sustainable high Free Cash Flow
generation and dividend capability
Community
Shareholders
HOW WE
CREATE VALUE
1
As at 31 December 2021.
1
As at 31 December 2021.
Trained staff
27
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE
Business Review
Thelast two years have seen anextremely
volatile operational environment anddisruption
across global supply chains andit has been vital
forour customers tomanage trade unbalances.
Asaresult, we have learned thecriticality
ofoffering theright infrastructure capacity
combined withahigh standard ofservice,
ensuringaclear focus onour clients’ needs
attheright time andintheright location. This
approach generatedavery favourable reception
across our client base. Building onthis strong
foundation, we not only successfully enhanced
our leading market positions inboth basins
ofpresence but also delivered solid growth
inAdjusted EBITDA andFree Cash Flow.
Due tothis strong performance, 2021marks
asignificant milestone intheGroup’s history,
aswe have succeeded inreaching our long-term
deleveraging targets. This achievement opens
up potential opportunities forrevising our capital
allocation approach inthefuture should we
see more predictable environment withgreater
visibility.
ALBERT LIKHOLET,
CEO ofGlobal Ports,
commented:
2021 Results: Continued strong growth, deleveraging targets achieved
Improved credit profile confirmed
byrating agencies in 2021
3
Moody’s upgraded rating
oftheCompany andGroup’s financial
instruments by1notch to
Ba1
RA Expert by2notches to
ruAA
Fitch Ratings affirmed at
BB+
Revenue
increased by
30.8%
to USD 502.8 million
(+17.1% like-for-like)
1
Operating profit
growth of
25.2%
to USD 197.1 million
Deleveraging target successfully achieved
withNet Debt down of
USD
120.7 million
andNet Debt toAdjusted EBITDA
reduced to
2.0 x
(–0.9x compared to31December2020)
Consolidated Marine Container
Throughput up
2.8% y-o-y
to1,576thousand TEU withstrong market
position successfully protected inall key
basins ofpresence
Adjusted EBITDA
grew by
17. 4 %
to USD 246.2 million,
delivering like-for-like
Profit for the period
increased by
2.9x
to USD 143.9 million
Adjusted EBITDA margin
increase of
15 basis points
to 65.4%
Free Cash Flow generation
growth of
46.9%
to USD 129.1
2
million
Consolidated Marine Bulk Throughput of
4.3million tonnes
(–14.6% y-o-y) ontheback ofthestrategic
decision tocease coal handling atVSC todrive
more profitable container volume growth
1
Like-for-like measures aregiven toprovide historical consistency withthedata before theaccounting change in2019.
Asaresult ofthenew terms ofcertain sales agreements, in2020 and2021 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thefirst half of2019 full revenue andassociated costs
have been gradually recognised inconsolidated revenue andtransportation expenses accordingly. This Adjusted
EBITDA neutral change resulted inadditional USD126.0million toconsolidated revenue (USD62.8million in2020)
andUSD126.0million tothecost ofsales in2021 (USD62.8million in2020).
2
Free Cash Flow definition andcalculation werechanged, fordetails andreconciliation please see: Reconciliation
ofAdditional data (non-IFRS) totheconsolidated financial statements inBusiness Review, andDefinitions.
3
In March 2022, Moody’s and Fitch credit ratings were withdrawn at the initiative of the agencies.
29 30
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
0.46
0.7
0.93
1. 14
1.47
1.98
2.44
3.01
3.68
–34.2%
2.42
3.5
4.51
4.92
5.18
5.11
3.78
3.82
4.43
4.87
5.09
5.05
5.4
–26.0%
+7.1%
5,049
2020 20 21SPb
and area
(incl. Ust-Luga)
Kaliningrad Far East South Northern
Ports
–79
159
232
51 –7
5,405
–4%
+51%
+14%
+6%
–5%
46 Baltics
3 Nothern Ports
16 South
35 Far East
Financial Highlights
• Consolidated revenue increased by30.8% toUSD502.8million; excluding
theimpact ofVSC transportation services, like-for-like revenue increased by17.1%
as25.0% increase inConsolidated Container Revenue offset 5.2% decrease
inConsolidated Non-container Revenue ontheback ofceased coal handling
atVSC.
• Like-for-like Revenue per TEU increased by21.6% toUSD188.7asaresult
ofpositive cargo, customer andbasin mix changes, aswellascustomers’
appreciation ofour quality services inhigh demand environment intheFar Eastern
basin.
• Operating profit increased by25.2% toUSD197.1million.
• Like-for-like Total Operating Cash Costs increased by16.4% toUSD131.8million
due toinflationary pressure, volumes growth andalso thefact that operating
inahigh demand environment andcapacity utilisation rate atVSC required
controlled cost increases todrive Adjusted EBITDA growth.
• Adjusted EBITDA increased by17.4% toUSD246.2million asaresult ofvolume
growth andRevenue per TEU increase. Profitability improved withlike-for-like
Adjusted EBITDA Margin at 65.4%, an increase of 15 basis points.
• TheGroup achieved significant Free Cash Flow growth of46.9% generating
USD129.1million overtheyear.
• TheGroup reduced Net Debt byUSD120.7million in2021allowing Net
Debt toAdjusted EBITDA todecrease from2.9x asof31December2020
to2.0x asattheend ofthereporting period, achieving theGroup’s long-term
deleveraging target.
Business Performance
• Strong market growth in2021saw theRussian marine container market achieving
all-time-high volumes in2021 of5.4million TEU (+7.1% y-o-y), driving growth
inboth containerised import of11.1% andcontainerised export of4.2%.
• Asaresult ofthesharp rise infreight rates inmost ofthemain global container
shipping trades, very tight network capacity intheAsia-Europe trade andadeficit
ofempty containers globally, market players increasingly preferred faster
container import andexport supply chains viatheshortest sea leg. Asaresult,
market growth wasconcentrated intheFar Eastern basin (+14.0%y-o-y)
andtheSouthern basin (+6.4% y-o-y) while
thecombined throughput ofterminals located inSaint
Petersburg andthesurrounding area declined by3.7%
y-o-y inFY2021.
• TheGroup successfully improved its market share
position inboth its basins ofpresence in2021, withVSC
throughput improving 14.8% y-o-y andthroughput ofits
terminals intheBaltic Basin declining by2.3% y-o-y
(being less than market decline). Intotal, Consolidated
Marine Container Throughput increased by2.8% y-o-y
in2021 to1,576thousand TEU.
• Aspreviously announced, VSC ceased coal handling
activities inSeptember2021, enabling theterminal
toconcentrate on the Group’s core strategic container
operations. Asaresult, theGroup’s Consolidated
Marine Bulk Throughput decreased in2021 by14.6%
y-o-y to4.3million tonnes.
• High andHeavy Ro-Ro handling increased by24.4%
to25.2thousand units, while car handling increased
by27.8% to104.9thousand units.
Outlook
• Thecompany’s outlook for2022isimpacted byincreased
volatility andheightened global andregional geopolitical
tensions, which has immediately lowered visibility
ontheprospects for 2022.
Operational Information
Thetable below sets out thecontainer andbulk cargo
throughput oftheGroup’s terminals fortheperiods
indicated. Gross throughput isshown ona100% basis
foreach terminal, including terminals held through joint
ventures andaccounted forusing theequity method.
1
Market data
Market data used inthis Report, aswellascertain statistics, including statistics inrespect ofmarket growth, volumes ofthird parties andmarket share, have been extracted fromofficial andindustry sources andother third-party sources, such
astheAssociation ofSea Commercial Ports (“ASOP”) theCentral Bank oftheRussian Federation andtheRussian Federal State Statistics Service, among others.
2
Results ofoperations forGlobal Ports fortheyear ended 31December2021
Thefinancial information presented inthis Report isextracted fromtheConsolidated Financial Statements fortheyear ended 31December2021. This Report also includes certain non-IFRS financial information, identified using capitalised terms
below. Forfurther information onthecalculation ofsuch non-IFRS financial information, see Reconciliation ofadditional data (non-IFRS) totheconsolidated financial information fortheyear ended 31December2021andDefinitions below.
Readers should read theentire Report together withtheGlobal Ports Group consolidated financial information.
Rounding adjustments have been made incalculating someofthefinancial andoperational information included inthis Report. Asaresult, numerical figures andpercentages shown astotals insometablesmay not beexact arithmetic
aggregations andother calculations ofthefigures that precede them. Certain financial information isderived fromthemanagement accounts.
FY2021 FY2020 Change Change
Abs %
Marine Terminals
Containerised cargo (thousand TEU)
PLP 399 377 22 5.9%
VSC 520 453 67 14.8%
FCT 628 654 (26) (4.0%)
ULCT 29 50 (21) (41.7)
Non-containerised cargo
Ro-Ro (thousand units) 25.2 20.3 4.9 24.4%
Cars (thousand units) 104.9 82.0 22.8 27.8%
Bulk cargo (thousand tonnes) 4,330 5,074 (743) (14.6%)
Consolidated Marine Container Throughput 1,576 1,533 42 2.8%
Consolidated Marine Bulk Throughput 4,330 5,074 (743) (14.6%)
Operational statistics ofJoint Ventures
Finnish Ports
Containerised cargo (thousand TEU) 77 98 (20) (20.7%)
Yanino (Inland Terminal)
Containerised cargo (thousand TEU) 88.3 86.1 2.2 2.5%
Bulk cargo throughput (thousand tonnes) 354.1 261.3 92.8 35.5%
Russian container market volumes, mln TEU
Russian container market dynamics by basins in 2021,
thousand TEU
Russian container market dynamics
by basins in 2021, %
-30
-20
-10
0
10
20
30
40
Full export
Full import
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
Containerised export and import growth, % y-o-y
31 32
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
5.1
4.3
–14.6%
2020 2021
155
North America
138
Europe
150
Turkey
104
World
39
Russia
Containerisation in Russia remains low, TEU/thousand people
Consolidated Marine Container throughput, % y-o-y
Cars, thousand units Ro-Ro, thousand units
Consolidated Marine Bulk throughput,
million tonnes
Annual container
throughput capacity
ofterminals
Asaresult ofprevious investment, theceasing ofcoal
handling atVSC andbased oncurrent estimates ofcontainer
dwell time, theGroup believes that thefollowing numbers
reflect berth andyard capacity oftheGroup’s terminals
asoftheend of2021.
Berth andgate capacity Yard capacity
thousand TEU per annum thousand TEU per annum
PLP 1,000 550
VSC 700 700
FCT 1,250 915
ULCT 440 220
–3.7
14.0
–2.3
14.8
Market
Global Ports
Saint Petersburg and area Far Eastern basin
2020 2021 2020 2021
82.0
104.9
20.3
25.2
27.8%
24.4%
Results ofoperations ofGlobal
Ports fortheyear period ended
31December2021and31 December 2020
Thefollowing table sets out theprincipal components oftheGroup’s consolidated
income statement andcertain additional non-IFRS data oftheGroup fortheyear
ended 31December2021 and31December2020.
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Selected consolidated financial information
Revenue 502.8 384.4 118.4 30.8%
Cost ofsales (276.8) (200.3) (76.4) 38.2%
Gross profit 226.0 184.1 41. 9 22.8%
Administrative, selling andmarketing expenses (27.0) (24.7) (2.3) 9.5%
Other income 1.3 1.3 – 0.0%
Share of(loss)/profit ofjoint ventures accounted forusing theequity method (2.8) (3.0) 0.2 (5.9%)
Other (losses)/gains– net (0.4) (0.3) (0.0) 10.3%
Operating profit 19 7. 1 157.4 39.7 25.2%
Finance income 4.1 2.4 1.7 72.7%
Finance costs (53.8) (71.8) 17. 9 (25.0%)
Change infair value ofderivative instruments (5.9) 18.4 (24.3) (132.1%)
Net foreign exchange gains/(losses) onfinancial activities 0.6 (41.8) 42.3 (101.4%)
Finance income/(costs)– net (55.1) (92.8) 37. 7 (40.6%)
Profit before income tax 142.0 64.6 7 7. 4 119.8%
Income tax credit/(expense) 1.8 (14.6) 16.5 (112.6%)
Profit fortheperiod 143.9 50.0 93.9 187.8%
Attributable to:
Owners oftheCompany 140.4 48.4 92.0 190.1%
Non-controlling interest 3.5 1.6 1.9 117.8%
Key Non-IFRS financial information
Like-for-like revenue 376.7 3 21. 7 55.1 17.1%
Adjusted EBITDA 246.2 209.7 36.5 17.4%
Like-for-like Adjusted EBITDA margin 65.4% 65.2%
Like-for-like Cash Cost ofsales (105.9) (90.2) (15.7) 17.4%
Like-for-like Total Operating Cash costs (131.8) (113.2) (18.6) 16.4%
Free Cash Flow 129.1 87. 9 41. 2 46.9%
Revenue
Thefollowing table sets forth thecomponents oftheconsolidated revenue
for2021and2020.
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Consolidated Container Revenue asreported 423.3 300.6 122.7 40.8%
Adjusted for
VSC transportation services 126.0 62.8 63.3 100.8%
Like-for-like Consolidated Container revenue 297.3 2 37. 8 59.5 25.0%
Non-container revenue 79.5 83.8 (4.4) (5.2%)
Consolidated Revenue 502.8 384.4 118.4 30.8%
Like-for-like consolidated revenue 376.7 3 21. 7 55.1 17.1%
Like-for-like Revenue per TEU 188.7 155.1 33.6 21.6%
Source: Drewry; some 2021 numbers are estimated
33 34
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
In2021,like-for-like consolidated revenue increased by17.1% toUSD376.7million
fromUSD321.7million in2020, driven bytheincrease inlike-for-like Consolidated
Container Revenue, which waspartially offset bydecline inother revenue.
Like-for-like Consolidated Container Revenue increased
by25.0%, orUSD59.5million, toUSD297.3million. This
change wasdriven byanincrease inConsolidated Marine
Container Throughput of2.3% andbya21.6% increase
inlike-for-like Revenue per TEU. Like-for-like Revenue
per TEU increased mainly asaresult ofpositive cargo,
customer andbasin mix changes, aswellasour customers’
appreciation ofour quality services inthehigh demand
environment intheFar Eastern basin.
Consolidated Non-Container Revenue decreased by5.2%,
orUSD4.4million, toUSD79.5million, asdecline
ofthroughput ofcoal atVSC mentioned above waspartially
offset bygrowth inrevenue fromhandling ofcars andHigh
andHeavy Ro-Ro ontheback ofthegrowing volumes
described above.
Asaresult ofnew terms agreed oncertain sales agreements,
in2020and2021 VSC acted asaprincipal versusarole
asanagent atthebeginning of2019: previously thenet result
ofrevenue fromtransportation services andassociated cost
wasincluded inconsolidated revenue. Sincethemiddle
ofthefirst half of2019full revenue andassociated
cost have been gradually recognised inconsolidated
revenue andtransportation expenses accordingly. This
Adjusted EBITDA neutral change resulted inanadditional
USD126.0million attributed toconsolidated revenue
(USD62.8million in2020) andUSD126.0million
attributed tothecost ofsales in2021 (USD62.8million
in2020). TheGroup discloses like-for-like data toprovide
historical consistency withthedata before this accounting
change in2019. In2021,thegrowth ofVSC revenue
fromtransportation services was caused byorganic growth
ofthis part ofbusiness.
Cost ofsales
Thefollowing table sets outabreakdown byexpenses
ofthecost ofsales for2021and2020.
Revenue per TEU recovery
1
, USD
Like-for-like revenue, USD million
Like-for-like Operating Cash Costs,
USD million
Adjusted EBITDA,
USD million
Free Cash Flow growth,
USD million
211
186
2017 2018 2019 2020 2021
178
155
189
2020
Like-for-like
Container Revenue
Non-Container
Revenue
2021
17.1%
321.7
+59.5
–4.4
376.7
113.21
131. 81
16.4%
2020 2021
2020 2021 2020 2021
209.7
246.2
17.4%
87.9
129.1
46.9%
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Depreciation ofproperty, plant andequipment 34.9 34.1 0.8 2.4%
Amortisation ofintangible assets 0.7 0.6 0.1 13.8%
Depreciation ofright-of-use assets 13.4 11 . 8 1.6 13.5%
Reversal ofimpairment ofproperty, plant andequipment (8.5) – (8.5) –
Write-off ofproperty, plant andequipment 4.4 0.9 3.5 391.2%
Staff costs 53.4 45.1 8.3 18.5%
Transportation expenses 132.6 6 7. 7 64.9 96.0%
• including VSC rail transportation costs 126.0 62.8 63.3 100.8%
• including transportation costs other than VSC
transportation costs
6.6 4.9 1.7 34.0%
Fuel, electricity andgas 9.6 8.5 1.1 12.9%
Repair andmaintenance ofproperty, plant andequipment 5.5 5.3 0.2 4.2%
Purchased services 18.7 16.2 2.6 16.0%
Taxes other than onincome 2.3 2.4 (0.0) (1.9%)
Other operating expenses 9.7 7. 9 1.9 23.7%
Total Cost ofSales 276.8 200.3 76.4 38.2%
Cash Сost ofSales 231. 9 153.0 73.9 48.3%
Like-for-like Cash Cost ofsales 105.9 90.2 15.7 17.4%
Thecost ofsales increased byUSD76.4million, or38.2%,
fromUSD200.3million in2020 toUSD276.8million
in2021primarily due togrowth intransportation
expenses atVSC. Thegrowth intransportation expenses
fromUSD62.8million toUSD126million in2021wasdriven
bynew terms ofcertain agreements that changed
therecognition ofrevenue andcosts generated byVSC
fromrailway services forclients asdescribed above.
Like-for-like Cash Cost ofSales increased
byUSD15.7million, or17.4%, fromUSD90.2million in2020
toUSD105.9million inof2021 inorder todrive Adjusted
EBITDA growth while improving Adjusted EBITDA margin.
Thekey drivers forlike-for-like Cash Cost ofSales were: staff
costs growth atVSC driven by14.8% increase incontainer
throughput ontheback ofhigh market demand while
theterminal operated intheenvironment ofthehigh utilisation
1
On like-for-like basis.
rate; consolidated volume growth; inflationary pressure; andgrowth inpurchased
services atPLP tosupport non-containerised cargo throughput increase.
Gross profit
Gross profit increased byUSD41.9million, or22.8%, fromUSD184.1million in2020
toUSD226million in2021. This increase wasdue tothefactors described above under
“Revenue” and“Cost ofsales”.
Administrative, selling andmarketing expenses
Administrative, selling andmarketing expenses increased byUSD2.3million, or9.5%,
fromUSD24.7million in2020 toUSD27million in2021andbroadly in line with
inflation inRussia overthesame period (8.4%).
Adjusted EBITDA andAdjusted EBITDA Margin
Adjusted EBITDA in2021increased by17.4%, orUSD36.5million
toUSD246.2million. Like-for-like Adjusted EBITDA Margin was64.4%, 15basis points
higher than in2020 (65.2%).
35 36
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Share ofprofit/(loss) ofjoint ventures accounted forusing theequity method
TheGroup’s share ofloss fromjoint ventures decreased fromaloss ofUSD3.0million
in2020 toaloss ofUSD2.8million in2021.
Theloss fromMLT Group increased fromUSD2.0million in2020 toaloss
ofUSD2.9million. This result wasprimarily driven mainly byadecreased volume atMLT.
Thechange intheshare ofresults fromCD Holding Group, fromaloss
ofUSD1.0million in2020 toaprofit ofUSD0.05million in2021, wasmainly driven
bythedepreciation oftheRussian Rouble against theUS Dollar in2021that resulted
inagain fromtherevaluation oftheRUBnominated borrowings ofYLP.
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
MLT (2.9) (2.0) (0.9) 43.2%
CD Holding 0.05 (1.0) 1.0 (105.2%)
Total share ofprofit/(loss) ofjoint ventures (2.8) (3.0) 0.2 (6.7%)
Liquidity andcapital
resources
General
Asof31December2021, theGroup had USD296.7million
incash andcash equivalents.
TheGroup’s liquidity requirements arise primarily
inconnection withrepayments ofprincipal andinterest
payments, capital investment programmes andongoing
costs ofits operations. In2021,theGroup’s liquidity needs
weremet primarily bycash flows generated fromits
operational activities aswellasborrowings. TheGroup
expects tofund its liquidity requirements inboth theshort
andmedium term withcash generated fromoperational
activities andborrowings.
Asaresult oftheshareholding andjoint venture
agreements ofMoby Dik, theFinnish Ports andYanino,
thecash generated fromtheoperational activities ofeach
oftheentities inthose businesses isnot freely available tofund
theother operations andcapital expenditures oftheGroup
oranyother businesses within theGroup andcan only belent
toanentity ordistributed asadividend withtheconsent
oftheother shareholders tothose arrangements.
Asof31December2021, theGroup had USD788.1million
oftotal borrowings (including lease liabilities), ofwhich
USD215.3million comprised current borrowings
andUSD572.8million comprised noncurrent borrowings.
See also“Capital resources”.
Cash flow
Thefollowing table sets out theprincipal components
oftheGroup’s consolidated cash flow statement
for2021andfor2020.
Net cash fromoperating activities
Net cash fromoperating activities increased
byUSD35.1million, or18.4%, fromUSD190.9million
in2020 toUSD226million in2021. Growth innet
cash fromoperating activities wasprimarily due
toa21.2% increase incash generated fromoperations
fromUSD196.6million in2020 toUSD238.3 in2021due
tothefinancial result fromoperations asdescribed above.
Net cash used ininvesting activities
Net cash used ininvesting activities increased
fromUSD32.5million in2020 toUSD39.5million in2021.
This change wasprimarily due toanincrease inpurchases
ofproperty, plant andequipment fromUSD33.9million
in2020 toUSD43.4 in2021asstrong market growth
andgrowing utilisation ofterminals requiredaCAPEX
increase todrive profitable growth.
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Net cash fromoperating activities 226.0 190.9 35.1 18.4%
Cash generated fromoperations 238.3 196.6 41.7 21.2%
Tax paid (12.2) (5.7) (6.6) 115.7%
Net cash used ininvesting activities (39.5) (32.5) (7.0) 21.6%
Purchases ofintangible assets (0.5) (0.9) 0.3 (38.7%)
Purchases ofproperty, plant andequipment (43.4) (33.9) (9.5) 28.0%
Proceeds fromsale ofproperty, plant andequipment 0.5 0.4 0.1 23.4%
Interest andloans repayments received 3.9 1.9 2.0 108.0%
Net cash used infinancing activities (93.9) (74.3) (19.6) 26.4%
Repayments ofborrowings (133.4) (73.0) (60.4) 82.8%
Proceeds fromborrowings 101. 8 72.1 29.7 41.2%
Interest paid onborrowings (52.7) (66.4) 13.7 (20.6%)
Interest paid onleases (4.7) (4.2) (0.5) 12.2%
Proceeds fromderivative financial instruments (1.2) (0.8) (0.3) 36.4%
Principal elements oflease payments (3.6) (2.0) (1.7) 85.4%
Free Cash Flow 129.1 87.9 41.2 46.9%
Net increase/(decrease) incash andcash equivalents 92.7 84.2 8.5 10.1%
Cash andcash equivalents atbeginning oftheperiod 207.0 124.4 82.6 66.4%
Exchange gains/(losses) oncash andcash equivalents (3.0) (1.5) (1.4) 92.9%
Cash andcash equivalents atend oftheperiod 296.7 207.0 89.7 43.3%
Net cash used infinancing activities
Net cash used infinancing activities increased
byUSD19.6million or26.4% fromUSD74.3million
in2020 toUSD93.9million. This wasdue toanincrease
intherepayment ofborrowings ofUSD60.4million
because ofscheduled FCT rouble bonds repayments
inthereporting period inline withtheGroup’s deleveraging
strategy. These werepartially offset byanincrease
inproceeds fromborrowings byUSD29.7million
or41.2% fromUSD72.1 in2020 toUSD101.8million
in2021astheGroup placed 5-year RUB7.5billion bonds
topartially refinance Eurobonds due inJanuary2022.
InJanuary2022 Eurobonds forthetotal amount
ofUSD199million weresuccessfully fully repaid.
Free Cash Flow
Free Cash Flow increased byUSD41.2million or46.9%
fromUSD87.9million in2020 toUSD129.1million in2021.
This change isdriven bythereasons describedabove.
Capital resources
TheGroup’s financial indebtedness consists ofbank borrowings, bonds andlease
liabilities andwasUSD788.1million asof31December2021. Asofthat date, all
oftheGroup’s borrowings weresecured byguarantees andsuretyships granted
bycertain Group companies. Certain ofthese borrowings contain covenants requiring
theGroup andtheborrower tomaintain specific indebtedness toAdjusted EBITDA
andother ratios, aswellascovenants having theeffect ofrestricting theability
oftheborrower totransfer assets, make loans andpay dividends toother members
oftheGroup. TheGroup isinfull compliance withcovenants inthereporting period.
TheWeighted Average Effective Interest Rate oftheGroup’s debt portfolio is6.66%
forUSDnominated borrowings and9.04% forRussian Rouble nominated borrowings.
Asof31December2021, theGroup hadaleverage ofNet Debt toAdjusted EBITDA
ratio of2.0x (compared toaratio of2.9x asof31December2020).
Net Debt, USD million
2013 2014 2015 2016 2017 2018 2019 2020 2021
1,350.2
1,207.7
1,047.6
947.3
865.9
780.3
747. 0
612.1
491.4
Other gains/(losses)—net
Other gains/(losses) changed fromanet loss ofUSD339thousand in2020 toanet
loss ofUSD374thousand in2021.
Operating profit/(loss)
TheGroup’s operating profit increased fromUSD157.4million in2020
toUSD197.1million in2021due tothefactors described above under “Gross
profit”, “Share ofprofit/(loss) ofjoint ventures accounted forusing theequity method”
and“Other gains/(losses)-net”.
Finance income/(costs)—net
Net finance income/(costs) decreased fromacost ofUSD92.8million in2020
toacost ofUSD55.1million2021. This move wasprimarily due toadecrease
ofinterest expenses onbonds fromUSD61.1million in2020 toUSD43.0million
in2021astheresult ofown Eurobond buyback in2020andsuccessful refinancing
ofFTC rouble bond withalower coupon rate. Inaddition, Net foreign exchange
loss fromfinancing activities changed fromaloss ofUSD41.8million in2020
toaprofit ofUSD0.6million in2021. This waspartially offset byachange inthefair
value ofderivative instruments toaloss ofUSD5.9million in2021 fromaprofit
ofUSD18.4million in2020.
Profit/(loss) before income tax
Profit before income tax increased toUSD142.0million in2021 fromUSD64.6million
in2020. This change isdue tothefactors described above under “Operating profit/
(loss)” and“Finance income/(costs)—net”.
Income tax expense
In2021,income tax credit wasUSD1.8million compared toUSD14.6million oftax
expense in2020. Thecurrent tax remained broadly unchanged (USD12.3million
ofexpense in2020compared toUSD11.1million in2021), while Deferred tax reversal
amounted toUSD13.0million compared toUSD0.9million in2020.
Profit/(loss) fortheperiod
TheGroup reportedaprofit ofUSD143.9million in2021, anincrease
ofUSD93.9million andalmost triple theprofit ofUSD50.0million in2020due
tothefactors described above.
37 38
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Thefollowing table sets out thematurity profile
oftheGroup’s total borrowings (including lease liabilities)
asof31December2021.
USDmln
1H2022 213.3
2H2022 2.0
2023 305.2
2024 58.9
2025 70.7
2026andafter 138.1
Total 788.1
Asof31December2021, thecarrying amounts
oftheGroup’s borrowings (including lease liabilities)
weredenominated inthefollowing currencies:
USDmln
Rouble 281.0
US dollar 507.1
Total 788.1
Debt maturity profile, USD million
Net Debt / Adjusted EBITDA
2013 2014 2015 2016 2017 2018 2019 2020 2021
0
1
2
3
4
5
Cash
31-Dec-2021
2022 2023 2024 2025 2026
and after
RUB
USD
USD hedged
USD 199 mln of Eurobonds successfully repaid in January 2022
296.7
215.3
305.2
58.9
70.7
138.1
Reconciliation ofadditional data (non-IFRS) totheconsolidated
financial information fortheyear ended 31December2021
Reconciliation ofAdjusted EBITDA toprofit fortheperiod
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Profit fortheyear 143.9 50.0 93.9 187.8%
Adjusted for
Income tax expense (1.8) 14.6 (16.5) (112.6%)
Finance costs—net 55.1 92.8 (37.7) (40.6%)
Depreciation ofproperty, plant andequipment 35.8 35.6 0.3 0.8%
Depreciation ofright-of-use assets 13.4 11 . 8 1.6 13.5%
Amortisation ofintangible assets 0.84 0.77 0.1 9.5%
Reversal ofimpairment ofproperty, plant andequipment (8.5) – (8.5) –
Write-off ofproperty, plant andequipment 4.4 0.9 3.5 391.2%
Other (gains)/losses—net 0.4 0.3 0.0 10.3%
Share of(profit)/loss ofjoint ventures accounted forusing
theequity method
2.8 3.0 (0.2) (5.9%)
Adjusted EBITDA 246.2 209.7 36.5 17.4%
Reconciliation ofAdjusted EBITDA Margin
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Revenue 502.8 384.4 118.4 30.8%
Adjusted EBITDA 246.2 209.7 36.5 17.4%
Adjusted EBITDA Margin 49.0% 54.6% – –
Reconciliation ofTotal Operating Cash Costs tocost ofsales andadministrative, selling
andmarketing expenses
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Cost ofsales 276.8 200.3 76.4 38.2%
Administrative, selling andmarketing expenses 2 7. 0 24.7 2.3 9.5%
Total 303.8 225.0 78.8 35.0%
Adjusted for
Depreciation ofproperty, plant andequipment (35.8) (35.6) (0.3) 0.8%
Depreciation ofright-of-use assets (13.4) (11.8) (1.6) 13.5%
Amortisation ofintangible assets (0.84) (0.77) (0.07) 9.5%
Reversal ofimpairment ofproperty, plant andequipment 8.5 – 8.5 –
Write-off ofproperty, plant andequipment (4.4) (0.9) (3.5) –
Total Operating Cash Costs 257.9 176.0 81. 9 46.5%
39 40
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Reconciliation ofCash Cost ofSales tocost ofsales
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Cost ofsales 276.8 200.3 76.4 38.2%
Adjusted for
Depreciation ofproperty, plant andequipment (34.9) (34.1) (0.8) 2.4%
Depreciation ofright-of-use assets (13.4) (11.8) (1.6) 13.5%
Amortisation ofintangible assets (0.7) (0.6) (0.1) 13.8%
Reversal ofimpairment ofproperty, plant andequipment 8.5 – 8.5 –
Write-off ofproperty, plant andequipment (4.4) (0.9) (3.5) 391.2%
Cash Cost ofSales 231.9 153.0 79.0 51.6%
Reconciliation ofCash Administrative, Selling andMarketing Expenses toAdministrative,
selling andmarketing expenses
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Administrative, selling andmarketing expenses 2 7. 0 24.7 2.3 9.5%
Adjusted for
Depreciation ofproperty, plant andequipment (1.0) (1.5) 0.5 (35.9%)
Amortisation ofintangible assets (0.17) (0.18) 0.01 (5.1%)
Cash Administrative, Selling andMarketing expenses 25.9 23.0 2.9 12.5%
Reconciliation ofNet Debt andTotal Debt toborrowings andlease liabilities
Asat31.12.2021 Asat31.12.2020 Change Change
USDmln USDmln USDmln %
Non-current Borrowings 536.1 632.9 (96.8) (15.3%)
Current Borrowings 211 . 8 153.3 58.5 38.2%
Non-current Lease liabilities 36.7 31.1 5.6 18.1%
Current Lease liabilities 3.4 1.8 1.6 90.0%
Total Debt 788.1 819.1 (31.0) (3.8%)
Adjusted for
Cash andcash equivalents (296.7) (207.0) (89.7) 43.3%
Net Debt 491.4 612.1 (120.7) (19.7%)
Reconciliation ofFree Cash Flow tonet cash fromoperating activities
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Net cash fromoperating activities 226.0 190.9 35.1 18.4%
Adjusted for
Net cash used ininvesting activities (39.5) (32.5) (7.0) 21.6%
Interest paid (57.4) (70.6) 13.2 (18.6%)
Free Cash Flow 129.1 87. 9 41. 2 46.9%
Reconciliation oflike-for-like revenue toconsolidated revenue
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Consolidated revenue 502.8 384.4 118.4 30.8%
Adjusted for
VSC transportation services 126.0 62.8 63.3 100.8%
Like-for-like revenue 376.7 3 21. 7 55.1 17.1%
Reconciliation oflike-for-like Consolidated Container Revenue
toConsolidated Container Revenue
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Consolidated Container Revenue 423.3 300.6 122.7 40.8%
Adjusted for
VSC transportation services 126.0 62.8 63.3 100.8%
Like-for-like Consolidated Container Revenue 297.3 23 7. 8 59.5 25.0%
Reconciliation oflike-for-like Cash Cost ofSales toCash Cost ofSales
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Cash Cost ofSales 231.9 153.0 79.0 51.6%
Adjusted for
VSC transportation services 126.0 62.8 63.3 100.8%
Like-for-like Cash Cost ofSales 105.9 90.2 15.7 17.4%
Reconciliation oflike-for-like Total Operating Cash Costs toTotal Operating Cash Costs
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Total Operating Cash Costs 257.9 176.0 81.9 46.5%
Adjusted for
VSC transportation services 126.0 62.8 63.3 100.8%
Total like-for-like Operating Cash Costs 131. 8 113.2 18.6 16.4%
Reconciliation oflike-for-like Adjusted EBITDA Margin
FY2021 FY2020 Change Change
USDmln USDmln USDmln %
Like-for-like revenue 376.7 3 21. 7 55.1 17.1%
Adjusted EBITDA 246.2 209.7 36.5 17.4%
Like-for-like EBITDA Margin 65.4% 65.2%
41 42
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
SUSTAINABLE
AND SAFE
BUSINESS
Environmental,
Social and Governance
Welcome toGlobal Ports Sustainability Report for2021.
Thereport provides our stakeholders withinformation ontheGroup’s
sustainability strategy andhow we performed in2021.
Our vision istobeapartner ofchoice forshipping lines
andfreight forwarders asthebest-connected independent container
terminal operator inRussia withunequalled access todomestic
andinternational trade flows. Therefore, we regard sustainability
withits pillars ofenvironment, society andgovernance (ESG)
asanessential part ofour strategy. Andwe arecommitted todriving
Global Ports onamore sustainable path, inorder tomaximise
thepositive impact ofESG practices.
Astheleading container ports group inRussia, we have long
understood theimportance ofsustainability andwe work hard tomeet
our ESG responsibilities. Our ambition istobeasustainability leader
inthecontainer ports andlogistics sector, underpinned andsupported
bytheGroup’s strong governance culture. We have made steady
year onyear progress inour ESG practices, increasing thelevel
ofESG disclosures, expanding our standard metrics, andobtaining
our sustainability ratings whose scores areincreasingly considered
byinvestors.
Toimplement our sustainability ambitions, our development
strategy needs toevolve tokeep pace withour stakeholders’
expectations andanexpanding reporting landscape. Consequently,
in2021, we undertookawide-ranging review ofour sustainability
approach. Recognising that sustainability isnota‘one size-fits-
all’ approach, we worked withaleading global sustainability
consulting firm tocreateadetailed understanding ofour
sustainability positioning, including peer group comparisons,
surveys ofstakeholders, andanalysis ofbest practices. Thepurpose
ofthereview istoset new sustainability targets andgoals,
theachievement ofwhich will add value forour stakeholders
andmaximise our ESG impact.
Although thepast year has been anextremely challenging
one, we have made good progress onachieving our ESG priorities
during 2021. We continue to take our environmental stewardship
ALBERT LIKHOLET
Сhief Executive Officer
ofGlobal Ports
Management LLC
responsibilities very seriously; overthepast year,
we focused onmaintaining rigorous regulatory
compliance andmaking improvements inthree
key areas: energy efficiency, environmental
protection, andmarine conservation. Safety
isatthecore ofeverything we do atGlobal Ports,
andwe elevated our focus onsafety culture last
year inour pursuit ofazero-harm environment.
Andwe also continued toinvest inbuilding our
employer brand, encouraging staff development
andsupporting thecommunities we serve.
Astheindustry leader, Global
Ports has long advocated theimportance
ofbeingaresponsible business, andwe continue
towork hard tomeet our broader responsibilities
tosociety. Asanorganisation, we have
reached thestage where if we aretocontinue
to create sustainable long-term value, we
need tochartanew, more sustainable course
fortheGroup.
We recognise we areatthestart ofour
sustainability journey, but we arecommitted
tobecomingafully sustainable business
andmeeting theexpectations ofour stakeholders
andsociety.
Environment
Our industry, like others, isworking todevelop sustainable business practices
that reduce its impact ontheenvironment. AtGlobal Ports, environmental
sustainability isacritical part ofour business strategy, requiringacareful balance
bestruck between our growth aspirations andour sustainability obligations. We
arecommitted toaccelerating theintegration ofsustainable practices intoour
business operations, improving our carbon footprint andlowering emissions across
our value chain.
TheGroup hasastrong track record ofcompliance withenvironmental
legislation. We arefully transparent andaccountable when it comes toissues
relating totheenvironment. Our environmental management system requires
that all companies within thegroup evaluate andmanage their environmental
impacts, enforce local environmental laws andregulations, andmake continuous
improvements. All oftheGroup’s terminals carry comprehensive sustainability plans
andthese areembedded inall theGroup’s investment programmes.
Strategically andoperationally theGroup made good progress inits environmental
approach in2021. TheGroup announced atits interim results inAugust 2021it
had made thestrategic decision tocease all coal handling operations atits VSC
terminal asofSeptember 2021. This decision significantly reduced theenvironmental
impact ofVSC, andmeans it fully focused onhandling more environmentally-friendly
container handling.
Operationally, theGroup intensified its efforts tosupport theenvironment. Priority
projects included ones focused onenergy conservation, emissions andgreen
recycling.
Climate Change
Climate change isone ofthemost significant challenges facing mankind. Inaction
isnot anoption if theworld istoreverse theeffects ofclimate change, andlimit
global warming towell below 2.0degree above pre-industrial levels. AtGlobal
Ports we aredetermined toplay our part byreducing our emissions, becoming more
energy efficient, andimproving climate change adaptation.
Compared toother modes oftransportation, shipping isone ofthemost energy
efficient ways totransport freight, moving 90% oftheworld’s goods. Asleaders
oftheregion’s logistics infrastructure, our ports can play animportant part inthedrive
todecarbonise andbepart ofthesolution toaddressing climate change. Because
our container terminals arestrategically situated inthekey gateways ofRussia, they
act ashubs connecting two of the most environmentally-friendly transport options,
marine shipping andfreight rail tocreate eco-friendly value chains.
Atthesame time, ports infrastructure faces increased risks fromclimate-related threats
such asrising sea levels orsevere weather events, which will require port operators
like Global Ports tostrengthen our climate change adaptation byupgrading our
infrastructure andoperations. Our approach toclimate change, therefore, focuses
onboth adaptation andmitigation measures through cutting our greenhouse gas
emissions, improving infrastructure resilience, andcontinuing toinnovate.
While theGroup complies withall mandatory rules
andregulations regarding Greenhouse Gas Emissions
(GHG), we recognise that theGroup needs toimprove
its decarbonisation efforts. Andin2021theGroup made
theenvironmentally significant decision todiscontinue
coalhandling atits VSC terminal inRussia’s Far East
sinceSeptember ofthelast year, reducing its carbon
footprint.
TheGroup continued tomake progress inits
decarbonisation initiatives, withongoing measure such
astheintroduction ofmore energy-efficient lighting
systems andheating systems being supplemented
bynew initiatives in2021including introduction ofgreen
electricity charging points; greater use ofelectric vehicles
andelectric cranes; introduction ofmore efficient plant
andmachinery.
We stopped generating electricity usingnatural gas
atone oftheterminals.
Asaresult, we have again reduced our energy usage
across theGroup, withelectricity andfuel consumption
per tonne ofcargo handled both falling forthefourth
straight year.
Meantime, we continue tocollaborate closely withother
participants inthelogistics value chain tofind solutions that
create more eco-efficient logistics chains. We areworking
withour shipping clients, our suppliers, rail freight
companies andtrucking firms tomake changes inthis area.
Environmental Protection andConservation
We arecommitted tobeing stewards ofthenatural
environments inwhich we operate. Akey strategic focus
isminimising theenvironmental impacts ofour port
operations onthelocal ecosystems. Theland, waterways
andestuaries that we manage arevaluable natural assets,
andwe continually review our operations toensure that
we areacting inanenvironmentally responsible way.
Attheheart ofour approach iseffective environmental
management, acting toconserve, regenerate andprotect
thenatural habitats, marine andland-based, around our
terminals.
45 46
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
We implementedanumber ofenvironmental schemes andpilot projects toimprove
theenvironment atour locations during 2021. In2021,theGroup’s expenditure
onenvironmental protection schemes wasmainly focused on our VSC andULCT
terminals. Forexample, atVSC, intheRussian Far East, incooperation withtheGreen
Patrol organisation, we financed thework tode-pollute Lake Solyonoye andrid
it ofharmful oil products. This resulted inpositive improvements totheecology
ofthelake andits surrounding area based onanalyses carried out byexperts from
theAdmiral Nevelsky Maritime University.
Sustainability isalsoanimportant part ofour port infrastructure capacity planning,
inpreparing forfuture expansion. We continue towork closely withlocal
andregional governments ensuring that anypotential environmental impacts resulting
fromland reclamation, reconstruction ordevelopment areproperly quantified
andaddressed.
Water Usage
Global Ports iscommitted toactively manage its water resources, including being
more efficient inhow we use water. Across our terminals, waste istreated andrecycled
back tothewaterways. Theterminals areactively working toimprove theefficiency
ofwastewater treatment toensure thedischarge ofclean water inanyconditions.
We arealso working toconserve water usage across
theGroup through monitoring ofwater usage, andinstalling
more water-efficient equipment. All water consumers have been
equipped withwater flow meters, which ensures 100% leakage
control andmonitoring ofconsumption atall times. Monitoring
ofwater use iscarried out monthly bytaking readings fromflow
meters, which areequipped withall releases towater bodies
andmetering units oftap water fromsuppliers. Thedata
issubmitted aspart ofreports totheFederal Agency forWater
Resources. We use recycled water forcar washing inone ofour
terminals.
Waste Management
Waste isamajor global issue andwe havearesponsibility
tominimise theimpacts ofour operations. Tackling thewaste
challenge istherefore animportant pillar ofour environmental
activities. Waste management isthesubject ofseveral Group
programmes, focused onminimising how much waste we
produce, repurposing andrecycling where we can, andensuring
that disposing ofwaste takes place inthemost eco-friendly way.
Social
Asaprovider ofcritical national infrastructure, Global Ports
already hasabig impact onpeople’s lives asafacilitator
ofglobal trade, connecting economies. But we also
areintimately connected toour local economies, where
our presence hasasignificant social impact: supporting
communities, funding social investment, providing
employment, andcreating job training anddevelopment
opportunities.
Asaresponsible business, we recognise that thewell-
being ofour employees andthecommunities directly affects
thelong term prospects fortheGroup’s development. We
arecommitted toadvancing our social agenda which aims
atproviding safe working conditions, motivated employees,
equal opportunities, engaged communities, andeconomic
andsocial support fortheregions where we operate.
Safety
Thehealth andsafety ofeveryone who works atGlobal
Ports isour top priority. We haveafundamental duty ofcare
toensure that our people aresafe atall times andwe
arecommitted toplacing safety assurance atthecore ofour
operations andcorporate culture.
Our zero-harm strategy has asits objective theremoval
oftherisk ofharm fromall ofour operations. Tomeet our
zero-harm objective, our focus isonbuildingasustainable
safety culture among our employees, contractors andother
terminal visitors. We pride ourselves onsetting high safety
standards andcontinually seek todrive improvements inour
performance.
Thenature oftheworking environment atour terminals
places high demands onour employees andcontractors,
meaning that they areregularly exposed torisks while
doing their jobs. Every day oftheyear, we aretasked
withensuring that thesafety ofour employees, contractors
andothers who visit our terminals isaccorded thehighest
priority.
Our approach todevelopingasustainable safety culture
isbased onthree principles:
• providingasafe working environment
• providing comprehensive implementation plans built
around best practice safety andcompliance standards
• offering comprehensive training focused onrisk
awareness andreduction
We constantly monitor health andsafety risks toensure
that our risk controls andworking practices arethesafest
they can be. We believe this approach leads tobetter
safety outcomes. Our safety management system focuses onensuring compliance
withour safety standards toprovideasafe work environment, based:
• Global Minimum Safety requirements (GMR) that arealigned withindustry
best practices
• Safety audits toimprove compliance ofindividual terminals withGMR
• Safety briefings andinformation updates forour staff andcontractors
• Safety walks programme ofdaily audits ateach terminal
• Health andsafety training forline management andemployees staff
• General safety training drills
• Specialised training programmes forhandling dangerous orhazardous cargoes
• Monitoring employees’ health andwellbeing toimprove wellbeing andreduce
incidence ofoccupational illnesses.
Safety Governance
TheBoard has overall responsibility forhealth andsafety matters andiscommitted
tocontinuous improvement inour safety culture andsystems. TheBoard sets Health
andSafety policy, agrees onsafety standards andreviews performance.
TheChief Operating Officer isthesenior executive responsible forhealth
andsafety compliance andperformance monitoring. TheChief Operating Officer
regularly reviews feedback andperformance reports supplied bytheindividual
business units andtheBoard receives monthly performance reports. TheGroup’s
safety performance isregularly reviewed bytheBoard andanydecisions taken
arediscussed andagreed withtheexecutive team.
Safety Performance
In2021, against thebackdrop ofCOVID-19 Global Ports maintained its
unwavering commitment tosafety, payingahigh level ofattention toprotecting
thehealth andwellbeing ofour employees, contractors, customers andsuppliers.
Our group-wide programmes toimprove safety awareness andbuildastrong
safety culture made progress against thepriorities we had set for2021. These
included improving our safety processes andcontrols andimplementing our
Fatal 5programme,abehaviour-based safety campaign, focused onreducing
fivemajor recurring risks: working under thecranes, working atheight, working
withhazardous cargoes, obeying speed limits andworking ofcontractors.
Improving safety compliance withour GMRs remainsacore area offocus,
asthese arethecornerstone ofour safety compliance framework. Management
maintained its strict cycle ofannual safety audits ofterminals assessing
compliance levels, agreeing safety improvements andissuing instructions. This
focus oncontinuous safety has improved safety assurance across theGroup,
andcontributed toaconsistent reduction intherisk offatality.
We recognise theimportance ofleadership andbehaviours increatingapositive
safety culture andencourage our managers tolead their teams byexample. Our
Safety Walk programme ofdaily safety audits continues todeliver high levels
ofcompliance. Theritual ofdaily safety audits has taken firm root among our terminal
operations teams, helping tofoster thezero-harm safety culture we aspire to.
Energy Usage
2019 2020 2021
Electricity consumption per 1 tonne of cargo
handled by Russian Ports’ marine terminals, kWh
2.08 1.69 1.87
Fuel consumption per 1 tonne of cargo handled byRussian Ports’ marine terminals, l/t 0.46 0.44 0.44
Energy intensity of Russian Ports’ marine terminals, MWh per million of sales revenue in USD 12 0 108 91
47 48
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
We also acknowledge theimportance oflistening to,
andacting upon, our regular safety feedback sessions
withour employees. In2020, toimprove our safety audits,
theGroup introduced its unique GP Alarm mobile application,
one version ofwhich allows responsible employees
topromptly monitor record safety violations, while another
version, distributed toall employees, enables all individuals
tosound thealarm onsafety grounds. Thefeedback provided
byemployees using theapp during 2021wasinvaluable
inmaking improvements tothefunctionality oftheapplication
anddriving user engagement.
Our flagship Fatal 5safety programme, which focuses onfive
high risk activities, achieved most ofits planned activities
fortheyear, delivering further improvement incritical safety
processes andrisk reduction:
• Working under cranes: working withcranes andother
types oflifting equipment creates risks forindividuals
working underneath. Ascranes play anessential role
interminal operations, loading andunloading cargo, it
isincumbent ontheGroup toensure thesafety ofthose
working inthevicinity ofcrane operators. Objects falling
fromheight areone ofthemost common threats, asfalling
loads can cause serious injuries andfatalities. Toavoid
such events, we introducedanumber oftechnical
solutions todelimit work zones under cranes. Where
these weredifficult toimplement, we introduced greater
surveillance, appointing crane supervisors andintroducing
safety zones
• Working atheight: many oftheactivities carried out inour
ports could lead toafall fromheight. These activitiesmay
beduring routine operations orduring one-off maintenance
activities. Toreduce therisks involved inworking atheight,
we introducedanumber ofimprovements tohelp
keep colleagues working atheight safely. We tested
andupgraded thesafety oftheequipment used forworking
atheight andatthesame time introducedanumber
ofadditional features. Forinstance, inJuly 2021, we
installed sophisticated video systems atall six ship-to-shore
(STS) cranes operating atthePetrolesport terminal, enabling
crane operators tomonitor cargo movement far more
effectively, making loading andoffloading operations far
safer aswellasmore efficient
• Working withhazardous cargo: we establishedasingle
protocol across all our terminals forthehandling
ofhazardous materials, modelled onAPM
Terminals’ guidelines andtherequirements laid down
intheInternational Maritime Dangerous Goods Code
(IMDG). We introduced training foremployees involved
inhandling hazardous materials, based onthenew
requirements, alongside further controls andmore audits
• Working withcontractors: atGlobal Ports our safety culture extends toall visitors
toour terminals, including those working forother companies atour terminals. Our
safety management system aims toprotect all individuals onour premises so that
everyone can return home safely. Contractor safety wasapriority focus in2021,
ascontractors areanimportant stakeholder group andakey part ofGlobal
Ports’ overall safety management system. Toaddress theissue ofcontractor
safety, theHealth & Safety Security Environment Office oftheManagement
Committee took anin-depth look athow we protect our contractors.
Asaresult, we introducedanew safety regulation specifically forcontractors.
This isanimportant step intheGroup’s drive tomeet its target ofzero harm,
asthedirective establishesauniform set ofsafety requirement andprocedures
forcompanies performing tasks atterminals andfacilities owned byGlobal
Ports, andthese stipulations now form part oftheGroup’s standard contractual
terms forcontractors. TheGroup has now begun theformal process ofworking
withcontractors andtheir employees onthenew contractor safety regime,
andthat work will continue
• Speed awareness: traffic incidents representaserious risk inmarine terminals,
asthey operate 24hoursaday, inall weathers, withmultiple types ofvehicles
inuse. TheGroup has traffic-safety programmes designed toreduce therisk oftraffic
incidents, including those caused byspeeding. In2021,aseries ofmeasures
wereintroduced toensure that speed limits areobserved attheterminals. Alongside
theannual traffic maintenance andrenewal programmes, theGroup installed speed
sign boards that display live speeds ofvehicles, andradar-activated speed traps
todetect anddeter persistent violators. These actions have significantly increased
traffic safety across our container terminals
TheGroup also increased its commitment toimproving andexpanding its emergency
response programme. Thenumber andvariety ofemergency drills increased over2021,
toinclude emergency simulation events including dealing withhazardous cargo spills,
warehouse fires, individuals falling intowater, andfires atheight including oncranes.
Training staff inhow torespond toemergency incidents isanimportant part ofbuilding
anawareness ofrisk andeliminating accidents among employees. Inconjunction, our
terminal employees attend regular safety seminars todiscuss safety issues andreceive
updates including onrule changes, new legislation, safety incidents andgeneral
safety progress. Alongside increasing thetime allocated tosafety training, last year
theGroup upgraded theemergency facilities atits terminals,
establishing round theclock emergency medical support
stations andequipping each withdefibrillators.
Our absolute commitment tooccupational health andsafety
means increasing thelevel ofgeneral safety awareness
across theGroup isanongoing process. In2021, our safety
programme focused onsafety culture andcontractor safety.
In2022, theGroup’s safety plan will focus onbuilding
greater safety awareness andinvolvement among
terminal staff andimproving thelevels ofindustrial safety
compliance. Theplan also contains specific initiatives
toimprove thesafety ofour engineering andtechnical staff
who areinvolved incarrying out repairs andmaintenance
ofbuildings, structures, plants andequipment.
Toprovide greater transparency ofits safety performance,
theGroup began formally benchmarking its Lost Time
Injury Frequency Rate (LTIFR) in2020. In2021, we
maintainedalow rate ofreportable incidents, despite
thefact that our terminals wereoperating atfull stretch
tocope withthesurge indemand. In2021, Global Ports
companies hadaLost Time Injury Frequency Rate (LTIFR)
of0.71up from0.54in2020ontheback ofgrowing
throughput volumes andutilisation rate ofout terminals
aswellasincreased construction works attheterminals.
Our People
We arefocused onbuilding our reputation asaresponsible
employer. Across our seven terminals, we employ
over2,900employees, who arecritical tothelong term
success oftheGroup andthecreation ofsustainable value
forall our stakeholders. We arecommitted toinvesting
inour people tohelp them fulfil their ambitions, tokeeping
them safe, torecruiting theright people byoffering
rewarding career opportunities andtocreatingawork
culture which isinclusive andwhere every individual feels
respected andsupported.
Building a Culture ofEngagement
Employee engagement isastrategic priority asour long-term success rests
onbuildingaculture where our employees feel engaged andvalued. How our
employees feel about theGroup isofutmost importance totheGroup, so proactively
consulting withthem isapriority, astheir feedback isvitally important inshaping
thefuture oftheorganisation.
We communicate regularly withour people througharange ofchannels ensuring we
maintain effective andconsistent engagement withour workforce. These channels
include regular briefings, workshops, surveys andfeedback sessions. We believe
that regular communications help buildastrong employee brand andsupportive
companyculture.
We run periodic employee surveys togive our employees anopportunity tosay what
they think about working atGlobal Ports andwhat we can do tomake it even better.
Our most recent survey showed that high satisfaction levels among our employees.
In2021, we focused onimproving working conditions andpersonal development
opportunities.
LTIFR
2016 2017 2018 2019 2020 2021
1. 51
1.1
1.28
0.55
0.54
0.71
50 Less than 5 years
14 5–10 years
29 11–20 years
7 More than 20 year
Length of average service (years), %
Diversity data, females as a percentage
68%
of administration
staff
Employ more than
2,900
people
1
25%
of production
staff
29%
of total
1
As at 31 December 2021.
49 50
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Attracting andRetaining Talent
Inorder torecruit andretain thebest people, we strive
tooffer competitive benefits packages that reward success,
recognise individual contributions, andincentivise our
people tosucceed. Our performance management systems
aredesigned toensure that staff remuneration packages
aretransparent, simple tounderstand, andclosely tied
tocorporate performance. Global Ports isworking
toimprove executive remuneration disclosure andensure
alignment withshareholders. In2021, theGroup added
sustainability performance indicators linking sustainability
performance tobonus incentives forsomeofthesenior
management.
Asaresponsible employer, theGroup strives tooffer
anattractive package ofnon-financial incentives forits staff
andprospective employees. Thepackage ofincentives
includes: voluntary health insurance, gifts forcelebrations,
thecompanies ofthegroup hold corporate events
foremployees andtheir children, provide team buildings,
reimbursing orfinancing sports activities. Global Ports
terminals can provide bonuses toanniversaries, partial
compensation ofsanatoriums andchildren’s camps, material
assistance invarious life situations.
Training andDevelopment
Training anddevelopment areimportant elements
oftheGroup’s overall people development strategy
andconsidered crucial tothefuture success oftheGroup.
We value all our employees, andwe arecommitted
toproviding them withtraining anddevelopment
opportunities, both todevelop their talents, andensure
we aredeveloping thenext generation ofleaders. So we
invest inawide selection oftraining anddevelopment
opportunities tohelp individuals develop their careers
atGlobal Ports.
In2021, over1,900 employeesoftheGroup underwent
advanced training andtraining indevelopment programmes
informat ofexternal andinternal training. Particular
attention waspaid tothewide range ofbusiness topics,
incl. advanced training ofoperational staff, risk-oriented
approaches, compliance, financial modeling, project
management inconstruction, security ofinformation
technologies andnetworks, features oflegal regulation
anddispute resolution andbusiness performance
management.
Succession planning anddeveloping thenext generation
ofleaders isapriority area fortheGroup. In2021, we
continued todevelop our management development
programmes foraspiring fast-track leaders andmore
experienced managers, withtheobjective ofimproving
their skillsets. These programmes provide personalised
development based onamix ofone-to-one coaching,
mentoring, andmanagement courses.
Diversity, Inclusion andEquality
Our people arecritical toour success, so it isvital that we createaworkplace that
isinclusive andincreases diversity. Bydoing so, andcreatingawork culture that
embraces diversity, we can accessawider talent pool andbuildamore resilient
business.
We do not discriminate against employees onthebasis ofrace, religious orpolitical
beliefs, marital status, age, gender, sexual orientation ordisability. Our approach
isenshrined inour Code ofEthics which all employees must observe. All forms
ofdiscrimination areprohibited andall allegations ofharassment, including sexual
andracial harassment aretaken seriously andinvestigated thoroughly.
We continue topromote diversity andequal opportunity through staff communications
andtraining. Traditionally, thelogistics industry has employed more men than women,
andfemale representation within theindustry has been low.
Asattheyear-end, 29% ofour total workforce wasfemale, including 25%
ofproduction staff and68% ofadministrative staff. Ofour Board ofDirectors, women
accounted for27% ofthemembership andtwo out ofthethree independent directors.
Human Rights
AtGlobal Ports, we recognise thefundamental civil, political, economic andsocial
human rights andfreedoms ofevery individual andwe strive toreflect them inour
business activities. Our Code ofEthics incorporates our commitment tohuman rights
which isstrictly inaccordance withRussian andinternational human rights laws.
Our Human Rights approach isaligned withtheUN Guiding Principles onBusiness
andHuman Rights. Thepolicy establishes minimum thresholds withregard tohuman
rights that employees andthose who work withtheGroup must meet.
Our Communities
Global Ports iscommitted togiving back tosociety. Asamajor employer, investor
andpurchaser ofgoods andservices, we makeasignificant contribution totheoverall
economy. Andwe areproud tobeanintegral part ofthecommunities where we
operate. Our port locations aremore than sources oflocal employment; they arepart
ofthefabric ofthecommunity andplay anessential role ineveryday life. We want
tosupport our employees andtheir communities andimprove their quality oflife.
Social Investment
AsaGroup, we arecommitted togiving back tosociety through our social investment
programme. Our aim istobring about positive social change andhavealasting
impact onpeople andcommunities. Our approach isbased around supporting our
communities through targeted social investment andstaff volunteering.
We areasignificant employer inour communities andour employees
areencouraged tovolunteer andsupport our social investment schemes.
In2021,theGroup contributedtoits social andcommunity initiatives, which
arefocused around thethemes ofhealth, education, welfare andculture. Our welfare
andeducation support isdirected toward supporting community-based projects. We
supportanumber ofcultural projects including those focused onheritage restoration,
andwe also fundanumber ofcommunity-based sports programmes aspart ofour
work todeliver better health outcomes.
VSC’s Atmosphere Foundation contributedatotal ofRUB20million formedical,
sports, environmental, social, andcultural projects fortheresidents oftheNakhodka
urban district. TheFoundation continued its ongoing support ofakindergarten
No.65intheWrangel neighbourhood. TheFoundation gave overRUB4.5million
tosupport various public events including theannual City Day, andafurther
RUB3.5million wasdonated tosupply sound andlighting equipment toayouth
centre, where theNakhodka’s Rampa theatre group isbased.
Governance
1
In2021, we continued tomake improvements toensure theGroup continues
tomeet high standards ofgovernance.
Business Ethics
Good governance andethical behaviour arethecornerstones ofour operations
andthefoundation ofour licence tooperate. Asabusiness, we arecommitted
tocomplying withall relevant laws andregulations while upholding thehighest
standards ofethics. We expect everyone who works withus, fromour employees
tocontractors andsuppliers, toshare our values andbehave inanethical
andresponsible way asamatter ofcourse.
Our Code ofEthics establishes thegovernance framework forhow we conduct
business. Theprinciples laid out intheCode arefurther detailed inindividual
policy documents that address specific aspects ofour business ethics including
anti-corruption, whistleblowing, human rights, andsupplier relations.
Thepurpose ofTheCode istoclearly articulate our ethical standards
andprovide employees withaguide towhat isexpected ofthem intheir
behaviour andbusiness activities. It provides information onhow they can
get help, andalso guidance ontheir responsibility toreport issues if they
identifyaproblem. TheCode provides guidance toensure employees areaware
of, andunderstand, their ethical andlegal responsibilities, andcovers issues
relating toemployees, customers, shareholders andthecommunity. Onjoining,
new employees arerequired toread theCode andthen sign todemonstrate
that they have read andunderstood it. All employees arekept up todate
withtheGroup’s governance policies andwe provide ongoing training tocover
anypolicy changes.
Anti-Bribery & Corruption
We arecommitted toupholding thehighest ethical standards andoperateazero
tolerance approach tobribery andcorruption inanyform; our approach
isreflected intheGroup’s Code ofEthics, which sets out thestandards ofconduct
expected.
Our Anti-Bribery andCorruption Policy ensures that all our business isconducted
inanhonest andethical manner andincompliance withthelaw. Thepolicy
applies toall employees ofGlobal Ports, aswellasthose working onour behalf
inanycapacity.
Whistleblowing
Global Ports encourages its employees, clients andother stakeholders toreport
anypotentially unethical, unlawful orsuspicious conduct orpractices. TheGroup
operatesa24/7confidential whistle blower service that offersavariety ofroutes
toreport concerns:
• Viaadedicated e-mail address
• Viaafree confidential telephone number
• Face-to-face withasenior member ofGroup Internal Audit Department
responsible formanaging thewhistleblowing service
Details oftheservice areavailable ontheGroup’s intranet
aswellasoninformation boards located throughout
theoffices andprominently displayed attheGroup’s
terminals.
Theservice isrun bytheInternal Audit Department which
operates independently ofmanagement andreports
directly totheAudit & Risk Committee oftheBoard.
Calls tothehotline service aretreated inconfidence,
andinvestigated thoroughly andwithout bias.
In2021, 20reports weresubmitted totheconfidential
whistle blower service, 70% came viaemail,
withtheremainder reported viathetelephone hotline. Out
ofthe20reports submitted, 15required full investigation
andfollow-up actions andfivedid not asthese did not meet
thethreshold required. There wasjust one allegation relating
tofraud, which onfurther investigation wasnot upheld.
Responsible Procurement
We aim todevelop strong supplier relationships, working
together tomaintain thehighest ethical standards. This
isanimportant part ofour approach tosustainability
andimportant tohow we manage risk inour business. We
expect suppliers tocomply withtheGroup’s high ethical
standards andbehaviours which areset out intheGroup’s
Code ofEthics.
TheGroup’s Procurement Policy sets out theguidelines
forsuppliers. TheProcurement Department ofGlobal
Ports Management LLC has purchasing responsibility
fortheterminals oftheGroup based onthefollowing
principles:
• Full compliance withthelegislation oftheRussian
Federation
• Competitiveness andtransparency
• Supplier selection based onprice, quality andtimeliness
• Total cost ofownership
All procurement information isplaced onwww.etprf.
ru andwww.fabrikant.ru electronic marketplaces. All
necessary information isalso shared ontheEIS (Electronic
Information System) website www.zakupki.gov.ru.
All tender requests arepublished onthewebsites stated
above toensure fairness andtransparency inthetendering
process.
TheGroup conducts periodic reviews andaudits ofits
suppliers toensure compliance. Andtheprocurement
department continues tomonitor thedevelopment
ofresponsible procurement practices.
1
Please also see Corporate Governance section on page 59 of this Annual Report.
51 52
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Units 2019 2020 2021
ENVIRONMENT
Electricity Used
Thousand
MWh
42.0 39.8 43.9
Fuel Used (diesel, petrol) Mln litre 9.6 10.6 10.6
Electricity consumption per 1 tonne ofcargo handled
byRussian Ports’ marine terminals
kWh 2.08 1.69 1.87
Fuel consumption per 1 tonne ofcargo handled byRussian
Ports’ marine terminals
l/t 0.46 0.44 0.44
Energy intensity ofRussian Ports’ marine terminals
MWh
permillion
ofsales
revenue
inUSD
12 0 108 91
SOCIAL
Diversity
Diversity ofstaff
• male % 68 70 71
• female % 32 30 29
Administration staff
• male % 35 34 32
• female % 65 66 68
Production staff
• male % 73 74 75
• female % 27 26 25
Executive management
• male % 87 100 100
• female % 13 0 0
Health andSafety
LTIFR number 0.55 0.54 0.71
Fatalities number 1 0 0
Fatalities/ Thousand employees number 0.35 0 0
Sustainability Governance
Length ofservice (years)
• Less than 5 years % 40 44 50
• 5–10 years % 19 18 14
• 11–20 years % 28 31 29
• More than 20 year % 12 7 7
Number ofSites number 7 7 7
Political Donations number 0 0 0
Business Ethics Policy yes/ no yes yes yes
Anti-Bribery Ethics Policy yes/ no yes yes yes
Number ofEmployees - CSR number 2,870 2,797 2,929
Number ofPart-Time Employees number 5 52 37
Employee Turnover % 12 14 16
Employee Voluntary Turnover % 9 8 10
Employee Involuntary Turnover % 2 5 6
Employee Training Cost mln USD 0.1 0.1 0.1
Employee Average Age number х 43.3 43.6
GOVERNANCE
Board ofDirectors
TheBoard ofDirectors size number 11 11 11
Number ofIndependent Directors number 3 3 3
Senior Independent Directors number 1 1 1
Independent Directors % 27 27 27
Units 2019 2020 2021
Number ofExecutive Directors number 0 0 0
Number ofNon-Executive Directors number 11 11 11
Percentage ofNon-Executive Directors onBoard % 100.0 100.0 100.0
Tenure ofBoard
• < 1 year % 36 9 27
• 1–4 year % 64 91 64
• > 4 years % 0 0 9
Number ofBoard Meetings fortheYear number 18 13 12
Board Meeting Attendance % % 96.0 100.0 9 7. 7
Num ofDirectors Attending less than 75% ofMtg number 1 0 0
Independent Directors Board Meeting Attendance % 98.10 100.00 100.00
# Board Members Serving > 10 Years number 0 0 0
# Board Members Serving > 5 Years number 0 0 0
Longest Serving Board Member Name Mr. Morten Engelstoft Ms. Britta Dalunde Ms. Britta Dalunde
Chair Name Mr. Morten Engelstoft Mr. Soren Sjostrand Jakobsen Mr. Soren Sjostrand Jakobsen
Independent Chairperson yes/ no no no no
Date ofLast Board ofDirector Change date 14May 2018 29May 2020 27May 2021
Number ofBoard ofDirector Changes During FY number 4 2 3
CEO ontheBoard (Y/N) yes/ no no no no
CEO Duality yes/ no no no no
# Board Positions CEO Holds number 0 0 0
Executive Chair (Y/N) yes/ no no no no
Former CEO or its Equivalent onBoard yes/ no no no no
Board Duration (Years) number 3 3 3
Non Employee Board Members Holding Shares % 18. 18 18 .18 18 .18
# Executive Directors on2+ Boards number 0 0 0
ofExecutive Directors on2+ Boards % 0 0 0
# ofNon-Executive Board Members on3+ Boards number 3 3 3
Executive Management (Global Ports Management LLC)
CEO Name Mr. Vladimir Bychkov Mr. Albert Likholet Mr. Albert Likholet
Last Chief Executive Officer Start Date date 16July 2018 15July 2020 15July 2020
CEO Promoted from Within yes/ no no yes yes
Number ofCEO andEquivalent Changes During FY number 0 1 0
Chief Executive Officer Tenure asofFY End number 1.6 0.5 1.5
Chief Executive Officer Age number 52 39 40
Chief Financial Officer Name Mr. Alexander Roslavtsev Mr. Alexander Roslavtsev Mr. Alexander Roslavtsev
Last Chief Financial Officer Start Date date 25September 2017 25September 2017 25September 2017
Number ofCFO andEquivalent Changes During FY number 0 0 0
Chief Financial Officer Tenure asofFY End number 2.25 3.25 4.25
Last Chief Operating Officer Start Date date 21March 2016 1October 2020 1October 2020
Number ofCOO andEquivalent Changes During FY number 0 1 0
Chief Operating Officer Tenure asofFY End number 3.75 0.25 1.25
Diversity
Board diversity
• male % 73 73 73
• female % 27 27 27
Independent Directors Diversity
• male % 33 33 33
• female % 67 67 67
Number ofWomen onBoard number 3 3 3
Age oftheYoungest Director number 31 32 33
53 54
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Units 2019 2020 2021
Age oftheOldest Director number 66 62 62
Board ofDirectors Age Range number 35 30 29
Board Average Age number 52 50 51
Female Chief Executive Officer or Equivalent yes/ no no no no
Female Chairperson or Equivalent yes/ no no no no
Board has atLeast One Female Director yes/ no yes yes yes
Chief Executive Officer or Equivalent aWoman yes/ no no no no
Board Committee
Number ofBoard Committees number 3 3 3
Strategy Committee yes/ no yes yes yes
CSR/Sustainability Committee (Y/N) yes/ no no no no
Audit andRisk Committee
Audit andRisk Committee size number 5 5 5
Number ofIndepentant Directors inCommittee number 3 3 3
Percent ofIndependent Directors onAudit andRisk Committee % 60 60 60
Independent Audit andRisk Committee Chairperson yes/ no yes yes yes
Number ofNon-Executive Directors onAudit andRisk
Committee
number 5 5 5
Non Executive Directors onAudit andRisk Committee % 100 100 100
Number ofAudit andRisk Committee Meetings number 13 10 12
Audit andRisk Committee Meeting Attendance Percentage % 99 100 100
Nomination andRemuneration Committee
1
Nomination andRemuneration Committee size number 3 3 3
Number ofIndepentant Directors inCommittee number 1 1 1
Percent ofIndependent Directors onNomination
andRemuneration Committee
% 33 33 33
Independent Nomination andRemuneration Committee
Chairperson
yes/ no yes yes yes
Number ofNon-Executive Directors onNomination
andRemuneration Committee
number 3 3 3
Non Executive Directors onNomination andRemuneration
Committee
% 100 100 100
Number ofNomination andRemuneration Committee
Meetings
number 15 16 13
Nomination andRemuneration Committee Meeting
Attendance Percentage
% 9 7. 7 100.0 100.0
Strategy Committee
Strategy Committee size number 4 5 5
Number ofIndepentant Directors inCommittee number 1 1 1
Percent ofIndependent Directors onStrategy Committee % 25 20 20
Independent Strategy Committee Chairperson yes/ no no no no
Number ofNon-Executive Directors onStrategy Committee number 4 5 5
Non Executive Directors onStrategy Committee % 100 100 100
Number ofStrategy Committee Meetings number 5 8 13
Strategy Committee Meeting Attendance % 100 100 98
Investor Relations
Units 2019 2020 2021
IR Contact Name
1. Mikhail Grigoriev
2. Tatiana Khansuvarova
1. Mikhail Grigoriev
2. Tatiana Khansuvarova
1. Mikhail Grigoriev
2. Tatiana Khansuvarova
IR Title
1. Head ofIR andCapital
Markets
2. IR Analyst
1. Head ofIR andCapital
Markets
2. IR Analyst
1. Head ofIR andCapital
Markets
2. IR Analyst
IR Phone Number
1. +35725313475/
+79169917396
2. +78126771557
1. +35725313475/
+79169917396
2. +78126771557
1. +35725313475/
+79169917396
2. +78126771557
IR Tenure
1. 8 years
2. 2 years
1. 9 years
2. 3 years
1. 10 years
2. 4 years
IR Email Address ir@globalports.com ir@globalports.com ir@globalports.com
Other
Total Board ofDirector Compensation Paid th.USD 818 245 278
Total Salaries andBonuses Paid toExecutives th.USD 8,311 3,743 6,142
Auditor Ratification yes/ no yes yes yes
Source: Company data
1
TheNomination andRemuneration Committee wasestablished inJune 2019 following themerger ofthe Nomination
Committee andthe Remuneration Committee inorder tosimplify thework ofthecommittees andBoard members.
Thedata on2019 relate tothemeetings offormer separate Nomination andformer Remuneration committees
andalso tothemeetings ofthenew merged Nomination andRemuneration Committee.
55 56
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
CORPORATE
GOVERNANCE
EFFECTIVE GOVERNANCE
IS CENTRAL TO GLOBAL PORTS’
LONG-TERM SUCCESS
Corporate Governance
TheRole of theBoard
ofDirectors
TheCompany is governed byits Board ofDirectors (also
referred as “the Board”) which is collectively responsible
to theshareholders for theshort- andlong-term sustainable
success of theGroup, generating value toshareholders
andcontributing to thewider society asa whole. Its
responsibility is topromote adherence tobest-in-class
corporate governance.
TheBoard ofDirectors’ role is toprovide entrepreneurial
leadership to theGroup through establishing theGroup’s
purpose, values andstrategy, setting out thecorporate
governance standards, satisfying itself that these andits
culture are aligned, ensuring that thenecessary financial
andhuman resources are inplace for theGroup tomeet
its objectives andreviewing management performance.
73 Non-Executive Directors
27 Independent Non-Executive Directors
27 < 1 year
64 1–4 years
9 >4 years
27 Female
73 Male
67 Female
33
Male
Board independence, %
Tenure of the Board, %
Board diversity: the whole Board, % Board diversity: Independent Directors, %
10
Industry
5
Sustainable development
6
Risk management
7
Other
51
Board average age
29
Board agerange
11
Members
of the Board of Directors
3
Independent
directors
3
Committees
Directors’ superior mix of knowledge
andexperience
TheGroup seeks directors who bring strong track records anda deep
understanding of theindustry. TheBoard sets theGroup’s values andstandards
andensures all obligations toshareholders are understood andmet. TheBoard
ensures theGroup establishesa framework ofprudent andeffective controls, which
enables risk tobe assessed andmanaged andmaintainsa sound system ofinternal
control, corporate compliance andenterprise risk management tosafeguard
theGroup’s assets andshareholders’ investments in theGroup.
Theroles andresponsibilities of theChairman, Senior Independent Director,
Board andcommittees’ members are set out inwriting in theTerms ofReference of
theBoard andcommittees. Thelatest version of theTerms ofReference of theBoard
ofDirectors was approved by theshareholders on18 June 2019. It is available on
theCompany`s website.
Code ofEthics
TheCode ofEthics was approved by theBoard ofDirectors on8 December
2016andwas introduced in thecompanies of theGroup in thecourse of theyear
2017. The3rd revision of theCode ofEthics was adopted by theBoard ofDirectors
on18 August 2020, aimed atsimplifying andupdating theGroup’ mission, values
andstandards ofcorporate engagement.
Global Ports’ Code ofEthics outlines thegeneral business ethics andacceptable
standards ofprofessional behaviour that we expect ofall our directors, employees
andcontractors. This Code, given toall new staff as part oftheir induction, means
that everyone atGlobal Ports is accountable fortheir own decisions andconduct.
As well as general standards ofbehaviour, theCode covers fraud andcorruption,
ethics andconflicts ofinterest principles withreference todetailed policies.
Employees andexternal parties are encouraged toreport any suspected breaches,
via various channels including thededicated hotline.
TheCode is available toall staff onGlobal Ports’ website (in theCorporate
Governance section) andin theHR department atevery operating facility. There
are also other more detailed rules concerning our anti-fraud andwhistleblowing
policies.
TheBoard is updated ona regular basis onany breaches ofvarious policies with
thespecific focus on thefraud incidents andresulting actions, although significant
breaches have tobe reported to theBoard immediately.
59 60
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
CHAIRED BY INDEPENDENT DIRECTOR
5 members, including
3 Independent Directors
3 members, including
1 Independent Director
5 members, including
1 Independent Director
CHAIRED BY
NON-EXECUTIVE DIRECTOR
SOREN SJOSTRAND JAKOBSEN
Leads the Board and ensures its effectiveness
SECRETARY OF THE BOARD OF DIRECTORS
Ensures that Board procedures are respected and that information flows
between the Board and the management team
CHAIRMAN
3
Independent Directors
BOARD OF DIRECTORS
Nomination and
Remuneration Committee
Audit and Risk
Committee
Chief Executive Officer
and Executive management
Internal audit
Strategy Committee
11
members
CORPORATE GOVERNANCE
STRUCTURE
1
Members of theBoard ofDirectors
TheBoard ofDirectors leads theprocess inmaking new Board member appointments
andmakes recommendations onappointments toshareholders. Inaccordance with
theTerms ofReference of theBoard, all Directors are subject toelection byshareholders
at thefirst Annual General Meeting after their appointment, andtore-election
atintervals ofno more than one year. Any term beyond six years fora Non-Executive
Director is subject toparticularly rigorous review, andtakes intoaccount theneed
torefresh theBoard ona regular basis.
TheBoard comprises of11members. TheBoard reviews thesize of theBoard annually
andconsiders thecurrent size of theBoard as appropriate for thecurrent scope
andnature of theGroup’s operations.
Profiles ofeach Director are set out onpages 72–77ofthis Annual Report. On27
May 2021 Messrs. Demos Katsis, Sergey Shishkarev andAndrey Yashchenko
resigned from theBoard andMessrs. Vladimir Bychkov, Andrey Lenvalskiy andAndriy
Pavlyutin replaced them on thesame date. All new Board members were reviewed
andrecommended forappointment by theNomination andRemuneration Committee.
All other Directors were members of theBoard throughout theyear ended 31 December
2021, including theindependent directors: Ms. Britta Dalunde, Ms. Inna Kuznetsova
andMr. Lampros Papadopoulos
1
.
There were no significant changes in theresponsibilities of theDirectors during
2021except formembership in thecommittees as described below.
There is no provision in theCompany’s Articles ofAssociation for theretirement
ofDirectors byrotation. However, inaccordance with theTerms ofReference of
theBoard ofDirectors andtheresolutions adopted by theShareholders at theAnnual
General Meeting held on27 May 2021all present directors are subject tore-election
at thenext Annual General Meeting of theShareholders of theCompany, which will
take place in2022.
Chairman of theBoard ofDirectors
Mr. Soren Jakobsen is theChairman of theBoard since24 April 2020, when he
replaced Mr. Morten Engelstoft.
Therole of theChairman of theBoard ofDirectors is toensure that Board meetings are
held as andwhen necessary, lead thedirectors, ensure their effectiveness andreview
theagenda ofBoard meetings. TheChairman together with theSecretary of theBoard
review Board materials before they are presented to theBoard andensure that Board
members are provided withaccurate, timely andclear
information. Themembers of themanagement team who
have prepared thepapers, orwho can provide additional
insights into theissues being discussed, are invited topresent
papers orattend theBoard meeting at therelevant time.
Board members regularly hold meetings with theGroup’s
management todiscuss their work andevaluate their
performance.
TheChairman monitors communications andrelations
between theGroup andits shareholders, theBoard
andmanagement, andindependent andnon-independent
directors, witha view toencouraging dialogue
andconstructive relations. TheChairman should demonstrate
objective judgement andpromotea culture ofopenness
anddebate. Inaddition, theChairman facilitates constructive
board relations andtheeffective contribution ofall non-
executive directors.
TheGroup separates thepositions of theChairman
andCEO toensure anappropriate segregation ofroles
andduties.
TheBoard Committees
SinceDecember 2008,theBoard ofDirectors established
theoperation ofthree committees: anAudit andRisk
Committee,a Nomination Committee anda Remuneration
Committee. Thecomposition of thecommittees was changed
by theBoard ofDirectors inJune 2019: the Nomination
Committee andthe Remuneration Committee were merged
intoone anda new Strategy Committee was established.
1
On 14 March 2022, Britta Dalunde has tendered her resignation from the Company’s Board of Directors, effective from 23 March
2022 and Inna Kuznetsova informed the Company’s Board of Directors that she will not stand for re-election at the next AGM to be held
in2022.
1
As at 31 December 2021.
61 62
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Anexternal quality assessment review was done forGlobal
Port’s internal audit function in2021byone of theBig
4companies. Theassessment concluded that “Internal
audit generally conforms
1
with theInternational Standards
for theProfessional Practice ofInternal Auditing issued by
theInstitute ofInternal Auditors. Rating “Generally conforms”
means that aninternal audit activity hasa charter, policies,
andprocesses, which are judged tobe inconformance
with theStandards. Recommendations for thefunction
enhancement have been provided andare being
implemented
External Auditors
Anexternal auditor is appointed at theGlobal Ports AGM on
anannual basis toreview theGroup’s financial andoperating
performance.
This follows proposals drafted by theAudit andRisk
Committee for theBoard ofDirectors regarding
thereappointment of theexternal auditor of theGroup.
KPMG Limited were appointed as theauditor of
theCompany at theAnnual General Meeting of
theShareholders held in2021. KPMG Limited have expressed
their willingness tocontinue inoffice anda resolution giving
authority to theBoard ofDirectors tofix their remuneration
will be proposed at thenext Annual General Meeting of
theShareholders.
Shareholder Engagement
TheCompany’s shares are listed on theLondon Stock
Exchange (LSE) in theform ofGlobal Depository Receipts
(GDRs)
1
, andtheGroup’s communications withshareholders
are consistent withinternational best practice inline with
theinformation disclosure rules set out by theLondon Stock
Exchange.
Themain principles of theGroup’s disclosure approach are
regularity, efficiency, availability, reliability, completeness,
balance, equality andsafety ofinformation resources.
Shareholders area key consideration inBoard decision-
making andtheGroup has anactive approach
toshareholder engagement. Members of theexecutive
1
On3 March 2022, London Stock Exchange announced thedecision tosuspend theadmission
totrading ofGlobal Ports GDRs. Formore details, please see LSE notice:
https://docs.londonstockexchange.com/sites/default/files/documents/n0622.pdf.
Non-executive andIndependent
Directors
All of theBoard members are non-executive directors.
Mrs. Britta Dalunde, Mrs. Inna Kuznetsova andMr. Lampros Papadopoulos are
independent directors, andhave no relationship with theGroup, its related companies
ortheir officers. This means they can exercise objective judgment oncorporate affairs
independently frommanagement.
Although all directors have equal responsibility for theGroup’s operations, therole
of theindependent non-executive directors is particularly important inensuring that
themanagement’s strategies are constructively challenged. As well as ensuring
theGroup’s strategies are fully discussed andexamined, they must take intoaccount
thelong-term interests, not only of themajor shareholders, but also of theGDR holders,
bondholders, other lenders, employees, customers, suppliers andthecommunities
inwhich theGroup conducts its business.
Mrs. Britta Dalunde was appointed as theSenior Independent Director on31 May
2018. Therole of theSenior Independent Director is toprovidea sounding board for
theChairman andserve as anintermediary for theother directors andshareholders.
Led by thesenior independent director, thenon-executive directors should meet without
theChairman present atleast annually toappraise theChairman’s performance,
andonother occasions as necessary.
Board andManagement Remuneration
Non-Executive Directors serve on theBoard pursuant to theletters ofappointment. Such
letters ofappointment specify theterms ofappointment andtheremuneration ofNon-
Executive Directors. Only Independent Non-Executive Directors receive remuneration.
Levels ofremuneration for theIndependent Non-Executive Directors reflect thetime
commitment, responsibilities of therole andmembership of therespective committees of
theBoard. Directors are also reimbursed forexpenses associated withdischarge oftheir
duties. Directors are not eligible forbonuses, retirement benefits ortoparticipate inany
incentive plans operated by theGroup. Additional remuneration is paid formembership
andchairmanship of thecommittees by theIndependent Non-Executive Directors.
Theshareholders of theCompany approved theremuneration of themembers
of theBoard on29 June 2018, 30 December 2019, 16 April 2020, 29 May
2020and22 October 2021.
Neither theBoard members, nor themanagement has long-term incentive schemes.
However, theperformance-based part of theremuneration of thesenior management is
aligned to thestrategic goals andinitiatives approved by theBoard.
Theperformance-based part of theremuneration of theKey
Management is based on theKey Rules ofAwarding
andPayment ofPerformance Based Bonuses ofGPI Group
adopted by theBoard on15 June 2016andregularly
updated with thelast update on29 October 2020.
TheNomination andRemuneration Committee monitors
theefficiency of theRules andmakes recommendations to
theBoard ontheir amendment andrevision.
Refer toNote 30(f) to theConsolidated Financial Statements
fordetails of theremuneration paid to themembers of
theBoard andkey management.
Internal Audit
Theinternal audit function is carried out byGroup’s
Internal Audit Service (IAS). It is responsible foranalysing
thesystems ofrisk management, internal control procedures
andthecorporate governance process for theGroup witha
view toobtaininga reasonable assurance that:
• Risks are appropriately identified, assessed, responded to
andmanaged
• There is interaction with thevarious governance groups
occurs as needed
• Significant financial, managerial, andoperating
information is accurate, reliable, andtimely;
• Employee’s actions are incompliance withpolicies,
standards, procedures, andapplicable laws
andregulations
• Resources are acquired economically, used efficiently
andadequately protected
• Programmes, plans andobjectives are achieved;
• Quality andcontinuous improvement are fostered
intheGroup’s control process; and
• Significant legislative orregulatory issues impacting
theGroup are recognised andaddressed properly
TheHead of theIAS, Mr. Ilya Kotlov, functionally reports
directly to theAudit andRisk Committee.
1
“Generally conforms” is the best possible rating that can be awarded as the result of an external
quality assessment suggested by the Standard 1320 – Reporting on the Quality Assurance and
Improvement Programme of the International Standards for the Professional Practice of Internal
Auditing developed by the Institute of Internal Auditors.
management team meet regularly withinvestors, investment analysts, debt investors
andESG analysts todiscuss with andseek their views ona range ofissues including
strategy, business performance, corporate governance andESG matters. This
isundertaken througha structured programme ofroadshows, meetings, investor
conferences, industry events andsite-visits. Although thepandemic meant that
shareholder meetings were largely conducted on-line orbytelephone, itdid not
affect theGroup’s ability toengage withshareholders. Management conducted
over 200online meetings andparticipated insevenvirtual investor conferences
androadshows in2021.
Shareholders can access up-to-date information onGlobal Ports through theCompany’s
website, which has been recently relaunched andupdated. All material information on
theCompany can befound there, together withcopies ofannual andinterim results,
company presentations, press releases, annual reports, andwebcasts. TheInvestor
Relations team has day-to-day responsibility formanaging investor communications
acting inclose consultation with theBoard andtheexecutive management team.
TheBoard iskept informed ofsignificant discussions withshareholders andchanges
in theshareholder register andinvestor relations reports are regularly circulated to
themembers of theBoard ofDirectors.
63 64
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Board ofDirectors
SOREN SJOSTRAND JAKOBSEN VLADIMIR BYCHKOV
Mr. Jakobsen wasappointed asaNon-Executive member oftheBoard
ofDirectors ofGlobal Ports inMarch 2018.
Mr. Jakobsen brings extensive international experience inthemaritime industry
aswellasport development andoperation asaresult ofhis 41-year career
atA.P. Moller — Maersk Group, having spent thelast 16 years withAPM
Terminals. Mr. Jakobsen has been based inDubai, UAE since 2013, anduntil
2019 asPortfolio Manager forAPM Terminal’s Africa, Middle East andSouth
Asia joint venture portfolio. Since early 2019, Mr. Jakobsen focused onAPM
Terminal’s Russia portfolio aswell its joint venture interests globally. Mr.Jakobsen
also serves ontheboard ofvarious APM Terminals joint venture companies
including two other stock listed entities. His APM Terminals career has
included roles astheRegional Manager forLatin America, based inPanama
andasGlobal Head ofProject Implementation, based inTheHague,
theNetherlands. Prior tojoining APM Terminals, Mr. Jakobsen worked atMaersk
Line andSvitzer.
Mr. Jakobsen isagraduate oftheA.P. Moller — Maersk International Shipping
Education andofexecutive education courses atIMD inLausanne, Switzerland
andINSEAD Business School inFontainebleau, France.
External Appointments
Mr. Jakobsen holds anumber ofother Board positions including: Sogester
S.A., Angola; Salalah Port Services Company SOAG, Oman; APM Terminals
Bahrain B.S.C.; LCB Container Terminal 1 Ltd, Thailand; South East Asia Gateway
Terminal Pvt. Ltd, Sri Lanka andAbidjan Terminal SETV, Ivory Coast.
Mr. Bychkov wasappointed asaNon- Executive member oftheBoard
ofDirectors ofGlobal Ports inMay 2021.
Mr. Bychkov wasappointed Vice President ofLogistics andBusiness
Development atDelo Group inAugust 2020. Mr. Bychkov has worked atDelo
Group overaperiod of20 years, starting his career asafreight forwarder
in2000. Positions held during his tenure include President ofRuscon, thecontainer
andlogistics segment ofDelo Group (2010–2018); CEO ofDelo Group, where
he wasinstrumental toM&A, strategic partnerships, attracting equity finance
while successfully transforming theGroup intoanefficient transport business
withacore focus onstevedoring andlogistics (2004–2009); andDeputy CEO
(2003–2004).
Between 2018 and2020, Mr. Bychkov served asChief Executive Officer
ofGlobal Ports Management LLC andlead thetransformational shift oftheGroup
towards becoming acentralised client-oriented business withincreased
operational efficiency andareinforced leadership position intheindustry.
Mr. Bychkov holds degrees inlaw andfinance from both theAcademy ofFederal
Security andtheFinance Academy oftheRussian Federation respectively,
andanExecutive MBA from theSchool ofBusiness ofMoscow State University.
Mr. Bychkov owns 705,903 ordinary shares ofGlobal Ports Investments PLC
(235,301 GDRs).
External Appointments
Senior Vice President onStrategicDevelopment andIT, Management Company
“Delo”.
Chairman oftheBoard ofDirectors
Non-Executive Director
Member oftheStrategy Commitee, theNomination
andRemuneration Committee
Non-Executive Director
Chairman oftheStrategy Commitee
100% 86%
Meeting
participation
Meeting
participation
Experience
Industry
+
Risk management
+
Sustainable development
+
Other
–
Experience
Industry
+
Risk management
–
Sustainable development
–
Other
–
Remuneration
USD 2019 2020 2021
Board membership – – –
Remuneration
USD 2019 2020 2021
Board membership – – –
First elected in2018,
re-elected annually from 2018 to2021
Shareholding:
–
Shareholding:
235,301 GDRs representing 705,903 ordinary
shares
First elected in2021
65 66
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
STRATEGIC REPORT
Remuneration
USD
2
2019 2020 2021
Board membership 67,208 68,532 75,428
ARC chairmanship 16,802 17, 13 3 20,706
BRITTA DALUNDE
1
ALEXANDRA FOMENKO
Mrs. Dalunde wasappointed asanIndependent Non-Executive member oftheBoard
ofDirectors oftheCompany inMay 2017.
Mrs. Dalunde has over30 years’ experience asanexecutive andaboard member
ofvarious companies. She held therole ofGroup CFO atSJ AB, theSwedish national
rail operator, from 2009 until 2013. She has almost 25 years’ experience working
asaCFO while working indifferent industries including transportation, engineering
andIT.
Mrs. Dalunde’s prior board engagements include Projektengagemang Sweden AB
andBoule Diagnostics AB, both listed onNASDAQ Stockholm aswellasHANZA
Group AB andOniva Online Group Europe AB both listed onNasdaq First North,
where she served asIndependent Non-Executive Director andchairman oftheaudit
committees.
Mrs. Dalunde graduated from theUniversity ofUppsala withaBachelors degree
inBusiness Administration andInternational Business. She also earned anExecutive
MBA degree withaspecialism inStrategic Planning from theBusiness School atHeriot-
Watt University, Edinburgh.
Mrs. Dalunde owns 21,000 ordinary shares ofGlobal Ports Investments PLC
(7,000 GDRs).
External Appointments
Mrs. Dalunde currently also serves anIndependent Non-Executive Director
ofKopy Goldfields AB , which islisted onNASDAQ First North, aswellasbeing
anIndependent Non-Executive Director ofForSea Ferries AB, Nordion Energy AB,
Arlandabanan Infrastructure AB andasChairman ofChorus AB.
Ms. Alexandra Fomenko wasappointed asaNon-Executive member
oftheBoard ofDirectors ofGlobal Ports inJune 2019.
Ms. Alexandra Fomenko has undertaken anumber ofcommercial
andmanagerial roles inUkraine, France, theUAE andRussia. Her international
career commenced in2014 atVermillon SARL (France), where she held
theposition ofassistant export manager. She then moved ontoSolaris
Commodity DMCC (Dubai, UAE) tobecome thecommercial andlater general
manager ofthecompany between 2015 and2018. Ms. Fomenko joined Delo
Group inSeptember 2018, where she currently holds theposition ofHead
ofPortfolio Investments.
Ms. Alexandra Fomenko graduated withboth Bachelor’s andMaster’s degrees
inInternational Economics from Donetsk National Technical University inDonetsk,
Ukraine. She also holds anMSc (Management) from IAE Aix Graduate School
ofManagement, France, withaspecialisation inManagement ofInternational
Business.
External Appointments
Head ofPortfolio Investments inDelo Group.
Senior Independent Non-Executive Director
Chairwoman oftheAudit andRisk Committee
Non-Executive Director
Member oftheNomination andRemuneration Committee
100%
Meeting
participation
Experience
Industry
+
Risk management
+
Sustainable development
+
Other
+
Experience
Industry
+
Risk management
–
Sustainable development
–
Other
+
Remuneration
USD 2019 2020 2021
Board membership – – –
First elected in2017,
re-elected annually from 2018 to2021
First elected in2019,
re-elected in2020 and2021
100%
Meeting
participation
Shareholding:
7,000 GDRs representing 21,000 ordinary
shares
Shareholding:
–
1
On 14 March 2022, Britta Dalunde has tendered her resignation from the Company’s Board of Directors, effective from 23 March 2022.
2
Converted from EURusing theexchange rate attheend oftherespective period.
67 68
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
KRISTIAN BAI HØLLUND SHAVKAT KARY-NIYAZOV
Mr. Høllund wasappointed asaNon-Executive member oftheBoard
ofDirectors ofGlobal Ports inMay 2020.
Mr. Høllund isanexperienced finance leader andCFO with16 years’
global experience inahighly international environment. He wasappointed
asOperations CFO ofAPM Terminals inDecember 2018. Prior tothis, he
wasCommercial CFO atMaersk Line forfour years andhas held anumber
ofsenior financial roles atthecompany since he joined in2007 including CFO
China, CFO Netherlands andFinance Manager Central Europe, demonstrating
anability tolead large transformations indifferent geographies. He first joined
A.P Moller – Maersk Group in2005 asafinancial controller.
Mr. Høllund holds anExecutive MBA from IMD inLausanne, Switzerland
aswellasanMSc. inFinance andBSc. inInternational Business from
theUniversity ofAarhus, Denmark.
External Appointments
Operations CFO ofAPM Terminals.
Mr. Shavkat Kary-Niyazov wasappointed asaNon-Executive member
oftheBoard ofDirectors ofGlobal Ports inJune 2019.
Amathematician andacademic, Mr. Kary-Niyazov began his corporate
career in1995 asCFO ofAcademservice Ltd, theRussian tour operator, before
moving toSovlink LLC, theboutique investment-banking firm, in1997. After
themerger ofSovlink withAljba Alliance Bank in2000, he became Managing
Director ofSL Capital Services Ltd (Cyprus), aninternational financial company
andportfolio company ofthemerged group from 2002 to2005.
Mr. Kary-Niyazov has 15 years’ experience inthetransport industry, becoming
President ofMarine Façade, St. Petersburg, andamember ofFirst Quantum
Group in2005. This project isfocused onland reclamation anddevelopment
inSaint Petersburg, Russia andhas so far reclaimed more than 250 ha. ofland
andcompleted theconstruction ofthePassenger Port “Marine Façade ofSt.
Petersburg”. Inaddition tothis role, he served asPresident ofNational Container
Company in2006 before taking onhis current role asPresident ofFirst Quantum
Group, which he has held since 2011.
Mr. Kary-Niyazov graduated from Moscow State University withaMasters
degree inMathematics (withdistinction), which he followed up withaPh.D
intopology andgeometry atthesame university.
External Appointments
President ofFirst Quantum Group.
Non-Executive Director
Non-Executive Director
100%
Meeting
participation
Experience
Industry
+
Risk management
+
Sustainable development
–
Other
+
Experience
Industry
+
Risk management
–
Sustainable development
–
Other
+
Remuneration
USD 2019 2020 2021
Board membership – – –
Remuneration
USD 2019 2020 2021
Board membership – – –
First elected in2020,
re-elected in2021
First elected in2019,
re-elected in2020 and2021
100%
Meeting
participation
Shareholding:
–
Shareholding:
–
69 70
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Remuneration
USD
2
2019 2020 2021
Board membership 67,208 68,532 75,428
NRC chairmanship 16,802 17, 13 3 18,931
Committees` membership – – 3,550
INNA KUZNETSOVA
1
ANDREY LENVALSKY
Ms. Kuznetsova wasappointed anIndependent Non-Executive member
oftheBoard ofDirectors ofGlobal Ports inDecember 2017 effectiveJanuary
2018.
Ms. Kuznetsova istheCEO andBoard member of1010data, theleading
provider ofcross-enterprise data analytics tools. Until its recent acquisition
byE2open, Ms.Kuznetsova wasthePresident andChief Operating Officer
ofINTTRA, thelargest digital network forocean shipping industry, processing
overaquarter ofcontainers inglobal trade. Before joining INTTRA she
wastheChief Commercial Officer andmember oftheExecutive Board atCEVA
Logistics. Prior tothis, Ms. Kuznetsova spent 19 years atIBM, starting inRussia
andlater intheUS headquarters inavariety ofglobal roles, primarily focused
onfast growth opportunities andbusiness transformation. Inher last role she
wasglobal VP, Marketing & Sales, IBM Systems Software.
Ms. Kuznetsova’s prior board engagements include Sage Plc (LSE: SGE),
aFTSE 100 software company, where she served asIndependent Non-
Executive Director, andAvantida, aprivately-owned SaaS company inBelgium
incontainer repositioning space.
Ms. Kuznetsova completed her MS andPhD. study atMoscow State University
andlater earned anExecutive MBA from Columbia Business School.
External Appointments
CEO andBoard member of1010data.
Mr. Lenvalsky wasappointed asaNon- Executive member oftheBoard
ofDirectors ofGlobal Ports inMay 2021.
Mr. Lenvalsky wasappointed asVice President, Investments andCapital Markets
atDelo Group in2020. In2011-2020, he had several roles intheglobal
corporate andinvestment banking division ofBank ofAmerica Securities
from 2011 to2020, advising major Russian andinternational companies
inthetransport, infrastructure andnatural resources sectors onM&A, equity
anddebt placements. Andrey worked intheoil andgas team oftheinvestment
banking department ofRenaissance Capital in2010–2011 andatTroika Dialog
(presently Sberbank CIB) in2007–2009.
Mr. Lenvalsky graduated withhonours from theNational Research University
Higher School ofEconomics withadegree ininternational business. He
istheHSE Alumni Awards 2017 winner intheCorporate Business nomination.
External Appointments
Vice President, Investments andCapital Markets, Management Company Delo.
Independent Non-Executive Director
Member oftheNomination andRemuneration Committee,
theAudit andRisk Committee
Non-Executive Director
Member oftheStrategy Committee, theAudit andRisk
Committee
100%
Meeting
participation
Experience
Industry
+
Risk management
+
Sustainable development
+
Other
+
Experience
Industry
+
Risk management
–
Sustainable development
–
Other
+
Remuneration
USD 2019 2020 2021
Board membership – – –
First elected in2017,
re-elected annually from 2018 to2021
First elected in2021
86%
Meeting
participation
Shareholding:
–
Shareholding:
–
1
On 14 March 2022, Inna Kuznetsova informed the Company’s Board of Directors that she will not stand for re-election at the next AGM
to be held in 2022.
2
Converted from EURusing theexchange rate attheend oftherespective period.
71 72
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Remuneration
USD
1
2019 2020 2021
Board membership 50,406 68,532 75,428
Committees` membership – 5,711 10,057
LAMBROS PAPADOPOULOS ANDREY PAVLYUTIN
Mr. Papadopoulos wasappointed asanIndependent Non-Executive member
oftheBoard ofDirectors ofGlobal Ports inJanuary 2018.
Mr. Papadopoulos has over27years ofexperience asanexecutive
andaboard member ofvarious companies including current Chairmanship
oftheBoard ofDirectors atKEDIPES, theCyprus Asset Management Company
andTrastor Real Estate Investment Company inGreece. InJanuary2022, he
joined Agri Europe Cyprus Ltd asanIndependent Non-Executive Director.
In2013, Mr.Papadopoulos founded PenteP Advisors Ltd. Prior tothat
hewaswithCitigroup (London), where asaManaging Director wasHead
ofGreece/ Cyprus Equity Research andHead ofContinental European Country
andSmall andMid-Cap Companies. Hestarted his career withErnst & Young
inLondon. Mr.Papadopoulos studied Accounting withComputing (B.A.(Hons))
attheUniversity ofKent atCanterbury intheUnited Kingdom. HeisaMember
oftheInstitute ofChartered Accountants inEngland andWales.
External Appointments
Mr. Papadopoulos also currently serves astheChairman oftheBoard
ofDirectors atKEDIPES, theCyprus Asset Management Company, theChairman
oftheBoard ofDirectors atTrastor Real Estate Investment Company, which
islisted ontheGreek Stock Exchange, andtheChairman oftheRisk Committee
ofAgri Europe Cyprus Ltd, aholding company withbanking assets inSlovenia
andSerbia. HeistheFounder andGeneral Manager ofPenteP Advisors Ltd
(Cyprus).
Mr. Pavlyutin wasappointed asaNon-Executive member oftheBoard
ofDirectors ofGlobal Ports inMay 2021.
Mr. Pavlyutin held the position of Deputy Commercial Director of Global Ports
Management from 2016 to May 2021. He has participated in the development
and implementation of the Group’s commercial strategy and management
ofsales departments in the North-West and Far East.
Prior tothis, he wasVice President ofLogistics atFirst Quantum Group between
2014 and2016 andCEO ofFLC Group between 2014 and2015. He previously
held director roles atContainer Terminal Illichivsk (2013–2018), Sovfracht UUT
SA (2008–2013), Sovfracht Ukraine (2007–2008) andLLC Ukrainian Universal
Terminal (2006–2008). Mr. Pavlyutin started his career atMaersk in1997,
holding anumber ofroles across thebusiness inUkraine, USA andRussia.
Mr. Pavlyutin holds aSpecialist Diploma inAutomation andControl inTechnical
Systems from Odessa Polytechnic University.
External Appointments
—
Independent Non-Executive Director
Member oftheStrategy Committee, theAudit andRisk
Committee
Non-Executive Director
100%
Meeting
participation
Experience
Industry
–
Risk management
+
Sustainable development
+
Other
+
Experience
Industry
+
Risk management
–
Sustainable development
–
Other
–
Remuneration
USD 2019 2020 2021
Board membership – – –
First elected in2017,
re-elected annually from 2018 to2021
First elected in2021
86%
Meeting
participation
Shareholding:
–
Shareholding:
–
1
Converted from EURusing theexchange rate attheend oftherespective period.
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
MOGENS PETERSEN SERGEY SHISHKAREV
Mr. Petersen wasappointed asaNon-Executive member oftheBoard
ofDirectors ofGlobal Ports inJune 2019.
Mr. Petersen has more than 25 years’ experience ininfrastructure industries
including 14 years’ experience inthetransport, seaports andshipping industries.
He has held theposition ofAPM Terminals’ Portfolio Manager forRussia
andtheBaltics sinceNovember 2018. He first joined APM Terminals in2007
andheld various regional andglobal finance roles. Following APM Terminals’
acquisition ofits shareholding inGlobal Ports he held theposition ofSenior
Advisor inFinance, Strategy, Audit & Risk atGlobal Ports Management LLC from
2014 to2017. In2017–2018, he managed theCapital Investments Programme
atAPM Terminals focusing oninvestment portfolio management improving
customer relations andcost leadership.
MrPetersen began his career in1996 atEnerginet, thenational Danish energy
infrastructure company, before spending seven years atutility companies Hofor
andOrsted withfocus onenergy networks andrenewable energy investments.
Mr. Petersen holds anexecutive MBA from Henley Business School, UK
aswellasanMSc. inEconomics from theUniversity ofAarhus, Denmark
andadegree inFinance andEconomics (DEA) from theUniversité Louis Pasteur,
Strasbourg. MrPetersen holds international board professional certifications from
Copenhagen Business School (Denmark) andINSEAD (France).
External Appointments
Portfolio Manager inAPM Terminals Russia andtheBaltics, Member oftheBoard
ofDirectors atAPM Terminals — Aarhus A/S.
Mr. Shishkarev served asNon-Executive
member oftheBoard ofDirectors ofGlobal
Ports fromMay 2018 toMay 2021.
Mr. Shishkarev founded theDelo Group
in1993 andremained atthehelm
ofthecompany until 1999. He wasthen
elected totheState Duma oftheRussian
Federation, where he held various
executive positions within theCommittee
onInternational Affairs, theCommittee
onEnergy, Transport andCommunications.
Until 2011, Mr. Shishkarev wastheHead
oftheCommittee onTransport. He returned
toDelo Group in2014 asPresident.
Mr. Shishkarev isanauthor ofover50 bills
inthefield oftransportation.
Mr. Shishkarev graduated withhonours
from theMilitary Red Banner Institute
oftheMinistry ofDefense in1992. In2003,
he graduated from theRussian Academy
ofPublic Administration cum laude,
withadegree inState andMunicipal
Management. In2010, he became aDoctor
ofLaw.
Non-Executive Director
Memebr oftheStrategy Committee, theAudit andRisk
Committee
100%
Meeting
participation
Experience
Industry
+
Risk management
+
Sustainable development
+
Other
–
Remuneration
USD 2019 2020 2021
Board membership – – –
First elected in2019,
re-elected in2020 and2021
Thefollowing persons served asmembers oftheBoard ofDirectors
during thereporting year but haveresigned asofthedate ofthis report
publication:
Shareholding:
–
DEMOS KATSIS
Mr. Katsis served asaNon-Executive
member oftheBoard ofDirectors ofGlobal
Ports fromMay 2018 toMay 2021.
Mr. Katsis isthefounder, partner
andmanaging director ofCyprus-based
Katsis LLC law firm, withoffices inLimassol,
Nicosia, Athens andMalta andassociated
offices worldwide. Asmanaging director
ofthefirm, Mr. Katsis leverages his broad
legal experience intrusts, tax, corporate
litigation, corporate finance, commercial
law, M&Aandadvanced mitigation. Prior
tofounding Katsis LLC in2010, he worked
attheGeorge Georgiou LLC firm from
1999 to2003 andatother international
law firms between 2003 and2009. He
served asaPartner ataninternational law
firm between 2009 and2010, having
established andmanaged thefirm’s new
affiliate office inAthens between 2006
and2009.
Mr. Katsis graduated withhonours from
theUniversity ofBristol withaBachelor
ofLaw andaMaster ofLaws. Additionally,
he wasawarded afull E.U. scholarship
topursue aMasters’ degree inHuman
Rights & Democratisation attheUniversity
ofMalta.
He isalso anactive author ofvarious articles
inrelation tocorporate andcommercial
issues andisaProfessor atPericles ABLE
Project inMoscow.
ANDREY YASHCHENKO
Mr. Yashchenko wasappointed asaNon-
Executive Member oftheBoard ofDirectors
ofGlobal Ports fromApril 2020 toMay
2 021.
Heserves astheSenior Vice President,
Strategy andFinance ofDelo Group,
having joined thegroup in2018asCEO
oftheManagement Company Delo,
aposition heheld between 2018 and2019.
Between 2013 and2018, Mr.Yashchenko
held theposition oftheChief Financial
Officer inEn+Group, theleading global
vertically integrated producer ofaluminium
andpower. Prior tothis, hewastheFirst
Vice President andCFO atRussian
Platinum (2011–2012), held thepositions
ofDeputy CFO andCorporate Finance
Director atBasic Element (2006–2010)
andwasCapital Markets Director atRusal
(2000–2006).
Earlier inhis career, Mr. Yashchenko held
various corporate finance andstrategic
development positions attheTyumen
Oil Company, worked asanauditor
atDeloitte, andthen asaninvestment
analyst inMCSecurities andMontes Auri.
Hehas wide experience ofcorporate
activity including equity anddebt financing
ininternational andRussian markets, financial
strategy development andcapital structure
optimisation, aswellasinternational M&A,
corporate restructuring andholding structure
development.
Mr. Yashchenko graduated from
Moscow State University withadegree
inEconomics withhonours. Heisalso aCFA
Charterholder andaMember oftheCFA
Institute.
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Executive Management
ALBERT LIKHOLET ALEKSEY ERMOLIN
Mr. Likholet wasappointed CEO ofGlobal Ports Management LLC inJuly 2020.
He has also held thepositions ofManaging Director ofPetrolesport sinceAugust
2018 andManaging Director ofFirst Container Terminal sinceMay 2019.
Prior tojoining Global Ports, Mr. Likholet wasCEO ofNovoroslesexport (NLE),
theNCSP Group container terminal located onthenorth-east coast oftheBlack
Sea, forseven years, having been promoted from his role astheContainer
Terminal Manager.
Mr. Likholet began his career intheports industry in2002, working asagrain
inspector fortheControl Union atNovorossiysk, Temryuk andPort Kavkaz
marine terminals. He joined NLE in2003 asaberths andyards development
coordinator before holding anumber ofmanagement positions. Under his
management, NLE wasconverted intoamodern container terminal through
several stages ofinvestment, while retaining historic bulk andgeneral cargoes.
He holds adegree inManagement & Economics from Novorossiysk State
Maritime Academy.
Mr. Ermolin wasappointed asChief Information Officer ofGlobal Ports
Management LLC inJune 2020.
He has had apivotal role inthetechnological transformation oftheGroup.
He began asDirector ofIT atFirst Container Terminal in1988, contributing
tothetransformation project across thebusiness, successfully leading theproject
toimplement thefirst terminal operation system (TOS) inRussia. From 2007,
he then headed theIT department ofNational Container Company (NCC),
managing thedevelopment ofinformation technology across thegroup andled
thedigitalisation projects atNCC’s terminals. Following themerger ofGlobal
Ports andNational Container Company in2014, Mr. Ermolin took ontheposition
ofChief ofIT Department fortheenlarged Global Ports Group.
Mr. Ermolin isagraduate ofthePhysics Department ofSt. Petersburg State
University andholds aPhD inTheoretical Physics.
Сhief Executive Officer ofGlobal
Ports Management LLC, Managing
Director ofPetrolesport andFirst
Container Terminal
Chief Information Officer,
Global Ports Management LLC
BRIAN BITSCH
Mr. Bitsch wasappointed Chief Commercial Officer ofGlobal Ports
Management LLC inJuly 2017.
Before his appointment, he wasChief Commercial Officer atSogester S.A.
inAngola between 2011 and2017. Prior tothis, he wasamanagement consultant
inDenmark forseveral years, andbetween 2006 and2008 served invarious
senior executive roles atMSC Scandinavia Holding A/S.
Mr. Bitsch started his career in1990 asatrainee atMaersk andworked there
for16 years, holding various departments andregions, progressing toSenior
General Manager. During his time atMaersk, Mr. Bitsch worked inDenmark,
theUS, Bulgaria, andAngola.
Mr. Bitsch has completed A.P. Møller Shipping School andholds aGraduate
Diploma inBusiness Administration from Copenhagen Business School
aswellasaYMP from INSEAD.
Chief Commercial Officer
ofGlobal Ports Management LLC
1
Mr. Iodchin wasappointed Chief Strategy andBusiness Development Officer
ofGlobal Ports inOctober 2020.
He first joined Global Ports in2008, serving asanexecutive member
oftheBoard ofDirectors oftheCompany from 2008 to2019 aswellasholding
theposition ofSecretary oftheBoard ofDirectors ofGlobal Ports Investments
PLC since 2008. Mr. Iodchin currently also serves astheChairman oftheBoard
ofDirectors First Container Terminal Inc andJSC Ust-Luga Container Terminal,
andasaBoard member ofGlobal Ports (Finance) Plc andother companies
oftheGroup, aswellastheGeneral Manager ofGlobal Ports Investments PLC.
Mr. Iodchin isresponsible fordevelopment andimplementation oftheGroup
Strategy, business development projects aswellasrelations withthejoint-venture
partners. Mr. Iodchin isalso responsible forcorporate governance matters
andsupervises theactivities ofholding andfinance companies within theGroup.
He has taken anactive role inall major financing andM&Atransactions
oftheGroup during his tenure.
Mr. Iodchin obtained both aMaster’s degree andaPhD inEconomics from
Moscow State University. He also completed apostgraduate programme
attheMoscow Institute forEconomics andLinguistics andhas adiploma
ininternational finance, reporting standards andcorporate finance.
ALEXANDER IODCHIN
Chief Strategy andBusiness
Development Officer of
Global Ports
1
On 15 April Igor Pukhov has replaced Mr. Brian Bitsch who has left the Group due to personal reasons.
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Global Ports Investments PLC Annual Report 2021
ALEXANDER ROSLAVTSEV
Mr. Roslavtsev wasappointed Chief Financial Officer ofGlobal Ports
Management LLC inSeptember 2017.
Mr. Roslavtsev has over17 years ofexperience asaCFO invarious industries.
Before joining Global Ports, Alexander Roslavtsev wasCFO ofRusagro, one
ofRussia’s largest agricultural companies. Prior tothis, he wasCFO ofHewlett-
Packard Russia andCIS from 2010 to2016 andCFO andVice-President
ofRosinter Restaurants Holding from 2006 to2010. Mr. Roslavtsev also has atrack
record ofinternational experience having worked forIntel Corporation, Ford Motor
Company, KPMG UK andKPMG Russia.
In1995, Mr. Roslavtsev graduated from Moscow State Aviation Institute
withanM.S. Economics andEngineering andalso attended anumber ofbusiness
courses atWharton Business School. He isamember oftheAssociation
ofChartered Certified Accountants (ACCA).
Mr. Bogdanov wasappointed Managing Director oftheUst-Luga Container
Terminal in2018, where he had served asGeneral Manager since 2012.
Prior tojoining Ust-Luga, forfive years Andrey Bogdanov wastheCommercial
Director ofFirst Container Terminal. He served asDirector forOperations
intheSea Port ofSt. Petersburg from 2003. From 2000 to2003, Mr. Bogdanov
held theposition ofChief Executive Officer ofMCT PORT. From 1993, he
served asHead ofDepartment ofMCT PORT, before being promoted toChief
Operations Officer. In1984–1993, Mr. Bogdanov worked forLeningrad Sea
Commercial Port (from 1992 known astheSea Port ofSt. Petersburg).
Mr. Bogdanov graduated from Admiral Makarov State Maritime Academy.
Mr. van Assendelft has served asthemanaging director ofMulti-Link Terminals
Ltd Oy sinceDecember 2004 andwastheGeneral Manager ofMoby Dik
fromJune 2004 untilJuly 2010.
Mr. van Assendelft has also held aposition asamember oftheboard ofdirectors
ofNiinisaaren Portti Osakeyhtio Oy (NiPO) sinceApril 2007. Prior tohis
appointment asthemanaging director ofMulti-Link Terminals Ltd Oy, he worked
forContainer-Depot Ltd Oy asadirector untilDecember 2005.
He studied attheHelsinki University ofTechnology andKotka Svenska Samskola.
Chief Financial Officer ofGlobal
Ports Management LLC
DIRK VAN ASSENDELFT
General Manager ofMulti-Link
Terminals
Terminal Directors
ANDREY BOGDANOV
Managing Director
ofUst-Luga Container
Terminal
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
IVAN RADCHENKO MARC NIEDERER
Mr. Dolgiy wasappointed Managing Director inApril 2021.
Mr. Dolgiy joined Global Ports in2019 asHead ofDepartment foroperational
efficiency andstrategic projects andsubsequently became Deputy Chief
Operating Officer inMay 2020. Inboth these roles, Mr. Dolgiy made
asignificant contribution totheimprovement inoperational efficiency across
theGroup’s terminals. Mr. Dolgiy wasappointed Executive Director ofVSC
inJanuary 2021. Between 2007 and2018, Mr. Dolgiy held various positions
atRuskon, one ofRussia’s leading container rail transportation companies,
commencing his career there asChief Engineer andlast holding theposition
ofDeputy CEO. Prior tothis, MrDolgiy held various positions atNovorossiysk
Commercial Sea Port between 2000 and2007.
Mr. Dolgiy graduated withHonours from South-Russian State Polytechnic
University.
Ivan Radchenko served asGeneral Manager ofYanino Logistics
Park fromSeptember 2018 andGeneral Manager ofMoby Dik
fromNovember 2020 toSeptember 2021.
Prior tohis appointment, Mr. Radchenko worked asaBusiness
Development Manager forMaersk Line inVladivostok. Healso
served astheCEO ofPacific Logistic LLC between 2015
and2018, overseeing a15–20% yearly increase inthroughput
aswellastheimplementation ofarange ofinfrastructure projects.
Additionally, MrRadchenko wasthemanager ofGlobal Ports’ Moby
Dik container terminal, andaSenior Sales Manager atYanino
Logistics Park between 2010 and2011. Ivan Radchenko began his
career asHead ofAnalysis andForecast Division atCommercial
Port ofVladivostok JSC in2006. Mr.Radchenko holds abachelor’s
degree withhonors from Russia’s Far Eastern State Technical Fisheries
University.
Mr. Niederer was appointed Chief Operational Officer of Global
Ports Management LLC in October 2020.
Mr. Niederer has over 26 years of experience in infrastructure
management, most recently, as a Vice President at AP Møller
Maersk. He has also held the position of Managing Director
Americas for Svitzer (one of the largest towage companies
intheworld, part of AP Møller Maersk Group) where he focused on
growing the business in Latin America.
Mr. Niederer began his career in 1993 with P&O Nedlloyd,
part of Royal Nedlloyd Group, holding various sales and trade
manager roles across Europe, Australia and Africa before becoming
Managing Director of Russia, Ukraine, Georgia and the Baltics
in 2002. Once the company was bought by Maersk in 2006,
Mr.Niederer took up managing roles in the Mediterranean,
Northern Europe and North America before being based in the UK,
managing Svitzer Europe from 2012.
Educated in the Netherlands, he holds a BBA from Nyenrode and
an MSc Economics from the University of Groningen. He also holds
an MBA with High Honors from Chicago Booth Business School
and continues his management training on an ongoing basis through
theHarvard & IMD Lausanne Executive Training programme.
VADIM SHPITYAK
Vadim Shpityakwasappointed General Manager ofMoby Dik andYanino
Logistics Park inSeptember 2021.
Mr. Shpityak has over17 years’ experience intheindustry. Most recently,
asHead ofTechnical Assets Maintenance Department – Group Chief Engineer
ofGlobal Ports Management LLC, he delivered increased technical andcost
efficiencies anddeveloped policy andstrategy forTAM taking intoaccount
ESG improvements. Prior tothis, he held thepositions ofTechnical Director
atPetrolesport andChief Engineer atFirst Container Terminal.
Mr. Shpityak started his career in2003 withNovorossiysk Commercial Sea
Port Group, since holding Chief Engineer positions across thegroup’s terminals
Novoroslesexport andTerminal Mega. He holds degrees from Novorossiysk
Industrial College andfrom theRostov State University ofCivil Engineering.
General Manager ofMoby Dik
andYanino Logistic Park
Thefollowing persons served asmanagers oftheGroup
during thereporting year but stepped down from their roles
asofthedate ofthis report publication:
ILIA DOLGIY
Managing Director
ofVostochnaya Stevedoring
Company
Former Chief Operational Officer
of Global Ports Management LLC
Former General Manager of Moby Dik
and Yanino Logistic Park
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Risk Management
Global Ports isexposed toavariety ofrisks andopportunities that can have commercial,
financial, operational andcompliance impacts onits business performance, reputation
andlicence tooperate. TheBoard recognises that creating shareholder value involves
theacceptance ofrisk. Effective management ofrisk istherefore critical toachieving
thecorporate objective ofdelivering long-term growth andadded value toour
shareholders.
Global Ports bases its risk management activities onaseries ofwell-defined risk
management principles, derived fromexperience, best practice, andcorporate
governance regimes. TheGroup’s enterprise risk management processes (ERM)
aredesigned toidentify, assess, respond, monitor and, where possible, mitigate
oreliminate threats tothebusiness caused bychanges inthebusiness, financial,
regulatory andoperating environment.
TheBoard has overall oversight responsibility forGPI’s risk management
andfortheestablishment oftheframework ofprudent andeffective controls. Assuch, it
systematically monitors andassesses therisks attributable totheGroup’s performance
anddelivery oftheGPI strategy. Wherearisk has been identified andassessed,
theGroup selects themost appropriate risk measure available inorder toreduce
thelikelihood ofits occurrence andmitigate anypotential adverse impact.
TheBoard delegates totheChief Executive Officer ofLLC Global Ports
ManagementLLC theresponsibility fortheeffective implementation andmaintenance
oftherisk management system. Day-to-day responsibility forrisk management lies
withthemanagement team. TheAudit andRisk Committee isauthorised bytheBoard
tomonitor, review andreport ontheorganisation, functionality andeffectiveness
oftheGroup’s Enterprise Risk Management (ERM) system.
Global Ports isexposed toavariety ofrisks which arelisted
below. Theorder inwhich these risks arepresented isnot
intended tobeanindication oftheprobability oftheir
occurrence orthemagnitude oftheir potential effects.
Not all ofthese risks arewithin theGroup’s control,
andthelist cannot beconsidered tobeexhaustive, asother
risks anduncertaintiesmay emerge inachanging external
andinternal environment that could haveamaterial adverse
effect ontheGroup’s ability toachieve its business objectives
anddeliver its overall strategy.
Further information onour risk management system,
includingadetailed description ofidentified risk factors,
isinthenotes totheConsolidated Financial Statements
attached tothis report.
TheGroup’s financial risk management andcritical
accounting estimates andjudgments aredisclosed inNotes
3and4totheConsolidated Financial Statements.
TheGroup’s contingencies aredisclosed inNote
28totheConsolidated Financial Statements.
Risk factor Risk management approach
Strategic risks
Market conditions:
Global Ports’ operations aredependent ontheglobal macroeconomic environment
andresulting trade flows, including inparticular container volumes.
Container market throughput isclosely correlated tothevolume ofimported goods,
which isdriven bydomestic consumer demand, andinfluenced byRUBcurrency fluc-
tuations against USD/Euro, andexported goods, which inturn correlate withtheRus-
sian rouble exchange rate fluctuations andglobal commodity markets` trends.
TheGroup remains exposed totherisk ofcontraction intheRussian andworld econ-
omy which, if it weretooccur, could further dampen consumer demand andlead
toadisruption inthecontainer market which could have anadverse impact
ontheGroup.
Atthesame time being part ofRussian andworld logistics chains, theterminals
oftheGroup areexposed andfeel theimpact ofthedisruptions anddisbalanc-
es inthese logistics chains caused byCOVID-19andsuch cases like Ever Given
accident.
TheGroup has responded tothroughput volatility inthecontainer market by:
• Focusing onquality andvalue-driven services (getting closer tothecustomer)
• Greater focus onbalancing export andimport container flows aswellasthecargo mix
• Offering operational flexibility toall clients viaoperational excellence
• Investments ininfrastructure development andequipment
• Termination ofhandling coal atVSC tooptimise thehandling ofcontainers
• Effective cost containment
• Development ofIT solutions
• Adopting new revenue streams andattracting new cargoes
Competition:
Barriers toentry aretypically high inthecontainer terminal industry due tothecapi-
tal-intensive nature ofthebusiness. However, challenging market trading condi-
tions mean that competition fromother container terminals continues tobeasignifi-
cant factor, which isalso supported bytheexisting excess capacity inthemarket, i.e.,
intheNorth-West ofRussia. Further consolidation between container terminal opera-
tors andcontainer shipping companies, thecreation ofnew strategic alliances, thein-
troduction ofnew/upgraded capacity andcarrier consolidation could result ingreat-
er price competition, lower utilisation, andpotential deterioration inprofitability.
Strategic international investorsmay develop oracquire stakes inexisting competitor
Russian container terminals, which could bring new expertise intothemarket anddivert
clients andcargoes away from theGroup.
Also, Beneficial Cargo Ownersmay optimise their logistics chains anddecide tocon-
trol them, whichmay lead tochanges inthecompetitive environment.
Given thehistorically high margins intheRussian container handling industry, this
trendmay continue, which isdemonstrated bygrowing competition intheRussian Far-
East whereanumber ofnew projects wereannounced attheFar-Eastern Economic
Forum inSeptember 2021. Though we do not expect new major capacity tocome
tothemarket inthenext 3–4years, theconversion ofsomeoftheexisting terminals
intothehandling ofcontainers already started.
TheGroup actively monitors thecompetitive landscape andadjusts its strategy accordingly,
i.e., theGroup prioritises building close long-term strategic relationships withits leading cus-
tomers (locally, regionally andwithheadquarters).
TheGroup’s focus onservice quality isakey differentiator fromits competition
andtheGroup believes this isone ofits key competitive advantages.
TheGroup continues toinvest inits terminals andinfrastructure toensure competitive levels
ofservice. It takesalong-term approach tomanaging its network ofterminals that represent
core infrastructure assets inRussia withanexpected operating lifespan of10to20years
andbeyond. TheGroup ownsasignificant land bank giving it flexibility should market con-
ditions require it. TheGroup maintains level ofcapital expenditure inline withtherequire-
ments needed tomaintain effective development ofits existing capacity. TheGroup has
developed long-term operating master plans foreach ofits terminals that enable it toreact
quickly inthecase ofadditional market demands being placed onits facilities’ infrastruc-
ture andequipment. TheGroup’s healthy cash flow generation anddecreasing leverage
allow financial flexibility interms oftiming andsize oftherequired capital expenditure
programme.
Risk factor Risk management approach
Political, Geopolitical, military conflicts andeconomic andsocial instability:
Russian foreign affairs andgeopolitics could lead toinstability intheRussian econo-
my. Therefore, uncertain operating environment anddecreasing, asaresult ofsocial
andpolitical instability, could affect theGroup’s profitability andability tosell its ser-
vices due tosignificant economic andpolitical risks.
Certain government policies ortheselective andarbitrary enforcement ofsuch poli-
cies could make it more difficult fortheGroup tocompete effectively and/or impact
its profitability.
Thecurrent geopolitical situation andconflict surrounding Russia andUkraine will ad-
versely affect operations oftheGroup, i.e. themanagement oftheGroup isaware
ofthefact that someshipping lines have announced that they temporarily suspend
shipments toandfromRussian Federation. It ispossible that other shipping lines
will follow withsimilar restrictions. TheGroupmay also beadversely indirectly af-
fected byUS, EU, UK andother jurisdictions sanctions against Russian business/
companies– measures that have had andmay continue tohave anadverse ef-
fect ontheRussian economy anddemand forgoods, commodities andservices
aswellassupply ofequipment andspare parts, interest rates andRUB/USDex-
change rate. Ongoing sanctions could also slow down ormake it very challenging
toprocess thesettlements withclients andsuppliers andtodeal withcertain persons
andentities inRussia orinother countries.
Following already imposed sanctions onRussian Central Bank, its restrictions forcap-
ital movements outside Russian Federation andother developments oftheconfron-
tation, there isanuncertainty about theavailability oftheoptions forrefinancing
in2023when principal payments ofEurobonds 2023fall due. Thesituation islarge-
ly dependent onactions ofRussian Government andCentral Bank that aredifficult
toforesee.
Inlight ofthegeopolitical andmacroeconomic challenges faced bytheports industry
inrecent years, theGroup has focused onimproving its resilience, inparticular its abili-
ty towithstand short-term economic fluctuations inRussia, aswellasthewider regional
andglobal environment. This has includedastrong focus oncost containment measures,
andonstrengthening its financial position byrefinancing its debt, switching tolonger matur-
ities atfixed rates, execute theinvestment programmes ahead oftime andincrease there-
silience ofits treasury operations. Inaddition, theGroup has developed its growth strategy
toembrace exports andnew revenue streams tocounteract theimpact ofanyfall incon-
sumer sentiment oranymacro-economic downturn.
TheGroup has strengthened its system tomonitor compliance withrestrictions posed byin-
ternational sanctions andfend off therisk ofsecondary sanctions.
TheGroup continues tomaintain aninternational base ofshareholders, bondholders
andbusiness partners.
TheGroup’s management isclosely monitoring events inRussia andUkraine,
aswellasthepossibility oftheimposition offurther sanctions inconnection withtheesca-
lating confrontation andanyresulting increase oftensions between Russia, andtheUS,
UK and/or theEU. Themanagement understands what needs tobedone under current
circumstances andbelieves that it has required resources tolead theGroup through these
difficult times.
TheGroup hasastrong track record inpromptly meeting all its debt obligations, successful
refinancing anddeleveraging andenjoys high credibility inlocal andinternational bank-
ing andcapital markets that we expect should support theGroup inits efforts torefinance
inSeptember 2023orearlier.
TheGroup isnot aware ofanyspecific sanctions related toits ownership oroperations.
Coronavirus (COVID-19):
Theglobal coronavirus (COVID-19) pandemic that emerged during 2020impact-
ed thecontainer ports industry andGlobal Ports own operations, resulting insignifi-
cant interruption toglobal trade, disruption tosupply chains, reshuffling ofvessel calls,
andhigh FX volatility.
Despite theintroduction ofvaccination programmes, visibility remains low, new strains
ofvirus areemerging, andtherisk offuture outbreaks anddisruption tobusiness oper-
ations remains. Risks include:
• personnel shortages due toCOVID-19related illness
• inability todeliver contracted services due toregulatory orsafety requirements
• loss ofrevenue due tobusiness interruption, loss ofcustomer volumes orcustomer
withdrawals
• additional process steps orsafety measures
• liquidity issues associated withdelays incustomer payments, potential customer
failures oravailability offinancing.
Theauthorities inRussia demanded that thetransport industry enterprises ensure that atleast
80% ofemployees arevaccinated, which theGroup’s terminals completed within there-
quired time frame.
Group measures tomitigate risk aregrouped under/focused onfour main priorities:
• Protecting all employees (operations andadmin) andcommunities: including
on-site vaccination attheterminals, medical examinations, restrictions ontravelling
andexternal/internal meetings, social distancing, additional disinfection accord-
ing totheschedule, personal protective equipment provided forpersonnel, improved
cleaning, purchasing protective masks, gloves andCOVID-19tests forthelocal
hospital inNakhodka, Far East. Administrative staff had been either recommended
ormoved towork fromhome. TheGroup tried toestablish themaximum comfort forits
employees during remote work. TheIT infrastructure wasadapted tonew challenges
andwasworking without major failures. Asofthedate ofsigning thefinancial state-
ments, theemployees werenot fully returned fromworking fromhome. TheGroup has
not takenafinal decision, onwhether someoftheemployees shall continue working
fromhome going forward. Anyreturn totheoffice isandwill beaccompanied byfol-
lowing thestrict safety protocols including social distancing, disinfection, use ofmasks,
limitation ofexternal contacts.
• Supporting customers: uninterrupted 24/7operations (quay, yard andgates), tosup-
port andprotect customers’ supply chains inRussia, improved commercial andopera-
tional flexibility;
• Strengthening online channels, including maximum digitalisation ofdocumentation
andcustomer integration, further development ofonline solutions todecrease thene-
cessity ofclient’s presence attheterminal, improvement ofresilience ofIT systems toex-
ternal shocks andcyber attacks;
• Ensuring financial stability andcash preservation, including proactive management
ofcosts, receivables andcapacity foreffective adaptation tocrisis andits consequenc-
es, Stress testing offinancial performance andliquidity position, revisiting financial
plans.
All these measures implemented ensured that theterminals oftheGroup (quay, yard
andgates) remained 100% operational toservice vessels/handle cargoes throughout
thepandemic aswellasthecall andservice centres oftheGroup wereworking without
interruption.
Operational risks
Leases ofterminal land:
TheGroup leasesasignificant amount oftheland andquays required tooperate
its terminals fromgovernment agencies andtoalesser extent fromprivate entities.
Anyrevision oralteration totheterms ofthese leases orthetermination ofthese leases,
orchanges totheunderlying property rights under these leases, could adversely affect
theGroup’s business.
TheGroup believes it hasastable situation atpresent regarding its land leases andits ter-
minals have been inoperation foranumber ofyears. TheGroup owns thefreehold on66%
ofthetotal land ofits terminals and70% oftheland ofits container andinland terminals
inRussia. Theremainder isheld under short andlong-term leases routinely renewable atim-
material costs.
Customer Profile andConcentration:
TheGroup isdependent onarelatively limited number ofmajor customers (shipping
lines, freight forwarders etc.) forasignificant portion ofits business.
These customers areaffected byconditions intheir market sector which can result
incontract changes andrenegotiations aswellasspending constraints, andthis isfur-
ther exacerbated bycarrier consolidation.
TheGroup conducts extensive andregular dialogue withkey customers andactively moni-
tors changes that might affect our customers’ demand forour services.
TheGroup hasaclear strategy toreduce its dependence onits major customers, bytarget-
ing new customers, increasing theshare ofbusiness fromother existing global customers,
andnew cargo segments.
TheGroup isalso relying onthecontribution fromnon-container revenues through building
its presence inmarine bulk cargoes like coal andscrap metal (share ofnon-container reve-
nue was22% and17% in2020and2021respectively).
83 84
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Risk factor Risk management approach
Reliance onthird parties:
TheGroup isdependent ontheperformance ofservices bythird parties outside its
control, including all those other participants inthelogistics chain, such ascustoms
inspectors, supervisory authorities, Russian Railways, rolling stock operators andoth-
ers, andtheperformance ofsecurity procedures carried out atother port facilities
andbyits shipping line customers.
TheGroup strives tomaintainacontinuous dialogue andcooperation withthird parties
across thesupply chain. Inaddition, its geographic diversification provides it withsomeflex-
ibility inits logistics, should bottlenecks develop inone area.
Tariff regulation:
Tariffs forcertain services atcertain oftheGroup’s terminals have inthepast, been
regulated bytheRussian Federal Antimonopoly Service (FAS). Asaresult, thetariffs
charged forsuch services were, andmay potentially inthefuture be, subject toamax-
imum tariff rate and/or fixed inRussian roubles asPLP, VSC, andFCT, like many other
Russian seaport operators, areclassified asnatural monopolies under Russian law.
All tariffs areset inRussian roubles. Tothebest oftheknowledge oftheGroup’s manage-
ment, theGroup isinfull compliance withthetariff legislation.
TheGroup continues tomonitor foranylegislative proposals andregulatory actions
that could lead tochanges totheexisting tariff regulations andits natural monopoly sta-
tus. It seeksaproactive dialogue withtherelevant Russian federal authorities. It believes
it isaswell placed asanymarket participant toadapt toanyfuture changes intariff
regulation.
Human resources management:
TheGroup’s competitive position andprospects depend ontheexpertise andexperi-
ence ofits key management team andits ability tocontinue toattract, retain andmoti-
vate qualified personnel.
Lack ofqualified workers inthemarket andactive competitions can lead toadefi-
ciency ofhuman resources.
Industrial action oradverse labour relations could disrupt theGroup’s operating activi-
ties andhave anadverse effect onperformance results.
Changes inwork conditions aswellasgrowing competition onthelabour marketmay
lead tohigher staff turnover.
TheGroup annually reviews labour market trends andaligns employee salaries andbene-
fits atall levels tofoster andretain skilled labour.
TheGroup invests intheprofessional development ofits staff atall levels, including interna-
tional best practices implementation andinternal development/ training programmes.
TheGroup engages insocially responsible business practices andthesupport oflocal
communities.
TheGroup isregularly exploring employee’s satisfaction andloyalty andprovide measures
tokeepasufficient level ofthese metrics.
TheGroup strives tomaintainapositive working relationship withlabour unions atits facili-
ties. Moreover, it pursues overall labour policies designed toprovideasalary andCOVID
support benefit package inline withtheexpectations ofour employees.
Health, safety, security:
Accidents involving thehandling ofhazardous materials attheGroup’s terminals
could disrupt its business andoperations and/or subject theGroup toenvironmental
andother liabilities.
Therisk ofsafety incidents isinherent intheGroup’s businesses.
TheGroup’s operations could beadversely affected byterrorist attacks, natural disas-
ters orother catastrophic events beyond its control.
TheGroup has implemented clear safety policies designed around international best prac-
tices andbenchmarks using such measures asGPI Global Minimum Requirements.
Safety isone oftheGroup’s top priorities. Asafety strategy andannual action plans have
been developed andarebeing implemented, tobuildasustainable safety culture across
thewhole Group. Thedetailed roadmap isdesigned toensure sustainable implementation
ofsafety culture overthemedium term.
GPI isconstantly improving its safety practices byinvolving theemployees inidentifying
andmitigating potential safety risks.
Similarly, GPI works withall its stakeholders tomaintain high level ofphysical security
around port facilities andvessel operations tominimise therisk ofterrorist attacks.
Environment:
Degradation oftheenvironment andtheconsequences fromstringent environmen-
tal regulations andinvestor sustainability expectationsmay influence theprofitability
ofthebusiness.
TheGroup constantly monitors theenvironmental, legislation changes andexpectations
andinresponse isdeveloping its ESG targets which will bealigned withits business strate-
gy, governance andrisk management processes.
In2021,thecoal handling operations wereceased inone oftheCompany’s subsidiaries.
Information technology andsecurity:
TheGroup’s container terminals rely onIT andtechnology systems tokeep their op-
erations running efficiently, prevent disruptions tologistic supply chains, andmonitor
andcontrol all aspects oftheir operations.
AnyIT glitches orincidents can create major disruptions forcomplex logistic supply
chains.
Anyprolonged failure ordisruption ofthese IT systems, whetheraresult ofahuman
error,adeliberate data breach oranexternal cyber threat could create major disrup-
tions interminal operations. This could dramatically affect theGroup’s ability torender
its services tocustomers, leading toreputational damage, disruption tobusiness oper-
ations andaninability tomeet its contractual obligations.
TheGroup has centralised its IT function inrecent years which isanimportant step inensur-
ing both theefficiency andconsistency oftheGroup’s security protocols implementation.
We arecontinuing toalign our IT strategy withthebusiness objectives.
We regularly review, update andevaluate all software, applications, systems, infrastructure
andsecurity, i.e., inNovember 2021 VSC andSolvo completed testing andcommissioning
ofanew terminal operating system (TOS). Thenew TOS enables real-time tracking ofall
ship andcontainer handling procedures attheterminal andcritical functions like operation-
al accounting, warehouse management, railhead container handling andplanning, vehicle
handling, andoversight ofcontainers during customs clearance.
All software andsystems areupgraded orpatched regularly toensure that we minimise
vulnerabilities.
Each ofour business units has anIT disaster recovery plan.
Our security policies andinfrastructure tools areupdated orreplaced regularly tokeep
pace withchanging andgrowing threats.
Our security infrastructure isupdated regularly andemploys multiple layers ofdefence.
Connectivity toour partners’ systems iscontrolled, monitored andlogged.
Regulatory andcompliance risks
Regulatory compliance:
TheGroup issubject toawide variety ofregulations, standards andrequirements
andmay face substantial liability if it fails tocomply withexisting regulations applica-
ble toits businesses.
TheGroup’s terminal operations aresubject toextensive laws andregulations govern-
ing, among other things, theloading, unloading andstorage ofhazardous materials,
environmental protection andhealth andsafety.
TheGroup strives tobeincompliance atall times withall regulations governing its activities
anddevotes considerable management andfinancial resources toensure compliance.
Changes inregulations:
Changes toexisting regulations ortheintroduction ofnew regulations, procedures
orlicensing requirements arebeyond theGroup’s control andmay beinfluenced
bypolitical orcommercial considerations not aligned withtheGroup’s interests.
Anyexpansion ofthescope oftheregulations governing theGroup’s environmen-
tal obligations, inparticular, would likely involve substantial additional costs, includ-
ing costs relating tomaintenance andinspection, development andimplementation
ofemergency procedures andinsurance coverage orother financial assurance ofits
ability toaddress environmental incidents orexternal threats.
TheGroup maintainsaconstructive dialogue withrelevant federal, regional andlocal au-
thorities regarding existing andplanned regulations. TheGroup does not have thepower
toblock anyorall regulations itmay judge tobeharmful, but this dialogue should ensure it
has time toreact tochanges intheregulatory environment.
Risk factor Risk management approach
Conflict ofinterests:
TheGroup’s controlling beneficial shareholdersmay have interests that conflict
withthose oftheholders oftheGDRs ornotes.
Themajor implications ofthis risk arethat (i) co-controlling shareholders pursue other
businesses not related toGPI andhencemay not bedeeply involved withdeveloping
GPI and(ii) one ofthemajor shareholders isalsoamajor customer oftheGroup.
Theemployees oftheGroupmay have interests inthecompanies, thatmay orpoten-
tiallymay have thebusiness withtheGroup.
TheGroup’s corporate governance system isdesigned tomaximise thecompany’s val-
ue forall shareholders andensure theinterests ofall stakeholders aretaken intoaccount.
TheGroup’s LSE listing ensures our compliance withthehighest international standards.
Inaddition, theBoard consists ofhighly experienced individuals including strong independ-
ent directors.
In2020,theGroup adopted thePolicy onConflicts ofInterest regulating thepotential con-
flicts ofinterest bytheemployees oftheGroup andupdated it in2021.
Legal andtax risks:
Anadverse determination ofpending andpotential legal actions involving
theGroup’s subsidiaries could have anadverse effect ontheGroup’s business, rev-
enues andcash flows andtheprice oftheGDRs. Weaknesses relating totheRus-
sian legal andtax system andappropriate Russian law create anuncertain environ-
ment forinvestment andbusiness activity andlegislationmay not adequately protect
against expropriation andnationalisation. Thelack ofindependence ofcertain
members ofthejudiciary, thedifficulty ofenforcing court decisions andgovernmen-
tal discretion claims could prevent theGroup fromobtaining effective redress incourt
proceedings.
TheGroup maintainsastrong andprofessional legal function designed tomonitor legal
risks, avoid legal actions where possible andcarefully oversee anychanges inapplicable
legislation thatmay occur.
TheGroup performs ongoing monitoring ofchanges inrelevant tax legislation andcourt
practice inthecountries where its companies arelocated anddevelops theGroup’s legal
andtax position accordingly.
Financial risks
Foreign exchange risks:
TheGroup issubject toforeign-exchange risk arising fromvarious currency expo-
sures, primarily theRussian rouble andtheUS dollar. Foreign-exchange risk istherisk
offluctuations inprofits andcash flows oftheGroup arising from themovement
offoreign-exchange rates. Risk also arises from therevaluation ofassets andliabilities
denominated inforeign currency.
Asof2021, all Group tariffs aredenominated inRussian roubles, andpart oftheGroup’s
debt isdenominated inUS Dollars. Most oftheGroup’s operating expenses, ontheother
hand, areandwill continue tobedenominated andsettled inRussian roubles.
Inorder tomitigate thepossibility offoreign exchange risks arising fromasignificant mis-
match between thecurrency ofrevenue andthecurrency ofdebt (‘open FX position’),
theGroup isconverting part ofits existing USDdebt intoRUB, thecurrency ofrevenue. Dur-
ing 2018 –2022,theGroup bought back and/ orredeemed part ofits USDdenominated
Eurobonds exposure andcurrently~57% ofthetotal issued Eurobonds have been bought
back and/ orfully redeemed.
New debt in2020–2021wasattracted/raised only inRussian rouble, i.e., VSС bonds
intheamount of12.5billion RUB–USDequivalent ofUSD168.25mln.
Inaddition, theGroup has negotiated withsomeofits customers theright tochange its
Russian rouble tariffs inconjunction withRUB/USDexchange rate fluctuations
withinarange of+/–15% each time when theaverage RUB/USDexchange rate
foragiven month falls beyond 5% from thebase exchange rate used fortranslating original
USDtariffs toRUB,however, therisk above thelevels ofthese currency moves remains.
Credit risk:
TheGroupmay besubject tocredit risk, arising primarily fromtrade andother re-
ceivables, loans receivable andcash andits equivalents andderivative financial
instruments.
TheGroup’s business isalso dependent onseveral large key customers.
TheGroup closely tracks its accounts receivable overall andthecreditworthiness ofkey cus-
tomers andsuppliers.
Debt, leverage andliquidity:
TheGroup’s indebtedness ortheenforcement ofcertain provisions ofits financing ar-
rangements could affect its business orgrowth prospects.
Failure topromptly monitor andforecast compliance withloan covenants both
attheGroup andindividual terminal levelsmay result incovenant breaches andtech-
nical defaults.
If theGroup isunable toaccess funds (liquidity) itmay beunable tomeet financial
obligations when they fall due, oronanongoing basis, toborrow funds inthemarket
atanacceptable price tofund its commitments.
TheGroup has been able toreduce its total debt level. FCT Series 2–3 Bonds wererepaid
in2021using their own funds. Debt reduction beyond minimum repayment requirements re-
mainsamanagement priority in2022.
Liquidity risk iscarefully monitored, withregular forecasts prepared fortheGroup andits
operating entities.
Asoftheend of2021 Group Net debt/EBITDA ratio reached 2.0x.
TheGroup deleveraging strategy together withthebetter business development outlook led
toMoody’s upgrade rating oftheСompanyand theGroup financial instruments by1notch
toBa1, RA Expert by2notches toruAA, Fitch Ratings affirmation atBB+ in2021.
Therisk ofliquidity has been significantly reduced viaextensions ofdebt maturities through
public debt issuance in2021:
VSС issued Russian rouble bonds intheamount of7.5billion RUB– USDequivalent
ofUSD100.95mln, which isapart oftherouble-denominated Bond Programme ofVSC
withMoscow Exchange which provides VSC withthepotential toissue additional bonds
ofRUB17.5billion– USDequivalent ofUSD235.56mln, overanunlimited period oftime
withamaturity ofup to10years. FCT hasasimilar Bond Programme forRUB50billion–
USDequivalent ofUSD673.01mln. Inaddition, theGroup has overUSD300million
ofopen uncommitted limits forcredit line facilities from thebanks which incombination
withVSC andFCT bonds can facilitate financial flexibility anddiversification ofthedebt
portfolio oftheGroup andtherefinancing oftheexisting debt oftheGroup andensure
all obligations oftheGroup falling due inthenext 12months aremet. TheGroup regularly
stress tests scenarios when different negative trends that could affect cash flows areidenti-
fied. Theliquidity position iscarefully monitored incase offurther deterioration offinancial
performance.
85 86
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
CONSOLIDATED
FINANCIAL
STATEMENTS
Management report
andconsolidated
financial statements
31December 2021
Table of Contents
BOARD OFDIRECTORS ANDOTHER OFFICERS 2
MANAGEMENT REPORT 4
DIRECTORS’ RESPONSIBILITY STATEMENT 30
CONSOLIDATED INCOME STATEMENT FORTHEYEAR ENDED
31DECEMBER 2021 31
CONSOLIDATED STATEMENT OFCOMPREHENSIVE INCOME
FORTHEYEAR ENDED 31DECEMBER 2021 32
CONSOLIDATED BALANCE SHEET ASAT31DECEMBER 2021 33
CONSOLIDATED STATEMENT OFCHANGES INEQUITY
FORTHEYEAR ENDED 31DECEMBER 2021 34
CONSOLIDATED STATEMENT OFCASH FLOWS
FORTHEYEAR ENDED 31DECEMBER 2021 35
NOTES TOTHECONSOLIDATED FINANCIAL STATEMENTS 36
1. General information 36
2. Basis ofpreparation andsummary ofsignificant accounting policies 37
3. Financial risk management 50
4. Critical accounting estimates andjudgements 54
5. Segmental information 56
6. Expenses bynature 71
7. Other gains/(losses)– net 72
8. Employee benefit expense 72
9. Finance income/(costs)– net 73
10. Net foreign exchange gains/(losses) 73
11 . Income tax expense 74
12. Basic anddiluted earnings per share 74
13. Dividend distribution 74
14. Property, plant andequipment 75
15. Intangible assets 78
16. Financial instruments bycategory 79
17. Credit quality offinancial assets 79
18. Inventories 80
19. Trade andother receivables 80
20. Cash andcash equivalents 82
21. Share capital 82
22. Borrowings 83
23. Lease liabilities andright-of-use assets 86
24. Derivative financial instruments 87
25. Deferred income tax liabilities 88
26. Trade andother payables 89
2 7. Joint ventures andnon-controlling interests 89
28. Contingencies 94
29. Commitments 96
30. Related party transactions 96
31. Events after thebalance sheet date 98
INDEPENDENT AUDITOR’S REPORT 99
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Board ofDirectors andother officers (continued)
Registered office
20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus
Secretary
Team Nominees Limited
20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus
Board ofDirectors
andother officers
Board ofDirectors
Mr. Soren Jakobsen (appointed 02March 2018)
(Mr. Mogens Petersen isthealternate toMr. Soren Jakobsen)
Chairman oftheBoard ofDirectors since24April 2020, Non-Executive Director,
Member ofNomination andRemuneration andStrategy Committees
Mr. Vladimir Bychkov (appointed 27May 2021)
Non-executive Director, Chairman ofStrategy Committee
Ms. Britta Dalunde (appointed 12May 2017)
Senior Independent Non-Executive Director, Chairwoman ofAudit andRisk Committee
Mr. Kristian Bai Hollund (appointed 29May 2020)
(Mr. Soren Jakobsen isthealternate toMr. Kristian Bai Hollund)
Non-executive Director
Ms. Alexandra Fomenko (appointed 18June 2019)
Non-Executive Director, Member ofNomination andRemuneration Committee
Mr. Shavkat Kary-Niyazov (appointed 18June 2019)
Non-Executive Director
Ms. Inna Kuznetsova (appointed 01January 2018)
Independent Non-Executive Director, Chairwoman ofNomination andRemuneration
Committee, Member ofAudit andRisk Committee
Mr. Andrey Lenvalskiy (appointed 27May 2021)
Non-Executive Director, Member ofAudit andRisk andStrategy Committees
Mr. Lampros Papadopoulos (appointed 01January 2018)
Independent Non-Executive Director, Member ofAudit andRisk andStrategy
Committees
Mr. Andriy Pavlyutin (appointed 27May 2021)
Non-Executive Director
Mr. Mogens Petersen (appointed 18June 2019)
(Mr. Soren Jakobsen isthealternate toMr. Mogens Petersen)
Non-Executive Director, Member ofAudit andRisk andStrategy Committees
Members oftheBoard ofDirectors, who resigned during theyear
Mr. Demos Katsis resigned on27May 2021
Mr. Sergey Shishkarev resigned on27May 2021
Mr. Andrey Yashchenko resigned on27May 2021
2 3
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report
1. TheBoard ofDirectors presents its report together withtheaudited consolidated financial statements ofGlobal Ports Investments Plc
(hereafter also referred toas“GPI” orthe“Company” or“Global Ports”) andits subsidiaries andjoint ventures (hereafter collectively
referred toasthe“Group”) fortheyear ended 31December 2021. TheGroup’s financial statements have been prepared inaccordance
withInternational Financial Reporting Standards (hereafter also referred as“IFRS”) asadopted bytheEuropean Union (“EU”)
andtherequirements ofCyprus Companies Law, Cap. 113.
Principal activities andnature ofoperations oftheGroup
2. Theprincipal activities oftheGroup aretheoperation ofcontainer andgeneral cargo terminals inRussia andFinland. TheGroup offers its
customersawide range ofservices fortheir import andexport logistics operations. There wereno changes inprincipal activities oftheGroup
inthecurrent year.
Results
3. TheGroup’s results fortheyear areset out onpages 31and32.
Changes ingroup structure
4. Themanagement continues theoptimization oftheGroup structure andelimination oftheexcess companies from theGroup. Asapart
ofsimplification andstreamlining ofGroup structure thefollowing steps wereimplemented in2021.
a. On01.04.2021 Alocasia CO. Ltd andBelvo Establishment Ltd transferred their ownership inUst-Luga Container Terminal JSC toFirst Container
Terminal Inc (0.543% and1.63% respectively). First Container Terminal Inc directly owns 80% oftheshare capital ofUst-Luga Container
Terminal JSC.
b. On24.06.2021 NCC Group Ltd wasliquidated.
c. On11.10.2021alegal merger ofNational Container Holding Company Ltd intoGlobal Ports Investments Plc wascompleted. Asaresult
ofthereorganisation, Global Ports Investments Plc directly holds 100% inVostochnaya Stevedoring Company LLC, JSC Petrolesport, Farvater
LLC andShakhovo-18 LLC andindirectly owns 100% inFirst Container Terminal Inc and80% inUst-Luga Container Terminal JSC viaJSC
Petrolesport.
d. On11.10.2021 Global Ports Investments Plc transferred one share ofGlobal Ports (Finance) PLC toFarvater LLC.
e. Amembers’ voluntary liquidation ofAlocasia CO. Ltd andBelvo Establishment Ltd wasinitiated inOctober 2021.
f. On22.12.2021 VIFS LLC, wholly-owned subsidiary ofVostochnaya Stevedoring Company LLC, wasliquidated.
These reorganisations did not have animpact ontheunderlying assets/liabilities andoverall activities oftheGroup.
5. There wereno other material changes inthegroup structure. However, theBoard ofDirectors isregularly reviewing theGroup structure
andthepossibilities tooptimize it andwill continue its efforts inthefollowing years.
Review ofDevelopments, Position andPerformance oftheGroup’s Business
6. Strong market growth in2021saw theRussian marine container market achieving all-time-high volumes in2021of5.4million TEUs
(+7.1%y-o-y), driving growth inboth containerised import of11.1% andcontainerised export of4.2%.
7. Asaresult ofthesharp rise infreight rates inmost ofthemain global container shipping trades, very tight network capacity intheAsia-
Europe trade andadeficit ofempty containers globally, market players increasingly preferred faster container import andexport supply
chains viatheshortest sea leg. Asaresult, market growth wasconcentrated intheFar Eastern basin (+14.0% y-o-y) andtheSouthern basin
(+6.4%y-o-y) while thecombined throughput ofterminals located inSaint Petersburg andthesurrounding area declined by3.7% y-o-y
inFY2021.
8. TheGroup successfully improved in2021its market share position inboth its basins ofpresence, withVSC throughput improving 14.8% y-o-y
andthroughput ofits terminals intheBaltic Basin declining by2.3% y-o-y (being less than market decline). Intotal, Consolidated Marine
Container Throughput increased by2.8% y-o-y in2021to1,576thousand TEUs.
9. Aspreviously announced, VSC ceased thecoal handling activities inSeptember 2021, enabling theterminal toconcentrate ontheGroup’s core
strategic operations ofdriving container volumes. Asaresult, theGroup’s Consolidated Marine Bulk Throughput decreased in2021by14.6%
y-o-y to4.3million tonnes.
10. High andHeavy Ro-Ro handling increased by24.4% to25.2thousand units, while car handling increased by27.8% to104.9thousand units.
11 . Consolidated revenue increased by30.8% toUSD502.8million; excluding theimpact ofVSC transportation services, like-for-like revenue
increased by17.1% as25.0% increase inConsolidated Container Revenue offset 5.2% decrease inConsolidated Non-container Revenue
ontheback ofceased coal handling atVSC.
12. Like-for-like Total Operating Cash Costs increased by16.4% toUSD131.8million due toinflationary pressures, volumes growth andalso
thefact that operating inahigh demand environment andhigh capacity utilisation rates atVSC required controlled cost increases todrive
Adjusted EBITDA growth.
13. Adjusted EBITDA increased by17.4% toUSD246.2million asaresult ofvolume growth andRevenue per TEU increase (like-for-like Revenue
per TEU increased by21.6% toUSD188.7asaresult ofpositive cargo, customer andbasin mix changes, aswellascustomers’ appreciation
ofour quality services inhigh demand environment intheFar Eastern basin). Profitability improved withalike-for-like Adjusted EBITDA Margin
to65.4% posting anincrease of15basis points.
14. TheGroup achieved significant Free Cash Flow growth of46.9% generating USD129.1million overtheyear.
15. TheGroup reduced Net Debt byUSD120.7million in2021allowing Net Debt toAdjusted EBITDA todecrease from2.9x asof31December
2020to2.0x asattheend ofthereporting period, achieving theGroup’s long-term deleveraging target.
Theterms used above aredefined asfollows:
Adjusted EBITDA (anon-IFRS financial measure) forGlobal Ports Group isdefined asprofit fortheperiod before income tax expense, finance
income/(costs)—net, depreciation, write-off andimpairment ofproperty plant andequipment, depreciation andimpairment ofright-of-use assets,
amortisation, write-off andimpairment ofintangible assets, share ofprofit/(loss) ofjoint ventures accounted forusing theequity method, other
gains/(losses)—net.
Net Debt (anon-IFRS financial measure) isdefined asthesum ofcurrent borrowings, non-current borrowings, current andnon-current lease
liabilities (following adoption ofIFRS 16) andswap derivatives less cash andcash equivalents andbank deposits withmaturity over90days.
Revenue per TEU isdefined astheGlobal Ports Group’s Consolidated Container Revenue divided bytotal Consolidated Container Marine
Throughput.
Adjusted EBITDA Margin (anon-IFRS financial measure) iscalculated asAdjusted EBITDA divided byrevenue, expressed asapercentage.
Consolidated Container Revenue isdefined asrevenue generated fromcontainerised cargo services.
Consolidated Non-Container Revenue isdefined asadifference between total revenue andConsolidated Container Revenue.
Consolidated Marine Bulk Throughputisdefined ascombined marine bulk throughput byconsolidated terminals: PLP, VSC, FCT andULCT.
Consolidated Marine Container Throughputisdefined ascombined marine container throughput byconsolidated marine terminals: PLP, VSC, FCT
andULCT.
Free Cash Flow (anon-IFRS financial measure) iscalculated asnet cash fromoperating activities less net cash used ininvesting activities
andinterest paid onborrowings andlease liabilities.
Total Debt (anon-IFRS financial measure) isdefined asthesum ofcurrent borrowings, non-current borrowings, current andnon-current lease
liabilities (following adoption ofIFRS 16) andswap derivatives.
Management report (continued)
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report (continued)
Risk factor Risk management approach
Strategic risks
Market conditions:
Global Ports’ operations aredependent ontheglobal macroeconomic environment
andresulting trade flows, including inparticular container volumes.
Container market throughput isclosely correlated tothevolume ofimported goods,
which isdriven bydomestic consumer demand, andinfluenced byRUBcurrency fluctu-
ations against USD/Euro, andexported goods, which inturn correlate withtheRussian
rouble exchange rate fluctuations andglobal commodity markets` trends.
TheGroup remains exposed totherisk ofcontraction intheRussian andworld economy
which, if it weretooccur, could further dampen consumer demand andlead toadisrup-
tion inthecontainer market which could have anadverse impact ontheGroup.
Atthesame time being part ofRussian andworld logistics chains, theterminals
oftheGroup areexposed andfeel theimpact ofthedisruptions anddisbalances inthese
logistics chains caused byCOVID-19andsuch cases like Ever Given accident.
TheGroup has responded tothroughput volatility inthecontainer market by:
• Focusing onquality andvalue-driven services (getting closer tothecustomer)
• Greater focus onbalancing export andimport container flows aswellasthecar-
go mix
• Offering operational flexibility toall clients viaoperational excellence
• Investments ininfrastructure development andequipment
• Termination ofhandling coal atVSC tooptimise thehandling ofcontainers
• Effective cost containment
• Development ofIT solutions
• Adopting new revenue streams andattracting new cargoes
Competition:
Barriers toentry aretypically high inthecontainer terminal industry due tothecapital-
intensive nature ofthebusiness. However, challenging market trading conditions mean
that competition fromother container terminals continues tobeasignificant factor, which
isalso supported bytheexisting excess capacity inthemarket, i.e., intheNorth-West
ofRussia. Further consolidation between container terminal operators andcontainer
shipping companies, thecreation ofnew strategic alliances, theintroduction ofnew/
upgraded capacity andcarrier consolidation could result ingreater price competition,
lower utilisation, andpotential deterioration inprofitability.
Strategic international investorsmay develop oracquire stakes inexisting competitor
Russian container terminals, which could bring new expertise intothemarket anddivert
clients andcargoes away from theGroup.
Also, Beneficial Cargo Ownersmay optimise their logistics chains anddecide tocontrol
them, whichmay lead tochanges inthecompetitive environment.
TheGroup actively monitors thecompetitive landscape andadjusts its strategy accordingly,
i.e., theGroup prioritises building close long-term strategic relationships withits leading
customers (locally, regionally andwithheadquarters).
TheGroup’s focus onservice quality isakey differentiator fromits competition
andtheGroup believes this isone ofits key competitive advantages.
TheGroup continues toinvest inits terminals andinfrastructure toensure competitive
levels ofservice. It takesalong-term approach tomanaging its network ofterminals
that represent core infrastructure assets inRussia withanexpected operating lifespan
of10to20years andbeyond. TheGroup ownsasignificant land bank giving it flexi-
bility should market conditions require it. TheGroup maintains level ofcapital expendi-
ture inline withtherequirements needed tomaintain effective development ofits existing
capacity. TheGroup has developed long-term operating master plans foreach ofits
terminals that enable it toreact quickly inthecase ofadditional market demands be-
ing placed onits facilities’ infrastructure andequipment. TheGroup’s healthy cash flow
generation anddecreasing leverage allow financial flexibility interms oftiming andsize
oftherequired capital expenditure program.
Future Developments oftheGroup
16. TheBoard ofDirectors does not expect anysignificant changes intheactivities oftheGroup intheforeseeable future.
Risk Management Process, Principal Risks andUncertainties
17. Global Ports isexposed toavariety ofrisks andopportunities that can have commercial, financial, operational andcompliance impacts onits
business performance, reputation andlicence tooperate. TheBoard recognises that creating shareholder value involves theacceptance ofrisk.
Effective management ofrisk istherefore critical toachieving thecorporate objective ofdelivering long-term growth andadded value toour
shareholders.
18. Global Ports bases its risk management activities onaseries ofwell-defined risk management principles, derived fromexperience, best
practice, andcorporate governance regimes. TheGroup’s enterprise risk management processes (ERM) aredesigned toidentify, assess,
respond, monitor and, where possible, mitigate oreliminate threats tothebusiness caused bychanges inthebusiness, financial, regulatory
andoperating environment.
19. TheBoard has overall oversight responsibility forGPI’s risk management andfortheestablishment oftheframework ofprudent andeffective
controls. Assuch, it systematically monitors andassesses therisks attributable totheGroup’s performance anddelivery oftheGPI strategy.
Wherearisk has been identified andassessed, theGroup selects themost appropriate risk measure available inorder toreduce thelikelihood
ofits occurrence andmitigate anypotential adverse impact.
20. TheBoard delegates totheChief Executive Officer ofLLC Global Ports Management theresponsibility fortheeffective implementation
andmaintenance oftherisk management system. Day-to-day responsibility forrisk management lies withthemanagement team. TheAudit
andRisk Committee isauthorized bytheBoard tomonitor, review andreport ontheorganization, functionality andeffectiveness oftheGroup’s
Enterprise Risk Management (ERM) system.
21. Global Ports isexposed toavariety ofrisks which arelisted below. Theorder inwhich these risks arepresented isnot intended
tobeanindication oftheprobability oftheir occurrence orthemagnitude oftheir potential effects.
22. Not all ofthese risks arewithin theGroup’s control, andthelist cannot beconsidered tobeexhaustive, asother risks anduncertaintiesmay
emerge inachanging external andinternal environment that could haveamaterial adverse effect ontheGroup’s ability toachieve its business
objectives anddeliver its overall strategy.
23. Further information onour risk management system, includingadetailed description ofidentified risk factors, isinthenotes totheConsolidated
Financial Statements attached tothis report.
24. TheGroup’s financial risk management andcritical accounting estimates andjudgments aredisclosed inNotes 3and4totheconsolidated
financial statements.
25. TheGroup’s contingencies aredisclosed inNote 28totheconsolidated financial statements.
Management report (continued)
6 7
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Risk factor Risk management approach
Coronavirus (COVID-19):
Theglobal coronavirus (COVID-19) pandemic that emerged during 2020impacted
thecontainer ports industry andGlobal Ports own operations, resulting insignificant in-
terruption toglobal trade, disruption tosupply chains, reshuffling ofvessel calls, andhigh
FX volatility.
Despite theintroduction ofvaccination programs, visibility remains low, new strains ofvi-
rus areemerging, andtherisk offuture outbreaks anddisruption tobusiness operations
remains. Risks include:
• personnel shortages due toCOVID-19related illness
• inability todeliver contracted services due toregulatory orsafety requirements
• loss ofrevenue due tobusiness interruption, loss ofcustomer volumes orcustomer
withdrawals
• additional process steps orsafety measures
• liquidity issues associated withdelays incustomer payments, potential customer
failures oravailability offinancing.
Theauthorities inRussia demanded that thetransport industry enterprises ensure that
atleast 80% ofemployees arevaccinated, which theGroup’s terminals completed within
therequired time frame.
Group measures tomitigate risk aregrouped under/focused onfour main priorities:
• Protecting all employees (operations andadmin) andcommunities: including on-
site vaccination attheterminals, medical examinations, restrictions ontravelling
andexternal/internal meetings, social distancing, additional disinfection according
totheschedule, personal protective equipment provided forpersonnel, improved
cleaning, purchasing protective masks, gloves andCOVID-19tests forthelocal
hospital inNakhodka, Far East. Administrative staff had been either recommend-
ed ormoved towork fromhome. TheGroup tried toestablish themaximum com-
fort forits employees during remote work. TheIT infrastructure wasadapted tonew
challenges andwasworking without major failures. Asofthedate ofsigning thefi-
nancial statements, theemployees werenot fully returned fromworking fromhome.
TheGroup has not takenafinal decision, onwhether someoftheemployees shall
continue working fromhome going forward. Anyreturn totheoffice isandwill
beaccompanied byfollowing thestrict safety protocols including social distancing,
disinfection, use ofmasks, limitation ofexternal contacts.
• Supporting customers: uninterrupted 24/7operations (quay, yard andgates),
tosupport andprotect customers’ supply chains inRussia, improved commercial
andoperational flexibility;
• Strengthening online channels, including maximum digitalisation ofdocumentation
andcustomer integration, further development ofonline solutions todecrease thene-
cessity ofclient’s presence attheterminal, improvement ofresilience ofIT systems
toexternal shocks andcyber attacks;
• Ensuring financial stability andcash preservation, including proactive management
ofcosts, receivables andcapacity foreffective adaptation tocrisis andits conse-
quences, Stress testing offinancial performance andliquidity position, revisiting fi-
nancial plans.
All these measures implemented ensured that theterminals oftheGroup (quay, yard
andgates) remained 100% operational toservice vessels/handle cargoes throughout
thepandemic aswellasthecall andservice centres oftheGroup wereworking without
interruption.
Management report (continued)
Risk factor Risk management approach
Given thehistorically high margins intheRussian container handling industry, this
trendmay continue, which isdemonstrated bygrowing competition intheRussian Far-
East whereanumber ofnew projects wereannounced attheFar-Eastern Economic
Forum inSeptember 2021. Though we do not expect new major capacity tocome
tothemarket inthenext 3–4years, theconversion ofsomeoftheexisting terminals
intothehandling ofcontainers already started.
Political, Geopolitical, military conflicts andeconomic andsocial instability:
Russian foreign affairs andgeopolitics could lead toinstability intheRussian economy.
Therefore, uncertain operating environment anddecreasing, asaresult ofsocial
andpolitical instability, could affect theGroup’s profitability andability tosell its services
due tosignificant economic andpolitical risks.
Certain government policies ortheselective andarbitrary enforcement ofsuch policies
could make it more difficult fortheGroup tocompete effectively and/or impact its
profitability.
Thecurrent geopolitical situation andconflict surrounding Russia andUkraine will ad-
versely affect operations oftheGroup, i.e. themanagement oftheGroup isaware
ofthefact that someshipping lines have announced that they temporarily suspend ship-
ments toandfromRussian Federation. It ispossible that other shipping lines will follow
withsimilar restrictions. TheGroupmay also beadversely indirectly affected byUS, EU,
UK andother jurisdictions sanctions against Russian business/companies– measures
that have had andmay continue tohave anadverse effect ontheRussian economy
anddemand forgoods, commodities andservices aswellassupply ofequipment
andspare parts, interest rates andRUB/USDexchange rate. Ongoing sanctions could
also slow down ormake it very challenging toprocess thesettlements withclients
andsuppliers andtodeal withcertain persons andentities inRussia orinother countries.
Following already imposed sanctions onRussian Central Bank, its restrictions forcapi-
tal movements outside Russian Federation andother developments oftheconfrontation,
there isanuncertainty about theavailability oftheoptions forrefinancing in2023when
principal payments ofEurobonds 2023fall due. Thesituation islargely dependent
onactions ofRussian Government andCentral Bank that aredifficult toforesee.
Inlight ofthegeopolitical andmacroeconomic challenges faced bytheports industry
inrecent years, theGroup has focused onimproving its resilience, inparticular its abili-
ty towithstand short-term economic fluctuations inRussia, aswellasthewider regional
andglobal environment. This has includedastrong focus oncost containment measures,
andonstrengthening its financial position byrefinancing its debt, switching tolonger ma-
turities atfixed rates, execute theinvestment programs ahead oftime andincrease there-
silience ofits treasury operations. Inaddition, theGroup has developed its growth strat-
egy toembrace exports andnew revenue streams tocounteract theimpact ofanyfall
inconsumer sentiment oranymacro-economic downturn.
TheGroup has strengthened its system tomonitor compliance withrestrictions posed
byinternational sanctions andfend off therisk ofsecondary sanctions.
TheGroup continues tomaintain aninternational base ofshareholders, bondholders
andbusiness partners.
TheGroup’s management isclosely monitoring events inRussia andUkraine,
aswellasthepossibility oftheimposition offurther sanctions inconnection withtheesca-
lating confrontation andanyresulting increase oftensions between Russia, andtheUS,
UK and/or theEU. Themanagement understands what needs tobedone under cur-
rent circumstances andbelieves that it has required resources tolead theGroup through
these difficult times.
TheGroup hasastrong track record inpromptly meeting all its debt obligations, success-
ful refinancing anddeleveraging andenjoys high credibility inlocal andinternational
banking andcapital markets that we expect should support theGroup inits efforts torefi-
nance inSeptember 2023orearlier.
TheGroup isnot aware ofanyspecific sanctions related toits ownership oroperations.
Management report (continued)
8 9
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report (continued)
Risk factor Risk management approach
Human resources management:
TheGroup’s competitive position andprospects depend ontheexpertise andexperi-
ence ofits key management team andits ability tocontinue toattract, retain andmoti-
vate qualified personnel.
Lack ofqualified workers inthemarket andactive competitions can lead toade-
ficiency ofhuman resources.
Industrial action oradverse labour relations could disrupt theGroup’s operating activi-
ties andhave anadverse effect onperformance results.
Changes inwork conditions aswellasgrowing competition onthelabour marketmay
lead tohigher staff turnover.
TheGroup annually reviews labour market trends andaligns employee salaries andbene-
fits atall levels tofoster andretain skilled labour.
TheGroup invests intheprofessional development ofits staff atall levels, including interna-
tional best practices implementation andinternal development/ training programmes.
TheGroup engages insocially responsible business practices andthesupport oflocal
communities.
TheGroup isregularly exploring employee’s satisfaction andloyalty andprovide measures
tokeepasufficient level ofthese metrics.
TheGroup strives tomaintainapositive working relationship withlabour unions atits facili-
ties. Moreover, it pursues overall labour policies designed toprovideasalary andCOVID
support benefit package inline withtheexpectations ofour employees.
Health, safety, security:
Accidents involving thehandling ofhazardous materials attheGroup’s terminals
could disrupt its business andoperations and/or subject theGroup toenvironmental
andother liabilities.
Therisk ofsafety incidents isinherent intheGroup’s businesses.
TheGroup’s operations could beadversely affected byterrorist attacks, natural disas-
ters orother catastrophic events beyond its control.
TheGroup has implemented clear safety policies designed around international best prac-
tices andbenchmarks using such measures asGPI Global Minimum Requirements.
Safety isone oftheGroup’s top priorities. Asafety strategy andannual action plans have
been developed andarebeing implemented, tobuildasustainable safety culture across
thewhole Group. Thedetailed roadmap isdesigned toensure sustainable implementation
ofsafety culture overthemedium term.
GPI isconstantly improving its safety practices byinvolving theemployees inidentifying
andmitigating potential safety risks.
Similarly, GPI works withall its stakeholders tomaintain high level ofphysical security
around port facilities andvessel operations tominimise therisk ofterrorist attacks.
Environment:
Degradation oftheenvironment andtheconsequences fromstringent environmen-
tal regulations andinvestor sustainability expectationsmay influence theprofitability
ofthebusiness.
TheGroup constantly monitors theenvironmental, legislation changes andexpectations
andinresponse isdeveloping its ESG targets which will bealigned withits business stra-
tegy, governance andrisk management processes.
In2021thecoal handling operations wereceased inone oftheCompany’s subsidiaries.
Management report (continued)
Risk factor Risk management approach
Operational risks
Leases ofterminal land:
TheGroup leasesasignificant amount oftheland andquays required tooperate
its terminals fromgovernment agencies andtoalesser extent fromprivate entities.
Anyrevision oralteration totheterms ofthese leases orthetermination ofthese leases,
orchanges totheunderlying property rights under these leases, could adversely affect
theGroup’s business.
TheGroup believes it hasastable situation atpresent regarding its land leases andits ter-
minals have been inoperation foranumber ofyears. TheGroup owns thefreehold on66%
ofthetotal land ofits terminals and70% oftheland ofits container andinland terminals
inRussia. Theremainder isheld under short andlong-term leases routinely renewable atim-
material costs.
Customer Profile andConcentration:
TheGroup isdependent onarelatively limited number ofmajor customers (shipping
lines, freight forwarders etc.) forasignificant portion ofits business.
These customers areaffected byconditions intheir market sector which can result
incontract changes andrenegotiations aswellasspending constraints, andthis isfur-
ther exacerbated bycarrier consolidation.
TheGroup conducts extensive andregular dialogue withkey customers andactively moni-
tors changes that might affect our customers’ demand forour services.
TheGroup hasaclear strategy toreduce its dependence onits major customers, bytarget-
ing new customers, increasing theshare ofbusiness fromother existing global customers,
andnew cargo segments.
TheGroup isalso relying onthecontribution fromnon-container revenues through building
its presence inmarine bulk cargoes like coal andscrap metal (share ofnon-container reve-
nue was22% and17% in2020and2021respectively).
Reliance onthird parties:
TheGroup isdependent ontheperformance ofservices bythird parties outside its
control, including all those other participants inthelogistics chain, such ascustoms
inspectors, supervisory authorities, Russian Railways, rolling stock operators
andothers, andtheperformance ofsecurity procedures carried out atother port
facilities andbyits shipping line customers.
TheGroup strives tomaintainacontinuous dialogue andcooperation withthird parties
across thesupply chain. Inaddition, its geographic diversification provides it withsomefle-
xibility inits logistics, should bottlenecks develop inone area.
Tariff regulation:
Tariffs forcertain services atcertain oftheGroup’s terminals have inthepast, been
regulated bytheRussian Federal Antimonopoly Service (FAS). Asaresult, thetariffs
charged forsuch services were, andmay potentially inthefuture be, subject
toamaxi mum tariff rate and/or fixed inRussian roubles asPLP, VSC, andFCT, like
many other Russian seaport operators, areclassified asnatural monopolies under
Russian law.
All tariffs areset inRussian roubles. Tothebest oftheknowledge oftheGroup’s manage-
ment, theGroup isinfull compliance withthetariff legislation.
TheGroup continues tomonitor foranylegislative proposals andregulatory actions
that could lead tochanges totheexisting tariff regulations andits natural monopoly sta-
tus. It seeksaproactive dialogue withtherelevant Russian federal authorities. It believes
it isaswell placed asanymarket participant toadapt toanyfuture changes intariff
regulation.
10 11
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report (continued)
Risk factor Risk management approach
Changes inregulations:
Changes toexisting regulations ortheintroduction ofnew regulations, procedures orli-
censing requirements arebeyond theGroup’s control andmay beinfluenced bypoliti-
cal orcommercial considerations not aligned withtheGroup’s interests. Anyexpansion
ofthescope oftheregulations governing theGroup’s environmental obligations, inpar-
ticular, would likely involve substantial additional costs, including costs relating tomain-
tenance andinspection, development andimplementation ofemergency procedures
andinsurance coverage orother financial assurance ofits ability toaddress environmen-
tal incidents orexternal threats.
TheGroup maintainsaconstructive dialogue withrelevant federal, regional andlo-
cal authorities regarding existing andplanned regulations. TheGroup does not have
thepower toblock anyorall regulations itmay judge tobeharmful, but this dialogue
should ensure it has time toreact tochanges intheregulatory environment.
Conflict ofinterests:
TheGroup’s controlling beneficial shareholdersmay have interests that conflict withthose
oftheholders oftheGDRs ornotes.
Themajor implications ofthis risk arethat (i) co-controlling shareholders pursue other
businesses not related toGPI andhencemay not bedeeply involved withdeveloping
GPI and(ii) one ofthemajor shareholders isalsoamajor customer oftheGroup.
Theemployees oftheGroupmay have interests inthecompanies, thatmay orpotential-
lymay have thebusiness withtheGroup.
TheGroup’s corporate governance system isdesigned tomaximise thecompany’s value
forall shareholders andensure theinterests ofall stakeholders aretaken intoaccount.
TheGroup’s LSE listing ensures our compliance withthehighest international standards.
Inaddition, theBoard consists ofhighly experienced individuals including strong inde-
pendent directors.
In2020theGroup adopted thePolicy onConflicts ofInterest regulating thepotential
conflicts ofinterest bytheemployees oftheGroup andupdated it in2021.
Legal andtax risks:
Anadverse determination ofpending andpotential legal actions involving theGroup’s
subsidiaries could have anadverse effect ontheGroup’s business, revenues andcash
flows andtheprice oftheGDRs. Weaknesses relating totheRussian legal andtax system
andappropriate Russian law create anuncertain environment forinvestment andbusi-
ness activity andlegislationmay not adequately protect against expropriation andna-
tionalisation. Thelack ofindependence ofcertain members ofthejudiciary, thedifficulty
ofenforcing court decisions andgovernmental discretion claims could prevent theGroup
fromobtaining effective redress incourt proceedings.
TheGroup maintainsastrong andprofessional legal function designed tomonitor legal
risks, avoid legal actions where possible andcarefully oversee anychanges inapplica-
ble legislation thatmay occur.
TheGroup performs ongoing monitoring ofchanges inrelevant tax legislation andcourt
practice inthecountries where its companies arelocated anddevelops theGroup’s le-
gal andtax position accordingly.
Management report (continued)
Risk factor Risk management approach
Information technology andsecurity:
TheGroup’s container terminals rely onIT andtechnology systems tokeep their ope-
rations running efficiently, prevent disruptions tologistic supply chains, andmonitor
andcontrol all aspects oftheir operations.
AnyIT glitches orincidents can create major disruptions forcomplex logistic supply
chains.
Anyprolonged failure ordisruption ofthese IT systems, whetheraresult ofahuman er-
ror,adeliberate data breach oranexternal cyber threat could create major disruptions
interminal operations. This could dramatically affect theGroup’s ability torender its ser-
vices tocustomers, leading toreputational damage, disruption tobusiness operations
andaninability tomeet its contractual obligations.
TheGroup has centralised its IT function inrecent years which isanimportant step inen-
suring both theefficiency andconsistency oftheGroup’s security protocols implementa-
tion. We arecontinuing toalign our IT strategy withthebusiness objectives.
We regularly review, update andevaluate all software, applications, systems, infrastruc-
ture andsecurity, i.e., inNovember 2021 VSC andSolvo completed testing andcommis-
sioning ofanew terminal operating system (TOS). Thenew TOS enables real-time track-
ing ofall ship andcontainer handling procedures attheterminal andcritical functions like
operational accounting, warehouse management, railhead container handling andplan-
ning, vehicle handling, andoversight ofcontainers during customs clearance.
All software andsystems areupgraded orpatched regularly toensure that we minimise
vulnerabilities.
Each ofour business units has anIT disaster recovery plan.
Our security policies andinfrastructure tools areupdated orreplaced regularly tokeep
pace withchanging andgrowing threats.
Our security infrastructure isupdated regularly andemploys multiple layers ofdefence.
Connectivity toour partners’ systems iscontrolled, monitored andlogged.
Regulatory andcompliance risks
Regulatory compliance:
TheGroup issubject toawide variety ofregulations, standards andrequirements
andmay face substantial liability if it fails tocomply withexisting regulations applicable
toits businesses.
TheGroup’s terminal operations aresubject toextensive laws andregulations govern-
ing, among other things, theloading, unloading andstorage ofhazardous materials, en-
vironmental protection andhealth andsafety.
TheGroup strives tobeincompliance atall times withall regulations governing its
activities anddevotes considerable management andfinancial resources toensure
compliance.
12 13
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report (continued)
Risk factor Risk management approach
Debt, leverage andliquidity:
TheGroup’s indebtedness ortheenforcement ofcertain provisions ofits financing ar-
rangements could affect its business orgrowth prospects.
Failure topromptly monitor andforecast compliance withloan covenants both
attheGroup andindividual terminal levelsmay result incovenant breaches andtechni-
cal defaults.
If theGroup isunable toaccess funds (liquidity) itmay beunable tomeet financial
obligations when they fall due, oronanongoing basis, toborrow funds inthemarket
atanacceptable price tofund its commitments.
TheGroup has been able toreduce its total debt level. FCT Series 2–3 Bonds werere-
paid in2021using their own funds. Debt reduction beyond minimum repayment require-
ments remainsamanagement priority in2022.
Liquidity risk iscarefully monitored, withregular forecasts prepared fortheGroup andits
operating entities.
Asoftheend of2021 Group Net debt/EBITDA ratio reached 2.0x.
TheGroup deleveraging strategy together withthebetter business development outlook
led toMoody’s upgrade rating oftheСompanyand theGroup financial instruments
by1notch toBa1, RA Expert by2notches toruAA, Fitch Ratings affirmation atBB+
in2021.
Therisk ofliquidity has been significantly reduced viaextensions ofdebt maturities
through public debt issuance in2021:
VSС issued Russian rouble bonds intheamount of7.5billion RUB– USDequivalent
ofUSD100.95mln, which isapart oftherouble-denominated Bond Program ofVSC
withMoscow Exchange which provides VSC withthepotential toissue additional bonds
ofRUB17.5billion– USDequivalent ofUSD235.56mln, overanunlimited period oftime
withamaturity ofup to10years. FCT hasasimilar Bond Program forRUB50billion–
USDequivalent ofUSD673.01mln. Inaddition, theGroup has overUS Dollars 300mil-
lion ofopen uncommitted limits forcredit line facilities from thebanks which incombi-
nation withVSC andFCT bonds can facilitate financial flexibility anddiversification
ofthedebt portfolio oftheGroup andtherefinancing oftheexisting debt oftheGroup
andensure all obligations oftheGroup falling due inthenext 12months aremet.
TheGroup regularly stress tests scenarios when different negative trends that could affect
cash flows areidentified. Theliquidity position iscarefully monitored incase offurther de-
terioration offinancial performance.
Management report (continued)
Risk factor Risk management approach
Financial risks
Foreign exchange risks:
TheGroup issubject toforeign-exchange risk arising fromvarious currency exposures,
primarily theRussian rouble andtheUS dollar. Foreign-exchange risk istherisk offluc-
tuations inprofits andcash flows oftheGroup arising from themovement offoreign-
exchange rates. Risk also arises from therevaluation ofassets andliabilities denominated
inforeign currency.
Asof2021, all Group tariffs aredenominated inRussian roubles, andpart oftheGroup’s
debt isdenominated inUS Dollars. Most oftheGroup’s operating expenses, ontheother
hand, areandwill continue tobedenominated andsettled inRussian roubles.
Inorder tomitigate thepossibility offoreign exchange risks arising fromasignificant mis-
match between thecurrency ofrevenue andthecurrency ofdebt (‘open FX position’),
theGroup isconverting part ofits existing USDdebt intoRUB, thecurrency ofrevenue.
During 2018-2022theGroup bought back and/ orredeemed part ofits USDdeno-
minated Eurobonds exposure andcurrently~57% ofthetotal issued Eurobonds have
been bought back and/ orfully redeemed.
New debt in2020-2021wasattracted/raised only inRussian rouble, i.e., VSС bonds
intheamount of12.5billion RUB-USDequivalent ofUSD168.25mln.
Inaddition, theGroup has negotiated withsomeofits customers theright tochange
its Russian rouble tariffs inconjunction withRUB/USDexchange rate fluctuationswith-
inarange of+/-15% each time when theaverage RUB/USDexchange rate foragi-
ven month falls beyond 5% from thebase exchange rate used fortranslating original
USDtariffs toRUB,however, therisk above thelevels ofthese currency moves remains.
Credit risk:
TheGroupmay besubject tocredit risk, arising primarily fromtrade andother receivables,
loans receivable andcash andits equivalents andderivative financial instruments.
TheGroup’s business isalso dependent onseveral large key customers.
TheGroup closely tracks its accounts receivable overall andthecreditworthiness ofkey
customers andsuppliers.
14 15
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Members oftheBoard ofDirectors
34. TheBoard ofDirectors leads theprocess inmaking new Board member appointments andmakes recommendations onappointments
toshareholders. Inaccordance withtheTerms ofReference oftheBoard, all Directors aresubject toelection byshareholders atthefirst Annual
General Meeting after their appointment, andtore-election atintervals ofno more than one year. Anyterm beyond six years foraNon-
Executive Director issubject toparticularly rigorous review, andtakes intoaccount theneed torefresh theBoard onaregular basis.
35. TheBoard currently has 11members andthey wereappointed asshown onpage 2.
36. On27May 2021 Messrs. Demos Katsis, Sergey Shishkarev andAndrey Yashchenko resigned from theBoard andMessrs. Vladimir Bychkov,
Andrey Lenvalskiy andAndriy Pavlyutin replaced them onthesame date. All new Board members werereviewed andrecommended
forappointment bytheNomination andRemuneration Committee.
37. All other Directors weremembers oftheBoard throughout theyear ended 31December 2021, including theindependent directors: Ms. Britta
Dalunde, Ms. Inna Kuznetsova andMr. Lampros Papadopoulos.
38. There wereno significant changes intheresponsibilities oftheDirectors during 2021except formembership inthecommittees asdescribed
below.
39. There isno provision intheCompany’s Articles ofAssociation fortheretirement ofDirectors byrotation. However, inaccordance withtheTerms
ofReference oftheBoard ofDirectors andtheresolutions adopted bytheShareholders attheAnnual General Meeting held on27May
2021all present directors aresubject tore-election atthenext Annual General Meeting oftheShareholders oftheCompany, which will take
place in2022.
Directors’ Interests
40. Theinterests intheshare capital ofGlobal Ports Investments Plc, both direct andindirect, ofpersons discharging managerial responsibilities,
aswellaspersons closely associated withthem asof31December 2021and31December 2020areshown below. Mr. Sergey Shishkarev
resigned from theposition ofDirector on27May 2021. Mr. Vladimir Bychkov wasappointed totheposition ofDirector onthesame date.
Name Type ofholding Shares held at
31December 2021
Shares held at
31December 2020
Britta Dalunde Through holding oftheGDRs 7,000 GDRs representing
21,000ordinary shares
7,000 GDRs representing
21,000ordinary shares
Sergey Shishkarev Through shareholding inLLC Management Company “Delo”
andother related entities
NA 88,769,817ordinary shares
NA 34,605,183ordinary
non-voting shares
Vladimir Bychkov Through holding oftheGDRs 235,301 GDRs representing
705,903ordinary shares
NA
Management report (continued)Management report (continued)
Internal control andrisk management systems inrelation tothefinancial reporting process
26. 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. Thedescription below applies toall
companies oftheGroup andtheGroup asawhole.
2 7. Financial reporting andsupervision arebased onapproved budgets andonmonthly performance reporting.
28. TheAudit andRisk Committee oftheBoard ofdirectors oftheCompany reviews certain high-risk areas atleast onceayear, including
thefollowing:
– Significant accounting estimates;
– Material changes totheaccounting policies.
29. 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theBoard ofDirectors. Theinternal financial reporting ensures aneffective process tomonitor theGroup’s financial results,
making it possible toidentify andcorrect anyerrors oromissions. Themonthly financial reporting from therespective entities isanalysed
andmonitored bythecentralised department inorder toassess thefinancial andoperating performance aswellastoidentify anyweaknesses
intheinternal reporting, failures tocomply withprocedures andtheGroup accounting policies.TheAudit andRisk Committee follows up
toensure that anyinternal control weaknesses aremitigated andthat anyerrors oromissions inthefinancial statements identified andreported
bytheauditors arecorrected, including controls orprocedures implemented toprevent such errors oromissions.
Use offinancial instruments bytheGroup
30. TheGroup’s activities expose it toavariety offinancial risks: market risk (including foreign exchange risk, cash flow andfair value interest
rate risk), credit risk andliquidity risk. Foradescription oftheGroup’s financial risk management objectives andpolicies andasummary
oftheGroup’s exposure tofinancial risks please refer toNote 3oftheconsolidated financial statements.
TheRole oftheBoard ofDirectors
31. TheCompany isgoverned byits Board ofDirectors (also referred as“theBoard”) which iscollectively responsible totheshareholders
fortheshort- andlong-term sustainable success oftheGroup, generating value toshareholders andcontributing tothewider society
asawhole. Its responsibility istopromote adherence tobest-in-class corporate governance.
32. TheBoard ofDirectors’ role istoprovide entrepreneurial leadership totheGroup through establishing theGroup’s purpose, values andstrategy,
setting out thecorporate governance standards, satisfying itself that these andits culture arealigned, ensuring that thenecessary financial
andhuman resources areinplace fortheGroup tomeet its objectives andreviewing management performance. TheGroup seeks directors
who bring strong track records andadeep understanding oftheindustry. TheBoard sets theGroup’s values andstandards andensures all
obligations toshareholders areunderstood andmet. TheBoard ensures theGroup establishesaframework ofprudent andeffective controls,
which enables risk tobeassessed andmanaged andmaintainsasound system ofinternal control, corporate compliance andenterprise risk
management tosafeguard theGroup’s assets andshareholders’ investments intheGroup.
33. Theroles andresponsibilities oftheChairman, Senior Independent Director, Board andcommittees’ members areset out inwriting
intheTerms ofReference oftheBoard andcommittees. Thelatest version oftheTerms ofReference oftheBoard ofDirectors wasapproved
bytheshareholders on18June 2019. It isavailable ontheCompany`s website.
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Global Ports Investments PLC Annual Report 2021
51. TheCommittee isresponsible for:
– monitoring theintegrity ofthefinancial statements ofthecompany andanyformal announcements relating tothecompany’s financial
performance, andreviewing significant financial reporting judgments contained inthem;
– providing advice (where requested bytheboard) onwhether theannual report andaccounts, taken asawhole, isfair, balanced
andunderstandable, andprovides theinformation necessary forshareholders toassess thecompany’s position andperformance, business
model andstrategy;
– reviewing thecompany’s internal financial controls andinternal control andrisk management systems;
– monitoring andreviewing theeffectiveness ofthecompany’s internal audit function;
– making recommendations totheboard, about theappointment, reappointment andremoval oftheexternal auditor, andgiving
therecommendations inrelation toremuneration andterms ofengagement oftheexternal auditor foraudit andnon-audit services;
– reviewing andmonitoring theexternal auditor’s independence andobjectivity;
– reviewing theeffectiveness oftheexternal audit process;
– developing andimplementing policy ontheengagement oftheexternal auditor tosupply non-audit services; and
– reporting totheBoard onhow it has discharged its responsibilities.
52. In2021theAudit andRisk Committee met 12times (2020: 10times) toreview anddiscuss inter alia thefollowing significant issues andmatters
inaddition andontop ofthose listed above, among others:
– Meetings withinternal auditors todiscuss theresults oftheir audits andad-hoc reviews, working plans andprogress inmonitoring theexecution
ofinternal audit recommendations;
– Meetings withexternal auditors todiscuss thematters related totheaudit work done bythem andanyissues arising fromtheir audits’ reviews;
– Discussion ofthelevel ofclarity andcompleteness ofdisclosures infinancial statements withthemanagement andexternal auditors andmaking
therecommendations totheBoard;
– Assessment ofefficiency ofexternal auditor bydiscussing theaudit approach andaudit plan, monitoring ofcompliance withtheplan,
receiving thefeedback from themembers ofthemanagement team, involved intheaudit process, assessing theinternal resources allocated
bytheexternal auditor, thekey risks totheaudit process andtheir mitigation measures, review oftheauditor`s management letter, consideration
ofthelevel andquality ofcommunication between theexternal auditor andCommittee during theaudit process.
– Consideration andapproval ofaudit schedules andreview oftheimpairment models andtheimpact ofthenew IFRS standards
ontheCompany`s financial statements. TheCommittee`s task istoalign theimpairment models withtheshort-, mid- andlong-term forecasts
andtounderstand what impact thenew standards would have onthefinancial statements andGroup`s compliance withthecovenants;
– Consideration andapproval oftheengagement ofexternal auditors forrendering ofnon-audit services. Ineach particular case theCommittee
wasassessing theimpact ofnon-audit services ontheindependence andobjectivity oftheexternal auditor. TheCommittee reviewed thescope
ofservices oncompliance withthelist ofpermitted non-audit services, thepotential impact oftheservices ontheaudit work andfinancial
statements anddiscussed withtheexternal auditor how their internal compliance procedures wereperformed andwhether all internal
compliance requirements weremet. TheCommittee monitors theshare ofnon-audit service inrelation toits compliance withthestandards;
– Review ofthepublic materials containing financial information inrelation tocompliance withthefinancial statements, thedisclosure
andtransparency requirements andBoard`s view onthemid andlong-term development oftheGroup;
– Consideration ofvarious reports from themanagement;
– Review ofthemajor risks. TheCommittee had meetings withRisk Management ofGPM todiscuss theКеу Risks andRisk andInternal Controls
Matrices’ development status;
Management report (continued)
Chairman oftheBoard ofDirectors
41. Mr. Soren Jakobsen istheChairman oftheBoard since24April 2020, when he replaced Mr. Morten Engelstoft.
42. Therole oftheChairman oftheBoard ofDirectors istoensure that Board meetings areheld asandwhen necessary, lead thedirectors, ensure
their effectiveness andreview theagenda ofBoard meetings. TheChairman together withtheSecretary oftheBoard review Board materials
before they arepresented totheBoard andensure that Board members areprovided withaccurate, timely andclear information. Themembers
ofthemanagement team who have prepared thepapers, orwho can provide additional insights intotheissues being discussed, areinvited
topresent papers orattend theBoard meeting attherelevant time. Board members regularly hold meetings withtheGroup’s management
todiscuss their work andevaluate their performance.
43. TheChairman monitors communications andrelations between theGroup andits shareholders, theBoard andmanagement, andindependent
andnon-independent directors, withaview toencouraging dialogue andconstructive relations. TheChairman should demonstrate objective
judgement andpromoteaculture ofopenness anddebate. Inaddition, theChairman facilitates constructive board relations andtheeffective
contribution ofall non-executive directors.
44. TheGroup separates thepositions oftheChairman andCEO toensure anappropriate segregation ofroles andduties.
Non-executive andIndependent Directors
45. All oftheBoard members arenon-executive directors.
46. Mrs. Britta Dalunde, Mrs. Inna Kuznetsova andMr. Lampros Papadopoulos areindependent directors, andhave no relationship
withtheGroup, its related companies ortheir officers. This means they can exercise objective judgment oncorporate affairs independently
frommanagement.
47. Although all directors have equal responsibility fortheGroup’s operations, therole oftheindependent non-executive directors isparticularly
important inensuring that themanagement’s strategies areconstructively challenged. Aswellasensuring theGroup’s strategies arefully
discussed andexamined, they must take intoaccount thelong-term interests, not only ofthemajor shareholders, but also oftheGDR holders,
bondholders, other lenders, employees, customers, suppliers andthecommunities inwhich theGroup conducts its business.
48. Mrs. Britta Dalunde wasappointed astheSenior Independent Director on31May 2018. Therole oftheSenior Independent Director
istoprovideasounding board fortheChairman andserve asanintermediary fortheother directors andshareholders. Led bythesenior
independent director, thenon-executive directors should meet without theChairman present atleast annually toappraise theChairman’s
performance, andonother occasions asnecessary.
TheBoard Committees
49. SinceDecember 2008theBoard ofDirectors established theoperation ofthree committees: anAudit andRisk Committee,aNomination
Committee andaRemuneration Committee. Thecomposition ofthecommittees waschanged bytheBoard ofDirectors inJune 2019:
Nomination Committee andRemuneration Committee weremerged intoone andanew Strategy Committee wasestablished.
TheAudit andRisk Committee
50. TheAudit andRisk Committee comprises offive Non-Executive Directors, three ofwhom areindependent, andmeets atleast four timesayear.
TheAudit andRisk Committee ischaired byMrs. Britta Dalunde (anIndependent Non-Executive Director appointed asof12May 2017),
andits other members areMrs. Inna Kuznetsova (anIndependent Non-Executive Director appointed asof01January 2018), Mr. Lampros
Papadopoulos (anIndependent Non-Executive Director appointed asof01January 2018), Mr. Mogens Petersen (appointed asof18June
2019) andMr. Andrey Lenvalskiy (appointed asof27May 2021). Mr. Andrey Yashchenko resigned from theAudit andRisk Committee
on27May 2021.
Management report (continued)
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
c. new remuneration payable totheGroup Senior Management Team andKey Management team members oftheGroup companies.
Indetermining thelevel ofremuneration ofthekey senior management oftheGroup theCommittee referred tothelevel ofskills andexpertise,
theposition andscope ofwork andresponsibilities aswellastothemarket levels forsimilar positions.
58. Intheyear 2021thekey focus oftheNomination andRemuneration Committee wasontheChief Executive Officer ofGlobal Ports Management
LLC succession planning program, talent management, remuneration ofthemembers oftheBoard ofDirectors andBoard performance
evaluation.
TheStrategy Committee
59. TheStrategy Committee wasestablished inJune 2019. Asper its terms ofreference, theCommittee meets atleast once each year. TheStrategy
Committee asofthedate ofthis report comprises five Directors, one ofwhom isindependent. Currently, theStrategy Committee ischaired
byMr. Vladimir Bychkov (appointed asof27May 2021). Theother members areMr. Mogens Petersen, Mr. Soren Jakobsen andMr.Lampros
Papadopoulos (anIndependent Non-Executive Director), all appointed asof18June 2019, andMr. Andrey Lenvalskiy (appointed
asof27May 2021). Messrs. Sergey Shishkarev andAndrey Yashchenko resigned from theStrategy Committee on27May 2021. TheStrategy
Committee‘ Terms ofreferences wereupdated attheend of2021.
60. TheCommittee isacommittee oftheBoard ofDirectors that assists theBoard ofDirectors indischarging its corporate governance responsibilities
inrelation tothesetting andoversight ofthestrategy andstrategic initiatives oftheCompany andits subsidiaries andjoint venture companies
(theGroup) tobeapproved bytheBoard ofDirectors fromtime totime, andproviding oversight overtheimplementation anddevelopment
ofthose byexecutive management. TheCommittee has been formed tofosteracooperative, interactive strategic planning process between
theBoard andexecutive management.
61. In2021theStrategy Committee met 13times (8times in2020) toconsider andgive recommendations totheBoard forapproval of:
– various investment proposals, including Vostochnaya Stevedoring Company LLC Operating Master Plan;
– merger ofNational Container Holding Company Ltd withGlobal Ports Investments PLC, asapart offurther optimization ofGroup structure;
– theamended andrestated Strategy Committee Terms ofReference; and
– admission totrading oftheGlobal Ports Investments PLC GDRs onMoscow Exchange.
62. Inaddition, theStrategy Committee reviewed anddiscussed thestrategic priorities andstrategic targets, development ofcompetitive environment
andGroup reaction toit, strategic risks andtheir mitigation, functional strategies andaction plans fortheir execution, aswellasvarious strategic
projects inthepipeline.
Board Performance
63. TheBoard meets atleast five timesayear. Fixed meetings arescheduled atthestart ofeach year. Ad hoc meetings arecalled when there
arepressing matters requiring theBoard’s consideration anddecision inbetween thescheduled meetings.
64. In2021theBoard met formally 12times (2020: 13) toreview current performance andtodiscuss andapprove important business decisions.
65. In2021theBoard met todiscuss andapprove important business decisions, which included among others:
– FY2020financial statements, 1H2021interim financial statements andAnnual Report;
– Review ofsegments financial andoperational performance;
– Consideration of2022financial budget, major risks anduncertainties, commercial strategy, corporate social responsibility matters, internal
control framework;
– Changes inGroup management andtheBoard ofDirectors;
Management report (continued)
– Review ofGDPR andsanctions compliance requirements;
– Review ofaccepted IT risks;
– Review theresults ofcentralisation ofthefunctions oftheGroup;
– Review oftax related matters;
– Review ofCharity activity in2021andbudget 2022;
– Review various other compliance related matters;
– Review ofthereport ontheresults ofanexternal assessment ofGlobal Ports Internal Audit Function vs conformance withtheInternational
Standards fortheProfessional Practice ofInternal Auditing;
– Consideration andgiving therecommendations totheBoard tooffer KPMG Limited forelection astheCompany’ s auditor
forFY2021andmonitoring oftheaudit hand overfromPwC toKPMG;
– Consideration andgiving therecommendations totheBoard ofDirectors fortheapproval oftheRelated Parties Transactions Policy
andtheupdated andrestated Accounting Policy.
TheNomination andRemuneration Committee
53. TheNomination andRemuneration Committee wasestablished inJune 2019following themerger oftheNomination Committee
andRemuneration Committee inorder tosimplify thework ofthecommittees andBoard members.
54. TheCommittee isacommittee oftheBoard ofDirectors which assists theBoard indischarging its corporate governance responsibilities
inrelation tonomination, appointment andremuneration ofall Directors andtheChairman/ Chairwoman oftheBoard ofDirectors
andofthesenior executive management oftheCompany andits subsidiaries andjoint venture companies, andoversee thedevelopment
ofadiverse pipeline forsuccession aswellastoevaluate theperformance oftheBoard ofDirectors, its committees, theChairman/
Chairwoman oftheBoard ofDirectors andindividual directors. Themain objective oftheCommittee istodetermine theframework andpolicy
forthenomination andremuneration ofIndependent Non-Executive Directors, Executive Directors andsenior company executives ensuring
theconsistency withthecompany talent strategy, remuneration policy, market trends andcompany’s commitment forDiversity andInclusion;
ensure onboarding fornew directors; set theframework forsuccession planning andtalent management; run annual Board Performance
evaluation process toensure its growing effectiveness.
55. TheNomination andRemuneration Committee asofthedate ofthis report comprises three Directors, one ofwhom isindependent.
TheCommittee meets atleast once each year. Currently, theNomination andRemuneration Committee ischaired byMrs. Inna Kuznetsova
(anIndependent Non-Executive Director appointed astheChairwoman ofthemerged Nomination andRemuneration Committee asof18June
2019). Theother members areMs. Alexandra Fomenko (appointed asamember ofthecommittee asof11November 2019) andMr. Soren
Jakobsen (appointed asamember ofthecommittee asof24April 2020).
56. TheCommittee meets atleast once each year.
57. In2021theNomination andRemuneration Committee met 13times (16times in2020):
– todiscuss andrecommend thecandidates tobeelected totheBoard andBoard Committees;
– todiscuss themanagement succession andtalent development program, aswellasGlobal Ports Management LLC Chief Executive Officer
Succession Planning directions andnext steps;
– todiscuss andrecommend totheBoard:
a. theappointment ofnew Managing Director ofVostochnaya Stevedoring Company LLC, Chief Operations Officer ofGlobal Ports
Management LLC, new Chief Executive Officer ofMoby Dik LLC andYanino Logistics Park LLC,
b. fees payable tomembers oftheBoard ofDirectors,
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
Board Diversity
69. TheCompany does not haveaformal Board diversity policy withregards tomatters such asage, gender oreducational andprofessional
backgrounds, but theBoard has thefull commitment todiversity within theGroup. Following thebest practice, while making thenew
appointments andconsidering thecurrent composition oftheBoard ofDirectors, these aspects aretaken intoaccount.
70. Asofthedate ofpublication ofthese financial statements theBoard has 3females representing 27% ofthetotal number ofdirectors.
Theaverage age ofdirectors is51years ranging from33to63years. TheBoard hasanecessary balance ofskills andexpertise torun
theCompany andtheGroup. TheBoard members have thefollowing educational backgrounds: port andtransportation industry, accounting
andfinancial, banking sector andlegal. There are5nationalities represented ontheBoard. TheBoard members reside in7countries.
Board andManagement Remuneration
71. Non-Executive Directors serve ontheBoard pursuant totheletters ofappointment. Such letters ofappointment specify theterms ofappointment
andtheremuneration ofNon-Executive Directors. Only Independent Non-Executive Directors receive remuneration.
72. Levels ofremuneration fortheIndependent Non-Executive Directors reflect thetime commitment, responsibilities oftherole andmembership
oftherespective committees oftheBoard. Directors arealso reimbursed forexpenses associated withdischarge oftheir duties. Directors
arenot eligible forbonuses, retirement benefits ortoparticipate inanyincentive plans operated bytheGroup. Additional remuneration ispaid
formembership andchairmanship ofthecommittees bytheIndependent Non-Executive Directors.
73. Theshareholders oftheCompany approved theremuneration ofthemembers oftheBoard on29June 2018, 30December 2019, 16April
2020, 29May 2020and22October 2021.
74. Neither theBoard members, nor themanagement has long-term incentive schemes. However, theperformance-based part oftheremuneration
ofthesenior management isaligned tothestrategic goals andinitiatives approved bytheBoard.
75. Theperformance-based part oftheremuneration oftheKey Management isbased ontheKey Rules ofAwarding andPayment ofPerformance
Based Bonuses ofGPI Group adopted bytheBoard on15June 2016andregularly updated withthelast update on29October 2020.
TheNomination andRemuneration Committee monitors theefficiency oftheRules andmakes recommendations totheBoard ontheir
amendment andrevision.
76. Refer toNote 30(f) totheconsolidated financial statements fordetails oftheremuneration paid tothemembers oftheBoard andkey
management.
General Manager
7 7. Mr. Alexander Iodchin occupies theposition ofGeneral Manager andtheBoard granted him thepowers tocarry out all business related
totheCompany`s operation up toatotal value asestablished bytheAuthority Matrix. It has also granted him powers todischarge other
managerial duties related totheordinary course ofbusiness oftheCompany, including representing theCompany before anygovernment
orgovernment-backed authority.
78. Thedecisions forall other matters arereserved fortheBoard. TheAuthority Matrix contains thelist ofsuch reserved matters.
79. Mr. Iodchin isalso acting astheBoard Secretary sinceDecember 2008andastheChief Strategy andBusiness Development Officer
atGlobal Ports Group pursuant toBoard’s decision on29October 2020.
Company Secretary
80. TheGroup maintainsacompany secretary, who isresponsible forsafeguarding therights andinterests ofshareholders, including
theestablishment ofeffective andtransparent arrangements forsecuring therights ofshareholders.
81. Team Nominees Limited has been acting asthecompany secretary since theGroup’s incorporation inFebruary 2008.
Management report (continued)
• Revision andadoption ofvarious group-wide policies andregulations, namely theRelated Parties Transactions Policy, Internal Audit Service’s Quality
Assurance andImprovement Policy, theamended andrestated Terms ofReference oftheStrategy Committee; amended andrestated Corporate
Accounting Policies Guidelines oftheGroup;
• Consideration ofvarious compliance matters;
• Consideration andapproval oftherevision ofexternal andinternal financing arrangements andorganizational restructurings;
• Consideration andapproval ofnew financing arrangements, e.g., issue ofVSC bonds forrefinancing ofEurobonds 2022; intra-group financing
ofEurobonds 2022redemption.
• Consideration andapproval ofmajor capital expenditures andinvestment projects; and
• Consideration andapproval ofvarious resolutions related totheoperations oftheCompany`s subsidiaries andjoint ventures.
66. Thenumber ofBoard andBoard Committee meetings held intheyear 2021andtheattendance ofdirectors during these meetings
wasasfollows:
Board of
Directors
Nomination andRemuneration
Committee
Strategy Committee Audit andRisk Committee
A B A B A B A B
Vladimir Bychkov 6 7 - - 8 8 - -
Britta Dalunde 12 12 - - - - 12 12
Kristian Bai Hollund 12 12 - - - - - -
Alexandra Fomenko 12 12 13 13 - - - -
Soren Jakobsen 12 12 13 13 12 13 - -
Demos Katsis 5 5 - - - - - -
Inna Kuznetsova 12 12 13 13 - - 12 12
Andrey Lenvalskiy 6 7 - - 8 8 5 5
Shavkat Kary Niyazov 12 12 - - - - - -
Lampros Papadopoulos 12 12 - - 13 13 12 12
Andriy Pavlyutin 6 7 - - - - - -
Mogens Petersen 12 12 - - 13 13 12 12
Sergey Shishkarev 5 5 - - 5 5 - -
Andrey Yashchenko 5 5 - - 5 5 7 7
A= Number ofmeetings attended
B = Number ofmeetings eligible toattend during theyear
6 7. Theoperation oftheBoard, its Committees andindividual Directors issubject toregular evaluation. Theevaluation oftheBoard andindividual
Directors’ performance can beconducted through self-assessment, cross-assessment orbyanexternal third party. TheNon-Executive Directors,
led bytheSenior Independent Director, areresponsible fortheperformance evaluation oftheChairman oftheBoard. TheBoard did not
engage anyexternal advisors forevaluation ofits performance intheyears 2020and2021.
68. In2021theBoard conducted theself-evaluation, which results werediscussed inDecember 2021.
Management report (continued)
22 23
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
– Treasury Policy adopted on23April 2020;
– Procurement Standard oftheCompany adopted on18August 2020;
– Group Code ofcorporate ethics adopted on18August 2020; Related Party Transactions Policy adopted on2February 2021; and
– Internal Audit Service’s Quality Assurance andImprovement Policy adopted on10December 2021.
88. Inorder tofurther strengthen thecorporate governance andclearly set themanagement authority limits within theGroup theBoard ofDirectors
approved theAuthority Matrix framework attheend oftheyear 2016, which wasrevised inJune 2019providing extended authorities
totheGroup management inorder tosimplify thedecision making process. Theimplementation ofthis revised framework intheoperating units
wasfinalised in2020.
89. More information ontheGroup’s Corporate Governance can befound athttps://www.globalports.com/en/company/governance/.
Whistleblowing Hotline ofGlobal Ports
90. Global Ports encourages its employees, clients andother stakeholders toreport cases orraise concerns about potentially unethical, unlawful
orsuspicious conduct orpractices.
TheGroup operatesa24/7confidential whistleblower service that offersavariety ofroutes toreport concerns:
– viaadedicated e-mail address
– Bycalling our free confidential telephone number
– Face-to-face withasenior member ofInternal Audit Department responsible formanaging theservice
Details ofthewhistleblowing service areavailable ontheGroup’s internet site aswellasoninformation boards located throughout theoffices
andprominently displayed attheGroup’s various port terminals.
Theservice isadministered bytheInternal Audit Department which operates independently ofmanagement andreports directly totheAudit & Risk
Committee oftheBoard ofdirectors. TheChairman oftheAudit & Risk Committee isinformed ofall reports received andrecommended follow-up
actions.
All reports areimmediately logged bytheInternal Audit Department which administer theservice. Reports arethen assessed todecide if further
investigation isrequired either bytheInternal Audit Department orbytheappropriate management, inthecase ofoperational issues.
Regardless ofhow concerns areraised, all aretreated inconfidence, andinvestigated thoroughly andwithout bias always ensuring theanonymity
ofthewhistle blower andprotection fromretaliation.
All investigation results andfollow-up actions arepresented totheBoard’s Audit & Risk Committee bytheHead ofInternal Audit Department.
91. In2021we have received 20reports totheCorporate Hotline, 5reports werenot classified asHotline claim asrepresented ordinary customer
requests. Fortheremaining 15reports, necessary investigations wereperformed andresults communicated totheAudit & Risk Committee
aswellastop management andappropriate follow up measures weretaken.
70% ofrepots (14out of20) werereceived bye-mail andtherest 30% (6out of20) byphone.
Key reports topics:
– Poor service– 20% (3out of15)
– Improper behavior byGroup employee– 33% (5out of15)
– Inefficient operations– 20% (3out of15)
– HR, H&S, finance– 27% (4out of15)
One report contained allegations ofmanagement fraud, however, internal investigation did not confirm these allegations.
Management report (continued)
82. Thecompany secretary’s responsibilities include ensuring compliance bytheGroup, its management bodies andofficers withthelaw
andtheGroup’s charter andinternal documents. Thecompany secretary organises thecommunication process between theparties
tocorporate relations, including thepreparation andholding ofgeneral meetings; storage, maintenance anddissemination ofinformation about
theGroup; andreview ofcommunications fromshareholders.
Corporate Governance andCorporate Social Responsibility (CSR)
83. TheGroup hasadiverse set ofstakeholders, frominternational institutions holding our shares andbonds andbank financial institutions
which provided bank borrowings totheGroup, toour customers, employees, regulators andcommunities. Made up ofseasoned industry
professionals, theBoard ofDirectors iscommitted toacting inthebest interest ofall stakeholders. TheCompany isnot subject totheprovisions
oftheUK Corporate Governance Code, but follows internationally recognised best practices customary tothepublic companies having GDRs
withstandard listing andadmitted totrading atLondon Stock Exchange.
Inaddition, theCompany has not yet been subject totheTask Force onClimate-related Financial Disclosures (TCFD) Recommendations
andRecommended Disclosures, however, it monitors applicable legislation updates andstrives tobeincompliance withthem
84. CSR isanintegral part ofrealising core strategic priorities oftheGroup. Theobjectives fortheGroup’s business andCSR strategies
arethesame— togenerate sustainable shareholder value overthelong term. TheGroup prepares annual CSR report, last available
athttps://www.globalports.com/upload/iblock/ffb/GP_AR20_EN_CSR_Report.pdf
.
85. Improving its corporate governance structure inaccordance withtheinternationally recognised best practices theGroup adopted important
policies andprocedures, which it regularly reviews andupdates.
86. On18June 2019anew Terms ofReference oftheBoard ofDirectors wereadopted. Asofthesame date, theBoard merged Nomination
andRemuneration Committees andestablished Strategy Committee. Consequently, theterms ofreference ofthenew committees wereadopted
inJune 2019. Theamended andrestated Terms ofReference oftheStrategy Committee wereadopted on10December 2021.
87. TheCompany’s corporate governance policies andpractices aredesigned toensure that theCompany isfocused onupholding its
responsibilities totheshareholders. They include, inter alia:
– Appointment policy;
– Terms ofreference oftheBoard ofDirectors;
– Terms ofreference oftheAudit andRisk, Nomination andRemuneration andStrategy Committees;
– Antifraud policy;
– Policy onInvestigation ofImproper Activities;
– Investigation policy;
– Anti-Corruption Policy;
– Data protection compliance policy;
– Policy onReporting Allegations ofSuspected Improper Activities;
– Risk management policy;
– Foreign Trade Controls Policy;
– Insurance Standard;
– Charity andSponsorship Policy;
– Group Securities Dealing Code;
– Dividend Policy;
– Conflicts ofInterest Policy adopted on29June 2020;
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
100. During theyears 2020and2021, theCompany did not declare orpay anydividends.
101. TheBoard ofDirectors oftheCompany recommends tothemembers toapprove thereduction oftheshare premium account oftheCompany
bycrediting theamount ofUS$550million totheretained earnings reserve. Anysurplus remaining intheretained earnings reserve shall
beavailable tobeused astheCompany deems appropriate fromtime totime. Theshare premium reduction issubject toratification
bytheCyprus Courts andshall become effective upon registration withtheCyprus registrar ofcompanies.
102. TheBoard ofDirectors oftheCompany does not recommend thepayment ofafinal dividend fortheyear 2021.
Share Capital
Significant direct orindirect holdings (including indirect shareholding through structures orcross shareholdings)
103. Theinformation onsignificant direct andindirect shareholders isavailable
athttp://www.globalports.com/globalports/investors/shareholder-information/major-shareholders
.
104. There areno special titles that provide special control rights toanyoftheshareholders. There arerestrictions inexercising ofvoting rights
ofshares (please refer toparagraph 103below).
Authorised share capital
105. Theauthorised share capital oftheCompany amounts toUS$175,000,000.00divided into750,000,000ordinary shares
and1,000,000,000ordinary non-voting shares withapar value ofUS$0.10each.
Issued share capital
106. Theissued share capital oftheCompany amounts toUS$57,317,073.10divided into422,713,415ordinary shares and150,457,316ordinary
non-voting shares withapar value ofUS$0.10each.
10 7. Theordinary shares andtheordinary non-voting shares rank pari passu inall respects save that, theordinary non-voting shares do not have
theright toreceive notice, attend orvote atanygeneral meeting, nor tobetaken intoaccount forthepurpose ofdetermining thequorum
ofanygeneral meeting.
Rules forAmending Articles
108. TheArticles ofassociation oftheCompanymay beamended fromtime totime bythespecial resolution oftheGeneral Meeting
oftheshareholders.
Corporate Social Responsibility Report
109. TheCorporate Social Responsibility Report isdrawn up asaseparate report andwill bemade public ontheCompany`s website (theaddress
ofwhich, atthedate ofpublication ofthis report, iswww.globalports.com) within six months from thebalance sheet date.
Events after thebalance sheet date
110. Theevents after thebalance sheet date aredisclosed inNote 31totheconsolidated financial statements.
Research anddevelopment activities
111 . TheGroup isnot engaged inresearch anddevelopment activities.
Management report (continued)
Code ofethics andconduct
92. TheCode ofEthics wasapproved bytheBoard ofDirectors on08December 2016andwasintroduced inthecompanies oftheGroup
inthecourse oftheyear 2017. The3rd revision oftheCode ofEthics wasadopted bytheBoard ofDirectors on18August 2020, aimed
atsimplifying andupdating theGroup’ mission, values andstandards ofcorporate engagement.
93. Global Ports’ code ofethics andconduct outlines thegeneral business ethics andacceptable standards ofprofessional behaviour that we
expect ofall our directors, employees andcontractors. This code, given toall new staff aspart oftheir induction, means that everyone atGlobal
Ports isaccountable fortheir own decisions andconduct. Aswellasgeneral standards ofbehaviour, thecode covers fraud andcorruption,
ethics andconflicts ofinterest principles withreference todetailed policies. Employees andexternal parties areencouraged toreport
anysuspected breaches, viavarious channels including thededicated hotline.
94. Thecode isavailable toall staff onGlobal Ports’ website (intheCorporate Governance section) andintheHR department atevery operating
facility. There arealso other more detailed rules concerning our anti-fraud andwhistleblowing policies.
95. TheBoard isupdated onaregular basis onanybreaches ofvarious policies withthespecific focus onthefraud incidents andresulting actions,
although significant breaches have tobereported totheBoard immediately.
Dividends
96. Pursuant totheArticles ofAssociation theCompanymay pay dividends out ofits profits. Totheextent that theCompany declares andpays
dividends, owners ofGlobal Depositary Receipts (hereafter also referred as“GDRs”) ontherelevant record date will beentitled toreceive
dividends payable inrespect ofOrdinary Shares underlying theGDRs, subject totheterms oftheDeposit Agreement. TheCompany expects
topay dividends inUS dollars. If dividends arenot paid inUS dollars, they will beconverted intoUS dollars bytheDepositary andpaid
toholders ofGDRs net ofcurrency conversion expenses.
9 7. TheCompany isaholding company andthus its ability topay dividends depends ontheability ofits subsidiaries andjoint ventures topay
dividends totheCompany inaccordance withtherelevant legislation andcontractual restrictions (shareholder agreements, bank borrowings
covenants, andterms oftheissuance ofthepublic debt instruments). Thepayment ofsuch dividends byits subsidiaries andjoint ventures
iscontingent upon thesufficiency oftheir earnings, cash flows anddistributable reserves. Themaximum dividend payable bytheCompany’s
subsidiaries andjoint ventures isrestricted tothetotal accumulated retained earnings oftherelevant subsidiary orjoint venture, determined
according tothelaw applicable toeach entity.
98. TheCompany hasaDividend Policy inplace which provides forthepayment ofnot less than 30% ofanyimputed consolidated net profit
fortherelevant financial year oftheGroup. Imputed profit iscalculated astheconsolidated net profit fortheperiod oftheGroup attributable
totheowners oftheCompany asshown intheCompany’s consolidated financial statements fortherelevant financial year prepared under EU
IFRS andinaccordance withtherequirements oftheCyprus Companies Law, Cap. 113, less certain non-monetary consolidation adjustments.
TheCompany’s dividend policy issubject tomodification fromtime totime astheBoard ofDirectorsmay deem appropriate.
99. In2015following therevision ofcurrent market situation, market prospects andprioritising thedeleveraging strategy overdividend distribution,
which should ensure thelong-term robustness oftheGroup’s finances, theBoard suspended thepayment ofthedividends inthemid-
term. TheBoard continues tomonitor themarket forrecovery aswellasforlevels ofvolatility inorder toidentify theappropriate timing
foraresumption ofthepayment ofadividend, subject tomaintaining conservative leverage ratios.
Management report (continued)
26 27
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report (continued)
External auditors
118. Anexternal auditor isappointed attheGlobal Ports AGM onanannual basis toreview theGroup’s financial andoperating performance.
119. This follows proposals drafted bytheAudit andRisk Committee fortheBoard ofDirectors regarding thereappointment oftheexternal auditor
oftheGroup.
120. KPMG Limited wereappointed astheauditor oftheCompany attheAnnual General Meeting oftheShareholders held in2021. KPMG Limited
have expressed their willingness tocontinue inoffice andaresolution giving authority totheBoard ofDirectors tofix their remuneration will
beproposed atthenext Annual General Meeting oftheShareholders.
ByOrder oftheBoard
Soren Jakobsen
Chairman oftheBoard
02March 2022
Alexander Iodchin
Secretary oftheBoard
Branches
112. TheGroup did not have oroperate through anybranches during theyear.
Treasury shares
113. TheCompany did not acquire either directly orthroughaperson inhis own name but onbehalf oftheCompany anyofits own shares.
Going Concern
114. Directors have access toall information necessary toexercise their duties. TheDirectors continue toadopt thegoing concern basis inpreparing
theconsolidated financial statements. We base our statement onthefollowing facts:
– inquiries andfollowingareview oftheGroup’s principal risks anduncertainties,
– budget for2022financial perspectives inthemid-term,
– thelatest forecasts overaperiod of5–10years reflecting its business andinvestment cycles, including cash flows andborrowing facilities.
TheDirectors also considered
– thepotential implications oftheRussian-Ukrainian crisis,
– impact ofthesanctions introduced against Russia,
– aswellastheban ondelivery/dispatch ofvarious containerised cargoes to/from Russia
ontheoperational andfinancial performance oftheGroup, forecasts andgoing concern.
TheDirectors consider that theGroup has adequate resources tomeet its liabilities asthey fall due andtocontinue inoperation fortheforeseeable
future.
Internal audit
115. Theinternal audit function iscarried out byGroup’s Internal Audit Service (IAS). It isresponsible foranalysing thesystems ofrisk management,
internal control procedures andthecorporate governance process fortheGroup withaview toobtainingareasonable assurance that:
– risks areappropriately identified, assessed, responded toandmanaged;
– there isinteraction withthevarious governance groups occurs asneeded;
– significant financial, managerial, andoperating information isaccurate, reliable, andtimely;
– employee’s actions areincompliance withpolicies, standards, procedures, andapplicable laws andregulations;
– resources areacquired economically, used efficiently andadequately protected;
– programs, plans andobjectives areachieved;
– quality andcontinuous improvement arefostered intheGroup’s control process; and
– significant legislative orregulatory issues impacting theGroup arerecognised andaddressed properly.
116. TheHead oftheIAS, Mr. Ilya Kotlov, functionally reports directly totheAudit andRisk Committee.
117. Anexternal quality assessment review wasdone forGlobal Port’s internal audit function in2021byone oftheBig 4companies. Theassessment
concluded that “Internal audit generally conforms
1
withtheInternational Standards fortheProfessional Practice ofInternal Auditing issued
bytheInstitute ofInternal Auditors. Rating “Generally conforms” means that aninternal audit activity hasacharter, policies, andprocesses,
which arejudged tobeinconformance withtheStandards. Recommendations forthefunction enhancement have been provided andarebeing
implemented
Management report (continued)
1
“Generally conforms” isthebest possible rating that can beawarded astheresult ofanexternal quality assessment suggested
bytheStandard 1320 – Reporting ontheQuality Assurance andImprovement Program oftheInternational Standards fortheProfessional
Practice ofInternal Auditing developed bytheInstitute ofInternal Auditors.
28 29
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Consolidated income
statement for theyear ended
31December2021
(inthousands ofUS dollars) Note For theyear ended
31 December
2021 2020
Revenue 5 502,790 384,436
Cost ofsales 6 (276,774) (200,329)
Gross profit 226,016 184,107
Administrative, selling andmarketing expenses 6 (27,043) (24,701)
Other income 1,300 1,300
Share ofprofit/(loss) ofjoint ventures accounted forusing theequity method 27(a) (2,798) (2,973)
Other gains/(losses)– net 7 (374) (339)
Operating profit/(loss) 197,101 157,394
Finance income 9 4,070 2,357
Finance costs 9 (53,828) (71,751)
Change infair value ofderivatives 9 (5,904) 18,380
Net foreign exchange gains/(losses) onfinancial activities 9, 3(a)(i) 581 (41,763)
Finance income/(costs)– net 9 (55,081) (92,777)
Profit/(loss) before income tax 142,020 64,617
Income tax credit/(expense) 11 1,838 (14,631)
Profit/(loss) for theyear 143,858 49,986
Attributable to:
Owners of theCompany 140,401 48,399
Non-controlling interest 27(b) 3,457 1,587
143,858 49,986
Basic anddiluted earnings per share forprofit/(loss) attributable to theowners of theparent of
theCompany during theyear (expressed inUS$ per share)
12 0.24 0.08
Thenotes onpages 36 to98 are anintegral part ofthese consolidated financial statements.
Directors’ Responsibility
Statement
TheCompany’s Board ofDirectors is responsible for thepreparation ofconsolidated financial statements that givea true andfair view inaccordance
withInternational Financial Reporting Standards as adopted by theEuropean Union andtherequirements of theCyprus Companies Law, Cap.113,
andforsuch internal control as theBoard ofDirectors determines is necessary toenable thepreparation ofconsolidated financial statements that are free
frommaterial misstatement, whether due tofraud orerror.
This responsibility includes selecting appropriate accounting policies andapplying them consistently; andmaking accounting estimates andjudgements
that are reasonable in thecircumstances.
Inpreparing theconsolidated financial statements, theBoard ofDirectors is also responsible forassessing theGroup’s ability tocontinue asa going
concern, disclosing, as applicable, matters related togoing concern andusing thegoing concern basis ofaccounting unless theBoard ofDirectors either
intends toliquidate theGroup ortocease operations, orhas no realistic alternative but todo so.
Those charged withgovernance are responsible foroverseeing theGroup’s financial reporting process.
TheBoard ofDirectors’ confirmations
TheBoard ofDirectors confirms that, to thebest ofits knowledge:
a. theconsolidated financial statements, which are presented onpages 31to98, which have been prepared inaccordance withInternational
Financial Reporting Standards as adopted by theEuropean Union andtherequirements of theCyprus Companies Law, Cap.113, givea true
andfair view of theassets, liabilities, financial position andprofit orloss of theCompany andtheundertakings included in theconsolidation taken
asa whole; and
b. themanagement report includesa fair review of thedevelopment andperformance of thebusiness andtheposition of theCompany
andtheundertakings included in theconsolidation taken asa whole, together witha description of theprincipal risks anduncertainties that it
faces/they face.
Further, theBoard ofDirectors confirms that, to thebest ofits knowledge:
i. adequate accounting records have been maintained which disclose withreasonable accuracy thefinancial position of theGroup andexplain
its transactions;
ii. all information ofwhich it is aware that is relevant to thepreparation of theconsolidated financial statements, such as accounting records
andall other relevant records anddocumentation, has been made available to theCompany’s auditors;
iii. the consolidated financial statements disclose theinformation required by theCyprus Companies Law, Cap.113in themanner so required;
iv. the Consolidated Management Report has been prepared inaccordance with therequirements of theCyprus Companies Law, Cap.113,
andtheinformation given therein is consistent with theconsolidated financial statements;
v. the information included in thecorporate governance statement inaccordance with therequirements ofsubparagraphs (iv) and(v)
ofparagraph 2(a) ofArticle 151of theCyprus Companies Law, Cap. 113, andwhich is included asa specific section of theConsolidated
Management Report, have been prepared inaccordance with therequirements of theCyprus Companies Law, Cap. 113, andis consistent with
theconsolidated financial statements; and
vi. the corporate governance statement includes all information referred toinsubparagraphs (i), (ii), (iii), (vi) and(vii) ofparagraph 2(a) ofArticle
151of theCyprus Companies Law, Cap. 113.
ByOrder oftheBoard
Soren Jakobsen
Chairman oftheBoard
Limassol
02March 2022
Alexander Iodchin
Secretary oftheBoard
30 31
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Consolidated balance sheet
asat31 December 2021
(inthousands ofUS dollars) Note As at31 December
2021 2020
Assets
Non-current assets 1,058,899 1,059,995
Property, plant andequipment 14 426,427 417,481
Right-of-use assets 23 525,161 530,362
Intangible assets 15 11,697 12,060
Investments injoint ventures 27(a) 19,873 23,383
Prepayments forproperty, plant andequipment 14 3,915 2,842
Deferred tax assets 25 58,190 50,788
Derivative financial instruments 24 – 9,572
Trade andother receivables 19 13,636 13,507
Current assets 384,569 267,174
Inventories 18 8,237 7,127
Derivative financial instruments 24 5,465 627
Trade andother receivables 19 69,375 48,882
Income tax receivable 4,835 3,570
Cash andcash equivalents 20 296,657 206,968
Total assets 1,443,468
1,327,169
Equity and liabilities
Total equity 499,391
361,378
Equity attributable to theowners of theCompany 480,116 345,497
Share capital 21 57,317 57,317
Share premium 21 923,511 923,511
Capital contribution 101,300 101,300
Currency translation reserve (836,468) (830,686)
Transactions withnon-controlling interest (209,122) (209,122)
Retained earnings 443,578 303,177
Non-controlling interest 27(b) 19,275 15,881
Total liabilities 944,077 965,791
Non-current liabilities 691,627 786,791
Borrowings 22 536,110 632,925
Lease liabilities 23 36,725 31,088
Trade andother payables 26 1,732 -
Deferred tax liabilities 25 117,060 122,778
Current liabilities 252,450 179,000
Borrowings 22 211,816 153,276
Lease liabilities 23 3,439 1,810
Trade andother payables 26 36,705 23,540
Current income tax liabilities 490 374
Total equity and liabilities 1,443,468 1,327,169
TheBoard ofDirectors ofGlobal Ports Investments Plc approved andauthorised these consolidated financial statements forissue on02 March 2022.
Soren Jakobsen, Director Britta Dalunde, Director
Thenotes onpages 36 to98 are anintegral part ofthese consolidated financial statements.
Consolidated statement
ofcomprehensive income
fortheyear ended
31 December 2021
(inthousands ofUS dollars) Note For theyear ended
31 December
2021 2020
Profit/(loss) for theyear 143,858 49,986
Other comprehensive income/(loss)
Items that may be subsequently reclassified to theincome statement
Currency translation differences (5,112) (79,811)
Share ofcurrency translation differences ofjoint ventures accounted forusing theequity method 27(a) (670) (2,061)
Total items that can be reclassified subsequently to theincome statement (5,782) (81,872)
Items that may not be subsequently reclassified to theincome statement
Share ofcurrency translation differences attributable tonon-controlling interest (63) (2,820)
Total items that cannot be reclassified subsequently to theincome statement (63) (2,820)
Other comprehensive income/(loss) for theyear, net oftax (5,845) (84,692)
Total comprehensive income/(loss) for theyear 138,013 (34,706)
Total comprehensive income/(loss) attributable to:
Owners of theCompany 134,619 (33,473)
Non-controlling interest 27(b) 3,394 (1,233)
Total comprehensive income/(loss) for theyear 138,013 (34,706)
Items in thestatement above are disclosed net oftax. There is no income tax relating to thecomponents ofother comprehensive income above.
Thenotes onpages 36 to98 are anintegral part ofthese consolidated financial statements.
32 33
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
(inthousands ofUS dollars) Note For theyear ended
31 December
2021 2020
Cash flows fromoperating activities
Profit/(loss) before income tax 142,020 64,617
Adjustments for:
Depreciation ofproperty, plant andequipment 14 35,849 35,559
Depreciation ofright-of-use assets 23 13,411 11,817
Reversal ofimpairment ofproperty, plant andequipment 14,4(i) (8,517) -
Loss ondisposal ofsubsidiaries andassets held forsale 7 (165) –
(Profit)/loss onsale ofproperty, plant andequipment 14 (446) (7)
Write off ofproperty, plant andequipment 14 4,378 891
Amortisation ofintangible assets 15 843 770
Interest income 9 (4,070) (2,357)
Interest expense andother finance costs 9 53,828 71,224
Change inemployee benefits provision 26 1,944 -
Loss onextinguishment offinancial liabilities 9,22 – 527
Share of(profit)/loss injointly controlled entities including impairment 27(a) 2,798 2,973
Change infair value ofderivative financial instruments 9 5,904 (18,380)
Foreign exchange differences onnon-operating activities 11 43,691
Other non-cash items (47) (81)
Operating cash flows before working capital changes 247,741 211,244
Changes inworking capital
Inventories (1,160) (171)
Trade andother receivables (18,715) (7,459)
Trade andother payables 10,396 (7,011)
Cash generated fromoperations 238,262 196,603
Income tax paid (12,216) (5,664)
Net cash fromoperating activities 226,046 190,939
Cash flows frominvesting activities
Purchases ofintangible assets (546) (890)
Purchases ofproperty, plant andequipment (43,360) (33,888)
Proceeds fromsale ofproperty, plant andequipment 14 539 436
Proceeds fromdisposal ofassets classified asheld forsale – (2)
Loan andinterest repayments received fromrelated parties 30(g) 409 572
Interest received fromthird parties, bank balances anddeposits 3,442 1,279
Net cash used ininvesting activities (39,516) (32,493)
Cash flows fromfinancing activities
Proceeds fromborrowings 22 101,760 72,079
Repayments ofborrowings 22 (133,408) (72,981)
Principal elements oflease payments 23 (3,635) (1,961)
Interest paid onborrowings 22 (52,723) (66,385)
Interest paid onlease liabilities 23 (4,703) (4,192)
Proceeds from/(settlements of) derivative financial instruments not used forhedging 22,24 (1,158) (849)
Net cash used infinancing activities (93,867) (74,289)
Net increase/(decrease) incash andcash equivalents 92,663 84,157
Cash andcash equivalents atbeginning oftheyear 206,968 124,353
Exchange gains/(losses) oncash andcash equivalents (2,974) (1,542)
Cash andcash equivalents atend oftheyear 20 296,657 206,968
Thenotes onpages 36 to98 areanintegral part ofthese consolidated financial statements.
Consolidated statement
ofchanges inequity for theyear
ended 31 December 2021
(inthousands ofUS dollars) Note Attributable to theowners of theCompany
Share
capital
Share
premium
Capital
contribu-
tion
Translation
reserve
Transactions
with
non-controlling
interest
Retained
earnings
1
Total Non-
controlling
interest
Total
Balance at31 December 2019 57,317 923,511 101,300 (748,814) (209,122) 254,778 378,970 17,114 396,084
Total other comprehensive income/(loss) – – – (81,872) – – (81,872) (2,820) (84,692)
Profit/(loss) for theyear – – – – – 48,399 48,399 1,587 49,986
Total comprehensive income/(loss) for
theyear ended 31December 2020
– – – (81,872) – 48,399 (33,473) (1,233) (34,706)
Balance at31 December 2020 57,317 923,511 101,300 (830,686) (209,122) 303,177 345,497 15,881 361,378
Total other comprehensive income/(loss) – – – (5,782) – – (5,782) (63) (5,845)
Profit/(loss) for theyear – – – – – 140,401 140,401 3,457 143,858
Total comprehensive income/(loss) for
theyear ended 31December 2021
– – – (5,782) – 140,401 134,619 3,394 138,013
Balance at31 December 2021 57,317 923,511 101,300 (836,468) (209,122) 443,578 480,116 19,275 499,391
1
Retained earnings in theseparate financial statements of theCompany is theonly reserve that is available fordistribution in theform ofdividends to theCompany’s shareholders.
Thetranslation reserve comprises all foreign currency differences arising from thetranslation of thefinancial statements offoreign operations.
Thenotes onpages 36 to98 are anintegral part ofthese consolidated financial statements.
Consolidated statement ofcash
flows for theyear ended
31December2021
34 35
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
2. Basis ofpreparation andsummary ofsignificant accounting policies
Theprincipal accounting policies applied in thepreparation ofthese consolidated financial statements are set out below. These policies have been
consistently applied toall years presented inthese consolidated financial statements, unless otherwise stated.
Basis ofpreparation
Theconsolidated financial statements of theGroup have been prepared inaccordance withInternational Financial Reporting Standards (“IFRSs”) as
adopted by theEuropean Union (“EU”) andtherequirements of theCyprus Companies Law, Cap. 113.
As of thedate of theauthorisation ofthese consolidated financial statements all International Financial Reporting Standards issued byInternational
Accounting Standards Board (IASB) that are effective as at1 January 2021have been adopted by theEU through theendorsement procedure
established by theEuropean Commission.
Theconsolidated financial statements have been prepared under thehistorical cost convention as modified by therevaluation ofderivatives.
Thepreparation ofconsolidated financial statements inconformity withIFRS requires theuse ofcertain critical accounting estimates andrequires
management toexercise its judgment in theprocess ofapplying theGroup’s accounting policies. Theareas involvinga higher degree ofjudgment
orcomplexity, orareas where assumptions andestimates are significant to theconsolidated financial statements are disclosed inNote 4.
Though theDirectors acknowledge thematerial uncertainty surrounding theoperating environment of theGroup following therecent developments as
explained innotes 28and31to theconsolidated financial statements, they continue toadopt thegoing concern basis inpreparing theconsolidated
financial statements. TheDirectors base their statement on thefollowing facts: inquiries andfollowinga review of theGroup’s principal risks
anduncertainties, budget for2022financial perspectives in themid-term, thelatest forecasts overa period of5-10years reflecting its business
andinvestment cycles, including cash flows andborrowing facilities. TheDirectors also considered: thepotential implications of theRussian-Ukrainian
crisis, impact of thesanctions introduced against Russia, as well as theban ondelivery/dispatch ofvarious containerised cargoes to/from Russia on
theoperational andfinancial performance of theGroup, forecasts andgoing concern. TheDirectors consider that theGroup has adequate resources
tomeet its liabilities as they fall due andtocontinue inoperation for theforeseeable future.
Nevertheless, thedevelopments explained innotes 28and31indicate thata material uncertainty still exists that may cast significant doubt on theGroup’s
ability tocontinue asa going concern should thenature and/or theduration of thesanctions imposed onRussia differ significantly to theGroup’s
expectations.
New andamended standards adopted by theGroup
TheGroup adopted all new andrevised IFRSs, amendments andinterpretations, as adopted by theEU that are relevant toits operations andare effective
foraccounting periods beginning on1 January 2021. This adoption did not have any impact on theamounts recognised inprior periods andis not
expected tosignificantly affect thecurrent orfuture periods.
New standards andinterpretations not yet adopted by theGroup
At thedate ofapproval ofthese financial statementsa number ofnew standards andamendments tostandards andinterpretations are effective
forannual periods beginning after 1 January 2021andhave not been applied inpreparing these consolidated financial statements. None ofthese is
expected tohavea significant effect onthese consolidated financial statements.
Basis ofconsolidation
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which theGroup has control. TheGroup controls anentity over which it has power,
has exposure, orrights tovariable returns fromits involvement with theentity andhas theability toaffect those returns through its power over theentity.
Subsidiaries are fully included in theconsolidated financial statements from thedate onwhich control was transferred to theGroup orto theextent
that thesubsidiaries were obtained througha transaction between entities under common control from thedate which control was transferred toits
shareholders. They are derecognised from thefinancial statements from thedate that control ceases.
Notes totheconsolidated financial statements (continued)
Notes totheconsolidated
financial statements
1. General information
Country ofincorporation
Global Ports Investments Plc (hereafter the“Company” or“GPI”) wasincorporated on29February 2008asaprivate limited liability company
inaccordance withtheprovisions oftheCompanies Law, Cap. 113andisdomiciled inCyprus. Theaddress oftheCompany’s registered office
is20Omirou Street, Ayios Nicolaos, CY-3095, Limassol, Cyprus.
On18August 2008, followingaspecial resolution passed bytheshareholder, thename oftheCompany waschanged from“Global Ports Investments
Ltd” to“Global Ports Investments Plc” andtheCompany wasconverted intoapublic limited liability company inaccordance withtheprovisions
oftheCompanies Law, Cap. 113.
During thefirst half of2011, theCompany successfully completed aninitial public offering (“IPO”) ofits shares intheform ofglobal depositary receipts
(“GDRs”). TheCompany’s GDRs (one GDR representing 3ordinary shares) arelisted ontheMain Market oftheLondon Stock Exchange under
thesymbol “GLPR”.
TheCompany isjointly controlled byLLC Management Company “Delo” (“Delo Group”), one ofRussia’s largest privately owned transportation
companies, andAPM Terminals B.V. (“APM Terminals”),aglobal port, terminal andinland services operator.
Approval oftheconsolidated financial statements
These consolidated financial statements wereapproved andauthorised forissue bytheBoard ofDirectors on02March 2022.
Principal activities
Theprincipal activities oftheCompany, its subsidiaries andjoint ventures (hereinafter collectively referred toasthe“Group”) aretheoperation ofcontainer
andgeneral cargo terminals inRussia andFinland. TheGroup offers its customersawide range ofservices fortheir import andexport logistics operations.
Composition oftheGroup andits joint ventures
TheGroup’s terminals arelocated intheBaltic andFar East Basins, key regions forforeign trade cargo flows. TheGroup operates:
• five container terminals inRussia– Petrolesport (PLP), First Container Terminal (FCT), Ust-Luga Container Terminal (ULCT) andMoby Dik (MD) intheSt.
Petersburg andUst-Luga port cluster, andVostochnaya Stevedoring Company (VSC) inthePort ofVostochny;
• two container terminals inFinland– Multi-Link Terminals Helsinki andMulti-Link Terminals Kotka (Multi-Link Terminals orMLT Oy); and
• inland Yanino Logistics Park (YLP), located inthevicinity ofSt.Petersburg.
See also Note 5 forthedescription ofsegmental information oftheGroup. All entities above arefully consolidated, except forMoby Dik, Multi-Link
Terminals andYanino Logistics Park, which arejoint ventures accounted forusing theequity method ofaccounting.
TheCompany fully owns all of theabove terminals except foras described below:
• MLT andCD Holding groups are joint ventures withCMA Terminals where theCompany has 75% effective ownership interest (Note 27(a)). Moby
Dik (a container terminal in thevicinity ofSt. Petersburg), Multi-Link Terminals andMulti-Link Terminals Ltd constitute theMLT group. Yanino Logistics
Park (an inland container terminal in thevicinity ofSt. Petersburg) andCD Holding constitute theCD Holding group.
• Ust-Luga Container Terminal (located inUst-Luga, North-West Russia) is an80% subsidiary where Eurogate, one of theleading container terminal
operators inEurope hasa 20% non-controlling interest (Note 27(b)).
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PARENT COMPANY FINANCIAL STATEMENTS
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
Basis ofconsolidation (continued)
(c) Joint arrangements (continued)
Unrealised gains ontransactions between theGroup andits joint ventures are eliminated to theextent of theGroup’s interest in thejoint ventures.
Unrealised losses are also eliminated unless thetransaction provides evidence of animpairment of theasset transferred.
Investments injoint ventures are reviewed forimpairment whenever events orchanges incircumstances indicate that thecarrying amount may not be
recoverable. Animpairment loss is recognised through profit orloss for theamount bywhich theasset’s carrying amount exceeds its recoverable amount.
Therecoverable amount is thehigher of anasset’s fair value less costs tosell andvalue inuse. Value inuse is calculated byestimating theGroup’s share
of thepresent value of theestimated future cash flows expected tobe generated from theasset, including thecash flows from theoperations of theasset
andtheproceeds from theultimate disposal of theasset. Animpairment loss recognised inprior years is reversed where appropriate if there has beena
change in theestimates used todetermine therecoverable amount.
Revenue recognition
Revenuerepresents theamount ofconsideration towhich theGroup expects tobe entitled inexchange fortransferring thepromised goods orservices to
thecustomer, excluding amounts collected onbehalf ofthird parties (for example, value-added taxes).
TheGroup recognises revenue when theparties have approved thecontract andare committed toperform their respective obligations, theGroup can
identify each party’s rights andthepayment terms for thegoods orservices tobe transferred, thecontract has commercial substance, it is probable that
theGroup will collect theconsideration towhich it will be entitled inexchange for thegoods orservices that will be transferred tocustomer andwhen
specific criteria have been met foreach of theGroup’s contracts withcustomers as described below.
When another party is involved inproviding goods orservices toa customer, theGroup determines whether thenature ofits promise isa performance
obligation toprovide thespecified goods orservices itself (the Group isa principal andit controls thespecified good orservice before that good
orservice is transferred toa customer) ortoarrange forthose goods orservices tobe provided by theother party (the Group is anagent). TheGroup
determines whether it isa principal oranagent foreach specified good orservice promised to thecustomer.
When theGroup that isa principal satisfiesa performance obligation, theGroup recognises revenue in thegross amount ofconsideration towhich it
expects tobe entitled inexchange for thespecified good orservice transferred.When theGroup that is anagent satisfiesa performance obligation,
theGroup recognises revenue in theamount ofany fee orcommission towhich it expects tobe entitled inexchange forarranging for theother party
toprovide its specified goods orservices to thecustomer.
TheGroup bases its estimates onhistorical results, taking intoconsideration thetype ofcustomer, thetype oftransaction andthespecifics ofeach
arrangement. Inevaluating whether collectability of anamount ofconsideration is probable, theGroup considers only thecustomer’s ability andintention
topay theamount ofconsideration when it is due. Revenues earned by theGroup are recognised on thefollowing bases:
(a) Sales ofservices
TheGroup offers its customersa wide range ofcargo handling services forits import andexport logistics operations. These services are provided
over time andusually do not exceed one month. Revenue fromrendering ofthese services is recognised when theGroup satisfiesa performance
obligation bytransferring control over promised service toa customer over time in theaccounting period inwhich theservices are rendered. Revenue
from therendering ofthese services is recognised net ofdiscounts andestimates forrebates that are inaccordance with thecontracts entered intowith
thecustomers. Revenue is recognised to theextent that is highly probable thata significant reversal in theamount ofcumulative revenue recognised will not
occur when theuncertainty inrelation to therebates anddiscounts is resolved. Estimations forrebates anddiscounts are based on theGroup’s experience
withsimilar contracts andforecasted sales to thecustomer.
(b) Sales ofgoods
TheGroup sells unused materials andgoods. Sales ofgoods are recognised when theGroup satisfiesa performance obligation bytransferringa
control over promised goods toa customer ata point intime atwhich thecustomer obtains control of thegoods, which is usually when thecustomer takes
thegoods out of theterritory of theterminal.
Notes totheconsolidated financial statements (continued)
Basis ofconsolidation (continued)
(a) Subsidiaries (continued)
TheGroup accounts forbusiness combinations using theacquisition method when theacquired set ofactivities andassets meets thedefinition ofa
business andcontrol is transferred to theGroup. Indetermining whethera particular set ofactivities andassets isa business, theGroup assesses
whether theset ofaccounts andactivities acquired includes, ata minimum, aninput andsubstantive process andwhether theacquired set has theability
toproduce outputs.
Business combinations involving entities under common control (ultimately controlled by thesame party, before andafter thebusiness combination,
andthat control is not transitory) are accounted using thepredecessor basis ofaccounting. Under this method, thefinancial statements of theacquiree
are included in theconsolidated financial statements using pre-acquisition IFRS carrying amounts using uniform accounting policies, on theassumption
that theGroup was inexistence from thedate where common control was established. Forthese transactions, theexcess of thecost ofacquisition over
thecarrying amount of theGroup’s share ofidentifiable net assets acquired, including goodwill, arising at thedate ofacquisition by theshareholders, is
recorded inequity inretained earnings at thedate of thelegal restructuring.
Thepurchase method ofaccounting is used foracquisitions ofsubsidiaries that do not involve entities orbusinesses under common control with theGroup.
Thecost of anacquisition is measured at thefair value of theassets given, equity instruments issued andliabilities incurred orassumed at thedate
ofexchange. Acquisition-related costs are expensed as incurred, except if related to theissue ofdebt orequity securities. Identifiable assets acquired
andliabilities andcontingent liabilities assumed ina business combination are measured initially attheir fair values at theacquisition date. TheGroup
recognises any non-controlling interest in theacquiree on anacquisition-by-acquisition basis at thenon-controlling interest’s proportionate share of
therecognised amounts ofacquiree’s identifiablenet assets.Goodwill is initially measured as theexcess of theaggregate of theconsideration transferred
over thenet identifiable assets acquired andliabilities assumed. If this consideration is lower than thefair value of thenet assets of thesubsidiary acquired,
thedifference is recognised in theconsolidated income statement.
All intra-company transactions, balances, income, expenses andunrealised gains andlosses are eliminated onconsolidation. Unrealised losses are
also eliminated but considered as animpairment indicator of theasset transferred. Where necessary, adjustments are made to thefinancial statements
ofsubsidiaries tobring their accounting policies intocompliance withthose used by theGroup.
(b) Transactions withnon-controlling interests
Transactions withnon-controlling interests that do not result inloss ofcontrol are accounted foras equity transactions– that is, as transactions with
theowners intheir capacity as owners. Thedifference between fair value ofany consideration paid andtherelevant share acquired of thecarrying value
ofnet assets of thesubsidiary is recorded inequity. Gains orlosses ondisposals tonon-controlling interests are also recorded inequity.
(c) Joint arrangements
Under IFRS 11investments injoint arrangements are classified as either joint operations orjoint ventures depending on thecontractual rights
andobligations each investor has rather than thelegal structure of thejoint arrangement. TheGroup has assessed thenature ofits joint arrangements
anddetermined them tobe joint ventures. Joint ventures are accounted forusing theequity method ofaccounting.
Under theequity method ofaccounting, interests injoint ventures are initially recognised in theconsolidated balance sheet atcost, which includes
transaction costs, andadjusted thereafter torecognise theGroup’s share of thepost-acquisition profits orlosses andmovements inother comprehensive
income. When theGroup’s share oflosses ina joint venture equals orexceeds its interests in thejoint ventures (which includes any long-term interests that,
insubstance, form part of theGroup’s net investment in thejoint ventures), theGroup does not recognise further losses, unless it has incurred obligations
ormade payments onbehalf of thejoint ventures. TheGroup applies therequirements ofIFRS 9todetermine whether any additional impairment loss
needs tobe recognised inrespect ofloans given tojoint ventures, before taking intoaccount theeffect (if any) of theGroup’s share ofjoint ventures’ losses
applied against long-term interests in thejoint ventures as detailed below.
TheGroup’s share oflosses ina joint venture is first allocated against theGroup’s investment in thejoint venture andthen toany other long-term interests
that insubstance form part of theGroup’s net investment.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Foreign currency translation (continued)
(c) Group companies
Onconsolidation, exchange differences arising from thetranslation of thenet investment inforeign operations are taken toshareholders’ equity.
Ondisposal ofa foreign operation (including partial disposals which result inloss ofcontrol, significant influence orjoint control ofa subsidiary, associate
orjoint venture respectively, that includea foreign operation), thecumulative amount of theexchange differences relating tothat foreign operation,
recognised inother comprehensive income andaccumulated in theseparate component ofequity is reclassified fromequity toprofit orloss (asa
reclassification adjustment) when thegain orloss is recognised. Inthese cases, thecumulative amount ofexchange differences relating to theforeign
operation sold that have been attributed to thenon-controlling interests are derecognised but are not reclassified toprofit orloss.
Onpartial disposal ofa subsidiary that includesa foreign operation, theGroup re-attributes theproportionate share of thecumulative amount of
theexchange differences recognised inother comprehensive income to thenon-controlling interests inthat foreign operation. Inany other partial
disposal ofa foreign operation, theGroup reclassifies toprofit orloss only theproportionate share of thecumulative amount of theexchange differences
recognised inother comprehensive income.
Impairment ofnon-financial assets
Non-financial assets that are subject todepreciation oramortisation are reviewed forimpairment whenever events orchanges incircumstances indicate
that thecarrying amount may not be recoverable (refer toaccounting policy forintangible assets inrelation to theimpairment ofgoodwill) Animpairment
loss is recognised for theamount bywhich theasset’s carrying amount exceeds its recoverable amount. Therecoverable amount is thehigher of anasset’s
fair value less costs tosell andvalue inuse. For thepurposes ofassessing impairment, assets are grouped at thelowest levels forwhich there are
separately identifiable cash inflows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed forpossible
reversal ofimpairment ateach reporting date.
Property, plant andequipment (“PPE”)
Property, plant andequipment are recorded atpurchase orconstruction cost less accumulated depreciation andany accumulated impairment losses.
Historical cost includes expenditure that is directly attributable to theacquisition orconstruction of theitems.
Land is not depreciated.
Depreciation onproperty, plant andequipment is calculated using thestraight-line method toallocate their cost, less residual value, over their estimated
useful lives, as follows:
Number ofyears
Buildings andfacilities 5to50
Loading equipment andmachinery 3to25
Other production equipment 3to25
Office equipment 1to10
Assets under construction are not depreciated until they are completed andbrought intouse, atwhich time they are reclassified in therelevant class
ofproperty, plant andequipment anddepreciated accordingly.
Theassets’ residual values anduseful lives are reviewed, andadjusted if appropriate, ateach balance sheet date.
Anasset’s carrying amount is written down immediately toits recoverable amount if theasset’s carrying amount is greater than its estimated recoverable
amount.
Expenditure forrepairs andmaintenance ofproperty, plant andequipment is charged to theincome statement of theyear inwhich they are incurred. Thecost
ofmajor renovations andother subsequent expenditure are included in thecarrying amount of theasset orrecognised asa separate asset, as appropriate,
only when it is probable that future economic benefits associated with theitem will flow to theGroup andthecost of theitem can be measured reliably.
Borrowing costs directly attributable to theacquisition, construction orproduction of anasset that necessarily takesa substantial period oftime toget
ready forintended use orsale are capitalised andamortised over theuseful life of theasset. Other borrowing costs are recognised as anexpense in
thereporting period incurred. Interest is capitalised ata rate based on theGroup’s weighted average cost ofborrowing orat therate onproject specific
debt, where applicable.
Gains andlosses ondisposal ofproperty, plant andequipment are determined bycomparing theproceeds withcarrying amount andthese are included
within operating income.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
Revenue recognition (continued)
(c) Financing component
TheGroup does not have any material contracts where theperiod between thetransfer of thepromised goods orservices to thecustomer andpayment
by thecustomer exceeds one year. Asa consequence, theGroup does not adjust any of thetransaction prices for thetime value ofmoney.
(d) Contract assets andcontract liabilities
Incase theservices rendered by theGroup as of thereporting date exceed thepayments made by thecustomer as ofthat date andtheGroup does
not have theunconditional right tocharge theclient for theservices rendered,a contract asset is recognised. TheGroup assessesa contract asset
forimpairment inaccordance withIFRS 9using thesimplified approach permitted byIFRS 9which requires expected lifetime losses tobe recognised
frominitial recognition of thecontract asset. Animpairment ofa contract asset is measured, presented anddisclosed on thesame basis asa financial
asset that is within thescope ofIFRS 9. If thepayments made bya customer exceed theservices rendered under therelevant contract,a contract liability
is recognised. TheGroup recognises any unconditional rights toconsideration separately fromcontract assets asa trade receivable because only
thepassage oftime is required before thepayment is due.
Other income
(a) Rental income
See accounting policy forleases below.
(b) Interest income
Interest income onfinancial assets atamortised cost andfinancial assets atFVOCI calculated using theeffective interest method. Interest income is
calculated byapplying theeffective interest rate to thegross carrying amount ofa financial asset except forfinancial assets that subsequently become
credit impaired. Forcredit-impaired financial assets– Stage 3theeffective interest rate is applied to thenet carrying amount of thefinancial asset (after
deduction of theloss allowance), forStage 1andStage 2– gross amount offinancial assets.
(c) Dividend income
Dividend income is recognised when theright toreceive payment is established.
Foreign currency translation
(a) Functional andpresentation currency
Items included in thefinancial statements ofeach of theGroup’s entities are measured using thecurrency of theprimary economic environment inwhich
theentity operates (‘the functional currency’). Theconsolidated financial statements are presented inUnited States dollars (US$), which is theCompany’s
functional andpresentation currency.
(b) Transactions andbalances
Foreign currency transactions are translated into thefunctional currency using theexchange rates prevailing at thedates of thetransactions. Foreign
exchange gains andlosses resulting from thesettlement ofsuch transactions andfrom thetranslation atyear-end exchange rates ofmonetary assets
andliabilities denominated inforeign currencies are recognised in theincome statement.
Foreign exchange gains andlosses that relate toloans receivable, cash andcash equivalents andborrowings are presented net in theincome statement
within ‘net foreign exchange losses onfinancing activities’. All other foreign exchange gains andlosses are presented in theincome statement within ‘other
gains/(losses)– net’.
(c) Group companies
Theresults andfinancial position ofall theGroup entities (none ofwhich has thecurrency ofa hyper-inflationary economy) that havea functional currency
different from thepresentation currency are translated into thepresentation currency as follows:
-
Assets andliabilities are translated at theclosing rate existing at thedate of thebalance sheet presented;
-
Income andexpense items at theexchange rates prevailing at thedate oftransaction orusing average rates asa reasonable approximation;
-
Share capital, share premium andall other reserves are translated using thehistoric rate; and
-
All exchange differences resulting from theabove translation are recognised inother comprehensive income.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Leases (continued)
Each lease payment is allocated between theliability andfinance cost. Thefinance cost is charged toprofit orloss over thelease period topro-
ducea constant periodic rate ofinterest on theremaining balance of theliability foreach period. Theright-of-use asset is depreciated over theshorter of
theasset’s useful life andthelease term ona straight-line basis.
Thelease liability is initially measured at thepresent value of thelease payments that are not paid at thecommencement date, discounted using theinterest
rate implicit in thelease. If that rate cannot be determined, thelessee’s incremental borrowing rate is used, being therate that thelessee would have topay
toborrow thefunds necessary toobtain anasset ofsimilar value ina similar economic environment withsimilar terms andconditions.
Lease liabilities include thenet present value of thefollowing lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payment that are based on anindex;
• amounts expected tobe payable by thelessee under residual value guarantees;
• the exercise price ofa purchase option if thelessee is reasonably certain toexercise that option; and
• payments ofpenalties forterminating thelease, if thelease term reflects thelessee exercising that option.
According tosome lease contracts lease payment can be adjusted depending onchanges inconsumer price indexes ofRussian Federation. When such
change occurs therespective lease liability is remeasured witha corresponding adjustment to theright-of-use asset.
Right-of-use assets are measured atcost comprising thefollowing:
• the amount of theinitial measurement oflease liability;
• any lease payments made at orbefore thecommencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
Payments associated withshort-term leases andleases oflow-value assets are recognised ona straight-line basis as anexpense inprofit orloss. Short-
term leases are leases witha lease term of12months orless. Low-value assets comprise IT-equipment andsmall items ofoffice furniture withvalue less
than US$5thousands.
Extension andtermination options are included ina number ofproperty andequipment leases across theGroup. These are used tomaximise operational
flexibility interms ofmanaging theassets used in theGroup’s operations. Themajority ofextension andtermination options held are exercisable only by
theGroup andnot by therespective lessor. Indetermining thelease term, management considers all facts andcircumstances that create aneconomic
incentive toexercise anextension option, ornot exercisea termination option. Extension options (or periods after termination options) are only included in
thelease term if thelease is reasonably certain tobe extended (or not terminated). Theassessment is reviewed ifa significant event ora significant change
incircumstances occurs which affects this assessment andthat is within thecontrol of thelessee.
Forbusiness combinations where theentity acquired by theGroup hasa lease, theGroup measures thelease liability at thepresent value ofremaining
lease payments as if theacquired lease werea new lease at theacquisition date. TheGroup measures theright-of-use asset at thesame amount as
thelease liability, adjusted toreflect favourable orunfavourable terms of thelease when compared withmarket terms.
Sale andleaseback transactions
Theaccounting treatment followed by theGroup forsale andleaseback transactions inwhich theGroup, as theowner of anasset, sells theasset
andleases it back from thebuyer, depends onwhether thetransaction qualifies asa sale forwhich revenue is recognised, orwhether thetransaction isa
collateralised borrowing. If thetransfer of anasset owned by theGroup does not qualify asa sale, forexample, because theGroup has anobligation
ora right torepurchase theasset from thebuyer, theGroup as theseller-lessee does not de-recognise thetransferred asset, andit accounts for thecash
received asa financial liability.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
Intangible assets
(a) Goodwill
Goodwill represents theexcess of thecost of anacquisition over thefair value of theGroup’s share of thenet identifiable assets of theacquired
subsidiary/joint venture at thedate ofacquisition. Goodwill onacquisitions ofsubsidiaries is included in‘intangible assets’. Goodwill onacquisition
ofjoint ventures is included in thecarrying amount of theGroup’s investment in thejoint venture (refer toNote 2, Basis ofconsolidation, (c)). Separately
recognised goodwill is tested forimpairment annually andwhenever there is indication that goodwill may be impaired. Goodwill is carried atcost less
accumulated impairment losses. Impairment losses ongoodwill are not reversed. Gains andlosses on thedisposal of anentity include thecarrying amount
ofgoodwill relating to theentity sold. Goodwill related to thepartial disposal of anentity is not derecognised unless there is loss ofcontrol.
If theGroup’s interest in thenet fair value of theidentifiable assets, liabilities andcontingent liabilities recognised exceeds thecost of thebusiness
combination, theGroup reassesses theidentification andmeasurement of theacquiree’s identifiable assets, liabilities andcontingent liabilities
andthemeasurement of thecost of thecombination andrecognises immediately inprofit orloss any excess remaining after that reassessment.
Goodwill is allocated tocash-generating units (CGUs) for thepurpose ofimpairment testing. Theallocation is made tothose cash-generating units
orgroups ofcash-generating units that are expected tobenefit from thebusiness combination inwhich thegoodwill arose. TheGroup allocates goodwill
toeach CGU. When theGroup reorganises its reporting structure ina way that changes thecomposition ofone ormore cash-generating units towhich
goodwill has been allocated, thegoodwill is reallocated to theunits affected.
(b) Computer software
Acquired computer software licenses are capitalised on thebasis of thecosts incurred toacquire andbring touse thespecific software. Subsequently
computer software is carried atcost less any accumulated amortisation andany accumulated impairment losses. These costs are amortised using straight
line method over their estimated useful lives (3to10years). Costs associated withmaintaining computer software programmes are recognised as
anexpense as incurred.
Leases
At theinception ofa contract, theGroup assesses whethera contract is, orit contains,a lease. Acontract is, orcontains,a lease if it conveys theright
tocontrol theuse of anidentified asset fora period oftime inexchange forconsideration.
TheGroup is thelessor
Operating leases
Leases inwhicha significant portion of therisks andrewards ofownership are retained by thelessor are classified as operating leases. Rental income (net
ofany incentives given tolessees) is recognised ona straight-line basis over thelease term. Assets leased out under operating leases include insignificant
portions ofsome properties which are not used by theGroup which cannot be sold orleased out separately undera finance lease. These properties are
included inproperty, plant andequipment in thebalance sheet based on thenature of theasset.
TheGroup is thelessee
TheGroup leases land, buildings andfacilities, offices andloading andother production equipment. Land, buildings andfacilities rental contracts are
made forfixed periods of5to53years andhave extension options. Other lease contracts are typically made forfixed periods of3to5years. Lease
terms are negotiated on anindividual basis andcontaina wide range ofdifferent terms andconditions. Thelease agreements do not impose any
covenants, but leased assets may not be used as security forborrowing purposes.
Leases are recognised asa right-of-use asset anda corresponding liability at thedate atwhich theleased asset is available foruse by theGroup.
Theright ofuse asset is initially measured atcost, which comprises theinitial amount of thelease liability adjusted forany lease payments made at
orbefore thecommencement date, plus any initial direct costs incurred andanestimate ofcosts todismantle andremove theunderlying asset ortorestore
theunderlying asset orthesite inwhich it is located, less any lease incentives received.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
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PARENT COMPANY FINANCIAL STATEMENTS
Financial instruments (continued)
(b) Recognition, derecognition and initial measurement (continued)
TheGroup derecognisesa financial liability when its contractual obligations are discharged orcancelled orexpire. TheGroup also derecognisesa
financial liability when its terms are modified andthecash flows of themodified liability are substantially different, inwhich casea new financial liability
based on themodified terms is recognised atfair value.
Onderecognition ofa financial liability, thedifference between thecarrying amount extinguished andtheconsideration paid (including any non-cash
assets transferred orliabilities assumed) is recognised inprofit orloss within ‘finance income/(costs)– net’.
(c) Subsequent measurement
Financial assets atFVTPL are subsequently measured atfair value. Net gains andlosses, including any interest ordividend income, are recognised inprofit
orloss andpresented net within ‘other gains/(losses)-net’ in theperiod inwhich it arises.
Financial assets atamortised cost are subsequently measured atamortised cost using theeffective interest method. These are assets that are held
forcollection ofcontractual cash flows where those cash flows represent solely payments ofprincipal andinterest are measured atamortised cost.
Theamortised cost is reduced byimpairment losses which are presented as separate line item in thestatement ofprofit orloss. Interest income, foreign
exchange gains andlosses andimpairment are recognised inprofit orloss. Any gain orloss onderecognition is recognised inprofit orloss andpresented
in‘other gains/(losses)-net’, together withforeign exchange gains andlosses. Financial assets measured atamortised cost comprise cash andcash
equivalents, loans receivable, trade receivables andother financial assets atamortised cost.
Assets that are held forcollection ofcontractual cash flows andforselling thefinancial assets, where theassets’ cash flows represent solely payments
ofprincipal andinterest, are measured atFVOCI. Debt investments atFVOCI are subsequently measured atfair value. TheGroup does not hold any such
instruments.
Financial liabilities atFVTPL are measured atfair value andnet gains andlosses, including any interest expense, are recognised inprofit orloss. Other
financial liabilities are subsequently measured atamortised cost using theeffective interest method. Interest expense andforeign exchange gains
andlosses are recognised inprofit orloss. Any gain orloss onderecognition is also recognised inprofit orloss.
Borrowings are subsequently stated atamortised cost. Any difference between theproceeds (net oftransaction costs) andtheredemption value is
recognised inprofit orloss over theperiod of theborrowings, using theeffective interest method, unless they are directly attributable to theacquisition,
construction orproduction ofa qualifying asset, inwhich case they are capitalised as part of thecost ofthat asset.
Fees paid on theestablishment ofloan facilities are recognised as transaction costs of theloan to theextent that it is probable that some orall of thefacility
will be drawn down. Inthis case, thefee is deferred until thedrawdown occurs. To theextend there is no evidence that it is probable that some orall of
thefacility will be drawn down, thefee is capitalised asa prepayment andamortised over theperiod of thefacility towhich it relates.
Borrowing costs are interest andother costs that theGroup incurs inconnection with theborrowing offunds, including interest onborrowings, amortisation
ofdiscounts orpremium relating toborrowings, amortisation ofancillary costs incurred inconnection with thearrangement ofborrowings andexchange
differences arising fromforeign currency borrowings to theextent that they are regarded as anadjustment tointerest costs.
Borrowing costs directly attributable to theacquisition, construction orproduction of anasset that necessarily takesa substantial period oftime toget
ready forits intended use orsale are capitalised andamortised over theuseful life of theasset. Other borrowing costs are recognised as anexpense in
thereporting period incurred. Interest is capitalised ata rate based on theGroup’s weighted average cost ofborrowing orat therate onproject specific
debt, where applicable.
Borrowings are classified as current liabilities, unless theGroup has anunconditional right todefer settlement of theliability foratleast twelve months after
thebalance sheet date.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
Financial instruments
(a) Classification
(i) Financial assets
Oninitial recognition, theGroup classifies its financial assets in thefollowing measurement categories:
• Those tobe measured subsequently atfair value (either through OCI, orthrough profit orloss), and
• Those tobe measured atamortised cost.
Theclassification depends on theGroup’s business model formanaging thefinancial assets andthecontractual terms of thecash flows.
All financial assets of theGroup are held within thebusiness model whose objective is tohold financial assets inorder tocollect contractual cash flows,
except equity instruments. Equity instruments of theGroup are held within thebusiness model whose objective is achieved byboth collecting contractual
cash flows andselling financial assets.
TheGroup classifiesa financial asset as measured atamortised cost if it meets both of thefollowing conditions andis not designated as atFVTPL: it is held
withina business model whose objective is tohold assets tocollect contractual cash flows andits contractual terms give rise onspecified dates tocash
flows that are solely payments ofprincipal andinterest on theprincipal amount outstanding.
All financial assets of theGroup that are not classified as measured atamortised cost orFVOCI are measured atFVTPL. This includes all derivative
financial assets. Oninitial recognition, theGroup may irrevocably designatea financial asset that otherwise meets therequirements tobe measured
atamortised cost oratFVOCI as atFVTPL if doing so eliminates orsignificantly reduces anaccounting mismatch that would otherwise arise.
Adebt investment is measured atFVOCI if it meets both of thefollowing conditions andis not designated as atFVTPL: it is held withina business model
whose objective is achieved byboth collecting contractual cash flows andselling financial assets andits contractual terms give rise onspecified dates
tocash flows that are solely payments ofprincipal andinterest on theprincipal amount outstanding.
Oninitial recognition of anequity investment that is not held fortrading, theGroup may irrevocably elect topresent subsequent changes in theinvestment’s
fair value inOCI. This election is made on aninvestment-by-investment basis.
Theclassification depends on theGroup’s business model formanaging thefinancial assets andthecontractual terms of thecash flows. Financial assets
are not reclassified subsequent totheir initial recognition unless theGroup changes its business model formanaging financial assets, inwhich case all
affected financial assets are reclassified on thefirst day of thefirst reporting period following thechange in thebusiness model.
(ii) Financial liabilities
TheGroup classifies financial liabilities as measured atamortised cost orFVTPL. Afinancial liability is classified as atFVTPL if it is classified as held-for-
trading, it isa derivative orit is designated as such oninitial recognition.
(b) Recognition, derecognition andinitial measurement
Trade receivables anddebt securities issued are initially recognised when they are originated. All other financial assets andfinancial liabilities are initially
recognised when theGroup becomesa party to thecontractual provisions of theinstrument. Afinancial asset (unless it isa trade receivable withouta
significant financing component) orfinancial liability is initially measured atfair value plus orminus, for anitem not atFVTPL, transaction costs that are
directly attributable toits acquisition orissue. Atrade receivable withouta significant financing component is initially measured at thetransaction price.
Cash andcash equivalents are carried atamortised cost using theeffective interest method. Cash andcash equivalents include cash inhand anddeposits
held atcall withoriginal maturity up to90days withbanks. Trade payables are recognised initially atfair value andsubsequently measured atamortised
cost using theeffective interest method. Borrowings are recognised initially atfair value, net oftransaction costs incurred.
TheGroup derecognisesa financial asset when thecontractual rights to thecash flows from thefinancial asset expire orit transfers therights toreceive
thecontractual cash flows ina transaction inwhich either substantially all of therisks andrewards ofownership of thefinancial asset are transferred
ortheGroup neither transfers nor retains substantially all of therisks andrewards ofownership andit does not retain control of thefinancial asset.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Financial instruments (continued)
(f) Derivative financial instruments andhedging activities
Derivatives are initially recognised atfair value on thedatea derivative contract is entered into andare subsequently re-measured attheir fair value.
Themethod ofrecognising theresulting gain orloss depends onwhether thederivative is designated asa hedging instrument, andif so, thenature of
theitem being hedged. TheGroup designates certain derivatives as hedges ofa particular risk associated witha recognised asset ora liability orhighly
probable forecast transaction (cash flow hedge).
Derivative financial instruments not designated asa hedging instrument
Derivative financial instruments not designated asa hedging instrument are included within financial assets atfair value through profit orloss when
fair value is positive andwithin financial liabilities atfair value through profit orloss when fair value is negative. They are presented as current assets
orliabilities if they are expected tobe settled within 12months after theend of thereporting period. Changes in thefair value offoreign currency
derivatives (currency forward contracts andcurrency options) are presented in theincome statement within ‘change infair value ofderivatives’ as part
of‘finance income/(costs)– net’.
Derivative financial instruments designated asa hedging instrument
Atinception of thehedge relationship, theGroup documents theeconomic relationship between hedging instruments andhedged items including whether
changes in thecash flows of thehedging instruments are expected tooffset changes in thecash flows ofhedged items. TheGroup documents its risk
management objective andstrategy forundertaking its hedge transactions.
Movements on thehedging reserve are shown in thestatement ofother comprehensive income. Thefull fair value ofhedging derivatives is classified asa
non-current asset orliability when thematurity of thehedging relationship is more than 12months andasa current asset orliability when theremaining
maturity of thehedging relationship is less than 12months.
Theeffective portion ofchanges in thefair value ofderivatives that are designated andqualify as cash flow hedges is recognised inother comprehensive
income. Thegain orloss relating to theineffective portion ofcross-currency interest rate swap hedging variable rate borrowings is recognised immediately
in theincome statement within ‘finance costs’ andgain orloss relating to thehedging ofcurrency risk inforecast sale is recognised in‘other gains/
(losses)-net’.
Amounts accumulated inequity are reclassified toprofit orloss in theperiods when thehedged item affects profit orloss (for example, when theforecast
sale that is hedged takes place). Thegain orloss relating to theeffective portion ofcross-currency interest rate swap hedging variable rate borrowings is
recognised in theincome statement within ‘finance costs’ andgain orloss relating to thehedging ofcurrency risk inforecast sale is recognised in‘other
gains/(losses)-net’.
Whena hedging instrument expires oris sold, orwhena hedge no longer meets thecriteria forhedge accounting, any cumulative gain orloss existing
inequity atthat time remains inequity andis recognised when theforecast transaction is ultimately recognised in theincome statement. Gain orloss
existing inequity is recognised immediately in theincome statement if theforecast transaction is no longer expected tooccur.
Prepayments
Prepayments are carried atcost less provision forimpairment. Aprepayment is classified as non-current when thegoods orservices relating to
theprepayment are expected tobe obtained after one year, orwhen theprepayment relates to anasset which will itself be classified as non-current upon
initial recognition. Prepayments toacquire assets are transferred to thecarrying amount of theasset once theGroup has obtained control of theasset
andit is probable that future economic benefits associated with theasset will flow to theGroup. Other prepayments are written off toprofit orloss when
thegoods orservices relating to theprepayments are received. If there is anindication that theassets, goods orservices relating toa prepayment will
not be received, thecarrying value of theprepayment is written down accordingly anda corresponding impairment loss is recognised inprofit orloss for
theyear.
Inventories
Group entities usually maintaina store ofspareparts andservicing equipment forcritical components. These are often carried as inventory
andrecognised inprofit orloss as consumed. Majorspareparts, stand-by equipment andservicing equipment can also qualify as property,
plant andequipment when they meet thedefinition ofproperty, plant andequipment, including therequirement tobe used over more than one
period.Spareparts ininventory orproperty, plant andequipment are carried at thelower ofcost andnet realisable value.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
Notes totheconsolidated financial statements (continued)
Financial instruments (continued)
(c) Subsequent measurement (continued)
Anexchange between theGroup andits original lenders ofdebt instruments withsubstantially different terms, as well as substantial modifications of
theterms andconditions ofexisting financial liabilities, are accounted foras anextinguishment of theoriginal financial liability andtherecognition ofa
new financial liability. Theterms are substantially different if thediscounted present value of thecash flows under thenew terms, including any fees paid
net ofany fees received anddiscounted using theoriginal effective interest rate, is atleast 10% different from thediscounted present value of theremaining
cash flows of theoriginal financial liability.
Modifications ofliabilities that do not result inextinguishment are accounted forasa change inestimate usinga cumulative catch-up method, withany
gain orloss recognised inprofit orloss.
(d) Offsetting
Financial assets andfinancial liabilities are offset andthenet amount presented in thestatement offinancial position when, andonly when, theGroup
currently hasa legally enforceable right toset off theamounts andit intends either tosettle them ona net basis ortorealise theasset andsettle theliability
simultaneously.
(e) Impairment
Ateach reporting date, theGroup assesses whether financial assets carried atamortized cost are credit-impaired. Afinancial asset is “credit-impaired”
when one ormore events that havea detrimental impact on theestimated future cash flows of thefinancial asset have occurred. Evidence thata financial
asset is credit-impaired includes thefollowing observable data:
• significant financial difficult of thedebtor;
• a breach ofcontract such asa default orbeing more than 90days past due;
• the restructuring ofa loan oradvance by theCompany onterms that theGroup would not consider otherwise; or
• it is probable that thedebtor will enter bankruptcy orother financial reorganisation.
TheGroup assesses ona forward-looking basis theexpected credit losses associated withits debt instruments carried atamortised cost andFVOCI
andcash andcash equivalents. TheGroup measures expected credit losses (‘ECL’) andrecognises credit loss allowance ateach reporting date.
Theimpairment methodology applied depends onwhether there has beena significant increase incredit risk.
Thecarrying amount of thefinancial assets is reduced through theuse of anallowance account, andtheamount of theloss is recognised in theincome
statement within ‘net impairment losses onfinancial andcontract assets’. Fortrade receivables, theGroup applies thesimplified approach permitted
byIFRS 9, which requires expected lifetime losses tobe recognised frominitial recognition of thereceivables. Forall other financial assets that are
subject toimpairment under IFRS 9theGroup appliesa general approach– three-stage model forrecognizing andmeasuring expected losses
based onchanges incredit quality sinceinitial recognition. Afinancial instrument that is not credit-impaired oninitial recognition is classified inStage
1. Financial assets inStage 1have their ECL measured at anamount equal to theportion oflifetime ECL that results fromdefault events possible within
thenext 12months oruntil contractual maturity, if shorter (‘12 Months ECL’). If theGroup identifiesa significant increase incredit risk (‘SICR’) sinceinitial
recognition, theasset is transferred toStage 2andits ECL is measured based onECL ona lifetime basis, that is, up until contractual maturity but
considering expected prepayments, if any (‘Lifetime ECL’). Refer toNote 3(b), Credit risk section fora description ofhow theGroup determines whena
SICR has occurred. If theGroup determines thata financial asset is credit-impaired, theasset is transferred toStage 3andits ECL is measured asa
Lifetime ECL.
Additionally, fordebt instruments that qualify as low credit risk, theloss allowance is limited to12months expected credit losses. Fora description ofhow
theGroup determines low credit risk financial assets refer toNote 3, Credit risk section below.
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
Dividend distribution
Dividend distribution to theCompany’s shareholders is recognised asa liability in theGroup’s financial statements in theperiod inwhich they are
declared when theshareholders’ right toreceive them is established, i.e. when they are approved, appropriately authorised andare no longer at
thediscretion of theCompany.
More specifically, interim dividends are recognised as liability in theperiod inwhich these are authorised by theBoard ofDirectors andin thecase
offinal dividends, they are recognised in theperiod inwhich these are approved by theCompany’s shareholders.
Income taxes
Thetax expense for theperiod comprises current anddeferred tax. Tax is recognised onprofit orloss, except to theextent that it relates toitems
recognised inother comprehensive income ordirectly inequity. Inthis case, thetax is also recognised inother comprehensive income ordirectly
inequity respectively.
Current tax liabilities andassets for thecurrent andprior periods are measured at theamount expected tobe paid to orrecovered from thetaxation
authorities using thetax rates andlaws that have been enacted orsubstantively enacted by thebalance sheet date in thecountry where theentity
operates andgenerates taxable income. Management periodically evaluates positions taken intax returns withrespect tosituations inwhich
applicable tax regulations is subject tointerpretation andestablishes provisions where appropriate on thebasis ofamounts expected tobe paid to
thetax authorities.
Deferred income tax is provided infull, using theliability method, ontemporary differences arising between thetax bases ofassets andliabilities
andtheir carrying amounts in theconsolidated financial statements. Inaccordance with theinitial recognition exemption, deferred taxes are not
recorded fortemporary differences oninitial recognition of anasset ora liability ina transaction other thana business combination if thetransaction,
when initially recorded, affects neither accounting, nor taxable profit orloss. Deferred income tax is determined using tax rates andlaws that have
been enacted orsubstantively enacted by thebalance sheet date andare expected toapply when therelated deferred income tax asset is realised
orthedeferred income tax liability is settled.
Deferred income tax assets are recognised to theextent that it is probable that future taxable profit will be available against which thetemporary
differences can be utilised.
Deferred income tax is provided ontemporary differences arising oninvestments insubsidiaries, associates andjoint ventures, except where
thetiming of thereversal of thetemporary difference is controlled by theGroup andit is probable that thetemporary difference will not reverse in
theforeseeable future.
Deferred income tax is not recognised fortaxable temporary differences arising on theinitial recognition ofgoodwill.
TheGroup considers leases asa single transaction inwhich theassets andliabilities are integrally linked andrecognises deferred tax onnet
temporary differences.
Value Added Tax (“VAT”)
In theRussian Federation, output value added tax related tosales is payable totax authorities on theearlier of(a) collection of thereceivables
fromcustomers or(b) delivery of thegoods orservices tocustomers. Input VAT is generally recoverable against output VAT upon receipt of theVAT
invoice except forexport sales related input VAT that is reclaimable upon confirmation ofexport. Thetax authorities permit thesettlement ofVAT ona
net basis. Where provision has been made forimpairment ofreceivables, impairment loss is recognised for thegross amount of thedebtor, including
VAT. Thelease liabilities are disclosed net ofVAT. While theleasing payment includes VAT, theamount ofVAT from thelease payment made is
reclaimable against sales VAT. VAT related tosales andpurchases is recognised in thebalance sheet ona gross basis anddisclosed separately as
anasset andliability.
Employee benefits
Wages, salaries, contributions tostate pension andsocial insurance funds, paid annual leave andsick leave, bonuses andother benefits (such as
health services) are accrued in theyear inwhich theassociated services are rendered by theemployees of theGroup. These are included instaff
costs andtheGroup has no further obligations once thecontributions have been paid. Staff costs of theGroup mainly consists ofsalaries.
TheGroup recognisesa liability andanexpense forbonuses where contractually obliged orwhere there isa past practice that has createda
constructive obligation andanobligation can be estimated reliably.
Non-current assets held forsale
Non-current assets are classified as assets held forsale when their carrying amount is tobe recovered principally througha sale transaction anda sale is
considered highly probable. They are stated at thelower ofcarrying amount andfair value less costs tosell.
Cash flow statement
Thecash flow statement is prepared under theindirect method. Purchases ofproperty, plant andequipment (including prepayments forPPE) are presented
within cash flows frominvesting activities andfinance lease repayments within cash flows fromfinancing activities are shown net ofVAT. Related input VAT
is included inmovement inchanges ofworking capital, within trade andother receivables.
Share capital, share premium andcapital contribution
Ordinary shares are classified as equity.
Incremental costs directly attributable to theissue ofnew shares are shown inequity asa deduction, net oftax, from theproceeds.
Any excess of thefair value ofconsideration received over thepar value ofshares issued is recognised as share premium. Share premium is subject to
theprovision of theCyprus Companies Law onreduction ofshare capital.
Capital contribution represents contributions by theshareholders directly in thereserves of theCompany. TheCompany does not have any contractual
obligation torepay these amounts. However, these are distributable to theCompany’s shareholders at thediscretion of theBoard ofDirectors subject to
theshareholders’ approval.
Provisions andcontingent liabilities
Provisions are recognised when theGroup hasa present legal orconstructive obligation asa result ofpast events, it is more likely than not that anoutflow
ofresources will be required tosettle theobligation, andtheamount has been reliably estimated. Provisions are not recognised forfuture operating losses.
Where there area number ofsimilar obligations, thelikelihood that anoutflow will be required insettlement is determined byconsidering theclass
ofobligations asa whole. Aprovision is recognised even if thelikelihood of anoutflow withrespect toany one item included in thesame class
ofobligations may be small.
Provisions are measured at thepresent value of theexpenditure expected tobe required tosettle theobligation usinga pre-tax rate that reflects current
market assessments of thetime value ofmoney andtherisks specific to theobligation. Theincrease in theprovision due topassage oftime is recognised as
interest expense.
Provisions are only used tocover those expenses which they had been set up for. Other possible orpresent obligations that arise frompast events but it is
not probable that anoutflow ofresources embodying economic benefits will be required tosettle theobligation; ortheamount of theobligation cannot be
measured withsufficient reliability, are disclosed in thenotes to thefinancial statements as contingent liabilities.
Transactions withequity holders
TheGroup may enter intofinancing transactions withits shareholders andother entities which are under thecontrol of theultimate shareholders. When
such transactions are not conducted atarm’s length, theGroup’s accounting policy is torecognise any excess gains orlosses onsuch transactions directly
through equity andconsider these transactions as thereceipt ofadditional capital contribution ordistributions. Similar transactions withnon-equity holders,
orparties which are not under thecontrol of theultimate shareholders, are recognised inprofit orloss inaccordance withIFRS 9.
Segment reporting
Operating segments are reported ina manner consistent with theinternal reporting provided to thechief operating decision-maker. Thechief operating
decision-maker, who is responsible forallocating resources andassessing performance of theoperating segments, has been identified as theBoard
ofDirectors that makes strategic decisions.
Notes totheconsolidated financial statements (continued)
2. Basis ofpreparation andsummary ofsignificant accounting policies (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
3. Financial risk management (continued)
Financial risk factors (continued)
(a) Market risk (continued)
Thecarrying amount offinancial assets andliabilities inRussian operations denominated inEuros as at31 December 2021and31December 2020are
as follows:
(inthousands ofUS dollars) As at31 December
2021 2020
Liabilities 979 673
Capital commitments 10,461 874
Had Euro exchange rate strengthened/weakened by20% against theRussian rouble andall other variables remained unchanged, thepost-
tax profit andtheequity of theGroup for theyear ended 31December 2021, would have (decreased)/increased byUS$157thousand (2020:
US$108thousand). This is mainly due toforeign exchange gains andlosses arising upon retranslation ofaccounts payable denominated inEuros.
(ii) Cash flow andfair value interest rate risk
TheGroup is not exposed tochanges inmarket interest rates as its entire borrowings portfolio consists offixed rate debt as of31 December
2021and2020. However, theGroup is exposed tofair value interest rate risk through market value fluctuations ofloans receivable, borrowings andlease
liabilities withfixed rates.
Management monitors changes ininterest rates andtakes steps tomitigate these risks as far as practicable andeconomically feasible.
(b) Credit risk
(i) Risk management
Financial assets, which potentially subject theGroup tocredit risk, consist principally oftrade andother receivables, loans receivable (Note 19)
andcash andcash equivalents (Note 20) andderivative financial instruments (Note 24). TheGroup has policies inplace toensure that sales ofgoods
andservices are made tocustomers with anappropriate credit history. These policies enable theGroup toreduce its credit risk significantly. However,
theGroup’s business is heavily dependent onseveral large key customers accounting for45% of theGroup’s revenue for theyear ended 31 December
2021 (year ended 31 December 2020: 51%).
(ii) Impairment offinancial assets
TheGroup has three types offinancial assets that are subject to theexpected credit loss model:
• Trade receivables forsales ofgoods andfrom theprovision ofservices;
• Debt instruments andother financial assets carried atamortised cost (loans torelated parties andother receivables); and
• Cash andcash equivalents.
Cash andcash equivalents:
TheGroup’s cash andcash equivalents which have investment grade credit ratings withatleast one major rating agency are considered tohave low
credit risk, andtheloss allowance tobe recognised during theperiod was therefore limited to12months expected losses. Theidentified impairment loss
forcash andcash equivalents was immaterial tobe accounted for. For thesplit ofcash andcash equivalents bycredit rating refer toNote 17.
Trade receivables:
Tomeasure theexpected lifetime credit losses, theGroup performed theassessment on anindividual basis forits major customers based ondays past due
andthecorresponding historical credit losses experienced by theGroup withthose customers.
Forthose customers who are independently rated, theGroup monitors their credit quality based on theexternal credit ratings. Otherwise, if there is no
independent rating, theGroup monitors thecredit quality oftrade receivables on thebasis ofpast experience, identifying customers withworking history
with theGroup ofover 12months andno losses arising andothers, andalso byreference to thedays past due.
Notes totheconsolidated financial statements (continued)
3. Financial risk management
Financial risk factors
TheGroup’s activities expose it toa variety offinancial risks: market risk (including foreign exchange risk, cash flow andfair value interest rate risk), credit
risk andliquidity risk. TheGroup’s overall risk management programme focuses on theunpredictability offinancial markets andseeks tominimise potential
adverse effects on theGroup’s financial results.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises onmonetary items like cash inbanks, short-term investments, trade andother receivables, borrowings andtrade andother
payables denominated incurrency other than functional currency ofeach of theentities of theGroup.
Theanalysis below demonstrates theeffect ofa change ina key assumption while other assumptions remain unchanged. Inreality, there isa correlation
between theassumptions andother factors. It should also be noted that these sensitivities are usually non-linear, andlarger orsmaller impacts should not
be interpolated orextrapolated fromthese results. Thesensitivity analysis does not take intoconsideration that theGroup’s assets andliabilities are actively
managed. Additionally, thefinancial position of theGroup may vary at thetime that any actual market movement occurs. Other limitations in theabove
sensitivity analysis include theuse ofhypothetical market movements todemonstrate potential risk that only represent theGroup’s view ofpossible near-
term market changes that cannot be predicted withany certainty; andtheassumption that all interest rates move in anidentical fashion.
Currently thelong-term debt of theGroup is denominated inUS dollars andRussian roubles. TheUS dollar interest rates are relatively more attractive
compared to theRussian rouble interest rate. Therevenues ofRussian operations are mainly priced inRussian roubles andmost ofexpenses are
denominated andsettled inRussian roubles. TheGroup uses fromtime-to-time derivatives (foreign currency forwards andoptions) tomanage its
exposures toforeign exchange risk, formore details see Note 24. Theanalysis below does not cover borrowings ofjoint ventures as they are not
included in thefinancial position of theGroup.
Thecarrying amount offinancial assets andliabilities of theGroup’s components that have Russian rouble as their functional currency, denominated inUS
dollars are as follows:
(inthousands ofUS dollars) As at31 December
2021 2020
Assets 32,490 135,209
Liabilities 208 711
Intra-group financial assets 151,224 142,686
Intra-group financial liabilities 270,729 371,638
Thecarrying amount offinancial assets andliabilities of theGroup’s components that have US Dollar as their functional currency, denominated inRussian
roubles are as follows:
(inthousands ofUS dollars) As at31 December
2021 2020
Intra-group financial assets 109,758 107,329
Had US dollar exchange rate strengthened/weakened by15% against theRussian rouble andall other variables remained unchanged, thepost-tax
profit of theGroup for theyear ended 31 December 2021, would have (decreased)/increased byUS$24,783thousand (2020: US$25,334thousand)
andtheequity would have (decreased)/increased byUS$24,783thousand (2020: US$25,334thousand). This is mainly due toforeign exchange gains
andlosses arising upon retranslation ofcash andcash equivalents, accounts receivable, borrowings, leases andintra-group financial assets andliabilities
denominated inUS dollars andRussian roubles. Theabove sensitivity does not take intoaccount theeffect offoreign currency derivatives.
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
3. Financial risk management (continued)
Financial risk factors (continued)
(c) Liquidity risk (continued)
Themanagement of theGroup believes that it is successfully managing theexposure of theGroup toliquidity risk.
Thetable below summarises theanalysis offinancial liabilities bymaturity as of31December 2021and2020. Theamounts in thetable are contractual
undiscounted cash flows. Trade andother payables balances due within 12months equal their carrying balances as theimpact ofdiscounting is not
significant.
(inthousands ofUS dollars) Less than
1month
1-3months 3-6months 6months–
1year
1-2years 2-5years Over
5years
Total
As at31 December 2021
Borrowings
1
205,459 9,867 10,330 20,263 330,698 275,660 – 852,277
Lease liabilities 792 1,326 2,082 3,992 7,173 19,356 136,583 171,304
Trade andother payables 8,101 18,460 – 33 – – – 26,594
Derivative financial instruments:
• payments 110,359 – – – – – – 110,359
• receipts (114,800) – – – – – – (114,800)
Total 209,911 29,653 12,412 24,288 337,871 295,016 136,583 1,045,734
As at31 December 2020
Borrowings
1
6,911 153,830 5,568 22,328 236,330 478,468 – 903,435
Lease liabilities 592 930 1,521 2,945 5,490 14,853 137,600 163,931
Trade andother payables 5,027 9,364 7 553 – – – 14,951
Derivative financial instruments:
• payments 4,346 – – 4,428 110,982 – – 119,756
• receipts (3,800) – – (3,800) (114,800) – – (122,400)
Total 13,076 164,124 7,096 26,454 238,002 493,321 137,600 1,079,673
1
TheGroup repurchased its own Eurobonds in2020 (Note 22). There are 29% repurchased as ofboth 31 December 2021and31 December 2020. Theborrowings payments presented above exclude cash flows related to therepurchased part
ofEurobonds (before cancellation in2020).
Derivative financial instruments (currency forward andoption contracts) are gross settled.
(d) Capital risk management
TheGroup’s main objective when managing capital is tomaintain theability tocontinue asa going concern inorder toensure theprofitability of
theGroup, maintain optimum equity structure andreduce its cost ofcapital.
Defining capital, theGroup uses theamount ofequity andtheGroup’s borrowings.
TheGroup manages thecapital based onborrowings tototal capitalisation ratio. Borrowings include lease liabilities andloan liabilities.
Total capitalisation is calculated as thesum of thetotal Group borrowings andequity at thedate ofcalculation. Themanagement does not currently have
any specific target for therate ofborrowings tototal capitalisation.
Therate ofborrowings tototal capitalisation is as follows:
(inthousands ofUS dollars) As at31 December
2021 2020
Total borrowings 788,090 819,099
Total capitalisation 1,287,481 1,180,477
Total borrowings tototal capitalisation ratio (percentage) 61 % 69%
Notes totheconsolidated financial statements (continued)
3. Financial risk management (continued)
Financial risk factors (continued)
(b) Credit risk (continued)
Loans andother receivables:
Withrespect toother financial assets atamortised cost, theGroup considers theprobability ofdefault upon initial recognition of theasset andwhether
there has beena significant increase incredit risk on anongoing basis throughout each reporting period. Toassess whether there isa significant increase
incredit risk theGroup compares therisk ofa default occurring on theasset as at thereporting date with therisk ofdefault as at thedate ofinitial
recognition. It considers available reasonable andsupportive forwarding-looking information. Especially thefollowing indicators are incorporated:
• actual orexpected significant adverse changes inbusiness, financial oreconomic conditions that are expected tocausea significant change to
theborrower’s/counterparty’s ability tomeet its obligations;
• actual orexpected significant changes in theoperating results of theborrower/counterparty; and
• significant changes in theexpected performance andbehaviour of theborrower/counterparty, including changes in thepayment status
ofcounterparty andchanges in theoperating results of theborrower.
Regardless of theanalysis above,a significant increase incredit risk forloans andother receivables witha third party is presumed ifa debtor is more than
30days past due inmakinga contractual payment.
Adefault onloans andother receivables witha third party is when thecounterparty fails tomake contractual payments within 90days ofwhen they fall
due and/or thecounterparty is assessed as unlikely topay its obligations infull without realisation ofcollateral, regardless of theexistence ofany past-
due amount orthenumber ofdays past due.
Financial assets including trade andother receivables are written off when there is no reasonable expectation ofrecovery, such asa debtor/counterparty
failing toengage ina repayment plan with theGroup. Where loans orreceivables have been written off, theGroup continues toengage inenforcement
activity toattempt torecover thereceivable due. Where recoveries are made, these are recognised inconsolidated income statement.
TheGroup’s loans receivable fromrelated parties are within Stage 3of theIFRS 9impairment model. No material lifetime expected credit losses were
identified inrelation to theGroup’s loans receivable fromrelated parties.
Formore information on thecredit risk quality oftrade andother receivables of theGroup on31 December 2021refer toNotes 17 and19.
(c) Liquidity risk
Management controls current liquidity based onexpected cash flows andexpected revenue receipts.
Cash flow forecasting is performed at thelevel ofoperating entities of theGroup andatconsolidated level byGroup finance department. Group finance
department monitors forecasts of theGroup’s liquidity requirements toensure it has sufficient cash tomeet operational needs as well as scheduled
debt service while maintaining sufficient headroom toensure that theGroup does not breach covenants (where applicable) onany ofits borrowing
facilities. Such forecasting takes intoconsideration potential variations inoperating cash flows due tomarket conditions, theGroup’s debt repayments
andcovenant compliance.
Taking intoaccount expected levels ofoperating cash flows, availability ofcash andcash equivalents amounting toUS$296,657thousand (31
December 2020: US$206,968thousand) (Note 20) theGroup has theability tomeet its liabilities as they fall due andmitigate risks ofadverse changes
in thefinancial markets environment.
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
Critical accounting estimates andassumptions (continued)
(i) Estimated impairment ofgoodwill, property, plant andequipment, right-of-use assets andinvestments injoint ventures
TheGroup follows its accounting policies totest goodwill, other non-financial assets andinvestments injoint ventures forpossible impairment orreversal
ofimpairment. Because ofCOVID-19outbreak theGroup performed updated tests of theestimated recoverable amount forall CGUs in thecourse of
thepreparation of theconsolidated financial statements for theyear ended 31 December 2021.
TheGroup performeda test of theestimated recoverable amount of theCGUs using thevalue-in-use method, compared totheir carrying value, forall
CGUs except forYLP andMD forwhich fair value less costs tosell method was used.
ForYLP andMD valuation is based oncombination of themarket approach based onrecent sales ofsimilar assets andthecost approach (Level 2).
Thevalue-in-use assessment requires making judgments about long-term forecasts related to theCGUs subject toreview forwhich therecoverable amount
was calculated based onestimated discounted future cash flows. These forecasts are uncertain as they require assumptions about volumes, prices for
theproducts andservices, discount rates, future market conditions andfuture technological developments. Significant andunanticipated changes inthese
assumptions could requirea provision forimpairment ina future period.
Forall CGUs tested based ondiscounted future cash flows, cash flow projections covera period offive years based on theassumptions of thenext
12months. Cash flows beyond that five-year period have been extrapolated usinga steady terminal growth rate. Theterminal growth rate used does not
exceed thelong-term average growth rate for themarket inwhich entities operate. Forprojections prepared forCGUs inRussian ports segments as at31
December 2021a terminal growth rate of3% (31 December 2020: 3%) andthediscount rate 8.8% (31 December 2020: 9.4%) have been applied.
Forprojections prepared forFinnish ports CGUs as at31 December 2021a terminal growth rate of2% (31 December 2020: 2%) andthediscount rate
8.8% (31 December 2020: 9.7%) have been applied.
Key assumptions forRussian ports andFinnish ports CGUs tested based ondiscounted future cash flows are throughput volume, price per unit, growth
rates, anddiscount rates. Theprojected volumes reflect past experience adjusted by themanagement view on theprospective market developments.
Volume growth is estimated tobe inline with thelong-term market development, position ofeach terminal on themarket andits pricing power. ForCGUs
in theRussian ports segment, as supported byhistorical market performance andinview ofrelatively low containerisation level inRussia, thelong-term
average throughput growth rate for theRussian container market is higher than indeveloped markets.
In2021, following positive changes in thebusiness ofULCT coming fromstrong market demand forcoal handling, theGroup reassessed its estimates
andreversed animpairment loss recognised in2015. Theimpairment loss in theamount ofUS$46,686was fully allocated toproperty, plant
andequipment. Thefull reversal ofpreviously recognised impairment loss resulted inincrease in thedepreciated net book amount ofproperty, plant
andequipment byUS$8,517thousand (Note 14) as of31 December 2021.
Based on theresults of theimpairment tests forother CGUs carried out on31 December 2021, theBoard ofDirectors did not identify any impairment
losses andalso believes that there are no indications forreversal ofimpairments recognised inprevious periods fornon-financial assets other than
goodwill.
InMLT Oy, therecoverable amount calculated based on thevalue inuse exceeded thecarrying value byUS$1.0million. Adecrease in theaverage
container tariffs byapproximately 0.3% each year orcontainer handling volumes byapproximately 0.7% each year orthediscount rate of9.4%
ortheterminal growth of1.2%, as opposed tothose used inprojections would remove theheadroom.
Forother CGUs management believes that any reasonably possible change in thekey assumptions onwhich therecoverable amount is based would not
cause carrying amount toexceed therecoverable amount.
(ii) Russian legislation
Russian tax, currency andcustoms legislation is subject tovarying interpretations (Note 28).
4. Critical accounting estimates andjudgements (continued)
Notes totheconsolidated financial statements (continued)
Financial risk factors (continued)
(e) Fair value estimation
Fair value is theamount atwhicha financial asset could be exchanged ora liability settled ina transaction between knowledgeable willing parties in
anarm’s length transaction, other than ina forced sale orliquidation, andis best evidenced by anactive quoted market price.
Theestimated fair values offinancial instruments have been determined by theGroup, using available market information, where it exists, andappropriate
valuation methodologies andassistance ofexperts. However, judgment is necessarily required tointerpret market data todetermine theestimated fair
value. TheRussian Federation continues todisplay some characteristics of anemerging market andeconomic conditions continue tolimit thevolume
ofactivity in thefinancial markets. Market quotations may be outdated orreflect distress sale transactions andtherefore do not always represent thefair
values offinancial instruments. TheGroup has used all available market information inestimating thefair value offinancial instruments.
Thefair value offloating rate instruments is normally their carrying amount. Theestimated fair value offixed interest rate instruments is based onestimated
future cash flows expected tobe received, discounted atcurrent interest rates forinstruments withsimilar credit risk andremaining maturity. Discount rates
used depend oncredit risk of thecounterparty. Carrying amounts oftrade andother receivables approximate their fair values.
Theestimated fair value offixed interest rate instruments withstated maturity, forwhicha quoted market price is not available, was estimated based
onexpected cash flows, discounted atcurrent interest rates fornew instruments withsimilar credit risk andremaining maturity. Carrying amounts oftrade
andother payables which are due within twelve months approximate their fair values.
Thedisclosure of thefair value offinancial instruments carried atamortised cost andthefair value offinancial instruments carried atfair value is determined
using thefollowing valuation methods:
• Level 1– Quoted prices (unadjusted) inactive markets foridentical assets orliabilities.
• Level 2– Thefair value offinancial instruments that are not traded in anactive market is determined using valuation techniques. These valuation
techniques maximise theuse ofobservable market data where it is available andrely as little as possible onGroup’s specific estimates.
• Level 3– Inputs for theasset orliability that are not based onobservable market data (that is, unobservable inputs).
TheGroup’s financial instruments carried atfair value relate toderivative financial instruments in theform ofcurrency option andforward contracts andare
disclosed inNote 24. They are valued using Level 2valuation techniques from thetable above. There were no changes in thevaluation techniques during
theyear.
Specific valuation techniques used tovalue derivative financial instruments include:
• for currency forwards– thepresent value offuture cash flows based on theforward exchange rates at thebalance sheet date,
• for currency options– option pricing models (e.g. Black-Scholes model), and
• for other financial instruments– discounted cash flow analysis.
Level 2inputs include use ofquoted market prices ordealer quotes foridentical orsimilar instruments. Where significant adjustments tomarket based data
are made, orwhere other significant inputs are unobservable, thevaluation would be categorised as Level 3.
Changes inLevel 2andLevel 3fair values are analysed at theend ofeach reporting period.
4. Critical accounting estimates andjudgements
Estimates andjudgments are continually evaluated andthey are based onhistorical experience andother factors, including expectations offuture events
that are believed tobe reasonable under thecircumstances.
Critical accounting estimates andassumptions
TheGroup makes estimates andassumptions concerning thefuture. Theresulting accounting estimates will, bydefinition, seldom equal therelated actual
results. Theestimates andassumptions that havea significant risk ofcausinga material adjustment to thecarrying amounts ofassets andliabilities within
thenext financial year are discussed below:
3. Financial risk management (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
Thefollowing items do not represent operating segments, however, are provided to theCODM together withsegment information:
Holding companies (all other)
Thesegment consists ofGlobal Ports Investments Plc (GPI) andsome intermediate managing, holding andservice companies.
Reconciliation adjustments
Reconciliation adjustments consist oftwo major components:
• Effect ofproportionate consolidation– demonstrates theeffect ofproportionate consolidation ofMD, YLP andFinnish ports. In thesegmental reporting
thefinancial position andfinancial results ofthese segments are incorporated using theproportionate consolidation method with the75% proportion.
MD, YLP andFinnish ports information is presented on the100% basis in theRussian ports andFinnish ports segments andthen the25% portion which is
not consolidated is deducted asa ‘Reconciliation Adjustment’.
• Other adjustments– all other consolidation adjustments including but not limited to:
– elimination ofintragroup transactions (mainly intragroup sales anddividends) andbalances (mainly intragroup loans andinvestments insubsidiaries
andjoint ventures);
– consolidation adjustments ofresults ofsale orpurchase ofshares ofsubsidiaries;
– other consolidation adjustments.
TheGroup does not have any material regular transactions between segments except forthose which mainly relate tomanagement andfinancing
activities.
5. Segmental information (continued)
Notes totheconsolidated financial statements (continued)
5. Segmental information
Thechief operating decision-maker (CODM) has been identified as theBoard ofDirectors. They review theGroup’s internal reporting inorder toassess
performance andallocate resources. Theoperating segments were determined based onthese reports.
Group operations consist ofseveral major business units that are mainly organised as separate legal entities. Segment profit is obtained directly from
theaccounting records ofeach business unit andadjustments are made tobring their accounting records inline withIFRS as adopted by theEU; therefore,
there are no arbitrary allocations between segments. Certain business units are operating withone major operating company andsome supporting
companies.
TheBoard ofDirectors considers thebusiness frombotha geographic (which is represented bydifferent port locations managed byseparate legal
entities) andservices perspective regularly monitoring theperformance ofeach major business unit.
TheBoard ofDirectors assesses theperformance of theoperating segments based onrevenue (both inmonetary andquantity terms) major costs items
andnet profit after theaccounting records ofbusiness units are converted tobe inline withIFRS as adopted by theEU with theexclusion ofjoint ventures.
For thepurposes of theinternal reporting, joint ventures are assessed ona 100% ownership basis.
Assets are allocated based on theoperations of thesegment andthephysical location of theasset.
Forsegmental reporting purposes, theGroup’s consolidated financial position andconsolidated results are presented byproportionately combining
theinterests injoint ventures (MLT andCD groups). Additional disclosures are provided toreconcile thesegmental information with theconsolidated
income statement andtheconsolidated balance sheet. Forthis purpose andonthis basis, theGroup combines its share of thejoint ventures’ individual
income andexpenses, assets andliabilities andcash flows ona line-by-line basis withsimilar items in theGroup’s financial statements. TheGroup
recognises theportion ofgains orlosses on thesale ofassets by theGroup to thejoint venture that is attributable to theother venturers. Unrealised gains
ontransactions between theGroup andits joint ventures are eliminated to theextent of theGroup’s interest in thejoint venture. Unrealised losses are also
eliminated unless thetransaction provided evidence of animpairment of theasset transferred.
Thebrief description ofsegments is as follows:
Russian ports
Thesegment consists of thefollowing operating units:
• First Container Terminal (FCT), Petrolesport andFarvater (PLP) andvarious other entities (including some intermediate holdings) that own andmanage
two container terminals inSt. Petersburg port, North-West Russia. FCT andPLP are engaged inhandling ofcontainers, PLP is also engaged inhandling
ofro-ro, general cargo andscrap metal.
• Ust-Luga Container Terminal (ULCT),a container terminal inUst-Luga, near St. Petersburg, North-West Russia.
• Vostochnaya Stevedoring Company (VSC) andvarious other entities (including some intermediate holdings) that own andmanagea container
terminal inPort ofVostochny near Nahodka, Far-East Russia.
• Moby Dik (MD) andvarious other entities (including some intermediate holdings) that own andmanagea container terminal inKronstadt near St.
Petersburg, North-West Russia.
• Yanino Logistics Park (YLP) being anin-land container terminal inYanino near St.Petersburg, North-West Russia.
All of theabove terminals represent separate CGUs, with theexception ofPLP andFCT which work as one unit fromcommercial andoperational points
ofview andare considered as one CGU. Thetwo terminals havea common managing director andcommon senior management team andtheGroup
management andtheBoard ofDirectors of theCompany look atPLP andFCT as one combined terminal andmonitor its performance asa single unit,
without being legally merged together andremaining two separate legal entities.
Finnish ports
Thesegment consists ofcontainer terminals in theports ofVuosaari (Helsinki) andKotka, Finland owned andoperated byMulti-Link Terminals Ltd Oy (MLT
Oy CGU).
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
income statement above is as follows:
(inthousands ofUS dollars) Group as per propor-
tionate combination
Adjustments torecognise
for thecomponents un-
der theequity method
Total consolidated results
Revenue fromcontainer operations 429,567 (6,232) 423,335
Non-containerized cargo 89,312 (9,857) 79,455
Inter-segment revenue – – –
Total revenue 518,879 (16,089) 502,790
Cost ofsales (293,510) 16,736 (276,774)
Administrative, selling andmarketing expenses (28,942) 1,899 (27,043)
Other income 1,300 – 1,300
Share ofprofit/(loss) ofjoint ventures accounted forusing theequity method – (2,798) (2,798)
Other gains/(losses)– net (350) (24) (374)
Operating profit/(loss) 197,377 (276) 197,101
Finance income/(costs)– net (56,007) 926 (55,081)
incl. interest income 3,617 453 4,070
incl. interest expenses (54,641) 813 (53,828)
incl. change in thefair value ofderivative instruments (5,843) (61) (5,904)
incl. net foreign exchange gains/(losses) onfinancing activities 860 (279) 581
Profit/(loss) before income tax 141,370 650 142,020
Income tax expense 2,488 (650) 1,838
Profit/(loss) after tax 143,858 – 143,858
CAPEX oncash basis 43,822 (462) 43,360
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Notes totheconsolidated financial statements (continued)
Thesegment results for theyear ended 31 December 2021are as follows:
(inthousands ofUS dollars) Russian
ports
Finnish
ports
Total of
proportionally
combined
operating
segments
Holdings Consolidation adjustments Group as per
proportionate
combination
Effect
ofproportionate
combination
Other
adjustments
Revenue fromcontainer operations 424,795 6,849 431,644 – (2,077) – 429,567
Non-containerized cargo 90,537 2,587 93,124 – (3,780) (32) 89,312
Inter-segment revenue – – – 156 – (156) –
Total revenue 515,332 9,436 524,768 156 (5,857) (188) 518,879
Cost ofsales (287,452) (11,830) (299,282) (391) 6,150 13 (293,510)
Administrative, selling andmarketing expenses (6,322) (831) (7,153) (22,525) 539 19 7 (28,942)
Other income – – – 1,300 – – 1,300
Other gains/(losses)– net (390) 2 (388) (46) 13 71 (350)
Operating profit/(loss) 221,168 (3,223) 217,945 (21,506) 845 93 197,377
Finance income/(costs)– net (53,911) (284) (54,195) (2,385) 274 299 (56,007)
incl. interest income 5,790 – 5,790 98 (7) (2,264) 3,617
incl. interest expenses (54,297) (360) (54,657) (2,575) 327 2,264 (54,641)
incl. change in thefair value ofderivative instruments (5,903) 80 (5,823) – (20) – (5,843)
incl. net foreign exchange gains/(losses) onfinancing activities 499 (4) 495 92 (26) 299 860
Profit/(loss) before income tax 167,257 (3,507) 163,750 (23,891) 1,119 392 141,370
Income tax expense 1,855 675 2,530 174 (216) – 2,488
Profit/(loss) after tax 169,112 (2,832) 166,280 (23,717) 903 392 143,858
CAPEX
1
oncash basis 43,711 195 43,906 70 (154) – 43,822
1
CAPEX represents purchases ofproperty, plant andequipment
Thereconciliation ofresults for theyear ended 31 December 2021calculated withproportional consolidation to theresults presented inconsolidated
5. Segmental information (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Thesegment items operating expenses fortheyear ended 31December 2021areasfollows:
(inthousands ofUS dollars) Russian
ports
Finnish
ports
Total
ofproportionally
combined
operating
segments
Holdings Consolidation adjustments Group asper
proportionate
combination
Effect
ofproportionate
combination
Other
adjustments
Depreciation ofproperty, plant andequipment 37, 010 1,949 38,959 503 (903) – 38,558
Depreciation ofright-of-use assets 13,552 854 14,406 19 9 (299) – 14,307
Amortisation ofintangible assets 547 5 552 494 (51) – 995
Reversal ofimpairment ofproperty, plant andequipment (8,517) – (8,517) – – – (8,517)
Staff costs 60,464 5,057 65,521 17, 215 (2,572) 4 80,168
Transportation expenses 134,044 – 134,044 – (361) – 133,683
Fuel, electricity andgas 10,738 564 11,302 4 (371) – 10,935
Repair andmaintenance ofproperty, plant andequipment 6,099 1, 113 7, 212 15 (416) (4) 6,807
Total 253,937 9,542 263,479 18,430 (4,973) – 276,936
Other operating expenses 39,837 3,119 42,956 4,486 (1,716) (210) 45,516
Total cost ofsales, administrative, selling andmarketing
expenses
293,774 12,661 306,435 22,916 (6,689) (210) 322,452
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Thereconciliation ofoperating expenses fortheyear ended 31December 2021calculated withproportional consolidation totheresults presented
inconsolidated income statement above isasfollows:
(inthousands ofUS dollars) Group asper
proportionate
combination
Adjustments torecognise
forthecomponents
under theequity method
Total consolidated results
Depreciation ofproperty, plant andequipment 38,558 (2,709) 35,849
Depreciation ofright-of-use assets 14,307 (896) 13,411
Amortisation ofintangible assets 995 (152) 843
Reversal ofimpairment ofproperty, plant andequipment (8,517) – (8,517)
Staff costs 80,168 (7,703) 72,465
Transportation expenses 133,683 (1,086) 132,597
Fuel, electricity andgas 10,935 (1,112) 9,823
Repair andmaintenance ofproperty, plant andequipment 6,807 (1,247) 5,560
Total 276,936 (14,905) 262,031
Other operating expenses 45,516 (3,730) 41,786
Total cost ofsales, administrative, selling andmarketing expenses 322,452 (18,635) 303,817
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
5. Segmental information (continued)
Notes totheconsolidated financial statements (continued)
Thesegment assets andliabilities asat31December 2021areasfollows:
(inthousands ofUS dollars) Russian
ports
Finnish
ports
Total ofpropor-
tionally com-
bined operating
segments
Holdings Consolidation adjustments Group asper
proportionate
combination
Effect
ofproportionate
combination
Other
adjustments
Property, plant andequipment
(including prepayments forPPE)
446,252 12,232 458,484 362 (7,126) – 451,720
Right-of-use assets 529,002 3,568 532,570 19 (1,857) – 530,732
Investments injoint ventures – – – 165,818 – (165,818) –
Intangible assets 16,934 19 16,953 2,887 (1,429) – 18 ,411
Other non-current assets 217, 171 127,720 344,891 1,072,708 (33,013) (1,321,376) 63,210
Inventories 8,757 – 8,757 – (130) – 8,627
Trade andother receivables andother current assets 79,131 1,105 80,236 3,783 (661) (2,023) 81, 335
Cash andcash equivalents 292,743 308 293,051 8,162 (1,139) – 300,074
Total assets 1,589,990 144,952 1,734,942 1,253,739 (45,355) (1,489,217) 1,454,109
Long-term borrowings 539,905 2,979 542,884 151, 22 4 (4,540) (151,224) 538,344
Long-term lease liabilities 38,798 2,930 41,728 – (1,251) – 40,477
Other long-term liabilities 118, 791 761 119,552 – 94 – 119,646
Trade andother payables 31,002 2,077 33,079 8,777 (870) (1,984) 39,002
Short-term borrowings 211,870 680 212,550 – (225) – 212,325
Short-term lease liabilities 3,700 770 4,470 8 (247) – 4,231
Other short-term liabilities 224 – 224 483 (1) – 706
Total liabilities 944,290 10,197 954,487 160,492 (7,040) (153,208) 954,731
Non-controlling interest 19,275 – 19,275 – – – 19,275
Included within ‘Russian ports’, ‘Finnish ports’ and‘Holdings’ segments ‘Other non-current assets’ areinvestments insubsidiaries inthetotal amount
ofUS$5,353thousand, US$126,614thousand andUS$1,071,177thousand respectively (fully eliminated onconsolidation).
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Thereconciliation oftotal segment assets andliabilities asat31December 2021calculated withproportional consolidation totheresults presented
inconsolidated balance sheet above isasfollows:
(inthousands ofUS dollars) Group asper
proportionate
combination
Adjustments torecognise
forthecomponents
under theequity method
Total consolidated results
Property, plant andequipment (including prepayments forPPE) 451,720 (21,378) 430,342
Right-of-use assets 530,732 (5,571) 525,161
Investments injoint ventures – 19,873 19,873
Intangible assets 18,411 (6,714) 11,697
Other non-current assets 63,210 8,616 71,826
Inventories 8,627 (390) 8,237
Trade andother receivables andother current assets 81, 335 (1,660) 79,675
Cash andcash equivalents 300,074 (3,417) 296,657
Total assets 1,454,109 (10,641) 1,443,468
Long-term borrowings 538,344 (2,234) 536,110
Long-term lease liabilities 40,477 (3,752) 36,725
Other long-term liabilities 119,646 (854) 118,792
Trade andother payables 39,002 (2,297) 36,705
Short-term borrowings 212,325 (509) 211, 816
Short-term lease liabilities 4,231 (792) 3,439
Other short-term liabilities 706 (216) 490
Total liabilities 954,731 (10,654) 944,077
Non-controlling interest 19,275 – 19,275
62 63
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Thesegment results fortheyear ended 31December 2020areasfollows:
(inthousands ofUS dollars) Russian
ports
Finnish
ports
Total
ofproportionally
combined
operating
segments
Holdings Consolidation adjustments Group asper
proportionate
combination
Effect
ofproportionate
combination
Other
adjustments
Revenue fromcontainer operations 302,371 7, 75 3 310,124 – (2,380) – 307,744
Non-containerized cargo 92,979 973 93,952 – (2,744) – 91,208
Inter-segment revenue – – – 397 – (397) –
Total revenue 395,350 8,726 404,076 397 (5,124) (397) 398,952
Cost ofsales (211,585) (8,963) (220,548) (408) 5,367 6 (215,583)
Administrative, selling andmarketing expenses (7,974) (802) (8,776) (18,744) 637 271 (26,612)
Other income – – – 1,300 – – 1,300
Other gains/(losses)– net (435) 8 (427) 3,252 (30) (3,037) (242)
Operating profit/(loss) 175,356 (1,031) 174,325 (14,203) 850 (3,157) 15 7,815
Finance income/(costs)– net (93,114) (333) (93,447) (493) 2 91 – (93,649)
incl. interest income 2,683 – 2,683 117 (4) (1,199) 1,597
incl. interest expenses (72,298) (306) (72,604) (1,269) 424 1,199 (72,250)
incl. change inthefair value ofderivative instruments 18,380 34 18 ,414 – (9) – 18,405
incl. net foreign exchange gains/(losses) onfinancing
activities
(41,879) (61) (41,940) 659 (120) – (41,401)
Profit/(loss) before income tax 82,242 (1,364) 80,878 (14,696) 1,141 (3,157) 64,166
Income tax expense (13,790) 268 (13,522) (507) (151) – (14,180)
Profit/(loss) after tax 68,452 (1,096) 67,356 (15,203) 990 (3,157) 49,986
CAPEX
1
oncash basis 34,919 8,340 43,259 12 7 (2,375) – 41 , 011
1
CAPEX represents purchases ofproperty, plant andequipment
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Thereconciliation ofresults fortheyear ended 31December 2020calculated withproportional consolidation totheresults presented inconsolidated
income statement above isasfollows:
(inthousands ofUS dollars) Group asper
proportionate
combination
Adjustments torecognise
forthecomponents
under theequity method
Total consolidated results
Revenue fromcontainer operations 307,744 (7,139) 300,605
Non-containerized cargo 91,208 (7,377) 83,831
Inter-segment revenue – – –
Total revenue 398,952 (14,516) 384,436
Cost ofsales (215,583) 15,254 (200,329)
Administrative, selling andmarketing expenses (26,612) 1, 911 (24,701)
Other income 1,300 – 1,300
Share ofprofit/(loss) ofjoint ventures accounted forusing theequity method – (2,973) (2,973)
Other gains/(losses)– net (242) (97) (339)
Operating profit/(loss) 15 7, 815 (421) 157,394
Finance income/(costs)– net (93,649) 872 (92,777)
incl. interest income 1,597 760 2,357
incl. interest expenses (72,250) 499 (71,751)
incl. change inthefair value ofderivative instruments 18,405 (25) 18,380
incl. net foreign exchange gains/(losses) onfinancing activities (41,401) (362) (41,763)
Profit/(loss) before income tax 64,166 4 51 64,617
Income tax expense (14,180) (451) (14,631)
Profit/(loss) after tax 49,986 – 49,986
CAPEX oncash basis 41 , 011 (7,123) 33,888
64 65
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Thesegment items operating expenses fortheyear ended 31December 2020areasfollows:
(inthousands ofUS dollars) Russian
ports
Finnish
ports
Total
ofproportionally
combined
operating
segments
Holdings Consolidation adjustments Group asper
proportionate
combination
Effect ofpro-
portionate
combination
Other
adjustments
Depreciation ofproperty, plant andequipment 36,698 1,530 38,228 822 (873) – 38,177
Depreciation ofright-of-use assets 11 , 819 568 12,387 404 (244) – 12,547
Amortisation ofintangible assets 331 3 334 530 (24) – 840
Staff costs 53,266 4,620 57,886 14,153 (2,534) – 69,505
Transportation expenses 68,936 554 69,490 – (457) – 69,033
Fuel, electricity andgas 9,449 493 9,942 6 (311) – 9,637
Repair andmaintenance ofproperty, plant andequipment 6,043 997 7,040 15 (404) – 6,651
Total 186,542 8,765 195,307 15,930 (4,847) – 206,390
Other operating expenses 33,017 1,000 34,017 3,222 (1,157) (277) 35,805
Total cost ofsales, administrative, selling andmarketing
expenses
219,559 9,765 229,324 19 , 15 2 (6,004) (277) 242,195
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Thereconciliation ofoperating expenses fortheyear ended 31December 2020calculated withproportional consolidation totheresults presented
inconsolidated income statement above isasfollows:
(inthousands ofUS dollars) Group asper
proportionate
combination
Adjustments torecognise
forthecomponents
under theequity method
Total consolidated results
Depreciation ofproperty, plant andequipment 38,177 (2,618) 35,559
Depreciation ofright-of-use assets 12,547 (730) 11 , 817
Amortisation ofintangible assets 840 (70) 770
Staff costs 69,505 (7,602) 61,903
Transportation expenses 69,033 (1,370) 67,663
Fuel, electricity andgas 9,637 (932) 8,705
Repair andmaintenance ofproperty, plant andequipment 6,651 (1,240) 5,411
Total 206,390 (14,562) 191,828
Other operating expenses 35,805 (2,603) 33,202
Total cost ofsales, administrative, selling andmarketing expenses 242,195 (17,165) 225,030
66 67
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
The segment assets and liabilities as at 31 December 2020 are as follows:
(inthousands ofUS dollars) Russian
ports
Finnish
ports
Total
ofproportionally
combined
operating
segments
Holdings Consolidation adjustments Group asper
proportionate
combination
Effect
ofproportionate
combination
Other
adjustments
Property, plant andequipment (including prepayments
forPPE)
442,864 15,082 457,946 868 (9,623) – 449,191
Right-of-use assets 532,990 4,784 5 37, 7 74 223 (1,909) – 536,088
Investments injoint ventures 784 – 784 165,870 – (166,654) –
Intangible assets 13,257 11 13,268 3,119 (471) – 15,916
Other non-current assets 88,589 126,711 215,300 1,071,622 (33,016) (1,189,654) 64,252
Inventories 7,658 – 7,658 20 (138) – 7,540
Trade andother receivables (including income tax
prepayment)
50,972 3,241 54,213 3,988 (1,126) (866) 56,209
Cash andcash equivalents 207,822 1, 241 209,063 2,979 (1,268) – 210 ,7 74
Total assets 1,344,936 151,070 1,496,006 1,248,689 (47,551) (1,357,174) 1,339,970
Long-term borrowings 636,897 3,964 640,861 19,099 (4,814) (19,099) 636,047
Long-term lease liabilities 33,320 4,038 37,358 10 (1,570) – 35,798
Other long-term liabilities 123,283 1,027 124,310 – (275) (573) 123,462
Trade andother payables 20,920 1,929 22,849 4,727 (817) (664) 26,095
Short-term borrowings 153,479 855 154,334 – (296) – 154,038
Short-term lease liabilities 1,997 885 2,882 202 (318) – 2,766
Other short-term liabilities 374 – 374 – (2) – 372
Total liabilities 970,270 12,698 982,968 24,038 (8,092) (20,336) 978,578
Non-controlling interest 15,881 – 15,881 – – – 15,881
Included within ‘Russian ports’, ‘Finnish ports’ and‘Holdings’ segments ‘Other non-current assets’ areinvestments insubsidiaries inthetotal amount
ofUS$5,353thousand, US$126,614thousand andUS$1,071,189thousand respectively (fully eliminated onconsolidation).
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Thereconciliation oftotal segment assets andliabilities asat31December 2020calculated withproportional consolidation totheresults presented
inconsolidated balance sheet above isasfollows:
(inthousands ofUS dollars) Group asper
proportionate
combination
Adjustments torecognise
forthecomponents
under theequity method
Total consolidated results
Property, plant andequipment (including prepayments forPPE) 449,191 (28,868) 420,323
Right-of-use assets 536,088 (5,726) 530,362
Investments injoint ventures – 23,383 23,383
Intangible assets 15,916 (3,856) 12,060
Other non-current assets 64,252 9 , 615 73,867
Inventories 7,540 (413) 7, 127
Trade andother receivables (including income tax prepayment) 56,209 (3,130) 53,079
Cash andcash equivalents 210 , 774 (3,806) 206,968
Total assets 1,339,970 (12,801) 1,327,169
Long-term borrowings 636,047 (3,122) 632,925
Long-term lease liabilities 35,798 (4,710) 31,088
Other long-term liabilities 123,462 (684) 122,778
Trade andother payables 26,095 (2,555) 23,540
Short-term borrowings 154,038 (762) 153,276
Short-term lease liabilities 2,766 (956) 1, 810
Other short-term liabilities 372 2 374
Total liabilities 978,578 (12,787) 965,791
Non-controlling interest 15,881 – 15,881
Therevenue oftheGroup mainly comprises ofstevedoring services, storage andancillary port services forcontainer andbulk cargoes. Thesubsidiaries
andjoint ventures oftheGroup also provide services that areofsupport nature inrelation tothecore services mentioned above.
68 69
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
5. Segmental information (continued)
Revenue attributable todomestic andforeign customers fortheyear ended 31December 2021isdisclosed below inaccordance withtheir registered
address. Major clients oftheGroup areinternationally operating companies andtheir Russian branches. Their registered addresses areusually not
relevant tothelocation oftheir operations.
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Revenue fromdomestic customers– Cyprus 6,240 8,505
Revenue fromforeign customers bycountries:
Russia 430,121 307,585
South Korea 25,800 22,675
Denmark 12,290 5,899
UK 8,976 9,433
Finland 7, 2 73 5,309
Other 12,090 25,030
Revenue fromforeign customers total 496,550 375,931
Total revenue 502,790 384,436
Inboth 2021and2020there wasone customer representing more than 10% ofconsolidated revenue. This customer originated fromRussian ports
segment andits registered address isinRussia.
Themanagement also assesses theperformance oftheGroup based onadjusted EBITDA (anon IFRS financial measure) that isdefined asprofit/
(loss) fortheyear before income tax expense, finance income/(costs)-net, depreciation, write-off andimpairment ofproperty, plant andequipment,
depreciation andimpairment ofright-of-use assets, amortisation, write-off andimpairment ofintangible assets, share ofprofit/(loss) ofjoint ventures
accounted forusing theequity method andother gains/(losses)-net.
Theadjusted EBITDA oftheGroup iscalculated asfollows:
(inthousands ofUS dollars) Note Fortheyear ended
31December
2021 2020
Profit/(loss) fortheyear 143,858 49,986
Adjusted for:
Income tax expense 11 (1,838) 14,631
Finance (income)/costs-net 9 55,081 92,777
Amortisation ofintangible assets 6 843 770
Depreciation ofproperty, plant andequipment 6 35,849 35,559
Depreciation ofright-of-use assets 6 13,411 11 , 817
Reversal ofimpairment ofproperty, plant andequipment 6 (8,517) -
Write-off ofproperty, plant andequipment 6 4,378 891
Share of(profit)/loss ofjoint ventures accounted forusing theequity method 27(a) 2,798 2,973
Other (gains)/losses– net 7 373 339
Adjusted EBITDA 246,236 209,743
Notes totheconsolidated financial statements (continued)
6. Expenses bynature
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Staff costs (Note 8) 72,465 61,903
Depreciation ofproperty, plant andequipment (Note 14) 35,849 35,559
Depreciation ofright-of-use assets (Note 23) 13,411 11 , 817
Amortisation ofintangible assets (Note 15) 843 770
Reversal ofimpairment ofproperty, plant andequipment (Note 14) (8,517) -
Write-off ofproperty, plant andequipment (Note 14) 4,378 891
Transportation expenses 132,597 67,663
Fuel, electricity andgas 9,823 8,705
Repair andmaintenance ofproperty, plant andequipment 5,560 5,411
Taxes other than onincome 2,463 2,496
Legal, consulting andother professional services 2,432 2,191
Auditors’ remuneration 887 993
Expense relating toshort-term leases and/or leases oflow-value assets 617 374
Purchased services 18,743 16 ,162
Insurance 1,070 936
Other expenses 11,196 9,159
Total cost ofsales, administrative, selling andmarketing expenses 303,817 225,030
Thetotal fees ofthestatutory auditor forthestatutory audit oftheannual financial statements oftheCompany fortheyear ended 31December
2021amounted toUS$237thousand (2020: US$266thousand). Thetotal fees charged bytheCompany’s statutory auditor intheyear ended
31December 2021forother assurance services amounted toUS$-thousand (2020: US$57thousand), fortax andVAT advisory services amounted
toUS$-thousand (2020: US$47thousand) andother non-audit services amounted toUS$-thousand (2020: US$6thousand).
Theabove expenses areanalysed byfunction asfollows:
Cost ofsales
(inthousands ofUS dollars)
Fortheyear ended
31December
2021 2020
Staff costs 53,405 45,083
Depreciation ofproperty, plant andequipment 34,896 34,073
Depreciation ofright-of-use assets 13,411 11 , 817
Amortisation ofintangible assets 677 595
Reversal ofimpairment ofproperty, plant andequipment (Note 14) (8,517) -
Write-off ofproperty, plant andequipment (Note 14) 4,377 8 91
Transportation expenses 132,597 67,663
Fuel, electricity andgas 9,631 8,528
Repair andmaintenance ofproperty, plant andequipment 5,509 5,287
Taxes other than onincome 2,331 2,376
Expense relating toshort-term leases and/or leases oflow-value assets 266 113
Purchased services 18,743 16 ,162
Insurance 802 712
Other expenses 8,646 7,029
Total cost ofsales 276,774 200,329
70 71
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
6. Expenses bynature (continued)
Administrative, selling andmarketing expenses
(inthousands ofUS dollars)
Fortheyear ended
31December
2021 2020
Staff costs 19,060 16,820
Depreciation ofproperty, plant andequipment 953 1,486
Amortisation ofintangible assets 166 175
Fuel, electricity andgas 192 177
Repair andmaintenance ofproperty, plant andequipment 51 12 4
Taxes other than onincome 132 12 0
Legal, consulting andother professional services 2,432 2,191
Auditors’ remuneration 887 993
Expense relating toshort-term leases and/or leases oflow-value assets 351 2 61
Insurance 268 224
Other expenses 2,551 2,130
Total administrative, selling andmarketing expenses 27,043 24,701
7. Other gains/(losses)– net
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Foreign exchange gains/(losses) onnon-financing activities– net (Note 10) 225 209
Charity (309) (412)
Other gains/(losses)– net (290) (136)
Total other gains/(losses)– net (374) (339)
8. Employee benefit expense
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Salaries 54,609 47,610
Social insurance costs 13,177 12 , 121
Other employee benefits 1,944 -
Other staff costs 2,735 2,172
Total 72,465 61,903
Average number ofstaff employed during theyear 2,786 2,556
Included within ‘Social insurance costs’ for2021arecontributions made tothestate pension funds inthetotal amount ofUS$7,622thousand (2020:
US$7,127thousand).
Notes totheconsolidated financial statements (continued)
9. Finance income/(costs)– net
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Included infinance income:
Interest income onbank balances 3,442 1,327
Interest income onloans torelated parties (Note30(g)) 628 1,030
Total finance income calculated using effective interest rate method 4,070 2,357
Included infinance costs:
Interest expenses onbank borrowings (6,104) (6,066)
Interest expenses onbonds (42,961) (61,059)
Interest expenses onlease liabilities (4,763) (4,099)
Loss onextinguishment offinancial liabilities (Note 22) – (527)
Total finance costs (53,828) (71,751)
Change infair value ofcurrency forwards andcurrency options (Notes 22 and24) (5,904) 18,380
Net foreign exchange gains/(losses) onfinancing activities 5 81 (41,763)
Finance income/(costs)– net (55,081) (92,777)
10. Net foreign exchange gains/(losses)
Theexchange differences (charged)/credited totheincome statement areasfollows:
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Included in‘finance income/(costs)– net’ (Note 9) 5 81 (41,763)
Included in‘other gains/(losses)– net’ (Note 7) 225 209
Total 806 (41,554)
72 73
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
11. Income tax expense
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Current tax 11,069 12,261
Deferred tax
• Effect ofchange inwithholding tax rate (Note 25) – 3,230
• Effect oftemporary differences (Note 25) (12,907) (860)
Total (1,838) 14,631
Thetax ontheGroup’s profit/(loss) before tax differs from thetheoretical amount that would arise using theapplicable tax rate asfollows:
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Profit/(loss) before tax 142,020 64,617
Tax calculated attheapplicable tax rates– 20%
1
28,404 12,924
Tax effect ofexpenses not deductible fortax purposes 860 2,645
Recognition ofpreviously unrecognized tax losses (5,900) –
Tax effect ofreduced tax rates ofentities inRussian ports segment (6,646) (2,907)
Tax effect ofshare ofprofit/(loss) injointly controlled entities 560 595
Tax credit claimed byentities inRussian ports segment (18,093) (3,922)
Effect ofchange inwithholding tax rate – 3,230
Withholding tax onundistributed profits (1,023) 2,066
Tax charge (1,838) 14,631
1
Theapplicable tax rate used for2021and2020is20% asthis istheincome statutory tax rate applicable totheRussian ports segment, whereasubstantial part ofthetaxable income arises.
Following thereversal ofimpairment loss inULCT (Note 4(i)) in2021previously unrecognized tax losses tobeset off intheamount US$5,900thousand
have been recognized.
Deferred tax isprovided ontheundistributed profits ofsubsidiaries andjoint ventures, except when it isprobable that theGroup will not distribute dividends
from thespecific investment intheforeseeable future andtheGroup can control thepayment ofdividends.
TheCompany issubject tocorporation tax ontaxable profits attherate of12.5%.
12. Basic anddiluted earnings per share
Basic anddiluted earnings per share arecalculated bydividing theprofit attributable toequity holders oftheCompany bytheweighted average number
inissue during therespective period.
Fortheyear ended 31December
2021 2020
Profit/(loss) attributable totheowners oftheparent oftheCompany– inthousands ofUS dollars 140,401 48,399
Weighted average ofordinary shares inissue (thousands) 573,171 573,171
Basic anddiluted earnings per share forprofit/(loss) attributable totheowners oftheparent (expressed inUS$ per share) 0.24 0.08
13. Dividend distribution
During 2021and2020theCompany did not declare orpay dividends totheequity holders oftheCompany.
Notes totheconsolidated financial statements (continued)
14. Property, plant andequipment
(inthousands ofUS dollars) Land Buildings
andfacilities
Assets under
construction
Loading
equipment
andmachinery
Other
production
equipment
Office
equipment
Total
At1January 2020
Cost 151,149 371,764 14,098 229,133 10,308 2,166 778,618
Accumulated depreciation andimpairment – (155,201) – (115,657) (6,979) (1,446) (279,283)
Net book amount 151,149 216,563 14,098 113,476 3,329 720 499,335
Additions – 13,159 8,543 12,869 1,230 331 36,132
Transfers – 701 (732) 143 ( 111 ) (1) –
Disposals – (186) – (231) (9) (3) (429)
Write-offs – – (891) – – – (891)
Depreciation charge (Note 6) – (19,118) – (15,401) (759) (281) (35,559)
Translation reserve (24,488) (34,858) (2,938) (18,179) (529) (115) (81,107)
Closing net book amount 126,661 176,261 18,080 92,677 3,151 6 51 417,481
At31December 2020
Cost 126,664 323,066 18,080 197,989 9,527 2,155 677,481
Accumulated depreciation andimpairment (3) (146,805) – (105,312) (6,376) (1,504) (260,000)
Net book amount 126,661 176,261 18,080 92,677 3,151 6 51 417,4 81
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
14. Property, plant andequipment (continued)
(inthousands ofUS dollars) Land Buildings
andfacilities
Assets under
construction
Loading
equipment
andmachinery
Other pro-
duction
equipment
Office
equipment
Total
At1January 2021
Cost 126,664 323,066 18,080 197,989 9,527 2,155 677,481
Accumulated depreciation andimpairment (3) (146,805) – (105,312) (6,376) (1,504) (260,000)
Net book amount 126,661 176,261 18,080 92,677 3,151 6 51 417,4 81
Additions 104 8,519 11,222 20,654 2,334 133 42,966
Transfers – 3,587 (6,164) 2,632 (60) 5 –
Disposals – – – (8) – (85) (93)
Write-offs – (1,318) – (3,052) (8) – (4,378)
Depreciation charge (Note 6) – (19,180) – (15,430) (985) (254) (35,849)
Reversal ofimpairment loss – 5,008 – 3,509 – – 8,517
Translation reserve (714 ) (890) (131) (462) (25) 5 (2,217)
Closing net book amount 126,051 171,987 23,007 100,520 4,407 455 426,427
At31December 2021
Cost 126,051 327,157 23,007 208,591 10,716 1,905 697,427
Accumulated depreciation andimpairment – (155,170) – (108,071) (6,309) (1,450) (271,000)
Net book amount 126,051 171,987 23,007 100,520 4,407 455 426,427
Asof31December 2021, animpairment loss wasfully reversed following positive changes inthebusiness ofULCT coming fromstrong market demand
forcoal handling (Note 4(i)). TheUS$8,517thousand reversed isthedepreciated net book amount oftheimpairment loss US$46,686thousand
recognised in2015.
Notes totheconsolidated financial statements (continued)
14. Property, plant andequipment (continued)
Inthecash flow statement proceeds fromsale ofproperty, plant andequipment comprise of:
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Net book amount 4,471 1,320
Less: Non-cash items– write-offs ofproperty, plant andequipment (4,378) (891)
93 429
Profit onsale ofproperty, plant andequipment
1
446 7
Proceeds fromsale ofproperty, plant andequipment 539 436
1
Profit onsale ofproperty, plant andequipment isincluded in‘Cost ofsales’ intheconsolidated income statement.
Depreciation expense amounting toUS$34,896thousand in2021 (2020: US$34,073thousand) has been charged to‘cost ofsales’
andUS$953thousand in2021 (2020: US$1,486thousand) has been charged to‘administrative, selling andmarketing’ expenses (Note 6).
There wereno capitalised borrowing costs in2021and2020.
Lease rentals relating tothelease ofmachinery andproperty amounting toUS$266thousand in2021 (2020: US$113thousand) have been charged
to‘cost ofsales’ andUS$351thousand in2021 (2020: US$261thousand) has been charged to‘administrative, selling andmarketing expenses’.
Asat31December 2021theamounts prepaid forequipment not delivered andprepayments forconstruction works not yet carried out
wereUS$3,915thousand (2020: US$2,842thousand).
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
15. Intangible assets
(inthousands ofUS dollars) Goodwill Computer
software
Total
At1January 2020
Cost 9,443 5,965 15,408
Accumulated amortisation andimpairment – (1,444) (1,444)
Net book amount 9,443 4,521 13,964
Additions – 890 890
Amortisation charge (Note 6) – (770) (770)
Translation reserve (1,530) (494) (2,024)
Closing net book amount 7, 913 4,147 12,060
At31December 2020
Cost 7, 913 6,087 14,000
Accumulated amortisation andimpairment – (1,940) (1,940)
Net book amount 7, 913 4,147 12,060
Additions – 546 546
Amortisation charge (Note 6) – (843) (843)
Translation reserve (45) (21) (66)
Closing net book amount 7,868 3,829 11,697
At31December 2021
Cost 7,868 6,527 14,395
Accumulated amortisation andimpairment – (2,698) (2,698)
Net book amount 7,868 3,829 11,697
Goodwill isallocated totheGroup’s cash generating units (CGUs) identified according totheir operating segment. Anoperating segment-level summary
ofthegoodwill allocation ispresented below:
(inthousands ofUS dollars) Asat31December
2021 2020
PLP/ FCT (Russian ports segment) 3,403 3,422
VSC (Russian ports segment) 4,465 4,491
Total 7,868 7, 913
Therecoverable amount oftheabove CGUs isdetermined based onvalue inuse calculations. These calculations arebased onpost-tax cash flow
projections andall theassumptions inrelation togrowth rates aredetermined byreference tomanagement’s past experience andindustry forecasts.
Thediscount rates used reflect thespecific risks ofeach segment. See Note 4(i) fordetails ofassumptions used.
Notes totheconsolidated financial statements (continued)
16. Financial instruments bycategory
Theaccounting policies forfinancial instruments have been applied intheline items below:
(inthousands ofUS dollars) Asat31December
2021 2020
Financial assets atamortised cost
Trade andother receivables
1
54,211 40,901
Cash andcash equivalents 296,657 206,968
Total 350,868 247,869
Financial liabilities measured atamortised cost
Borrowings 747,926 786,201
Trade andother payables
2
26,594 15,503
Total 774,520 801,704
Lease liabilities 40,164 29,319
Derivative financial instruments
Derivative financial instruments not used forhedging atfair value through profit
orloss– assets
5,465 10,199
1
Trade andother receivables do not include taxes andprepayments.
2
Trade andother payables do not include taxes andcontract liabilities.
17. Credit quality offinancial assets
Thecredit quality offinancial assets that arefully performing (i.e. neither past due nor impaired) can beassessed byreference toexternal andinternal
sources ofinformation like business reputation, financial position andperformance, prior working history records. Customers withlonger history ofworking
withtheGroup areregarded bymanagement ashaving lower risk ofdefault.
Thecredit quality offinancial assets that areneither past due nor impaired classified byreference totheworking history ofthecounterparty withtheGroup
isasfollows:
(inthousands ofUS dollars) Asat31December
2021 2020
Trade andother receivables
Core customers– existing (more than one year ofworking history withtheGroup) 24,294 15,498
Trade andother receivables fromother customers (third parties) – 1,085
Other receivables fromthird parties withAa1credit rating byMoody’s Investors Service 1,300 1,300
Trade andother receivables fromrelated parties withBaa2credit rating byMoody’s Investors Service (Baa3in2020) 11,047 7, 07 7
Trade andother receivables fromother related parties 257 911
Total 36,898 25,871
Trade andother receivables fromother customers (third parties) arerelated tohighly reputable counterparties withno external credit rating.
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
17. Credit quality offinancial assets (continued)
Cash atbank andshort-term bank deposits (Note 20):
(inthousands ofUS dollars) Asat31December
Agency Rating 2021 2020
International rating agency Moody’s Investors Service Аа3 370 593
International rating agency Moody’s Investors Service А3 101,769 4,565
International rating agency Moody’s Investors Service/ Standard & Poor’s Baa3-Baa3u/ BBB- 143,522 160,714
International rating agency Moody’s Investors Service Ba1 50,963 40,905
International rating agency Moody’s Investors Service B3 – 137
No rating
1
No rating 33 54
Total 296,657 206,968
1
Cash inhand andcash andcash equivalents withbanks forwhich there isno rating. These banks arehighly reputable local banks inthecountry ofoperation oftherespective Group entities.
18. Inventories
(inthousands ofUS dollars) Asat31December
2021 2020
Spare parts andconsumables 8,237 7, 12 7
Total 8,237 7, 12 7
All inventories arestated atcost.
19. Trade andother receivables
(inthousands ofUS dollars) Asat31December
2021 2020
Trade receivables– third parties 25,130 16,501
Trade receivables– related parties (Note 30(d)) 12,441 7,988
Total trade receivables 37,571 24,489
Other receivables 2,783 2,739
Loans torelated parties (Note 30(g)) 13,857 13,673
VAT andother taxes recoverable 10,885 8,219
Total financial assets atamortised cost 2 7, 5 2 5 24,631
Prepayments forgoods andservices 4,819 5,073
Prepayments forgoods andservices– related parties (Note 30(d)) 13,096 8,196
Total trade andother receivables 83,011 62,389
Less non-current portion:
Loans torelated parties (13,636) (13,507)
Total non-current portion (13,636) (13,507)
Current portion 69,375 48,882
Notes totheconsolidated financial statements (continued)
19. Trade andother receivables (continued)
According tomanagement estimates thefair values oftrade andother receivables do not materially differ fromtheir carrying amounts.
At31December 2021, trade andother receivables amounting toUS$36,898thousand werezero days past due (31December 2020:
US$25,871thousand).
Trade andother receivables amounting toUS$3,456thousand (31December 2020: US$1,357thousand) werepast due but not impaired. These
relate toanumber ofindependent customers forwhom there isno history ofeither non repayment inthepast orrenegotiation oftherepayment terms due
toinability ofthecustomer torepay thebalance.
Theanalysis ofpast due trade andother receivables isasfollows:
(inthousands ofUS dollars) Asat31December
2021 2020
Less than 1month overdue 3,035 1,107
From1to3months overdue 415 204
From3to6months overdue 4 9
Over6months overdue 2 37
Total 3,456 1,357
During 2021no trade receivables (2020: nil) wereimpaired andwritten off infull.
Other classes within trade andother receivables do not contain impaired assets.
Thefair value ofreceivables approximates their carrying value astheimpact ofthediscounting isinsignificant andiswithin Level 3ofthefair value
hierarchy. Thefair value isbased ondiscounting ofcash flows using 7% (2020: 7%) discount rate.
Thecarrying amounts oftheGroup’s trade andother receivables aredenominated inthefollowing currencies:
(inthousands ofUS dollars) Asat31December
2021 2020
Currency:
US dollar 3,352 5,010
Russian rouble 79,340 57,201
Euro 319 178
Total 83,011 62,389
Themaximum exposure tocredit risk atthereporting date isthecarrying value ofeach class ofreceivables mentioned above. TheGroup does not hold
anycollateral assecurity foranyreceivables.
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
20. Cash andcash equivalents
(inthousands ofUS dollars) Asat31December
2021 2020
Cash atbank andinhand 122,258 53,952
Short-term bank deposits (less than 90days) 174,399 153,016
Total 296,657 206,968
Theeffective average interest rate onshort-term deposits on31December 2021was7.4% (31December 2020: 1.5%) andthese deposits have
anaverage maturity of35days in2021 (2020: 19days).
Cash andcash equivalents include thefollowing forthepurposes ofthecash flow statement:
(inthousands ofUS dollars) Asat31December
2021 2020
Cash andcash equivalents 296,657 206,968
Total 296,657 206,968
21. Share capital
Authorised share capital
Theauthorised share capital oftheCompany amounts toUS$175,000,000.00divided into750,000,000ordinary shares and1,000,000,000ordinary
non-voting shares withapar value ofUS$0.10each.
Issued share capital
Theissued share capital oftheCompany amounts toUS$57,317,073.10divided into422,713,415ordinary shares and150,457,316ordinary non-voting
shares withapar value ofUS$0.10each.
Theordinary shares andtheordinary non-voting shares rank pari passu inall respects save that, theordinary non-voting shares do not have theright
toreceive notice, attend orvote atanygeneral meeting, nor tobetaken intoaccount forthepurpose ofdetermining thequorum ofanygeneral meeting.
(inthousands ofUS dollars) Number ofshares
‘000
Share capital Share premium Total
At1/31December 2020/31December 2021 573,171 57,317 923,511 980,828
Notes totheconsolidated financial statements (continued)
22. Borrowings
(inthousands ofUS dollars) Asat31December
2021 2020
Non-current borrowings
Bank loans 61,760 62,845
Non-convertible bonds 474,350 570,080
Total non-current borrowings 536,110 632,925
Current borrowings
Bank loans 732 746
Interest payable onbank loans 64 96
Non-convertible bonds 198,557 135,363
Non-convertible bonds– interest payable 12,463 17, 0 71
Total current borrowings 211 , 816 153,276
Total borrowings 747,926 786,201
Thetotal carrying value ofnon-convertible bonds presented above isUS$672,907thousand, their face value isUS$674,229thousand.
Thematurity ofnon-current borrowings isanalysed asfollows:
(inthousands ofUS dollars) Asat31December
2021 2020
Between 1and2years 302,523 198,745
Between 2and5years 233,587 434,180
Total 536,110 632,925
Bank borrowings mature until 2025 (31December 2020: 2025) andbonds mature until 2026 (31December 2020: 2025).
Changes inliabilities andassets arising fromborrowings andderivative financial instruments:
(inthousands ofUS dollars) Note Fortheyear ended 31December 2021
Borrowings Fair value ofderivative
financial instruments
1
Total
Atbeginning ofyear 786,201 (10,199) 776,002
Non-cash transactions
Interest charged 9 49,065 – 49,065
Loss onextinguishment offinancial liabilities 9 – – –
Change infair value ofderivative financial instruments 24, 9 – 5,904 5,904
Foreign exchange differences (2,969) (12) (2,981)
Cash transactions
Borrowings received during theyear 101,760 – 101,760
Borrowings repaid during theyear (133,408) – (133,408)
Interest repaid during theyear andderivatives settlements (52,723) (1,158) (53,881)
Atend ofyear 747,926 (5,465) 742,461
1
Represents net position (liabilities less assets) ofderivative financial instruments
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
22. Borrowings (continued)
Notes totheconsolidated financial statements (continued)
(inthousands ofUS dollars) Note Fortheyear ended 31December 2020
Borrowings Fair value ofderivative
financial instruments
1
Total
Atbeginning ofyear 8 3 7, 211 9,184 846,395
Non-cash transactions
Interest charged 9 6 7, 125 – 6 7, 125
Loss onextinguishment offinancial liabilities 9 527 – 527
Change infair value ofderivative financial instruments 24, 9 – (18,380) (18,380)
Foreign exchange differences (51,375) (154) (51,529)
Cash transactions
Borrowings received during theyear 72,079 – 72,079
Borrowings repaid during theyear (72,981) – (72,981)
Interest repaid during theyear andderivatives settlements (66,385) (849) (67,234)
Atend ofyear 786,201 (10,199) 776,002
1
Represents net position (liabilities less assets) ofderivative financial instruments
InFebruary andMarch 2021theGroup repaid US$67,509thousand (RUB4,948million) andUS$65,149thousand (RUB4,936million) RUB-
denominated bonds.
InNovember 2021theGroup issued RUB-denominated bonds intheamount ofUS$101,760thousand (RUB7.5billion) atafixed coupon rate
withmaturity 5years.
InDecember 2020theGroup repaid US$60,500thousand (RUB4,415million) RUB-denominated bonds using theproceeds fromnew RUB-
denominated bonds intheamount ofUS$67,878thousand (RUB5billion) issued withmaturity over5years andalower interest rate.
InApril andSeptember 2016, theGPI group has successfully finalised issue oftwo tranches ofEurobonds ontheIrish Stock Exchange inthetotal amount
ofUS$700million atafixed coupon rate. Somecompanies within GPI group have unconditionally andirrevocably guaranteed these Eurobonds
onajoint andseveral basis.
In2018-2020theGroup has repurchased somepart ofEurobonds andpartly derecognised theliability. In2020theGroup cancelled those Eurobonds
that werepreviously purchased bytheGroup. Theaggregate principal amount oftheoutstanding 2022and2023 Eurobonds asofboth 31December
2020and31December 2021isUS$198,557thousands andUS$297,975thousand respectively. Please see Note 31 forthedetails ofrepayment
of2022 Eurobonds.
Fair value ofbank loans andnon-convertible bonds wasasfollows:
(inthousands ofUS dollars) Fair value hierarchy Asat31December
2021 2020
Non-convertible bonds Level 1 170,371 209,945
Non-convertible bonds Level 2 521,422 536,645
Bank loans Level 2 62,492 63,591
Total 754,285 810 , 181
Notes totheconsolidated financial statements (continued)
22. Borrowings (continued)
Theexposure oftheGroup’s borrowings tointerest rate changes andthecontractual repricing dates atthebalance sheet dates areasfollows (thetable
excludes interest payable):
(inthousands ofUS dollars) Asat31December
2021 2020
6months orless 198,557 135,332
6–12months – –
1–5years 536,842 138,977
Total 735,399 274,309
Thecarrying amounts oftheGroup’s borrowings aredenominated inthefollowing currencies:
(inthousands ofUS dollars) Asat31December
2021 2020
Russian rouble 241,037 280,330
US dollar 506,889 505,871
Total 747,926 786,201
Asof31December 2021, from theabove amount ofborrowings denominated inUS$114,420thousand werecovered byRUB/US$ currency forward
contracts effectively converting theUS$ denominated obligation intoRUBdenominated one andUS$87,000thousand werecovered byRUB/US$
currency option contracts (Note 24) that limit foreign exchange risk exposure toacertain level that management considers appropriate inthecurrent
economic environment.
Agreements ofthebank loans given tosomeofthesubsidiaries oftheGroup include certain covenants which set forth certain financial ratios andother
non-financial covenants that must becomplied with. All oftheGroup’s subsidiaries wereincompliance withall covenants.
Theweighted average effective interest rate onborrowings is7.27% (2020: 7.99%).
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Notes totheconsolidated financial statements (continued)
23. Lease liabilities andright-of-use assets
Movements inlease liabilities areanalysed asfollows:
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Atbeginning ofperiod 32,898 34,181
Non-cash transactions
Adjustments related tochanges intheindex affecting lease payments 74 8 294
New leases 10,018 5,797
Leases termination (6) –
Interest charged (Note 9) 4,763 4,099
Exchange differences 81 (5,320)
Cash transactions
Repayments ofleases (3,635) (1,961)
Repayments ofinterest (4,703) (4,192)
Atend ofperiod 40,164 32,898
Ofwhich are:
Current lease liabilities 3,439 1, 810
Non-current lease liabilities 36,725 31,088
Thematurity ofnon-current lease liabilities isanalysed asfollows:
(inthousands ofUS dollars) Asat31December
2021 2020
Between 1and2years 2,701 1, 416
Between 2and5years 7,296 3,251
Over5years 26,728 26,421
Total 36,725 31,088
Thecarrying amounts oftheGroup’s lease liabilities aredenominated inthefollowing currencies:
(inthousands ofUS dollars) Asat31December
2021 2020
Russian rouble 39,995 32,343
US dollar 169 555
Total 40,164 32,898
Total cash outflow forleases in2021isUS$8,955thousand (2020: US$6,527thousand).
Major part ofUS$617 (2020: US$374thousand)thousand lease expenses included incost ofsales andadministrative, selling andmarketing expenses
isrelated toshort-term leases.
Notes totheconsolidated financial statements (continued)
23. Lease liabilities andright-of-use assets (continued)
Movements inright-of-use assets areanalysed asfollows:
(inthousands ofUS dollars) Land Buildings
andfacilities
Loading
equipment
andmachinery
Other
production
equipment
Office
equipment
Total
Closing net book amount asat31December 2019 17, 62 5 620,719 1, 135 144 76 639,699
Additions – 12 0 5,677 – – 5,797
Adjustments related tochanges intheindex affecting lease payments 39 255 – – – 294
Leases termination – – (17) – – (17)
Transfers – – 66 – (66) –
Depreciation (Note 6) (399) (10,647) (697) (74) – (11,817)
Exchange differences (2,856) (100,420) (286) (22) (10) (103,594)
Closing net book amount asat31December 2020 14,409 510,027 5,878 48 – 530,362
Additions 18 20 9,857 123 – 10,018
Adjustments related tochanges intheindex affecting lease payments – 74 8 – – – 74 8
Leases termination – (21) (4) – – (25)
Depreciation (Note 6) (396) (10,233) (2,641) (141) – (13,411)
Exchange differences (78) (2,785) 332 – – (2,531)
Closing net book amount asat31December 2021 13,953 497,756 13,422 30 – 525,161
24. Derivative financial instruments
Cash collected/paid inrelation totheoptions andforward arrangements not used forhedging ispresented intheconsolidated statement ofcash
flows as‘proceeds from/(settlement of) derivative financial instruments not used forhedging’ aspart of‘financing activities’. During 2021several
forward contracts weresettled andoptions premiums werepaid withtheresulting net cash outflow US$1,158thousand (2020: net cash outflow
US$849thousand).
Asof31December 2021, thenet fair value ofoptions contracts waspositive US$20thousand (31December 2020: positive US$753thousand) andnet
fair value offorward contracts waspositive US$5,444thousand (31December 2020: positive US$9,446thousand). Asof31December 2021, there
areoutstanding forward contracts toacquire US$114,800thousand (31December 2020: US$122,400thousand) andcurrency options contracts
withpossibility toacquire US$87,000thousand (31December 2020: US$87,000thousand).
InJanuary 2022theGroup collected US$6,593thousand asaresult ofsettlement ofall its options andforward contracts.
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Notes totheconsolidated financial statements (continued)
25. Deferred income tax liabilities
Deferred tax assets andliabilities areoffset when there isalegally enforceable right tooffset current tax assets against current tax liabilities andwhen
thedeferred taxes relate tothesame fiscal authority. Theoffset amounts areasfollows:
(inthousands ofUS dollars) Asat31December
2021 2020
Deferred tax assets:
Deferred tax asset toberecovered after more than 12months 58,190 50,788
Deferred tax liabilities:
Deferred tax liability toberecovered after more than 12months (117,060) (122,778)
Deferred tax liabilities (net) (58,870) (71,990)
Thegross movement onthedeferred income tax account isasfollows:
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Atthebeginning oftheyear (71,990) (83,068)
Income statement charge:
Deferred tax credit/(charge) (Note11) 12,907 (2,370)
Other movements:
Currency translation differences 213 13,448
Attheend oftheyear (58,870) (71,990)
Themovement onthedeferred tax assets (+) andliabilities (-) during theyear, without taking intoconsideration theoffsetting ofbalances within thesame
tax jurisdiction, isasfollows:
(inthousands ofUS dollars) Property, plant
andequipment
Lease liabilities
andright-of-use
assets
Withholding
tax provision
Intangible
assets
Borrowings Tax losses Other assets
andliabilities
Total
At1January 2020 (53,068) (119,067) (6,368) (104) (235) 94,041 1,733 (83,068)
Income statement (Note11) 1,383 1,472 (4,506) 28 (126) (715) 94 (2,370)
Translation differences 8,631 19,271 1,062 13 1 (15,147) (383) 13,448
At31December 2020 (43,054) (98,324) (9,812) (63) (360) 78,179 1,444 (71,990)
Income statement (Note11) 2,913 1,862 993 (120) 253 4,338 2,668 12,907
Translation differences 189 527 – 1 – (395) (109) 213
At31December 2021 (39,952) (95,935) (8,819) (182) (107) 82,122 4,003 (58,870)
Following thereversal ofimpairment loss inULCT (Note 4(i)) in2021deferred tax asset intheamount US$5,900thousand wasrecognised.
Deferred income tax assets arerecognised fortax loss carry-forwards totheextent that therealisation oftherelated tax benefit through future taxable
profits isprobable. Theamount ofunremitted earnings ofcertain subsidiaries andjoint ventures onwhich no withholding tax provision wasrecognised
amounts toUS$739,372thousand (2020:US$701,664thousand).
Notes totheconsolidated financial statements (continued)
26. Trade andother payables
(inthousands ofUS dollars) Asat31December
2021 2020
Trade payables– third parties 4,089 3,011
Trade payables– related parties (Note 30(e)) 104 237
Payables forproperty, plant andequipment 930 4 61
Other payables– third parties 2,072 1,328
Other payables– related parties (Note 30(e)) 2,048 1,705
Payroll payable 2,138 1,700
Accrued expenses 15 , 213 6,509
Contract liabilities– third parties 4,024 5,174
Contract liabilities– related parties (Note 30(e)) 1,985 552
Employee benefits provision 1,944 –
Taxes payable (other than income tax) 3,890 2,863
Total trade andother payables 38,437 23,540
Employee benefits provision 1,732 –
Less non-current portion 1,732 –
Current portion 36,705 23,540
During theyear ended 31December 2021, theGroup recognised revenue intheamount ofUS$5,726thousand (2020: US$7,504thousand) that
related tocarried-forward contract liabilities atthebeginning oftheyear.
Thefair value oftrade andother payables approximates their carrying amount atthebalance sheet date.
27. Joint ventures andnon-controlling interests
(a) Joint ventures
TheGroup has thefollowing investments injoint ventures– MLT group andCD Holding group. These entities areanintegral part ofoperations
oftheGroup. See Note 1 andNote 5 formore details.
Thesummarised investments injoint ventures accounted forusing theequity method asat31December 2021and31December 2020areasfollows:
(inthousands ofUS dollars) MLT CD Holding Total
At1January 2021 23,383 – 23,383
Recognised share ofprofit/(loss) (2,849) 51 (2,798)
Share oflosses ofjoint ventures applied against other long-term interests (Note 30(g)) – (42) (42)
Translation differences (through other comprehensive income/(loss)) (661) (9) (670)
At31December 2021 19,873 – 19,873
(inthousands ofUS dollars) MLT CD Holding Total
At1January 2020 27,590 – 27,590
Recognised share ofprofit/(loss) (1,980) (993) (2,973)
Share ofprofits ofjoint ventures applied against other long-term interests (Note 30(g)) – 827 827
Translation differences (through other comprehensive income/(loss)) (2,227) 166 (2,061)
At31December 2020 23,383 – 23,383
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27. Joint ventures andnon-controlling interests (continued)
Notes totheconsolidated financial statements (continued)
(a) Joint ventures (continued)
Set out below aretheselected summarised financial information forjoint ventures that areaccounted forusing theequity method.
Selected income statement items
(inthousands ofUS dollars)
Fortheyear ended 31December 2021
MLT CD Holding
Revenue 13,310 10,118
Depreciation, amortisation andimpairment (4,106) (905)
Interest income 13 13
Interest expense (636) (674)
Profit/(loss) before income tax (4,665) 68
Income tax expense 866 –
Profit/(loss) after tax (3,799) 68
Other comprehensive income/(loss) (862) (13)
Total comprehensive income/(loss) (4,661) 55
Selected balance sheet items
(inthousands ofUS dollars)
Asat31December 2021
MLT CD Holding
Total non-current assets 29,924 12,945
Cash andcash equivalents (including current deposits withmaturity over90days) 4,131 425
Other current assets 2,011 1 , 118
Total current assets 6,142 1,543
Total assets 36,066 14,488
Non-current financial liabilities 7,820 15,343
Other non-current liabilities 877 –
Total non-current liabilities 8,697 15,343
Current financial liabilities excluding trade andother payables 1,557 426
Other current liabilities including trade andother payables 2,553 780
Total current liabilities 4,110 1,206
Total liabilities 12,807 16,549
Net assets 23,259 (2,061)
Notes totheconsolidated financial statements (continued)
27. Joint ventures andnon-controlling interests (continued)
(a) Joint ventures (continued)
Selected income statement items
(inthousands ofUS dollars)
Fortheyear ended 31December 2020
MLT CD Holding
Revenue 11,570 8,926
Depreciation, amortisation andimpairment (3,473) (1,088)
Interest income 11 5
Interest expense (604) (1,092)
Profit/(loss) before income tax (3,242) (1,324)
Income tax expense 602 –
Profit/(loss) after tax (2,640) (1,324)
Other comprehensive income/(loss) (2,339) 222
Total comprehensive income/(loss) (4,979) (1,102)
Selected balance sheet items
(inthousands ofUS dollars)
Asat31December 2020
MLT CD Holding
Total non-current assets 34,263 13,845
Cash andcash equivalents (including current deposits withmaturity over90days) 4,884 19 0
Other current assets 4,113 875
Total current assets 8,997 1,065
Total assets 43,260 14,910
Non-current financial liabilities 10,013 15,524
Other non-current liabilities 1,098 –
Total non-current liabilities 11 , 111 15,524
Current financial liabilities excluding trade andother payables 1,887 570
Other current liabilities including trade andother payables 2,342 932
Total current liabilities 4,229 1,502
Total liabilities 15,340 17,026
Net assets 27,920 (2,116)
Theinformation above reflects theamounts presented inthefinancial statements ofthejoint ventures adjusted fordifferences inaccounting policies
between thegroup andthejoint ventures.
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27. Joint ventures andnon-controlling interests (continued)
Notes totheconsolidated financial statements (continued)
(a) Joint ventures (continued)
Set out below isthereconciliation ofthesummarised financial information presented tothecarrying amount oftheGroup interest injoint ventures.
(inthousands ofUS dollars) Fortheyear ended 31December 2021
MLT CD Holding Total
Opening net assets atthebeginning oftheyear 27,920 (3,163) 24,757
Profit/(loss) fortheperiod (3,799) 68 (3,731)
Other comprehensive income/(loss) (862) (13) (875)
Closing net assets attheend oftheyear 23,259 (3,108) 20,151
Ownership interest 75% 75%
Interest injoint venture 17,444 (2,329) 15 , 115
Share oflosses ofjoint ventures applied against other long-term interests (Note30(g)) – 1,545 1,545
Other movements – 784 784
Goodwill 15,469 – 15,469
Impairment ofgoodwill (13,040) – (13,040)
Carrying value on31December 2021 19,873 – 19,873
(inthousands ofUS dollars) Fortheyear ended 31December 2020
MLT CD Holding Total
Opening net assets atthebeginning oftheyear 32,899 (2,061) 30,838
Profit/(loss) fortheperiod (2,640) (1,324) (3,964)
Other comprehensive income/(loss) (2,339) 222 (2,117)
Closing net assets attheend oftheyear 27,920 (3,163) 24,757
Ownership interest 75% 75%
Interest injoint venture 20,940 (2,371) 18,569
Share oflosses ofjoint ventures applied against other long-term interests (Note30(g)) – 1,587 1,587
Other movements – 784 784
Goodwill 15,558 – 15,558
Impairment ofgoodwill (13,115) – (13,115)
Carrying value on31December 2020 23,383 – 23,383
27. Joint ventures andnon-controlling interests (continued)
Notes totheconsolidated financial statements (continued)
(b) Non-controlling interests
Ust-Luga Container Terminal (located inUst-Luga, North-West Russia) isan80% subsidiary where Eurogate, one oftheleading container terminal
operators inEurope, hasa20% non-controlling interest on31December 2021and31December 2020.
During 2021and2020 Ust-Luga Container Terminal did not declare orpay dividends tothenon-controlling interest.
Set out below aretheselected summarised financial information forUst-Luga Container Terminal. Theamounts disclosed forthesubsidiary arebefore
inter-company eliminations.
Selected income statement items
(inthousands ofUS dollars)
Fortheyear ended
31December
2021 2020
Revenue 22,375 20,493
Profit/(loss) fortheyear 17,289 8,044
Other comprehensive income/(loss) fortheyear (316) (13,994)
Total comprehensive income/(loss) fortheyear 16,973 (5,950)
Profit/(loss) fortheyear attributable tonon-controlling interest 3,458 1,609
Total comprehensive income/(loss) fortheyear attributable tonon-controlling interest 3,395 (1,189)
Selected balance sheet items
(inthousands ofUS dollars)
Asat31December
2021 2020
Total non-current assets 75,250 40,653
Total current assets 27,759 41,093
Total assets 103,009 81,746
Total non-current liabilities 4,632 548
Total current liabilities 2,000 1,575
Total liabilities 6,632 2,123
Net assets 96,377 79,623
Accumulated non-controlling interest 19,275 15,925
Selected cash flow items
(inthousands ofUS dollars)
Fortheyear ended
31December
2021 2020
Net cash fromoperating activities 7,079 6,795
Net cash from/(used in) investing activities (20,931) 3,100
Net cash used infinancing activities (729) (743)
Net increase/(decrease) incash andcash equivalents (14,581) 9,152
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Notes totheconsolidated financial statements (continued)
28. Contingencies
Operating environment oftheGroup
TheGroup’s operations areprimarily located intheRussian Federation. Consequently, theGroup isexposed totheeconomic andfinancial markets
oftheRussian Federation, which display thecharacteristics ofanemerging market. Thelegal, tax andregulatory frameworks continue development, but
aresubject tovarying interpretations andfrequent changes which contribute together withother legal andfiscal impediments tothechallenges faced
byentities operating intheRussian Federation.
Starting in2014, theUnited States ofAmerica, theEuropean Union andsomeother countries have imposed andgradually expanded economic sanctions
againstanumber ofRussian individuals andlegal entities. Theimposition ofthesanctions has led toincreased economic uncertainty, including more
volatile equity markets,adepreciation oftheRussian rouble,areduction inboth local andforeign direct investment inflows andasignificant tightening
intheavailability ofcredit. Asaresult, someRussian entitiesmay experience difficulties accessing theinternational equity anddebt markets andmay
become increasingly dependent onstate support fortheir operations.
InFebruary 2022, following commencement ofmilitary operations inUkraine bytheRussian Federation, additional sanctions wereintroduced
bytheUnited States ofAmerica, theEuropean Union andsomeother countries against Russia. Moreover, there isanincreased risk that even further
sanctionsmay beintroduced. Thismay have significant adverse impact onRussia’s economy. These events have led todepreciation oftheRussian rouble,
increased volatility offinancial markets andsignificantly increased thelevel ofeconomic uncertainty intheRussian business environment.
Though there isincreased risk that new sanctionsmay beintroduced, their nature andduration andhence theultimate impact that these will have
ontheRussian economy ingeneral andtheoperations oftheGroup inparticular cannot atpresent beforeseen.
Finland represents established market economy withmore stable political systems anddeveloped legislation based onEU directives andregulations.
TheCOVID-19coronavirus pandemic has continued tocreate additional uncertainty inthebusiness environment.
Theconsolidated financial statements reflect management’s assessment oftheimpact oftheRussian business environment ontheoperations
andthefinancial position oftheGroup. Thefuture business environmentmay differ frommanagement’s assessment.
Tax legislation inRussia
Russian tax andcustoms legislation which wasenacted orsubstantively enacted attheend ofthereporting period, issubject tovarying interpretations
when being applied tothetransactions andactivities oftheGroup. Consequently, tax positions taken bymanagement andtheformal documentation
supporting thetax positionsmay bechallenged bythetax authorities. Russian tax administration isgradually strengthening, including thefact that
there isahigher risk ofreview oftax transactions withoutaclear business purpose orwithtax incompliant counterparties. Fiscal periods remain open
toreview bytheauthorities inrespect oftaxes forthree calendar years preceding theyear whenadecision about thereview wasmade. Under certain
circumstances reviewsmay cover longer periods.
TheRussian transfer pricing legislation isgenerally aligned withtheinternational transfer pricing principles developed bytheOrganisation forEconomic
Cooperation andDevelopment although it has specific features. This legislation provides forthepossibility ofadditional tax assessment inrespect
ofcontrolled transactions (transactions between related parties andcertain transactions withunrelated parties) if such transactions arenot onanarm’s
length basis.
Tax liabilities arising fromcontrolled transactions aredetermined using actual transaction prices. It ispossible, withtheevolution oftheinterpretation
ofthetransfer pricing rules, that such prices could bechallenged. Theimpact ofanysuch challenge cannot bereliably estimated; however, itmay
besignificant tothefinancial position and/or theoverall operations oftheGroup.
28. Contingencies (continued)
Notes totheconsolidated financial statements (continued)
Tax legislation inRussia (continued)
TheGroup includes companies incorporated outside ofRussia. Thetax liabilities oftheGroup aredetermined ontheassumption that these companies
arenot subject toRussian profits tax, because they do not haveapermanent establishment inRussia. TheControlled Foreign Company (CFC) legislation
introduced Russian taxation ontheprofits offoreign companies andnon-corporate structures (including trusts) controlled byRussian tax residents
(controlling parties). TheCFC income issubject toa20% tax rate. This interpretation oftherelevant legislationmay bechallenged but theimpact
ofanysuch challenge cannot bereliably estimated currently; however, itmay besignificant tothefinancial position and/or theoverall operations
oftheGroup.
AsRussian tax legislation does not provide definitive guidance incertain areas, theGroup adopts, fromtime totime, interpretations ofsuch uncertain
areas that could reduce theoverall tax rate oftheGroup. While management currently estimates that thetax positions andinterpretations that it has taken
can probably besustained, there isapossible risk that outflow ofresources will berequired should such tax positions andinterpretations bechallenged
bytherelevant authorities. Theimpact ofanysuch challenge cannot bereliably estimated; however, itmay besignificant tothefinancial position and/or
theoverall operations oftheGroup.
TheGroup’s management believes that its interpretation oftherelevant legislation isappropriate andtheGroup’s tax, currency legislation andcustoms
positions will besustained. Accordingly, asof31December 2021andasof31December2020management believes that no additional tax liability has
tobeaccrued inthefinancial statements.
Legal proceedings andinvestigations
Fromtime totime andinthenormal course ofbusiness, claims against theGroupmay bereceived. Onthebasis ofits own estimates andboth internal
andexternal professional advice, management isoftheopinion that no provisions should berecognised inthese consolidated financial statements.
Environmental matters
TheGroup issubject tolaws, regulations andother legal requirements relating totheprotection oftheenvironment, including those governing
thedischarge ofwaste water andtheclean-up ofcontaminated sites.
Issues related toprotection ofwater resources inRussia areregulated primarily bytheEnvironmental Protection Law, theWater Code andanumber
ofother federal andregional normative acts.
Pursuant totheWater Code, discharging waste water intothesea isallowed, provided that thevolume does not exceed theestablished standards
ofadmissible impact onwater resources. Atthesame time, theEnvironmental Protection Law establishesa“pay-to-pollute” regime, which implies that
companies need topay fordischarging waste waters. However, thepayments ofsuch fees do not relieveacompany fromits responsibility tocomply
withenvironmental protection measures.
If theoperations ofacompany violate environmental requirements orcause harm totheenvironment oranyindividual orlegal entity, environmental
authoritiesmay suspend these operations oracourt actionmay bebrought tolimit orban these operations andrequire thecompany toremedy theeffects
oftheviolation. Thelimitation period forlawsuits forthecompensation ofdamage caused totheenvironment istwenty years. Courtsmay also impose
clean-up obligations onoffenders inlieu oforinaddition toimposing fines.
Theenforcement ofenvironmental regulation inthecountries inwhich theGroup operates isevolving andtheenforcement posture ofgovernment
authorities iscontinuously being reconsidered. TheGroup periodically evaluates its obligations under environmental regulations. Asobligations
aredetermined, they arerecognised immediately. Potential liabilities, which might arise asaresult ofchanges inexisting regulations, civil litigation
orlegislation, cannot beestimated but could bematerial. Inthecurrent enforcement climate under existing legislation, management believes that there
areno significant liabilities forenvironmental damage.
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Notes totheconsolidated financial statements (continued)
29. Commitments
Capital commitments
Capital expenditure contracted foratthebalance sheet date but not yet incurred isasfollows:
(inthousands ofUS dollars) Asat31December
2021 2020
Property, plant andequipment 26,859 9,207
Total 26,859 9,207
30. Related party transactions
TheCompany isjointly controlled byLLC Management Company “Delo” (“Delo Group”), one ofRussia’s largest privately owned transportation
companies, andAPM Terminals B.V. (“APM Terminals”),aglobal port, terminal andinland services operator.
Forthepurposes ofthese consolidated financial statements, parties areconsidered toberelated if one party has theability tocontrol theother party
orexercise significant influence overtheother party inmaking financial andoperational decisions asdefined byIAS 24 “Related Party Disclosures”.
Inconsidering each possible related party relationship, attention isdirected tothesubstance oftherelationship, not merely thelegal form.
Thefollowing transactions werecarried out withrelated parties:
(a) Sale ofservices
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Entities under control ofowners ofcontrolling entities 102,884 92,912
Joint ventures inwhich GPI isaventurer 365 2 71
Other related parties – 17
Total 103,249 93,200
(b) Purchases ofservices andincurred expenses
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Entities under control ofowners ofcontrolling entities 109,028 52,065
Joint ventures inwhich GPI isaventurer 1,565 1,466
Other related parties – 1,636
Total 110,593 55,167
(c) Interest income
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Joint ventures inwhich GPI isaventurer 628 1,030
Total 628 1,030
30. Related party transactions (continued)
Notes totheconsolidated financial statements (continued)
(d) Trade andother receivables andprepayments
(inthousands ofUS dollars) Asat31December
2021 2020
Entities under control ofowners ofcontrolling entities 25,499 16,048
Joint ventures inwhich GPI isaventurer 38 13 6
Total 25,537 16,184
(e) Trade andother payables
(inthousands ofUS dollars) Asat31December
2021 2020
Entities under control ofowners ofcontrolling entities 4,076 2,310
Joint ventures inwhich GPI isaventurer 61 12 2
Other related parties – 62
Payroll payable andaccrued expenses related tokey management 2,590 876
Total 6,727 3,370
(f) Key management compensation/directors’ remuneration
(inthousands ofUS dollars) Fortheyear ended
31December
2021 2020
Key management compensation:
Wages andsalaries 5,345 3,349
Social insurance costs 797 394
Total
6,142
3,743
Directors’ remuneration (included also above):
Fees 278 245
Total 278 245
(g) Loans torelated parties
Thedetails ofloans provided tojoint ventures inwhich GPI isaventurer arepresented below (see also Note 19):
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Atthebeginning oftheyear 13,673 16,690
Interest charged 628 1,030
Loan andinterest repaid during theyear (409) (572)
GPI’s share oflosses ofjoint ventures applied against other long-term interests
(Note27(a))
42 (827)
Foreign exchange differences (77) (2,648)
Attheend oftheyear (Note 19) 13,857 13,673
Theloans arenot secured, wereprovided atfixed interest rate andarerepayable in2022. However, theloans areclassified asnon-current because
oftheGroup’s intention todefer repayment formore than 12months.
Thefair value ofloans torelated parties approximates their carrying value, astheimpact ofdiscounting isnot significant.
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PARENT COMPANY FINANCIAL STATEMENTS
Notes totheconsolidated financial statements (continued)
31. Events after thebalance sheet date
TheGroup successfully repaid its 2022 Eurobonds maturing inJanuary 2022inthetotal amount ofprincipal US$198,557thousand andaccumulated
interest US$6,822thousand.
On2March 2022, theBoard ofDirectors oftheCompany recommended tothemembers toapprove thereduction oftheshare premium account
oftheCompany bycrediting theamount ofUS$550million totheretained earnings reserve. Anysurplus remaining intheretained earnings reserve shall
beavailable tobeused astheCompany deems appropriate fromtime totime. Theshare premium reduction issubject toratification bytheCyprus Courts
andshall become effective upon registration withtheCyprus registrar ofcompanies.
Although 2021has beenasuccessful year fortheGroup andtheGroup experienced +20% volume growth inthroughput inthefirst two months of2022,
thecurrent geopolitical situation andconflict surrounding Russia andUkraine (asexplained innote 28) has thepotential toaffect operations oftheGroup
andits financial position very adversely.
Themanagement oftheGroup isaware ofthefact that someshipping lines have announced that they temporarily suspend delivery/dispatch ofvarious
containerised cargoes to/from Russian Federation. It ispossible that other shipping lines will follow withsimilar restrictions. This adversely affects
operations ofterminals oftheGroup intheshort term, but inthelong-term theGroup believes fundamental undercontainerisation ofRussian trade will
support volumes anddrives shipping lines desire toresume their services toRussia. Inaddition, based onthecurrently announced sanctions, theshare
ofsanctioned goods issmall, which should not significantly impact thethroughput.
Following already imposed sanctions onRussian Central Bank, its restrictions forcapital movements outside Russian Federation andother related
developments oftheconfrontation, there aresignificant uncertainties overtheavailable options forrefinancing inSeptember 2023when payment
ofEurobonds 2023falls due. Thesituation islargely dependent onthedevelopments oftheconfrontation andactions oftheRussian Government
andCentral Bank that aredifficult toforesee. Ontheother hand, theGroup hasastrong track record inpromptly meeting all its debt obligations,
successful refinancing anddeleveraging andenjoys high credibility inlocal andinternational banking andcapital markets that we expect should support
theGroup inits efforts torefinance inSeptember 2023orearlier. TheGroup also has US$128million ofcash equivalent balances on2March 2022,
most ofwhich isdenominated inUS$.
Total impact ofsanctions inconnection withtheescalating confrontation andincrease oftensions between Russia, andtheUnited States, United Kingdom
andtheEuropean Union remains uncertain, but thepresence inFar Eastern basin should partially mitigate theimpact ofsanctions ontheterminals located
intheNorth-West ofRussia.
TheGroup’s management isdoing everything possible toensure sustainability oftheGroup’s operations. Themanagement understands what needs
tobedone under current circumstances andbelieves that it has required resources andability tolead theGroup through these difficult times.
Independent auditors’ report
tothemembers ofGlobal Ports
Investments Plc
Report ontheaudit oftheconsolidated financial statements
Opinion
We have audited theaccompanying consolidated financial statements ofGlobal Ports Investments Plc (the‘’Company’’) andits subsidiaries
(the‘’Group’’), which arepresented onpages 31to98andcomprise theconsolidated balance sheet asat31December 2021, andtheconsolidated
statements ofprofit orloss andother comprehensive income, changes inequity andcash flows fortheyear then ended, andnotes totheconsolidated
financial statements, includingasummary ofsignificant accounting policies.
Inour opinion, theaccompanying consolidated financial statements giveatrue andfair view oftheconsolidated financial balance sheet oftheGroup
asat31December 2021, andofits consolidated financial performance andits consolidated cash flows fortheyear then ended inaccordance
withInternational Financial Reporting Standards asadopted bytheEuropean Union (‘’IFRS-EU’’) andtherequirements oftheCyprus Companies Law,
Cap. 113, asamended fromtime totime (the‘’Companies Law, Cap.113’’).
Basis foropinion
We conducted our audit inaccordance withInternational Standards onAuditing (‘’ISAs’’). Our responsibilities under those standards arefurther
described inthe‘’Auditors’ responsibilities fortheaudit oftheconsolidated financial statements’’’ section ofour report. We areindependent oftheGroup
inaccordance withtheInternational Code ofEthics (Including International Independence Standards) forProfessional Accountants oftheInternational
Ethics Standards Board forAccountants (‘’IESBA Code’’) together withtheethical requirements inCyprus that arerelevant toour audit ofthefinancial
statements, andwe have fulfilled our other ethical responsibilities inaccordance withthese requirements andtheIESBA Code. We believe that theaudit
evidence we have obtained issufficient andappropriate toprovideabasis forour opinion.
Material uncertainty relating togoing concern
We draw attention toNotes 2, 28and31totheconsolidated financial statements which describe therecent developments inRussia’s operating
environment andthematerial uncertainty that exists thatmay cast significant doubt ontheGroup’s ability tocontinue asagoing concern should thenature
andduration ofthesanctions imposed onRussia differ significantly totheGroup’s expectations. TheBoard ofDirectors continues toadopt thegoing
concern basis ofpreparation as, onthebasis oftheir current assessment oftheimpact oftheaforesaid developments based ontheir expectations
asexplained innote 31, they consider that theGroup has adequate resources tomeet its liabilities asthey fall due andtocontinue inoperation
fortheforeseeable future.
Our opinion isnot modified inrespect ofthis matter.
Nicosia
P.O. Box 21121, 1502
T.: +357 22 209000
F.: +357 22 678200
Paphos
P.O. Box 60288, 8101
T.: +357 26 943050
F.: +357 26 943062
Polis Chrysochous
P.O. Box 66014, 8330
T.: +357 26 322098
F.: +357 26 322722
Larnaca
P.O. Box 40075, 6300
T.: +357 24 200000
F.: +357 24 200200
Paralimni / Ayia Napa
P.O. Box 33200, 5311
T.: +357 23 820080
F.: +357 23 820084
KPMG Limited, a private company limited by shares, registered in Cyprus under registration number HE 132822 with its registered office at 14,
Esperidon Street, 1087, Nicosia, Cyprus.
KPMG Limited
Chartered Accountants
11, June 16th 1943 Street, 3022 Limassol, Cyprus
P.O.Box 50161, 3601 Limassol, Cyprus
T: +357 25 869000, F: +357 25 363842
98 99
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Key audit matters
Inaddition tothematter described inthematerial uncertainty related togoing concern section, we have determined thematters described below
tobethekey audit matters tobecommunicated inour report.
Key audit matters arethose matters that, inour professional judgment, wereofmost significance inour audit oftheconsolidated financial statements
ofthecurrent period. These matters wereaddressed inthecontext ofour audit oftheconsolidated financial statements asawhole, andinforming our
opinion thereon, andwe do not provideaseparate opinion onthese matters.
Impairment assessment ofgoodwill andother non-financial assets andinvestments injoint ventures
Refer toNotes 2, 4, 14, 15and27
Key audit matter How thekey audit matter wasaddressed inour audit
Significant judgement isrequired bymanagement indetermining whether there
areanyindications for, orreversal of, impairment pertaining totheGroup’s Cash Ge-
nerating Units (“CGUs”) and, where such indications exist, inassessing therecoverable
amount thereof.
We focused onthis area because COVID-19has continued tocreate additional uncer-
tainty inthebusiness environment andbecause of:
• thesize ofthecarrying amount ofgoodwill, other non-financial assets andinvest-
ments injoint ventures, and
• theinherent uncertainty andsubjectivity involved intheassessment oftherecovera-
ble amounts oftheCGUs due tothecomplexity andsubjective judgements required
inforecasting anddiscounting future cash flows andintheestimation offair value
less costs tosell, which arethebasis ofthemanagement’s assessments.
Inparticular, we focused our audit effort onmanagement’s impairment assessment
oftherecoverable amounts ofthefollowing:
• CGUs:
– First Container Terminal, Petrolesport andFarvater (“PLP/FCT”) CGU
andVostochnaya Stevedoring Company (“VSC”) CGU because goodwill isal-
located tothese two CGUs andtherefore anannual impairment assessment
isrequired;
– Ust-Luga Container Terminal (“ULCT”) CGU forwhichareversal ofimpairment
wasrecognized.
• Joint venture:
– Multi-Link Terminals Limited (“MLT”), withMoby Dik (“MD”) andMulti-Link Ter-
minals (“MLT Oy”) being theunderlying CGUs, forwhich animpairment assess-
ment has been performed bymanagement.
Therecoverable amounts ofPLP/FCT, VSC, ULCT andMLT Oy CGUs weredetermined
based onvalue inuse method derived fromdiscounted future cash flows models, whilst
therecoverable amount ofMD CGU wasdetermined based onfair value less costs
tosell method.
Based ontheresults oftheimpairment assessments, theBoard ofDirectors did not iden-
tify anyfurther impairment losses. Incontrast, following positive changes inthebusiness
ofULCT CGU, theBoard ofDirectors assessment resulted inthereversal ofaprevious
impairment loss pertaining toULCT CGU of$8,517thousand
We assessed whether thevalue inuse calculations wereperformed attheappropri-
ate level ofCGU andwe evaluated thevaluation inputs andassumptions, methodo-
logies andcalculations adopted bytheCompany’s Board ofDirectors indetermining
theCGUs’ recoverable amounts. Inorder toassist us inour audit we involved valuation
experts that have theknowledge andexperience intheindustry andcountry ofoperation
oftheunderlying CGUs toassist us inevaluating themethodology, models andassump-
tions used invalue inuse calculations.
ForMD CGU, we evaluated whether thefair value less costs tosell approach ismore
appropriate than thevalue inuse approach todetermine theCGU’s recoverable amount
given thespecific circumstances oftheCGU. We further evaluated thework oftheva-
luation expert used bymanagement byassessing theexpert’s objectivity, competence
andcapabilities andthemethodology, model andinputs used.
Withrespect tothevalue inuse models used forPLP/FCT, VSC, ULCT andMLT Oy
CGUs, we challenged andevaluated thecomposition ofthefuture cash flow forecasts
inthemodels including comparing them tothelatest budgets approved bytheBoard
ofDirectors.
We have also challenged andevaluated:
• management assumptions forthekey inputs, such asvolume andprice, andcom-
pared them tohistorical results, economic andindustry forecasts;
• thediscount rate applied tothese cash flows, byassessing theweighted average
cost ofcapital, andconsidering territory specific factors;
• themacroeconomic assumptions used bymanagement, bycomparing them tomar-
ket benchmarks andpublicly available information;
• theadequacy ofmanagement’s sensitivity calculations overtherecoverable amount
ofMLT Oy (due toits sensitivity tothekey assumptions) andtheassumptions that
created themost variability, being assumptions foraverage tariffs, handling volumes,
andtheterminal growth anddiscount rates.
We also performed look-back procedures bycomparing previous budgets used invalue
inuse calculations toactual results.
We evaluated theadequacy ofdisclosures, including disclosures about sensitivities
andmajor sources ofestimation uncertainty.
Other information
TheBoard ofDirectors isresponsible fortheother information. Theother information comprises theManagement Report, which we obtained prior
tothedate ofthis report, andtheAnnual Report, other than thefinancial statements andour auditor’s report thereon, which isexpected tobemade
available tous after that date.
Our opinion ontheconsolidated financial statements does not cover theother information andwe do not express anyform ofassurance conclusion
thereon, except asrequired bytheCompanies Law, Cap.113.
Inconnection withour audit oftheconsolidated financial statements, our responsibility istoread theother information and, indoing so, consider whether
theother information ismaterially inconsistent withtheconsolidated financial statements orour knowledge obtained intheaudit orotherwise appears
tobematerially misstated. If, based onthework we have performed, we conclude that there isamaterial misstatement ofthis other information, we
arerequired toreport that fact.
When we read theAnnual Report, if we conclude that there isamaterial misstatement therein, we arerequired tocommunicate thematter tothose
charged withgovernance and, if not corrected, we will bring thematter totheattention ofthemembers oftheCompany attheCompany’s Annual
General Meeting andwe will take such other action asmay berequired.
Withregards tothemanagement report, our report inthis regard ispresented inthe‘’Report onother legal requirements’’ section.
Responsibilities oftheBoard ofDirectors andthose charged withgovernance fortheconsolidated
financial statements
TheBoard ofDirectors isresponsible forthepreparation ofconsolidated financial statements that giveatrue andfair view inaccordance withIFRS-EU
andtherequirements oftheCompanies Law, Cap. 113, andforsuch internal control astheBoard ofDirectors determines isnecessary toenable
thepreparation ofconsolidated financial statements that arefree frommaterial misstatement, whether due tofraud orerror.
Inpreparing theconsolidated financial statements, theBoard ofDirectors isresponsible forassessing theGroup’s ability tocontinue asagoing concern,
disclosing, asapplicable, matters related togoing concern andusing thegoing concern basis ofaccounting, unless there isanintention toeither liquidate
theCompany ortocease theGroup’s operations, orthere isno realistic alternative but todo so.
TheBoard ofDirectors andthose charged withgovernance areresponsible foroverseeing theGroup’s financial reporting process.
Auditors’ responsibilities fortheaudit oftheconsolidated financial statements
Our objectives aretoobtain reasonable assurance about whether theconsolidated financial statements asawhole arefree frommaterial misstatement,
whether due tofraud orerror, andtoissue anauditors’ report that includes our opinion. Reasonable assurance isahigh level ofassurance, but
isnotaguarantee that anaudit conducted inaccordance withISAs will always detectamaterial misstatement when it exists. Misstatements can arise
fromfraud orerror andareconsidered material if, individually orintheaggregate, they could reasonably beexpected toinfluence theeconomic
decisions ofusers taken onthebasis ofthese consolidated financial statements.
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Auditors’ responsibilities fortheaudit oftheconsolidated financial statements (continuation)
Aspart ofanaudit inaccordance withISAs, we exercise professional judgment andmaintain professional skepticism throughout theaudit. We also:
• Identify andassess therisks ofmaterial misstatement oftheconsolidated financial statements, whether due tofraud orerror, design andperform audit
procedures responsive tothose risks, andobtain audit evidence that issufficient andappropriate toprovideabasis forour opinion. Therisk ofnot
detectingamaterial misstatement resulting fromfraud ishigher than forone resulting fromerror, asfraudmay involve collusion, forgery, intentional
omissions, misrepresentations, ortheoverride ofinternal control.
• Obtain anunderstanding ofinternal control relevant totheaudit inorder todesign audit procedures that areappropriate inthecircumstances, but not
forthepurpose ofexpressing anopinion ontheeffectiveness oftheGroup’s internal control.
• Evaluate theappropriateness ofaccounting policies used andthereasonableness ofaccounting estimates andrelated disclosures made bytheBoard
ofDirectors.
• Conclude ontheappropriateness oftheBoard ofDirectors’ use ofthegoing concern basis ofaccounting and, based ontheaudit evidence obtained,
whetheramaterial uncertainty exists related toevents orconditions thatmay cast significant doubt ontheGroup’s ability tocontinue asagoing
concern. If we conclude thatamaterial uncertainty exists, we arerequired todraw attention inour auditors’ report totherelated disclosures
intheconsolidated financial statements or, if such disclosures areinadequate, tomodify our opinion. Our conclusions arebased ontheaudit evidence
obtained up tothedate ofour auditors’ report. However, future events orconditionsmay cause theGroup tocease tocontinue asagoing concern.
• Evaluate theoverall presentation, structure andcontent oftheconsolidated financial statements, including thedisclosures, andwhether
theconsolidated financial statements represent theunderlying transactions andevents inamanner that achievesatrue andfair view.
• Obtain sufficient appropriate audit evidence regarding thefinancial information oftheentities orbusiness activities oftheGroup toexpress anopinion
ontheconsolidated financial statements. We areresponsible forthedirection, supervision andperformance oftheGroup audit. We remain solely
responsible forour audit opinion.
We communicate withthose charged withgovernance regarding, among other matters, theplanned scope andtiming oftheaudit andsignificant audit
findings, including anysignificant deficiencies ininternal control that we identify during our audit.
We also provide those charged withgovernance withastatement that we have complied withrelevant ethical requirements regarding independence,
andtocommunicate withthem all relationships andother matters thatmay reasonably bethought tobear onour independence, andwhere applicable,
actions taken toeliminate threats orsafeguards applied.
From thematters communicated withthose charged withgovernance, we determine those matters that wereofmost significance intheaudit
oftheconsolidated financial statements ofthecurrent period andaretherefore thekey audit matters. We describe these matters inour auditors’ report.
Report onother legal requirements
Pursuant totheadditional requirements oflaw L.53(I)/2017, andbased onthework undertaken inthecourse ofour audit, we report thefollowing:
• Inour opinion, themanagement report, thepreparation ofwhich istheresponsibility oftheBoard ofDirectors, has been prepared inaccordance
withtherequirements oftheCompanies Law, Cap 113, andtheinformation given isconsistent withtheconsolidated financial statements.
• Inthelight oftheknowledge andunderstanding ofthebusiness andtheGroup’s environment obtained inthecourse oftheaudit, we have not identified
material misstatements inthemanagement report.
Other matters
Reporting responsibilities
This report, including theopinion, has been prepared forandonly fortheCompany’s members asabody inaccordance withSection 69ofLaw
L.53(I)/2017andforno other purpose. We do not, ingiving this opinion, accept orassume responsibility foranyother purpose ortoanyother person
towhose knowledge this reportmay come to.
Comparative figures
Theconsolidated financial statements oftheCompany fortheyear ended 31December 2020wereaudited byanother auditor who expressed
anunmodified opinion onthose consolidated financial statements on5March 2021.
Theengagement partner ontheaudit resulting inthis independent auditors’ report isSylvia Loizides.
Certified Public Accountant andRegistered Auditor forandonbehalf of
KPMG Limited
Certified Public Accountants andRegistered Auditors
11, 16thJune 1943 Street
3022 Limassol
Cyprus
2March 2022
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL
STATEMENTS
Table
of Contents
BOARD OF DIRECTORS AND OTHER OFFICERS 1
MANAGEMENT REPORT 3
DIRECTORS’ RESPONSIBILITY STATEMENT 28
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021 29
BALANCE SHEET AS AT 31 DECEMBER 2021 30
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31DECEMBER 2021 31
STATEMENT OF CASH FLOWS FOR THE YEAR
ENDED 31DECEMBER 2021 32
NOTES TO THE FINANCIAL STATEMENTS 33
1. General information 33
2. Summary of significant accounting policies 33
3. Financial risk management 41
4. Critical accounting estimates and judgments 43
5. Finance income – net 45
6. Administrative expenses 45
7. Other gains/(losses) – net 46
8. Staff costs 46
9. Finance costs 46
10. Income tax expense 46
11 . Financial instruments by category 47
12. Credit quality of financial assets 48
13. Property, plant and equipment 48
14. Investments in subsidiaries 49
15. Investments in joint ventures 50
16. Other receivables 51
17. Cash and bank balances 51
18. Share capital and dividends 52
19. Other payables 53
20. Contingencies and commitments 53
21. Related party transactions 54
22. Events after the balance sheet date 57
INDEPENDENT AUDITOR’S REPORT 59
Global Ports Investments Plc
Management Report
andParent Company
Financial Statements
31December 2021
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Board ofDirectors
andother officers
Board ofDirectors andother officers (continued)
Board ofDirectors
Mr. Soren Jakobsen (appointed 02March 2018)
(Mr. Mogens Petersen isthealternate toMr. Soren Jakobsen)
Chairman oftheBoard ofDirectors since24April 2020, Non-Executive Director,
Member ofNomination andRemuneration andStrategy Committees
Mr. Vladimir Bychkov (appointed 27May 2021)
Non-executive Director, Chairman ofStrategy Committee
Ms. Britta Dalunde (appointed 12May 2017)
Senior Independent Non-Executive Director, Chairwoman ofAudit andRisk Committee
Mr. Kristian Bai Hollund (appointed 29May 2020)
(Mr. Soren Jakobsen isthealternate toMr. Kristian Bai Hollund)
Non-executive Director
Ms. Alexandra Fomenko (appointed 18June 2019)
Non-Executive Director, Member ofNomination andRemuneration Committee
Mr. Shavkat Kary-Niyazov (appointed 18June 2019)
Non-Executive Director
Ms. Inna Kuznetsova (appointed 01January 2018)
Independent Non-Executive Director, Chairwoman ofNomination andRemuneration
Committee, Member ofAudit andRisk Committee
Mr. Andrey Lenvalskiy (appointed 27May 2021)
Non-Executive Director, Member ofAudit andRisk andStrategy Committees
Mr. Lampros Papadopoulos (appointed 01January 2018)
Independent Non-Executive Director, Member ofAudit andRisk andStrategy
Committees
Mr. Andriy Pavlyutin (appointed 27May 2021)
Non-Executive Director
Mr. Mogens Petersen (appointed 18June 2019)
(Mr. Soren Jakobsen isthealternate toMr. Mogens Petersen)
Non-Executive Director, Member ofAudit andRisk andStrategy Committees
Members oftheBoard ofDirectors, who resigned during theyear
Mr. Demos Katsis resigned on27May 2021
Mr. Sergey Shishkarev resigned on27May 2021
Mr. Andrey Yashchenko resigned on27May 2021
Registered office
20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus
Secretary
Team Nominees Limited
20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus
1 2
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report
1. TheBoard ofDirectors presents its report together withtheaudited financial statements ofGlobal Ports Investments Plc (hereafter also referred
toas“GPI” orthe“Company” or“Global Ports”) fortheyear ended 31December 2021. 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, istheholding ofinvestments including anyinterest earning
activities. Thesubsidiaries andjoint-ventures oftheCompany (together withtheCompany the“Group”) areengaged intheoperation ofcontainer
andgeneral cargo terminals inRussia andFinland. TheGroup offers its customersawide range ofservices fortheir import andexport logistics
operations. There wereno changes inprincipal activities oftheGroup inthecurrent year.
Results
3. TheCompany’s results fortheyear areset out onpage 29.
Changes ingroup structure
4. Themanagement continues theoptimization oftheGroup structure andelimination oftheexcess companies from theGroup. Asapart
ofsimplification andstreamlining ofGroup structure thefollowing steps wereimplemented in2021.
a. On01.04.2021 Alocasia CO. Ltd andBelvo Establishment Ltd transferred their ownership inUst-Luga Container Terminal JSC toFirst Container
Terminal Inc (0.543% and1.63% respectively). First Container Terminal Inc directly owns 80% oftheshare capital ofUst-Luga Container
Terminal JSC.
b. On24.06.2021 NCC Group Ltd wasliquidated.
c. On11.10.2021alegal merger ofNational Container Holding Company Ltd intoGlobal Ports Investments Plc wascompleted. Asaresult
ofthereorganisation, Global Ports Investments Plc directly holds 100% inVostochnaya Stevedoring Company LLC, JSC Petrolesport, Farvater
LLC andShakhovo-18 LLC andindirectly owns 100% inFirst Container Terminal Inc and80% inUst-Luga Container Terminal JSC viaJSC
Petrolesport.
d. On11.10.2021 Global Ports Investments Plc transferred one share ofGlobal Ports (Finance) PLC toFarvater LLC.
e. Amembers’ voluntary liquidation ofAlocasia CO. Ltd andBelvo Establishment Ltd wasinitiated inOctober 2021.
f. On22.12.2021 VIFS LLC, wholly-owned subsidiary ofVostochnaya Stevedoring Company LLC, wasliquidated.
These reorganisations did not have animpact ontheunderlying assets/liabilities andoverall activities oftheGroup.
5. There wereno other material changes inthegroup structure. However, theBoard ofDirectors isregularly reviewing theGroup structure
andthepossibilities tooptimize it andwill continue its efforts inthefollowing years.
Review ofDevelopments, Position andPerformance oftheGroup’s Business
6. Strong market growth in2021saw theRussian marine container market achieving all-time-high volumes in2021of5.4million TEUs (+7.1% y-o-y),
driving growth inboth containerised import of11.1% andcontainerised export of4.2%.
7. Asaresult ofthesharp rise infreight rates inmost ofthemain global container shipping trades, very tight network capacity intheAsia-Europe trade
andadeficit ofempty containers globally, market players increasingly preferred faster container import andexport supply chains viatheshortest
sea leg. Asaresult, market growth wasconcentrated intheFar Eastern basin (+14.0% y-o-y) andtheSouthern basin (+6.4% y-o-y) while
thecombined throughput ofterminals located inSaint Petersburg andthesurrounding area declined by3.7% y-o-y inFY 2021.
8. TheGroup successfully improved in2021its market share position inboth its basins ofpresence, withVSC throughput improving 14.8% y-o-y
andthroughput ofits terminals intheBaltic Basin declining by2.3% y-o-y (being less than market decline). Intotal, Consolidated Marine Container
Throughput increased by2.8% y-o-y in2021to1,576thousand TEUs.
9. Aspreviously announced, VSC ceased thecoal handling activities inSeptember 2021, enabling theterminal toconcentrate ontheGroup’s core
strategic operations ofdriving container volumes. Asaresult, theGroup’s Consolidated Marine Bulk Throughput decreased in2021by14.6%
y-o-y to4.3million tonnes.
10. High andHeavy Ro-Ro handling increased by24.4% to25.2thousand units, while car handling increased by27.8% to104.9thousand units.
11 . Consolidated revenue increased by30.8% toUSD502.8million; excluding theimpact ofVSC transportation services, like-for-like revenue
increased by17.1% as25.0% increase inConsolidated Container Revenue offset 5.2% decrease inConsolidated Non-container Revenue
ontheback ofceased coal handling atVSC.
12. Like-for-like Total Operating Cash Costs increased by16.4% toUSD131.8million due toinflationary pressures, volumes growth andalso thefact
that operating inahigh demand environment andhigh capacity utilisation rates atVSC required controlled cost increases todrive Adjusted
EBITDA growth.
13. Adjusted EBITDA increased by17.4% toUSD246.2million asaresult ofvolume growth andRevenue per TEU increase (like-for-like Revenue per
TEU increased by21.6% toUSD188.7asaresult ofpositive cargo, customer andbasin mix changes, aswellascustomers’ appreciation ofour
quality services inhigh demand environment intheFar Eastern basin). Profitability improved withalike-for-like Adjusted EBITDA Margin to65.4%
posting anincrease of15basis points.
14. TheGroup achieved significant Free Cash Flow growth of46.9% generating USD129.1million overtheyear.
15. TheGroup reduced Net Debt byUSD120.7million in2021allowing Net Debt toAdjusted EBITDA todecrease from2.9x asof31December
2020to2.0x asattheend ofthereporting period, achieving theGroup’s long-term deleveraging target.
Theterms used above aredefined asfollows:
Adjusted EBITDA (anon-IFRS financial measure) forGlobal Ports Group isdefined asprofit fortheperiod before income tax expense, finance
income/(costs)—net, depreciation, write-off andimpairment ofproperty plant andequipment, depreciation andimpairment ofright-of-use assets,
amortisation, write-off andimpairment ofintangible assets, share ofprofit/(loss) ofjoint ventures accounted forusing theequity method, other
gains/(losses)—net.
Net Debt (anon-IFRS financial measure) isdefined asthesum ofcurrent borrowings, non-current borrowings, current andnon-current lease
liabilities (following adoption ofIFRS 16) andswap derivatives less cash andcash equivalents andbank deposits withmaturity over90days.
Revenue per TEU isdefined astheGlobal Ports Group’s Consolidated Container Revenue divided bytotal Consolidated Container Marine
Throughput.
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
Adjusted EBITDA Margin (anon-IFRS financial measure) iscalculated asAdjusted EBITDA divided byrevenue, expressed asapercentage.
Consolidated Container Revenue isdefined asrevenue generated fromcontainerised cargo services.
Consolidated Non-Container Revenue isdefined asadifference between total revenue andConsolidated Container Revenue.
Consolidated Marine Bulk Throughputisdefined ascombined marine bulk throughput byconsolidated terminals: PLP, VSC, FCT andULCT.
Consolidated Marine Container Throughputisdefined ascombined marine container throughput byconsolidated marine terminals: PLP, VSC, FCT andULCT.
Free Cash Flow (anon-IFRS financial measure) iscalculated asnet cash fromoperating activities less net cash used ininvesting activities andinterest paid
onborrowings andlease liabilities.
Total Debt (anon-IFRS financial measure) isdefined asthesum ofcurrent borrowings, non-current borrowings, current andnon-current lease liabilities
(following adoption ofIFRS 16) andswap derivatives.
Future Developments oftheGroup/Company
16. TheBoard ofDirectors does not expect anysignificant changes intheactivities oftheGroup/Company intheforeseeable future.
Risk Management Process, Principal Risks andUncertainties
17. Global Ports isexposed toavariety ofrisks andopportunities that can have commercial, financial, operational andcompliance impacts onits
business performance, reputation andlicence tooperate. TheBoard recognises that creating shareholder value involves theacceptance ofrisk.
Effective management ofrisk istherefore critical toachieving thecorporate objective ofdelivering long-term growth andadded value toour
shareholders.
18. Global Ports bases its risk management activities onaseries ofwell-defined risk management principles, derived fromexperience, best practice,
andcorporate governance regimes. TheGroup’s enterprise risk management processes (ERM) aredesigned toidentify, assess, respond,
monitor and, where possible, mitigate oreliminate threats tothebusiness caused bychanges inthebusiness, financial, regulatory andoperating
environment.
19. TheBoard has overall oversight responsibility forGPI’s risk management andfortheestablishment oftheframework ofprudent andeffective
controls. Assuch, it systematically monitors andassesses therisks attributable totheGroup’s performance anddelivery oftheGPI strategy.
Wherearisk has been identified andassessed, theGroup selects themost appropriate risk measure available inorder toreduce thelikelihood
ofits occurrence andmitigate anypotential adverse impact.
20. TheBoard delegates totheChief Executive Officer ofLLC Global Ports Management theresponsibility fortheeffective implementation
andmaintenance oftherisk management system. Day-to-day responsibility forrisk management lies withthemanagement team. TheAudit
andRisk Committee isauthorized bytheBoard tomonitor, review andreport ontheorganization, functionality andeffectiveness oftheGroup’s
Enterprise Risk Management (ERM) system.
21. Global Ports isexposed toavariety ofrisks which arelisted below. Theorder inwhich these risks arepresented isnot intended tobeanindication
oftheprobability oftheir occurrence orthemagnitude oftheir potential effects.
22. Not all ofthese risks arewithin theCompany’s control, andthelist cannot beconsidered tobeexhaustive, asother risks anduncertaintiesmay
emerge inachanging external andinternal environment that could haveamaterial adverse effect ontheGroup’s ability toachieve its business
objectives anddeliver its overall strategy.
23. Further information onour risk management system, includingadetailed description ofidentified risk factors iscontained inthenotes
totheFinancial Statements attached tothis report.
24. TheCompany’s financial risk management andcritical accounting estimates andjudgments aredisclosed inNotes 3 and4 tothefinancial
statements.
25. TheCompany’s contingencies aredisclosed inNote 20 tothefinancial statements.
Management report (continued)Management report (continued)
Risk factor Risk management approach
Strategic risks
Market conditions:
Global Ports’ operations aredependent ontheglobal macroeconomic environment
andresulting trade flows, including inparticular container volumes.
Container market throughput isclosely correlated tothevolume ofimported goods,
which isdriven bydomestic consumer demand, andinfluenced byRUBcurrency fluc-
tuations against USD/Euro, andexported goods, which inturn correlate withtheRussian
rouble exchange rate fluctuations andglobal commodity markets` trends.
TheGroup remains exposed totherisk ofcontraction intheRussian andworld economy
which, if it weretooccur, could further dampen consumer demand andlead toadisrup-
tion inthecontainer market which could have anadverse impact ontheGroup.
Atthesame time being part ofRussian andworld logistics chains, theterminals
oftheGroup areexposed andfeel theimpact ofthedisruptions anddisbalances inthese
logistics chains caused byCOVID-19andsuch cases like Ever Given accident.
TheGroup has responded tothroughput volatility inthecontainer market by:
• Focusing onquality andvalue-driven services (getting closer tothecustomer)
• Greater focus onbalancing export andimport container flows aswellasthecar-
go mix
• Offering operational flexibility toall clients viaoperational excellence
• Investments ininfrastructure development andequipment
• Termination ofhandling coal atVSC tooptimise thehandling ofcontainers
• Effective cost containment
• Development ofIT solutions
• Adopting new revenue streams andattracting new cargoes
Competition:
Barriers toentry aretypically high inthecontainer terminal industry due tothecapital-in-
tensive nature ofthebusiness. However, challenging market trading conditions mean
that competition fromother container terminals continues tobeasignificant factor, which
isalso supported bytheexisting excess capacity inthemarket, i.e., intheNorth-West
ofRussia. Further consolidation between container terminal operators andcontainer
shipping companies, thecreation ofnew strategic alliances, theintroduction ofnew/
upgraded capacity andcarrier consolidation could result ingreater price competition,
lower utilisation, andpotential deterioration inprofitability.
Strategic international investorsmay develop oracquire stakes inexisting competitor
Russian container terminals, which could bring new expertise intothemarket anddivert
clients andcargoes away from theGroup.
Also, Beneficial Cargo Ownersmay optimise their logistics chains anddecide tocontrol
them, whichmay lead tochanges inthecompetitive
TheGroup actively monitors thecompetitive landscape andadjusts its strategy accordingly,
i.e., theGroup prioritises building close long-term strategic relationships withits leading cus-
tomers (locally, regionally andwithheadquarters).
TheGroup’s focus onservice quality isakey differentiator fromits competition
andtheGroup believes this isone ofits key competitive advantages.
TheGroup continues toinvest inits terminals andinfrastructure toensure competitive
levels ofservice. It takesalong-term approach tomanaging its network ofterminals
that represent core infrastructure assets inRussia withanexpected operating lifespan
of10to20years andbeyond. TheGroup ownsasignificant land bank giving it flexibility
should market conditions require it. TheGroup maintains level ofcapital expenditure inline
withtherequirements needed tomaintain effective development ofits existing capacity.
TheGroup has developed long-term operating master plans foreach ofits terminals that
enable it toreact quickly inthecase ofadditional market demands being placed
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Global Ports Investments PLC Annual Report 2021
Risk factor Risk management approach
environment.
Given thehistorically high margins intheRussian container handling industry, this
trendmay continue, which isdemonstrated bygrowing competition intheRussian Far-
East whereanumber ofnew projects wereannounced attheFar-Eastern Economic
Forum inSeptember 2021. Though we do not expect new major capacity tocome
tothemarket inthenext 3–4years, theconversion ofsomeoftheexisting terminals
intothehandling ofcontainers already started.
onits facilities’ infrastructure andequipment. TheGroup’s healthy cash flow generation
anddecreasing leverage allow financial flexibility interms oftiming andsize ofthere-
quired capital expenditure program.
Political, Geopolitical, military conflicts andeconomic andsocial instability:
Russian foreign affairs andgeopolitics could lead toinstability intheRussian eco-
nomy. Therefore, uncertain operating environment anddecreasing, asaresult ofso-
cial andpolitical instability, could affect theGroup’s profitability andability tosell its
services due tosignificant economic andpolitical risks.
Certain government policies ortheselective andarbitrary enforcement ofsuch poli-
cies could make it more difficult fortheGroup tocompete effectively and/or impact
its profitability.
Thecurrent geopolitical situation andconflict surrounding Russia andUkraine will
adversely affect operations oftheGroup, i.e themanagement oftheGroup isaware
ofthefact that someshipping lines have announced that they temporarily suspend
shipments toandfromRussian Federation. It ispossible that other shipping lines
will follow withsimilar restrictions. TheGroupmay also beadversely indirectly af-
fected byUS, EU, UK andother jurisdictions sanctions against Russian business/
companies– measures that have had andmay continue tohave anadverse ef-
fect ontheRussian economy anddemand forgoods, commodities andservices
aswellassupply ofequipment andspare parts, interest rates andRUB/USDex-
change rate. Ongoing sanctions could also slow down ormake it very challenging
toprocess thesettlements withclients andsuppliers andtodeal withcertain persons
andentities inRussia orinother countries.
Following already imposed sanctions onRussian Central Bank, its restrictions forca-
pital movements outside Russian Federation andother developments ofthecon-
frontation, there isanuncertainty about availability oftheoptions forrefinancing
in2023when principal payments
Inlight ofthegeopolitical andmacroeconomic challenges faced bytheports industry
inrecent years, theGroup has focused onimproving its resilience, inparticular its abili-
ty towithstand short-term economic fluctuations inRussia, aswellasthewider regional
andglobal environment. This has includedastrong focus oncost containment measures,
andonstrengthening its financial position byrefinancing its debt, switching tolonger ma-
turities atfixed rates, execute theinvestment programs ahead oftime andincrease there-
silience ofits treasury operations. Inaddition, theGroup has developed its growth stra-
tegy toembrace exports andnew revenue streams tocounteract theimpact ofanyfall
inconsumer sentiment oranymacro-economic downturn.
TheGroup has strengthened its system tomonitor compliance withrestrictions posed
byinternational sanctions andfend off therisk ofsecondary sanctions.
TheGroup continues tomaintain aninternational base ofshareholders, bondholders
andbusiness partners.
TheGroup’s management isclosely monitoring events inRussia andUkraine,
aswellasthepossibility oftheimposition offurther sanctions inconnection withtheesca-
lating confrontation andanyresulting increase oftensions between Russia, andtheUS,
UK and/or theEU. Themanagement understands what needs tobedone under cur-
rent circumstances andbelieves that it has required resources tolead theGroup through
these difficult times.
TheGroup hasastrong track record inpromptly meeting all its debt obligations, success-
ful refinancing anddeleveraging andenjoys high credibility inlocal andinternational
banking andcapital markets that we expect should support theGroup inits efforts torefi-
nance inSeptember 2023orearlier.
TheGroup isnot aware ofanyspecific sanctions’ related toits ownership oroperations.
Management report (continued)
Risk factor Risk management approach
ofEurobonds 2023fall due. Thesituation islargely dependent onactions ofRussian
Government andCentral Bank that aredifficult toforesee.
Coronavirus (COVID-19):
Theglobal coronavirus (COVID-19) pandemic that emerged during 2020impacted
thecontainer ports industry andGlobal Ports own operations, resulting insignificant in-
terruption toglobal trade, disruption tosupply chains, reshuffling ofvessel calls, andhigh
FX volatility.
Despite theintroduction ofvaccination programs, visibility remains low, new strains ofvi-
rus areemerging, andtherisk offuture outbreaks anddisruption tobusiness operations
remains. Risks include:
• personnel shortages due toCOVID-19related illness
• inability todeliver contracted services due toregulatory orsafety requirements
• loss ofrevenue due tobusiness interruption, loss ofcustomer volumes orcustomer
withdrawals
• additional process steps orsafety measures
• liquidity issues associated withdelays incustomer payments, potential customer
failures oravailability offinancing.
Theauthorities inRussia demanded that thetransport industry enterprises ensure that
atleast 80% ofemployees arevaccinated, which theGroup’s terminals completed within
therequired time frame.
Group measures tomitigate risk aregrouped under/focused onfour main priorities:
• Protecting all employees (operations andadmin) andcommunities: including on-
site vaccination attheterminals, medical examinations, restrictions ontravelling
andexternal/internal meetings, social distancing, additional disinfection according
totheschedule, personal protective equipment provided forpersonnel, improved
cleaning, purchasing protective masks, gloves andCOVID-19tests forthelocal
hospital inNakhodka, Far East. Administrative staff had been either recommend-
ed ormoved towork fromhome. TheGroup tried toestablish themaximum com-
fort forits employees during remote work. TheIT infrastructure wasadapted tonew
challenges andwasworking without major failures. Asofthedate ofsigning thefi-
nancial statements, theemployees werenot fully returned fromworking fromhome.
TheGroup has not takenafinal decision, onwhether someoftheemployees shall
continue working fromhome going forward. Anyreturn totheoffice isandwill
beaccompanied byfollowing thestrict safety protocols including social distancing,
disinfection, use ofmasks, limitation ofexternal contacts.
• Supporting customers: uninterrupted 24/7operations (quay, yard andgates),
tosupport andprotect customers’ supply chains inRussia, improved commercial
andoperational flexibility;
• Strengthening online channels, including maximum digitalisation ofdocumentation
andcustomer integration, further development ofonline solutions todecrease thene-
cessity ofclient’s presence attheterminal, improvement ofresilience ofIT systems
toexternal shocks andcyber attacks;
• Ensuring financial stability andcash preservation, including proactive management
ofcosts, receivables andcapacity foreffective adaptation tocrisis andits conse-
quences, Stress testing offinancial performance andliquidity position, revisiting fi-
nancial plans.
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
Management report (continued)
Risk factor Risk management approach
All these measures implemented ensured that theterminals oftheGroup (quay, yard
andgates) remained 100% operational toservice vessels/handle cargoes throughout
thepandemic aswellasthecall andservice centres oftheGroup wereworking without
interruption.
Operational risks
Leases ofterminal land:
TheGroup leasesasignificant amount oftheland andquays required tooperate its ter-
minals fromgovernment agencies andtoalesser extent fromprivate entities. Anyrevision
oralteration totheterms ofthese leases orthetermination ofthese leases, orchanges
totheunderlying property rights under these leases, could adversely affect theGroup’s
business.
TheGroup believes it hasastable situation atpresent regarding its land leases andits
terminals have been inoperation foranumber ofyears. TheGroup owns thefreehold
on66% ofthetotal land ofits terminals and70% oftheland ofits container andinland
terminals inRussia. Theremainder isheld under short andlong-term leases routinely re-
newable atimmaterial costs.
Customer Profile andConcentration:
TheGroup isdependent onarelatively limited number ofmajor customers (shipping
lines, freight forwarders etc.) forasignificant portion ofits business.
These customers areaffected byconditions intheir market sector which can result incon-
tract changes andrenegotiations aswellasspending constraints, andthis isfurther exac-
erbated bycarrier consolidation.
TheGroup conducts extensive andregular dialogue withkey customers andactively
monitors changes that might affect our customers’ demand forour services.
TheGroup hasaclear strategy toreduce its dependence onits major customers, bytar-
geting new customers, increasing theshare ofbusiness fromother existing global custo-
mers, andnew cargo segments.
TheGroup isalso relying onthecontribution fromnon-container revenues through build-
ing its presence inmarine bulk cargoes like coal andscrap metal (share ofnon-container
revenue was22% and17% in2020and2021respectively).
Reliance onthird parties:
TheGroup isdependent ontheperformance ofservices bythird parties outside its
control, including all those other participants inthelogistics chain, such ascustoms in-
spectors, supervisory authorities, Russian Railways, rolling stock operators andothers,
andtheperformance ofsecurity procedures carried out atother port facilities andbyits
shipping line customers.
TheGroup strives tomaintainacontinuous dialogue andcooperation withthird par-
ties across thesupply chain. Inaddition, its geographic diversification provides it
withsomeflexibility inits logistics, should bottlenecks develop inone area.
Risk factor Risk management approach
Tariff regulation:
Tariffs forcertain services atcertain oftheGroup’s terminals have inthepast, been regu-
lated bytheRussian Federal Antimonopoly Service (FAS). Asaresult, thetariffs charged
forsuch services were, andmay potentially inthefuture be, subject toamaximum tariff
rate and/or fixed inRussian roubles asPLP, VSC, andFCT, like many other Russian sea-
port operators, areclassified asnatural monopolies under Russian law.
All tariffs areset inRussian roubles. Tothebest oftheknowledge oftheGroup’s manage-
ment, theGroup isinfull compliance withthetariff legislation.
TheGroup continues tomonitor foranylegislative proposals andregulatory actions
that could lead tochanges totheexisting tariff regulations andits natural monopoly sta-
tus. It seeksaproactive dialogue withtherelevant Russian federal authorities. It believes
it isaswell placed asanymarket participant toadapt toanyfuture changes intariff
regulation.
Human resources management:
TheGroup’s competitive position andprospects depend ontheexpertise andexperi-
ence ofits key management team andits ability tocontinue toattract, retain andmoti-
vate qualified personnel.
Lack ofqualified workers inthemarket andactive competitions can lead toadeficiency
ofhuman resources.
Industrial action oradverse labour relations could disrupt theGroup’s operating activities
andhave anadverse effect onperformance results.
Changes inwork conditions aswellasgrowing competition onthelabour marketmay
lead tohigher staff turnover.
TheGroup annually reviews labour market trends andaligns employee salaries andben-
efits atall levels tofoster andretain skilled labour.
TheGroup invests intheprofessional development ofits staff atall levels, including inter-
national best practices implementation andinternal development/ training programmes.
TheGroup engages insocially responsible business practices andthesupport oflocal
communities.
TheGroup isregularly exploring employee’s satisfaction andloyalty andprovide measures
tokeepasufficient level ofthese metrics.
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COVID support benefit package inline withtheexpectations ofour employees.
Health, safety, security:
Accidents involving thehandling ofhazardous materials attheGroup’s terminals could
disrupt its business andoperations and/or subject theGroup toenvironmental andother
liabilities.
Therisk ofsafety incidents isinherent intheGroup’s businesses.
TheGroup’s operations could beadversely affected byterrorist attacks, natural disasters
orother catastrophic events beyond its control.
TheGroup has implemented clear safety policies designed around international best
practices andbenchmarks using such measures asGPI Global Minimum Requirements.
Safety isone oftheGroup’s top priorities. Asafety strategy andannual action plans have
been developed andarebeing implemented, tobuildasustainable safety culture across
thewhole Group. Thedetailed roadmap isdesigned toensure sustainable implementa-
tion ofsafety culture overthemedium term.
GPI isconstantly improving its safety practices byinvolving theemployees inidentifying
andmitigating potential safety risks.
Similarly, GPI works withall its stakeholders tomaintain high level ofphysical security
around port facilities andvessel operations tominimise therisk ofterrorist attacks.
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
Management report (continued)
Risk factor Risk management approach
Environment:
Degradation oftheenvironment andtheconsequences fromstringent environmen-
tal regulations andinvestor sustainability expectationsmay influence theprofitability
ofthebusiness.
TheGroup constantly monitors theenvironmental, legislation changes andexpectations
andinresponse isdeveloping its ESG targets which will bealigned withits business stra-
tegy, governance andrisk management processes.
In2021thecoal handling operations wereceased inone oftheCompany’s subsidiaries.
Information technology andsecurity:
TheGroup’s container terminals rely onIT andtechnology systems tokeep their op-
erations running efficiently, prevent disruptions tologistic supply chains, andmonitor
andcontrol all aspects oftheir operations.
AnyIT glitches orincidents can create major disruptions forcomplex logistic supply
chains.
Anyprolonged failure ordisruption ofthese IT systems, whetheraresult ofahuman er-
ror,adeliberate data breach oranexternal cyber threat could create major disruptions
interminal operations. This could dramatically affect theGroup’s ability torender its ser-
vices tocustomers, leading toreputational damage, disruption tobusiness operations
andaninability tomeet its contractual obligations.
TheGroup has centralised its IT function inrecent years which isanimportant step inen-
suring both theefficiency andconsistency oftheGroup’s security protocols implementa-
tion. We arecontinuing toalign our IT strategy withthebusiness objectives.
We regularly review, update andevaluate all software, applications, systems, infrastruc-
ture andsecurity, i.e., inNovember 2021 VSC andSolvo completed testing andcom-
missioning ofanew terminal operating system (TOS). Thenew TOS enables real-time
tracking ofall ship andcontainer handling procedures attheterminal andcritical func-
tions like operational accounting, warehouse management, railhead container handling
andplanning, vehicle handling, andoversight ofcontainers during customs clearance.
All software andsystems areupgraded orpatched regularly toensure that we minimise
vulnerabilities.
Each ofour business units has anIT disaster recovery plan.
Our security policies andinfrastructure tools areupdated orreplaced regularly tokeep
pace withchanging andgrowing threats.
Our security infrastructure isupdated regularly andemploys multiple layers ofdefence.
Connectivity toour partners’ systems iscontrolled, monitored andlogged.
Regulatory andcompliance risks
Regulatory compliance:
TheGroup issubject toawide variety ofregulations, standards andrequirements
andmay face substantial liability if it fails tocomply withexisting regulations applicable
toits businesses.
TheGroup’s terminal operations aresubject toextensive laws andregulations governing,
among other things, theloading, unloading andstorage ofhazardous materials, environ-
mental protection andhealth andsafety.
TheGroup strives tobeincompliance atall times withall regulations governing its
activities anddevotes considerable management andfinancial resources toensure
compliance.
Management report (continued)
Risk factor Risk management approach
Changes inregulations:
Changes toexisting regulations ortheintroduction ofnew regulations, procedures orli-
censing requirements arebeyond theGroup’s control andmay beinfluenced bypoliti-
cal orcommercial considerations not aligned withtheGroup’s interests. Anyexpansion
ofthescope oftheregulations governing theGroup’s environmental obligations, inpar-
ticular, would likely involve substantial additional costs, including costs relating tomain-
tenance andinspection, development andimplementation ofemergency procedures
andinsurance coverage orother financial assurance ofits ability toaddress environmen-
tal incidents orexternal threats.
TheGroup maintainsaconstructive dialogue withrelevant federal, regional andlo-
cal authorities regarding existing andplanned regulations. TheGroup does not have
thepower toblock anyorall regulations itmay judge tobeharmful, but this dialogue
should ensure it has time toreact tochanges intheregulatory environment.
Conflict ofinterests:
TheGroup’s controlling beneficial shareholdersmay have interests that conflict withthose
oftheholders oftheGDRs ornotes.
Themajor implications ofthis risk arethat (i) co-controlling shareholders pursue other
businesses not related toGPI andhencemay not bedeeply involved withdeveloping
GPI and(ii) one ofthemajor shareholders isalsoamajor customer oftheGroup.
Theemployees oftheGroupmay have interests inthecompanies, thatmay orpoten-
tiallymay have thebusiness withtheGroup.
TheGroup’s corporate governance system isdesigned tomaximise thecompany’s value
forall shareholders andensure theinterests ofall stakeholders aretaken intoaccount.
TheGroup’s LSE listing ensures our compliance withthehighest international standards.
Inaddition, theBoard consists ofhighly experienced individuals including strong inde-
pendent directors.
In2020theGroup adopted thePolicy onConflicts ofInterest regulating thepotential
conflicts ofinterest bytheemployees oftheGroup andupdated it in2021.
Legal andtax risks:
Anadverse determination ofpending andpotential legal actions involving theGroup’s
subsidiaries could have anadverse effect ontheGroup’s business, revenues andcash
flows andtheprice oftheGDRs. Weaknesses relating totheRussian legal andtax
system andappropriate Russian law create anuncertain environment forinvestment
andbusiness activity andlegislationmay not adequately protect against expropria-
tion andnationalisation. Thelack ofindependence ofcertain members ofthejudiciary,
thedifficulty ofenforcing court decisions andgovernmental discretion claims could pre-
vent theGroup fromobtaining effective redress incourt proceedings.
TheGroup maintainsastrong andprofessional legal function designed tomonitor legal
risks, avoid legal actions where possible andcarefully oversee anychanges inappli-
cable legislation thatmay occur.
TheGroup performs ongoing monitoring ofchanges inrelevant tax legislation andcourt
practice inthecountries where its companies arelocated anddevelops theGroup’s le-
gal andtax position accordingly.
11 12
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report (continued)
Risk factor Risk management approach
Financial risks
Foreign exchange risks:
TheGroup issubject toforeign-exchange risk arising fromvarious currency exposures,
primarily theRussian rouble andtheUS dollar. Foreign-exchange risk istherisk offluc-
tuations inprofits andcash flows oftheGroup arising from themovement offoreign-
exchange rates. Risk also arises from therevaluation ofassets andliabilities denominated
inforeign currency.
Asof2021, all Group tariffs aredenominated inRussian roubles, andpart oftheGroup’s
debt isdenominated inUS Dollars. Most oftheGroup’s operating expenses, ontheother
hand, areandwill continue tobedenominated andsettled inRussian roubles.
Inorder tomitigate thepossibility offoreign exchange risks arising fromasignificant mis-
match between thecurrency ofrevenue andthecurrency ofdebt (‘open FX position’),
theGroup isconverting part ofits existing USDdebt intoRUB, thecurrency ofrevenue.
During 2018-2022theGroup bought back and/ orredeemed part ofits USDdenom-
inated Eurobonds exposure andcurrently~57% ofthetotal issued Eurobonds have been
bought back and/ orfully redeemed.
New debt in2020-2021wasattracted/raised only inRussian rouble, i.e., VSС bonds
intheamount of12.5billion RUB-USDequivalent ofUSD168.25mln.
Inaddition, theGroup has negotiated withsomeofits customers theright tochange
its Russian rouble tariffs inconjunction withRUB/USDexchange rate fluctuationswi-
thinarange of+/-15% each time when theaverage RUB/USDexchange rate foragi-
ven month falls beyond 5% from thebase exchange rate used fortranslating original
USDtariffs toRUB,however, therisk above thelevels ofthese currency moves remains.
Credit risk:
TheGroupmay besubject tocredit risk, arising primarily fromtrade andother receivables,
loans receivable andcash andits equivalents andderivative financial instruments.
TheGroup’s business isalso dependent onseveral large key customers.
TheGroup closely tracks its accounts receivable overall andthecreditworthiness ofkey
customers andsuppliers.
Management report (continued)
Risk factor Risk management approach
Debt, leverage andliquidity:
TheGroup’s indebtedness ortheenforcement ofcertain provisions ofits financing ar-
rangements could affect its business orgrowth prospects.
Failure topromptly monitor andforecast compliance withloan covenants both
attheGroup andindividual terminal levelsmay result incovenant breaches andtechni-
cal defaults.
If theGroup isunable toaccess funds (liquidity) itmay beunable tomeet financial
obligations when they fall due, oronanongoing basis, toborrow funds inthemarket
atanacceptable price tofund its commitments.
TheGroup has been able toreduce its total debt level. FCT Series 2–3 Bonds werere-
paid in2021using their own funds. Debt reduction beyond minimum repayment require-
ments remainsamanagement priority in2022.
Liquidity risk iscarefully monitored, withregular forecasts prepared fortheGroup andits
operating entities.
Asoftheend of2021 Group Net debt/EBITDA ratio reached 2.0x.
TheGroup deleveraging strategy together withthebetter business development outlook
led toMoody’s upgrade rating oftheСompanyand theGroup financial instruments
by1notch toBa1, RA Expert by2notches toruAA, Fitch Ratings affirmation atBB+
in2021.
Therisk ofliquidity has been significantly reduced viaextensions ofdebt maturities
through public debt issuance in2021:
VSС issued Russian rouble bonds intheamount of7.5billion RUB– USDequivalent
ofUSD100.95mln, which isapart oftherouble-denominated Bond Program ofVSC
withMoscow Exchange which provides VSC withthepotential toissue additional bonds
ofRUB17.5billion– USDequivalent ofUSD235.56mln, overanunlimited period oftime
withamaturity ofup to10years. FCT hasasimilar Bond Program forRUB50billion–
USDequivalent ofUSD673.01mln. Inaddition, theGroup has overUS Dollars 300mil-
lion ofopen uncommitted limits forcredit line facilities from thebanks which incombi-
nation withVSC andFCT bonds can facilitate financial flexibility anddiversification
ofthedebt portfolio oftheGroup andtherefinancing oftheexisting debt oftheGroup
andensure all obligations oftheGroup falling due inthenext 12months aremet.
TheGroup regularly stress tests scenarios when different negative trends that could affect
cash flows areidentified. Theliquidity position iscarefully monitored incase offurther de-
terioration offinancial performance.
13 14
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Management report (continued)
Internal control andrisk management systems inrelation tothefinancial reporting process
26. 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.
2 7. Financial reporting andsupervision arebased onapproved budgets andonmonthly performance reporting.
28. TheAudit andRisk Committee oftheBoard ofdirectors oftheCompany reviews certain high-risk areas atleast onceayear, including
thefollowing:
– Significant accounting estimates;
– Material changes totheaccounting policies.
29. 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theBoard
ofDirectors. Theinternal financial reporting ensures aneffective process tomonitor theGroup’s financial results, making it possible toidentify
andcorrect anyerrors oromissions. Themonthly financial reporting from therespective entities isanalysed andmonitored bythecentralised
department inorder toassess thefinancial andoperating performance aswellastoidentify anyweaknesses intheinternal reporting, failures
tocomply withprocedures andtheGroup accounting policies.TheAudit andRisk Committee follows up toensure that anyinternal control
weaknesses aremitigated andthat anyerrors oromissions inthefinancial statements identified andreported bytheauditors arecorrected,
including controls orprocedures implemented toprevent such errors oromissions.
Use offinancial instruments bytheCompany
30. 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. Foradescription oftheCompany’s financial risk management objectives andpolicies andasummary
oftheCompany’s exposure tofinancial risks please refer toNote 3ofthefinancial statements.
TheRole oftheBoard ofDirectors
31. TheCompany isgoverned byits Board ofDirectors (also referred as“theBoard”) which iscollectively responsible totheshareholders fortheshort-
andlong-term sustainable success oftheGroup, generating value toshareholders andcontributing tothewider society asawhole. Its
responsibility istopromote adherence tobest-in-class corporate governance.
32. TheBoard ofDirectors’ role istoprovide entrepreneurial leadership totheGroup through establishing theGroup’s purpose, values andstrategy,
setting out thecorporate governance standards, satisfying itself that these andits culture arealigned, ensuring that thenecessary financial
andhuman resources areinplace fortheGroup tomeet its objectives andreviewing management performance. TheGroup seeks directors who
bring strong track records andadeep understanding oftheindustry. TheBoard sets theGroup’s values andstandards andensures all obligations
toshareholders areunderstood andmet. TheBoard ensures theGroup establishesaframework ofprudent andeffective controls, which enables
risk tobeassessed andmanaged andmaintainsasound system ofinternal control, corporate compliance andenterprise risk management
tosafeguard theGroup’s assets andshareholders’ investments intheGroup.
33. Theroles andresponsibilities oftheChairman, Senior Independent Director, Board andcommittees’ members areset out inwriting intheTerms
ofReference oftheBoard andcommittees. Thelatest version oftheTerms ofReference oftheBoard ofDirectors wasapproved bytheshareholders
on18June 2019. It isavailable ontheCompany`s website.
Members oftheBoard ofDirectors
34. TheBoard ofDirectors leads theprocess inmaking new Board member appointments andmakes recommendations onappointments
toshareholders. Inaccordance withtheTerms ofReference oftheBoard, all Directors aresubject toelection byshareholders atthefirst Annual
General Meeting after their appointment, andtore-election atintervals ofno more than one year. Anyterm beyond six years foraNon-Executive
Director issubject toparticularly rigorous review, andtakes intoaccount theneed torefresh theBoard onaregular basis.
35. TheBoard currently has 11members andthey wereappointed asshown onpage 2.
36. On27May 2021 Messrs. Demos Katsis, Sergey Shishkarev andAndrey Yashchenko resigned from theBoard andMessrs. Vladimir Bychkov,
Andrey Lenvalskiy andAndriy Pavlyutin replaced them onthesame date. All new Board members werereviewed andrecommended
forappointment bytheNomination andRemuneration Committee.
37. All other Directors weremembers oftheBoard throughout theyear ended 31December 2021, including theindependent directors: Ms. Britta
Dalunde, Ms. Inna Kuznetsova andMr. Lampros Papadopoulos.
38. There wereno significant changes intheresponsibilities oftheDirectors during 2021except formembership inthecommittees asdescribed below.
39. There isno provision intheCompany’s Articles ofAssociation fortheretirement ofDirectors byrotation. However, inaccordance withtheTerms
ofReference oftheBoard ofDirectors andtheresolutions adopted bytheShareholders attheAnnual General Meeting held on27May 2021all
present directors aresubject tore-election atthenext Annual General Meeting oftheShareholders oftheCompany, which will take place
in2022.
Directors’ Interests
40. Theinterests intheshare capital ofGlobal Ports Investments Plc, both direct andindirect, ofpersons discharging managerial responsibilities,
aswellaspersons closely associated withthem asof31December 2021and31December 2020areshown below. Mr. Sergey Shishkarev
resigned from theposition ofDirector on27May 2021. Mr. Vladimir Bychkov wasappointed totheposition ofDirector onthesame date:
Name Type ofholding Shares held at
31December 2021
Shares held at
31December 2020
Britta Dalunde Through holding oftheGDRs 7,000 GDRs representing
21,000ordinary shares
7,000 GDRs representing
21,000ordinary shares
Sergey Shishkarev Through shareholding inLLC Management Company “Delo” andother
related entities
NA 88,769,817ordinary shares
NA 34,605,183ordinary non- voting
shares
Vladimir Bychkov Through holding oftheGDRs 235,301 GDRs representing
705,903ordinary shares
NA
Management report (continued)
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Chairman oftheBoard ofDirectors
41. Mr. Soren Jakobsen istheChairman oftheBoard since24April 2020, when he replaced Mr. Morten Engelstoft.
42. Therole oftheChairman oftheBoard ofDirectors istoensure that Board meetings areheld asandwhen necessary, lead thedirectors, ensure
their effectiveness andreview theagenda ofBoard meetings. TheChairman together withtheSecretary oftheBoard review Board materials
before they arepresented totheBoard andensure that Board members areprovided withaccurate, timely andclear information. Themembers
ofthemanagement team who have prepared thepapers, orwho can provide additional insights intotheissues being discussed, areinvited
topresent papers orattend theBoard meeting attherelevant time. Board members regularly hold meetings withtheGroup’s management
todiscuss their work andevaluate their performance.
43. TheChairman monitors communications andrelations between theGroup andits shareholders, theBoard andmanagement, andindependent
andnon-independent directors, withaview toencouraging dialogue andconstructive relations. TheChairman should demonstrate objective
judgement andpromoteaculture ofopenness anddebate. Inaddition, theChairman facilitates constructive board relations andtheeffective
contribution ofall non-executive directors.
44. TheGroup separates thepositions oftheChairman andCEO toensure anappropriate segregation ofroles andduties.
Non-executive andIndependent Directors
45. All oftheBoard members arenon-executive directors.
46. Mrs. Britta Dalunde, Mrs. Inna Kuznetsova andMr. Lampros Papadopoulos areindependent directors, andhave no relationship withtheGroup, its
related companies ortheir officers. This means they can exercise objective judgment oncorporate affairs independently frommanagement.
47. Although all directors have equal responsibility fortheGroup’s operations, therole oftheindependent non-executive directors isparticularly
important inensuring that themanagement’s strategies areconstructively challenged. Aswellasensuring theGroup’s strategies arefully discussed
andexamined, they must take intoaccount thelong-term interests, not only ofthemajor shareholders, but also oftheGDR holders, bondholders,
other lenders, employees, customers, suppliers andthecommunities inwhich theGroup conducts its business.
48. Mrs. Britta Dalunde wasappointed astheSenior Independent Director on31May 2018. Therole oftheSenior Independent Director
istoprovideasounding board fortheChairman andserve asanintermediary fortheother directors andshareholders. Led bythesenior
independent director, thenon-executive directors should meet without theChairman present atleast annually toappraise theChairman’s
performance, andonother occasions asnecessary.
TheBoard Committees
49. SinceDecember 2008theBoard ofDirectors established theoperation ofthree committees: anAudit andRisk Committee,aNomination
Committee andaRemuneration Committee. Thecomposition ofthecommittees waschanged bytheBoard ofDirectors inJune 2019: Nomination
Committee andRemuneration Committee weremerged intoone andanew Strategy Committee wasestablished.
TheAudit andRisk Committee
50. TheAudit andRisk Committee comprises offive Non-Executive Directors, three ofwhom areindependent, andmeets atleast four timesayear.
TheAudit andRisk Committee ischaired byMrs. Britta Dalunde (anIndependent Non-Executive Director appointed asof12May 2017), andits
other members areMrs. Inna Kuznetsova (anIndependent Non-Executive Director appointed asof01January 2018), Mr. Lampros Papadopoulos
(anIndependent Non-Executive Director appointed asof01January 2018), Mr. Mogens Petersen (appointed asof18June 2019) andMr.Andrey
Lenvalskiy (appointed asof27May 2021). Mr. Andrey Yashchenko resigned from theAudit andRisk Committee on27May 2021.
51. TheCommittee isresponsible for:
– monitoring theintegrity ofthefinancial statements ofthecompany andanyformal announcements relating tothecompany’s financial
performance, andreviewing significant financial reporting judgments contained inthem;
Management report (continued)
– providing advice (where requested bytheboard) onwhether theannual report andaccounts, taken asawhole, isfair, balanced
andunderstandable, andprovides theinformation necessary forshareholders toassess thecompany’s position andperformance, business
model andstrategy;
– reviewing thecompany’s internal financial controls andinternal control andrisk management systems;
– monitoring andreviewing theeffectiveness ofthecompany’s internal audit function;
– making recommendations totheboard, about theappointment, reappointment andremoval oftheexternal auditor, andgiving
therecommendations inrelation toremuneration andterms ofengagement oftheexternal auditor foraudit andnon-audit services;
– reviewing andmonitoring theexternal auditor’s independence andobjectivity;
– reviewing theeffectiveness oftheexternal audit process;
– developing andimplementing policy ontheengagement oftheexternal auditor tosupply non-audit services; and
– reporting totheBoard onhow it has discharged its responsibilities.
52. In2021theAudit andRisk Committee met 12times (2020: 10times) toreview anddiscuss inter alia thefollowing significant issues andmatters
inaddition andontop ofthose listed above, among others:
– Meetings withinternal auditors todiscuss theresults oftheir audits andad-hoc reviews, working plans andprogress inmonitoring theexecution
ofinternal audit recommendations;
– Meetings withexternal auditors todiscuss thematters related totheaudit work done bythem andanyissues arising fromtheir audits’ reviews;
– Discussion ofthelevel ofclarity andcompleteness ofdisclosures infinancial statements withthemanagement andexternal auditors andmaking
therecommendations totheBoard;
– Assessment ofefficiency ofexternal auditor bydiscussing theaudit approach andaudit plan, monitoring ofcompliance withtheplan,
receiving thefeedback from themembers ofthemanagement team, involved intheaudit process, assessing theinternal resources allocated
bytheexternal auditor, thekey risks totheaudit process andtheir mitigation measures, review oftheauditor`s management letter, consideration
ofthelevel andquality ofcommunication between theexternal auditor andCommittee during theaudit process.
– Consideration andapproval ofaudit schedules andreview oftheimpairment models andtheimpact ofthenew IFRS standards
ontheCompany`s financial statements. TheCommittee`s task istoalign theimpairment models withtheshort-, mid- andlong-term forecasts
andtounderstand what impact thenew standards would have onthefinancial statements andGroup`s compliance withthecovenants;
– Consideration andapproval oftheengagement ofexternal auditors forrendering ofnon-audit services. Ineach particular case theCommittee
wasassessing theimpact ofnon-audit services ontheindependence andobjectivity oftheexternal auditor. TheCommittee reviewed thescope
ofservices oncompliance withthelist ofpermitted non-audit services, thepotential impact oftheservices ontheaudit work andfinancial
statements anddiscussed withtheexternal auditor how their internal compliance procedures wereperformed andwhether all internal
compliance requirements weremet. TheCommittee monitors theshare ofnon-audit service inrelation toits compliance withthestandards;
– Review ofthepublic materials containing financial information inrelation tocompliance withthefinancial statements, thedisclosure
andtransparency requirements andBoard`s view onthemid andlong-term development oftheGroup;
– Consideration ofvarious reports from themanagement;
– Review ofthemajor risks. TheCommittee had meetings withRisk Management ofGPM todiscuss theКеу Risks andRisk andInternal Controls
Matrices’ development status;
– Review ofGDPR andsanctions compliance requirements;
– Review ofaccepted IT risks;
– Review theresults ofcentralisation ofthefunctions oftheGroup;
– Review oftax related matters;
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
– Review ofCharity activity in2021andbudget 2022;
– Review various other compliance related matters;
– Review ofthereport ontheresults ofanexternal assessment ofGlobal Ports Internal Audit Function vs conformance withtheInternational
Standards fortheProfessional Practice ofInternal Auditing;
– Consideration andgiving therecommendations totheBoard tooffer KPMG Limited forelection astheCompany’ s auditor
forFY2021andmonitoring oftheaudit hand overfromPwC toKPMG;
– Consideration andgiving therecommendations totheBoard ofDirectors fortheapproval oftheRelated Parties Transactions Policy
andtheupdated andrestated Accounting Policy.
TheNomination andRemuneration Committee
53. TheNomination andRemuneration Committee wasestablished inJune 2019following themerger oftheNomination Committee andRemuneration
Committee inorder tosimplify thework ofthecommittees andBoard members.
54. TheCommittee isacommittee oftheBoard ofDirectors which assists theBoard indischarging its corporate governance responsibilities inrelation
tonomination, appointment andremuneration ofall Directors andtheChairman/ Chairwoman oftheBoard ofDirectors andofthesenior
executive management oftheCompany andits subsidiaries andjoint venture companies, andoversee thedevelopment ofadiverse pipeline
forsuccession aswellastoevaluate theperformance oftheBoard ofDirectors, its committees, theChairman/ Chairwoman oftheBoard
ofDirectors andindividual directors. Themain objective oftheCommittee istodetermine theframework andpolicy forthenomination
andremuneration ofIndependent Non-Executive Directors, Executive Directors andsenior company executives ensuring theconsistency
withthecompany talent strategy, remuneration policy, market trends andcompany’s commitment forDiversity andInclusion; ensure onboarding
fornew directors; set theframework forsuccession planning andtalent management; run annual Board Performance evaluation process toensure
its growing effectiveness.
55. TheNomination andRemuneration Committee asofthedate ofthis report comprises three Directors, one ofwhom isindependent. TheCommittee
meets atleast once each year. Currently, theNomination andRemuneration Committee ischaired byMrs. Inna Kuznetsova (anIndependent
Non-Executive Director appointed astheChairwoman ofthemerged Nomination andRemuneration Committee asof18June 2019). Theother
members areMs. Alexandra Fomenko (appointed asamember ofthecommittee asof11November 2019) andMr. Soren Jakobsen (appointed
asamember ofthecommittee asof24April 2020).
56. TheCommittee meets atleast once each year.
57. In2021theNomination andRemuneration Committee met 13times (16times in2020):
– todiscuss andrecommend thecandidates tobeelected totheBoard andBoard Committees;
– todiscuss themanagement succession andtalent development program, aswellasGlobal Ports Management LLC Chief Executive Officer
Succession Planning directions andnext steps;
– todiscuss andrecommend totheBoard:
a. theappointment ofnew Managing Director ofVostochnaya Stevedoring Company LLC, Chief Operations Officer ofGlobal Ports
Management LLC, new Chief Executive Officer ofMoby Dik LLC andYanino Logistics Park LLC,
b. fees payable tomembers oftheBoard ofDirectors,
c. new remuneration payable totheGroup Senior Management Team andKey Management team members oftheGroup companies.
Indetermining thelevel ofremuneration ofthekey senior management oftheGroup theCommittee referred tothelevel ofskills andexpertise,
theposition andscope ofwork andresponsibilities aswellastothemarket levels forsimilar positions.
58. Intheyear 2021thekey focus oftheNomination andRemuneration Committee wasontheChief Executive Officer ofGlobal Ports Management
LLC succession planning program, talent management, remuneration ofthemembers oftheBoard ofDirectors andBoard performance evaluation.
Management report (continued)
TheStrategy Committee
59. TheStrategy Committee wasestablished inJune 2019. Asper its terms ofreference, theCommittee meets atleast once each year. TheStrategy
Committee asofthedate ofthis report comprises five Directors, one ofwhom isindependent. Currently, theStrategy Committee ischaired
byMr. Vladimir Bychkov (appointed asof27May 2021). Theother members areMr. Mogens Petersen, Mr. Soren Jakobsen andMr. Lampros
Papadopoulos (anIndependent Non-Executive Director), all appointed asof18June 2019, andMr. Andrey Lenvalskiy (appointed asof27May
2021). Messrs. Sergey Shishkarev andAndrey Yashchenko resigned from theStrategy Committee on27May 2021. TheStrategy Committee‘ Terms
ofreferences wereupdated attheend of2021.
60. TheCommittee isacommittee oftheBoard ofDirectors that assists theBoard ofDirectors indischarging its corporate governance responsibilities
inrelation tothesetting andoversight ofthestrategy andstrategic initiatives oftheCompany andits subsidiaries andjoint venture companies
(theGroup) tobeapproved bytheBoard ofDirectors fromtime totime, andproviding oversight overtheimplementation anddevelopment ofthose
byexecutive management. TheCommittee has been formed tofosteracooperative, interactive strategic planning process between theBoard
andexecutive management.
61. In2021theStrategy Committee met 13times (8times in2020) toconsider andgive recommendations totheBoard forapproval of:
– various investment proposals, including Vostochnaya Stevedoring Company LLC Operating Master Plan;
– merger ofNational Container Holding Company Ltd withGlobal Ports Investments PLC, asapart offurther optimization ofGroup structure;
– theamended andrestated Strategy Committee Terms ofReference; and
– admission totrading oftheGlobal Ports Investments PLC GDRs onMoscow Exchange.
62. Inaddition, theStrategy Committee reviewed anddiscussed thestrategic priorities andstrategic targets, development ofcompetitive environment
andGroup reaction toit, strategic risks andtheir mitigation, functional strategies andaction plans fortheir execution, aswellasvarious strategic
projects inthepipeline.
Board Performance
63. TheBoard meets atleast five timesayear. Fixed meetings arescheduled atthestart ofeach year. Ad hoc meetings arecalled when there
arepressing matters requiring theBoard’s consideration anddecision inbetween thescheduled meetings.
64. In2021theBoard met formally 12times (2020: 13) toreview current performance andtodiscuss andapprove important business decisions.
65. In2021theBoard met todiscuss andapprove important business decisions, which included among others:
– FY2020financial statements, 1H2021interim financial statements andAnnual Report;
– Review ofsegments financial andoperational performance;
– Consideration of2022financial budget, major risks anduncertainties, commercial strategy, corporate social responsibility matters, internal
control framework;
– Changes inGroup management andtheBoard ofDirectors;
– Revision andadoption ofvarious group-wide policies andregulations, namely theRelated Parties Transactions Policy, Internal Audit Service’s
Quality Assurance andImprovement Policy, theamended andrestated Terms ofReference oftheStrategy Committee; amended andrestated
Corporate Accounting Policies Guidelines oftheGroup;
– Consideration ofvarious compliance matters;
– Consideration andapproval oftherevision ofexternal andinternal financing arrangements andorganizational restructurings;
– Consideration andapproval ofnew financing arrangements, e.g., issue ofVSC bonds forrefinancing ofEurobonds 2022; intra-group financing
ofEurobonds 2022redemption.
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
– Consideration andapproval ofmajor capital expenditures andinvestment projects; and
– Consideration andapproval ofvarious resolutions related totheoperations oftheCompany`s subsidiaries andjoint ventures;
66. Thenumber ofBoard andBoard Committee meetings held intheyear 2021andtheattendance ofdirectors during these meetings wasasfollows:
Board of
Directors
Nomination
andRemuneration Committee
Strategy Committee Audit andRisk Committee
A B A B A B A B
Vladimir Bychkov 6 7 - - 8 8 - -
Britta Dalunde 12 12 - - - - 12 12
Kristian Bai Hollund 12 12 - - - - - -
Alexandra Fomenko 12 12 13 13 - - - -
Soren Jakobsen 12 12 13 13 12 13 - -
Demos Katsis 5 5 - - - - - -
Inna Kuznetsova 12 12 13 13 - - 12 12
Andrey Lenvalskiy 6 7 - - 8 8 5 5
Shavkat Kary Niyazov 12 12 - - - - - -
Lampros Papadopoulos 12 12 - - 13 13 12 12
Andriy Pavlyutin 6 7 - - - - - -
Mogens Petersen 12 12 - - 13 13 12 12
Sergey Shishkarev 5 5 - - 5 5 - -
Andrey Yashchenko 5 5 - - 5 5 7 7
A= Number ofmeetings attended
B = Number ofmeetings eligible toattend during theyear
6 7. Theoperation oftheBoard, its Committees andindividual Directors issubject toregular evaluation. Theevaluation oftheBoard andindividual
Directors’ performance can beconducted through self-assessment, cross-assessment orbyanexternal third party. TheNon-Executive Directors,
led bytheSenior Independent Director, areresponsible fortheperformance evaluation oftheChairman oftheBoard. TheBoard did not engage
anyexternal advisors forevaluation ofits performance intheyears 2020and2021.
68. In2021theBoard conducted theself-evaluation, which results werediscussed inDecember 2021.
Board Diversity
69. TheCompany does not haveaformal Board diversity policy withregards tomatters such asage, gender oreducational andprofessional
backgrounds, but theBoard has thefull commitment todiversity within theGroup. Following thebest practice, while making thenew appointments
andconsidering thecurrent composition oftheBoard ofDirectors, these aspects aretaken intoaccount.
70. Asofthedate ofpublication ofthese financial statements theBoard has 3females representing 27% ofthetotal number ofdirectors. Theaverage
age ofdirectors is51years ranging from33to63years. TheBoard hasanecessary balance ofskills andexpertise torun theCompany
andtheGroup. TheBoard members have thefollowing educational backgrounds: port andtransportation industry, accounting andfinancial,
banking sector andlegal. There are5nationalities represented ontheBoard. TheBoard members reside in7countries.
Management report (continued)
Board andManagement Remuneration
71. Non-Executive Directors serve ontheBoard pursuant totheletters ofappointment. Such letters ofappointment specify theterms ofappointment
andtheremuneration ofNon-Executive Directors. Only Independent Non-Executive Directors receive remuneration.
72. Levels ofremuneration fortheIndependent Non-Executive Directors reflect thetime commitment, responsibilities oftherole andmembership
oftherespective committees oftheBoard. Directors arealso reimbursed forexpenses associated withdischarge oftheir duties. Directors
arenot eligible forbonuses, retirement benefits ortoparticipate inanyincentive plans operated bytheGroup. Additional remuneration ispaid
formembership andchairmanship ofthecommittees bytheIndependent Non-Executive Directors.
73. Theshareholders oftheCompany approved theremuneration ofthemembers oftheBoard on29June 2018, 30December 2019, 16April 2020,
29May 2020and22October 2021.
74. Neither theBoard members, nor themanagement has long-term incentive schemes. However, theperformance-based part oftheremuneration
ofthesenior management isaligned tothestrategic goals andinitiatives approved bytheBoard.
75. Theperformance-based part oftheremuneration oftheKey Management isbased ontheKey Rules ofAwarding andPayment ofPerformance
Based Bonuses ofGPI Group adopted bytheBoard on15June 2016andregularly updated withthelast update on29October 2020.
TheNomination andRemuneration Committee monitors theefficiency oftheRules andmakes recommendations totheBoard ontheir amendment
andrevision.
76. Refer toNote 21(g) tothefinancial statements fordetails oftheremuneration paid tothemembers oftheBoard andkey management.
General Manager
7 7. Mr. Alexander Iodchin occupies theposition ofGeneral Manager andtheBoard granted him thepowers tocarry out all business related
totheCompany`s operation up toatotal value asestablished bytheAuthority Matrix. It has also granted him powers todischarge other
managerial duties related totheordinary course ofbusiness oftheCompany, including representing theCompany before anygovernment
orgovernment-backed authority.
78. Thedecisions forall other matters arereserved fortheBoard. TheAuthority Matrix contains thelist ofsuch reserved matters.
79. Mr. Iodchin isalso acting astheBoard Secretary sinceDecember 2008andastheChief Strategy andBusiness Development Officer atGlobal
Ports Group pursuant toBoard’s decision on29October 2020.
Company Secretary
80. TheGroup maintainsacompany secretary, who isresponsible forsafeguarding therights andinterests ofshareholders, including theestablishment
ofeffective andtransparent arrangements forsecuring therights ofshareholders.
81. Team Nominees Limited has been acting asthecompany secretary since theGroup’s incorporation inFebruary 2008.
82. Thecompany secretary’s responsibilities include ensuring compliance bytheGroup, its management bodies andofficers withthelaw
andtheGroup’s charter andinternal documents. Thecompany secretary organises thecommunication process between theparties tocorporate
relations, including thepreparation andholding ofgeneral meetings; storage, maintenance anddissemination ofinformation about theGroup;
andreview ofcommunications fromshareholders.
Corporate Governance andCorporate Social Responsibility (CSR)
83. TheGroup hasadiverse set ofstakeholders, frominternational institutions holding our shares andbonds andbank financial institutions which
provided bank borrowings totheGroup, toour customers, employees, regulators andcommunities. Made up ofseasoned industry professionals,
theBoard ofDirectors iscommitted toacting inthebest interest ofall stakeholders. TheCompany isnot subject totheprovisions oftheUK
Corporate Governance Code, but follows internationally recognised best practices customary tothepublic companies having GDRs withstandard
listing andadmitted totrading atLondon Stock Exchange.
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
Inaddition, theCompany has not yet been subject totheTask Force onClimate-related Financial Disclosures (TCFD) Recommendations
andRecommended Disclosures, however, it monitors applicable legislation updates andstrives tobeincompliance withthem.
84. CSR isanintegral part ofrealising core strategic priorities oftheGroup. Theobjectives fortheGroup’s business andCSR strategies
arethesame— togenerate sustainable shareholder value overthelong term. TheGroup prepares annual CSR report, last available
athttps://www.globalports.com/upload/iblock/ffb/GP_AR20_EN_CSR_Report.pdf.
85. Improving its corporate governance structure inaccordance withtheinternationally recognised best practices theGroup adopted important
policies andprocedures, which it regularly reviews andupdates.
86. On18June 2019anew Terms ofReference oftheBoard ofDirectors wereadopted. Asofthesame date, theBoard merged Nomination
andRemuneration Committees andestablished Strategy Committee. Consequently, theterms ofreference ofthenew committees wereadopted
inJune 2019. Theamended andrestated Terms ofReference oftheStrategy Committee wereadopted on10December 2021.
87. TheCompany’s corporate governance policies andpractices aredesigned toensure that theCompany isfocused onupholding its responsibilities
totheshareholders. They include, inter alia:
– Appointment policy;
– Terms ofreference oftheBoard ofDirectors;
– Terms ofreference oftheAudit andRisk, Nomination andRemuneration andStrategy Committees;
– Antifraud policy;
– Policy onInvestigation ofImproper Activities;
– Investigation policy;
– Anti-Corruption Policy;
– Data protection compliance policy;
– Policy onReporting Allegations ofSuspected Improper Activities;
– Risk management policy;
– Foreign Trade Controls Policy;
– Insurance Standard;
– Charity andSponsorship Policy;
– Group Securities Dealing Code;
– Dividend Policy;
– Conflicts ofInterest Policy adopted on29June 2020;
– Treasury Policy adopted on23April 2020;
– Procurement Standard oftheCompany adopted on18August 2020;
– Group Code ofcorporate ethics adopted on18August 2020; Related Party Transactions Policy adopted on2February 2021; and
– Internal Audit Service’s Quality Assurance andImprovement Policy adopted on10December 2021.
88. Inorder tofurther strengthen thecorporate governance andclearly set themanagement authority limits within theGroup theBoard ofDirectors
approved theAuthority Matrix framework attheend oftheyear 2016, which wasrevised inJune 2019providing extended authorities totheGroup
management inorder tosimplify thedecision making process. Theimplementation ofthis revised framework intheoperating units wasfinalised
in2020.
89. More information ontheGroup’s Corporate Governance can befound athttps://www.globalports.com/en/company/governance/.
Management report (continued)
Whistleblowing Hotline ofGlobal Ports
90. Global Ports encourages its employees, clients andother stakeholders toreport cases orraise concerns about potentially unethical, unlawful
orsuspicious conduct orpractices.
TheGroup operates a 24/7confidential whistleblower service that offers a variety ofroutes toreport concerns:
• viaadedicated e-mail address
• Bycalling our free confidential telephone number
• Face-to-face withasenior member ofInternal Audit Department responsible formanaging theservice
Details ofthewhistleblowing service areavailable ontheGroup’s internet site aswellasoninformation boards located throughout theoffices
andprominently displayed attheGroup’s various port terminals.
Theservice isadministered bytheInternal Audit Department which operates independently ofmanagement andreports directly totheAudit & Risk
Committee oftheBoard ofdirectors. TheChairman oftheAudit & Risk Committee isinformed ofall reports received andrecommended follow-up actions.
All reports areimmediately logged bytheInternal Audit Department which administer theservice. Reports arethen assessed todecide if further
investigation isrequired either bytheInternal Audit Department orbytheappropriate management, inthecase ofoperational issues.
Regardless ofhow concerns areraised, all aretreated inconfidence, andinvestigated thoroughly andwithout bias always ensuring theanonymity
ofthewhistle blower andprotection fromretaliation.
All investigation results andfollow-up actions arepresented totheBoard’s Audit & Risk Committee bytheHead ofInternal Audit Department.
91. In2021we have received 20reports totheCorporate Hotline, 5reports werenot classified asHotline claim asrepresented ordinary customer
requests. Fortheremaining 15reports, necessary investigations wereperformed andresults communicated totheAudit & Risk Committee
aswellastop management andappropriate follow up measures weretaken.
70% ofrepots (14out of20) werereceived bye-mail andtherest 30% (6out of20) byphone.
Key reports topics:
• Poor service– 20% (3out of15)
• Improper behavior byGroup employee– 33% (5out of15)
• Inefficient operations– 20% (3out of15)
• HR, H&S, finance– 27% (4out of15)
One report contained allegations ofmanagement fraud, however, internal investigation did not confirm these allegations.
Code ofethics andconduct
92. TheCode ofEthics wasapproved bytheBoard ofDirectors on08December 2016andwasintroduced inthecompanies oftheGroup
inthecourse oftheyear 2017. The3rd revision oftheCode ofEthics wasadopted bytheBoard ofDirectors on18August 2020, aimed
atsimplifying andupdating theGroup’ mission, values andstandards ofcorporate engagement.
93. Global Ports’ code ofethics andconduct outlines thegeneral business ethics andacceptable standards ofprofessional behaviour that we expect
ofall our directors, employees andcontractors. This code, given toall new staff aspart oftheir induction, means that everyone atGlobal Ports
isaccountable fortheir own decisions andconduct. Aswellasgeneral standards ofbehaviour, thecode covers fraud andcorruption, ethics
andconflicts ofinterest principles withreference todetailed policies. Employees andexternal parties areencouraged toreport anysuspected
breaches, viavarious channels including thededicated hotline.
94. Thecode isavailable toall staff onGlobal Ports’ website (intheCorporate Governance section) andintheHR department atevery operating
facility. There arealso other more detailed rules concerning our anti-fraud andwhistleblowing policies.
Management report (continued)
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Global Ports Investments PLC Annual Report 2021
95. TheBoard isupdated onaregular basis onanybreaches ofvarious policies withthespecific focus onthefraud incidents andresulting actions,
although significant breaches have tobereported totheBoard immediately.
Dividends
96. Pursuant totheArticles ofAssociation theCompanymay pay dividends out ofits profits. Totheextent that theCompany declares andpays
dividends, owners ofGlobal Depositary Receipts (hereafter also referred as“GDRs”) ontherelevant record date will beentitled toreceive
dividends payable inrespect ofOrdinary Shares underlying theGDRs, subject totheterms oftheDeposit Agreement. TheCompany expects
topay dividends inUS dollars. If dividends arenot paid inUS dollars, they will beconverted intoUS dollars bytheDepositary andpaid toholders
ofGDRs net ofcurrency conversion expenses.
9 7. TheCompany isaholding company andthus its ability topay dividends depends ontheability ofits subsidiaries andjoint ventures topay
dividends totheCompany inaccordance withtherelevant legislation andcontractual restrictions (shareholder agreements, bank borrowings
covenants, andterms oftheissuance ofthepublic debt instruments). Thepayment ofsuch dividends byits subsidiaries andjoint ventures
iscontingent upon thesufficiency oftheir earnings, cash flows anddistributable reserves. Themaximum dividend payable bytheCompany’s
subsidiaries andjoint ventures isrestricted tothetotal accumulated retained earnings oftherelevant subsidiary orjoint venture, determined
according tothelaw applicable toeach entity.
98. TheCompany hasaDividend Policy inplace which provides forthepayment ofnot less than 30% ofanyimputed consolidated net profit
fortherelevant financial year oftheGroup. Imputed profit iscalculated astheconsolidated net profit fortheperiod oftheGroup attributable
totheowners oftheCompany asshown intheCompany’s consolidated financial statements fortherelevant financial year prepared under EU
IFRS andinaccordance withtherequirements oftheCyprus Companies Law, Cap. 113, less certain non-monetary consolidation adjustments.
TheCompany’s dividend policy issubject tomodification fromtime totime astheBoard ofDirectorsmay deem appropriate.
99. In2015following therevision ofcurrent market situation, market prospects andprioritising thedeleveraging strategy overdividend distribution,
which should ensure thelong-term robustness oftheGroup’s finances, theBoard suspended thepayment ofthedividends inthemid-term.
TheBoard continues tomonitor themarket forrecovery aswellasforlevels ofvolatility inorder toidentify theappropriate timing foraresumption
ofthepayment ofadividend, subject tomaintaining conservative leverage ratios.
100. During theyears 2020and2021, theCompany did not declare orpay anydividends.
101. TheBoard ofDirectors oftheCompany recommends tothemembers toapprove thereduction oftheshare premium account oftheCompany
bycrediting theamount ofUS$550million totheretained earnings reserve. Anysurplus remaining intheretained earnings reserve shall
beavailable tobeused astheCompany deems appropriate fromtime totime. Theshare premium reduction issubject toratification bytheCyprus
Courts andshall become effective upon registration withtheCyprus registrar ofcompanies
102. TheBoard ofDirectors oftheCompany does not recommend thepayment ofafinal dividend fortheyear 2021.
Share Capital
Significant direct orindirect holdings (including indirect shareholding through structures orcross shareholdings)
103. Theinformation onsignificant direct andindirect shareholders isavailable
athttp://www.globalports.com/globalports/investors/shareholder-information/major-shareholders.
104. There areno special titles that provide special control rights toanyoftheshareholders. There arerestrictions inexercising ofvoting rights ofshares
(please refer toparagraph 103below).
Authorised share capital
105. Theauthorised share capital oftheCompany amounts toUS$175,000,000.00divided into750,000,000ordinary shares
and1,000,000,000ordinary non-voting shares withapar value ofUS$0.10each.
Issued share capital
106. Theissued share capital oftheCompany amounts toUS$57,317,073.10divided into422,713,415ordinary shares and150,457,316ordinary non-
voting shares withapar value ofUS$0.10each.
Management report (continued)
10 7. Theordinary shares andtheordinary non-voting shares rank pari passu inall respects save that, theordinary non-voting shares do not have
theright toreceive notice, attend orvote atanygeneral meeting, nor tobetaken intoaccount forthepurpose ofdetermining thequorum
ofanygeneral meeting.
Rules forAmending Articles
108. TheArticles ofassociation oftheCompanymay beamended fromtime totime bythespecial resolution oftheGeneral Meeting
oftheshareholders.
Corporate Social Responsibility Report
109. TheCorporate Social Responsibility Report isdrawn up asaseparate report andwill bemade public ontheCompany`s website (theaddress
ofwhich, atthedate ofpublication ofthis report, iswww.globalports.com) within six months from thebalance sheet date.
Events after thebalance sheet date
110. Theevents after thebalance sheet date aredisclosed inNote 22 tothefinancial statements.
Research anddevelopment activities
111 . TheCompany isnot engaged inresearch anddevelopment activities.
Branches
112. TheCompany did not have oroperate through anybranches during theyear.
Treasury shares
113. TheCompany did not acquire either directly orthroughaperson inhis own name but onbehalf oftheCompany anyofits own shares.
Going Concern
114. Directors have access toall information necessary toexercise their duties. TheDirectors continue toadopt thegoing concern basis inpreparing
thefinancial statements. We base our statement onthefollowing facts:
– inquiries andfollowingareview oftheGroup’s principal risks anduncertainties,
– budget for2022financial perspectives inthemid-term,
– thelatest forecasts overaperiod of5–10years reflecting its business andinvestment cycles, including cash flows andborrowing facilities.
TheDirectors also considered
– thepotential implications oftheRussian-Ukrainian crisis,
– impact ofthesanctions introduced against Russia,
– aswellastheban ondelivery/dispatch ofvarious containerised cargoes to/from Russia
ontheoperational andfinancial performance oftheGroup, forecasts andgoing concern.
TheDirectors consider that theGroup has adequate resources tomeet its liabilities asthey fall due andtocontinue inoperation fortheforeseeable future.
Management report (continued)
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Internal audit
115. Theinternal audit function iscarried out byGroup’s Internal Audit Service (IAS). It isresponsible foranalysing thesystems ofrisk management,
internal control procedures andthecorporate governance process fortheGroup withaview toobtainingareasonable assurance that:
– risks areappropriately identified, assessed, responded toandmanaged;
– there isinteraction withthevarious governance groups occurs asneeded;
– significant financial, managerial, andoperating information isaccurate, reliable, andtimely;
– employee’s actions areincompliance withpolicies, standards, procedures, andapplicable laws andregulations;
– resources areacquired economically, used efficiently andadequately protected;
– programs, plans andobjectives areachieved;
– quality andcontinuous improvement arefostered intheGroup’s control process; and
– significant legislative orregulatory issues impacting theGroup arerecognised andaddressed properly.
116. TheHead oftheIAS, Mr. Ilya Kotlov, functionally reports directly totheAudit andRisk Committee.
117. Anexternal quality assessment review wasdone forGlobal Port’s internal audit function in2021byone oftheBig 4companies. Theassessment
concluded that “Internal audit generally conforms
1
withtheInternational Standards fortheProfessional Practice ofInternal Auditing issued
bytheInstitute ofInternal Auditors. Rating “Generally conforms” means that aninternal audit activity hasacharter, policies, andprocesses,
which arejudged tobeinconformance withtheStandards. Recommendations forthefunction enhancement have been provided andarebeing
implemented.
External auditors
118. Anexternal auditor isappointed attheGlobal Ports AGM onanannual basis toreview theGroup’s financial andoperating performance.
119. This follows proposals drafted bytheAudit andRisk Committee fortheBoard ofDirectors regarding thereappointment oftheexternal auditor
oftheGroup.
120. KPMG Limited wereappointed astheauditor oftheCompany attheAnnual General Meeting oftheShareholders held in2021. KPMG Limited
have expressed their willingness tocontinue inoffice andaresolution giving authority totheBoard ofDirectors tofix their remuneration will
beproposed atthenext Annual General Meeting oftheShareholders.
Management report (continued)
ByOrder oftheBoard
Soren Jakobsen
Chairman oftheBoard
02March 2022
Alexander Iodchin
Secretary oftheBoard
1
“Generally conforms” isthebest possible rating that can beawarded astheresult ofanexternal quality assessment suggested
bytheStandard 1320 – Reporting ontheQuality Assurance andImprovement Program oftheInternational Standards fortheProfessional
Practice ofInternal Auditing developed bytheInstitute ofInternal Auditors.
Directors’ Responsibility Statement
TheCompany’s Board ofDirectors isresponsible forthepreparation ofconsolidated financial statements that give a true andfair view inaccordance
withInternational Financial Reporting Standards asadopted bytheEuropean Union andtherequirements oftheCyprus Companies Law, Cap.113,
andforsuch internal control astheBoard ofDirectors determines isnecessary toenable thepreparation ofconsolidated financial statements that arefree
frommaterial misstatement, whether due tofraud orerror.
This responsibility includes selecting appropriate accounting policies andapplying them consistently; andmaking accounting estimates andjudgements
that arereasonable inthecircumstances.
Inpreparing theconsolidated financial statements, theBoard ofDirectors isalso responsible forassessing theGroup’s ability tocontinue as a going
concern, disclosing, asapplicable, matters related togoing concern andusing thegoing concern basis ofaccounting unless theBoard ofDirectors either
intends toliquidate theGroup ortocease operations, orhas no realistic alternative but todo so.
Those charged withgovernance areresponsible foroverseeing theGroup’s financial reporting process.
TheBoard ofDirectors’ confirmations
TheBoard ofDirectors confirms that, tothebest ofits knowledge:
a. thefinancial statements, which arepresented onpages 29to58, which have been prepared inaccordance withInternational Financial
Reporting Standards asadopted bytheEuropean Union andtherequirements oftheCyprus Companies Law, Cap.113, giveatrue andfair view
oftheassets, liabilities, financial position andprofit orloss oftheCompany; and
b. themanagement report includesafair review ofthedevelopment andperformance ofthebusiness andtheposition oftheCompany, together
withadescription oftheprincipal risks anduncertainties that it faces.
Further, theBoard ofDirectors confirms that, tothebest ofits knowledge:
i. adequate accounting records have been maintained which disclose withreasonable accuracy thefinancial position oftheCompany andexplain
its transactions;
ii. all information ofwhich it isaware that isrelevant tothepreparation ofthefinancial statements, such asaccounting records andall other relevant
records anddocumentation, has been made available totheCompany’s auditors;
iii. thefinancial statements disclose theinformation required bytheCyprus Companies Law, Cap.113inthemanner so required;
iv. theManagement Report has been prepared inaccordance withtherequirements oftheCyprus Companies Law, Cap.113, andtheinformation
given therein isconsistent withthefinancial statements;
v. theinformation included inthecorporate governance statement inaccordance withtherequirements ofsubparagraphs (iv) and(v) ofparagraph
2(a) ofArticle 151oftheCyprus Companies Law, Cap. 113, andwhich isincluded asaspecific section oftheManagement Report, have been
prepared inaccordance withtherequirements oftheCyprus Companies Law, Cap, 113, andisconsistent withthefinancial statements; and
vi. thecorporate governance statement includes all information referred toinsubparagraphs (i), (ii), (iii), (vi) and(vii) ofparagraph 2(a) ofArticle
151oftheCyprus Companies Law, Cap. 113.
ByOrder oftheBoard
Soren Jakobsen
Chairman oftheBoard
Limassol
02March 2022
Alexander Iodchin
Secretary oftheBoard
27 28
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Statement ofcomprehensive
income fortheyear ended
31December 2021
(inthousands ofUS dollars) Note Fortheyear ended 31December
2021 2020
Revenue 21(a) 62 103
Other income 1300 1300
Dividend income 21(b) – 3291
Finance income/(costs)– net 5 (10) 4
Administrative expenses 6 (3713) (3539)
Other gains/(losses)– net 7 (3280) (12059)
(Impairment)/reversal ofimpairment ofinvestments insubsidiaries andjoint ventures 4,14 127929 (4884)
Operating profit/(loss) 122288 (15784)
Finance costs 9 (3043) (1151)
Profit/(loss) before income tax 119245 (16935)
Income tax credit/(expense) 10 1 (30)
Profit/(loss) fortheyear 119246 (16965)
Other comprehensive income – –
Total comprehensive income/(loss) fortheyear 119246 (16965)
Thenotes onpages 33to58areanintegral part ofthese financial statements.
Balance sheet
asat31December 2021
(inthousands ofUS dollars) Note At31December
2021 2020
Assets
Non-current assets
Property, plant andequipment 13 28 25
Investments insubsidiaries 14 754284 618994
Investments injoint ventures 15 20579 24847
Other receivables 16 – 403
Total non-current assets 774891 644269
Current assets
Other receivables 16 1799 2171
Cash andcash equivalents 17 1371 580
Total current assets 3170 2751
Total assets 778061 647020
Equity andliabilities
Capital andreserves
Share capital 18 57317 57317
Share premium 18 923511 923511
Capital contribution 101300 101300
Merger reserve 14 (111970) -
Retained earnings/(accumulated losses) (352369) (471615)
Total equity 617789 610 513
Non-current liabilities
Borrowings 21(h) 136727 19099
Financial guarantee liabilities 21(k) 21395 16152
Total non-current liabilities 158122 35251
Current liabilities
Financial guarantee liabilities 21(k) 1169 542
Other payables 19 9 81 714
Total current liabilities 2150 1256
Total liabilities 160272 36507
Total equity andliabilities 778061 647020
TheBoard ofDirectors ofGlobal Ports Investments Plc approved andauthorised these financial statements forissue on02 March 2022.
Soren Jakobsen, Director Britta Dalunde, Director
Thenotes onpages 33to58areanintegral part ofthese financial statements.
29 30
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
(inthousands ofUS dollars) Note Share
capital
Share premium Capital
contribution
Merger reserve Retained
earnings/
(accumulated losses)
1
Total
Balance at1January 2020 57317 923511 101300 (454650) 627478
Comprehensive loss
Loss fortheyear – – – (16965) (16965)
Balance at31December
2020/1January2021
57317 923511 101300 (471615) 610 513
Comprehensive income
Profit fortheyear – – – – 119246 119246
Transactions withrelated parties
Merger withasubsidiary 14 – – – (111970) – (111970)
Balance at31December 2021 57317 923511 101300 (111970) (352369) 617789
1
Retained earnings istheonly reserve that isavailable fordistribution.
Thenotes onpages 33 to58areanintegral part ofthese financial statements.
Statement ofchanges inequity
fortheyear ended
31December 2021
Statement ofcash flows
fortheyear ended
31December 2021
(inthousands ofUS dollars) Note Fortheyear ended 31December
2021 2020
Cash flows fromoperating activities
Profit/(loss) before tax 119245 (16935)
Adjustments for:
Depreciation ofproperty, plant andequipment andright-of-use assets 6,13 15 142
Impairment/(reversal ofimpairment) ofinvestments insubsidiaries andjoint ventures 14,15 (127929) 4884
Loss onremeasurement offinancial guarantee 7 4691 13371
Dividend income 21(b) – (3291)
Finance income 5 – (1)
Finance costs 9 3043 1220
Amortisation andderecognition offinancial guarantee 7 (1375) (1269)
Foreign exchange (gains)/losses andother non-monetary items (1) (58)
Operating cash flows before working capital changes (2311) (1937)
Changes inworking capital:
Other receivables 776 823
Other payables 209 (387)
Cash used inoperating activities (1326) (1501)
Tax paid – –
Net cash used inoperating activities (1326) (1501)
Cash flows frominvesting activities
Purchase ofinvestments insubsidiaries 14 – (44)
Repayment oforiginal cost ofsubsidiaries/merger withasubsidiary 14 405 513
Purchase ofinvestments injoint ventures 15 (9) –
Interest received – 1
Dividends received – 563
Net cash frominvesting activities 396 1033
Cash flows fromfinancing activities
Proceeds fromloans fromrelated parties 21(h) 5073 15921
Repayments ofloans fromrelated parties 21(h) (1000) (12292)
Lease principal andinterest paid – (90)
Interest paid torelated parties 21(h) (2342) (2644)
Net cash fromfinancing activities 1731 895
Net increase/(decrease) incash andcash equivalents 8 01 427
Cash andcash equivalents atbeginning oftheyear 580 15 0
Exchange gains/(losses) oncash andcash equivalents (10) 3
Cash andcash equivalents atend oftheyear 17 1371 580
Thenotes onpages 33 to58areanintegral part ofthese financial statements.
31 32
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
Notes tothefinancial statements
1. General information
Country ofincorporation
Global Ports Investments Plc (hereafter the“Company” or“GPI”) wasincorporated on29February 2008asaprivate limited liability company
andisdomiciled inCyprus inaccordance withtheprovisions oftheCyprus Companies Law, Cap. 113. Theaddress oftheCompany’s registered office
is20 Omirou Street, Limassol, Cyprus.
On18August 2008, followingaspecial resolution passed bytheshareholders, thename oftheCompany waschanged from“Global Ports Investments
Ltd” to“Global Ports Investments Plc” andtheCompany wasconverted intoapublic limited liability company inaccordance withtheprovisions
oftheCompanies Law, Cap. 113.
During thefirst half of2011theCompany has successfully completed aninitial public offering (“IPO”) ofits shares intheform ofglobal depositary
receipts (“GDRs”). TheCompany’s GDRs (one GDR representing 3ordinary shares) arelisted ontheMain Market oftheLondon Stock Exchange under
thesymbol “GLPR”.
TheCompany isjointly controlled byLLC Management Company “Delo” (“Delo Group”), one ofRussia’s largest privately owned transportation
companies, andAPM Terminals B.V. (“APM Terminals”),aglobal port, terminal andinland services operator.
Approval oftheparent company financial statements
These parent company’s financial statements wereapproved andauthorized forissue bytheBoard ofDirectors on02March 2022.
Principal activities
Theprincipal activity oftheCompany, which isunchanged fromlast year, istheholding ofinvestments, including anyinterest earning activities.
Thesubsidiaries andjoint-ventures oftheCompany areengaged intheoperation ofcontainer andgeneral cargo terminals inRussia andFinland.
2. Summary ofsignificant accounting policies
Theprincipal accounting policies applied inthepreparation ofthese financial statements areset out below. These policies have been consistently applied
toall years presented inthese financial statements unless otherwise stated.
Basis ofpreparation
Thefinancial statements oftheCompany have been prepared inaccordance withInternational Financial Reporting Standards (IFRS), asadopted
bytheEuropean Union (EU), andtherequirements oftheCyprus Companies Law, Cap.
113 .
Thefinancial statements have been prepared under thehistorical cost convention asmodified fortheinitial recognition offinancial instruments, including
intra-group financial guarantee contracts, atfair value.
TheCompany has prepared these separate financial statements oftheparent company forcompliance withtherequirements oftheCyprus Companies
Law, Cap.113andtheDisclosure Rules asissued bytheFinancial Conduct Authority oftheUnited Kingdom.
Asofthedate oftheauthorisation ofthefinancial statements, all International Financial Reporting Standards issued bytheInternational Accounting
Standards Board (IASB) that areeffective asof1January 2021have been adopted bytheEU through theendorsement procedure established
bytheEuropean Commission.
Thepreparation offinancial statements inconformity withIFRSs requires theuse ofcertain critical accounting estimates andrequires management
toexercise its judgment intheprocess ofapplying theCompany’s accounting policies. Theareas involvingahigher degree ofjudgment orcomplexity,
orareas where assumptions andestimates aresignificant tothefinancial statements aredisclosed inNote 4.
Though theDirectors acknowledge thematerial uncertainty surrounding theoperating environment oftheGroup following therecent developments
asexplained innotes 20 and22 tothefinancial statements, they continue toadopt thegoing concern basis inpreparing thefinancial statements.
TheDirectors base their statement onthefollowing facts: inquiries andfollowingareview oftheGroup’s principal risks anduncertainties, budget
for2022financial perspectives inthemid-term, thelatest forecasts overaperiod of5–10years reflecting its business andinvestment cycles, including
cash flows andborrowing facilities. TheDirectors also considered: thepotential implications oftheRussian-Ukrainian crisis, impact ofthe
Basis ofpreparation (continued)
sanctions introduced against Russia, aswellastheban ondelivery/dispatch ofvarious containerised cargoes to/from Russia ontheoperational
andfinancial performance oftheGroup, forecasts andgoing concern. TheDirectors consider that theGroup has adequate resources tomeet its liabilities
asthey fall due andtocontinue inoperation fortheforeseeable future.
Nevertheless, thedevelopments explained innotes 20 and22 indicate thatamaterial uncertainty still exists thatmay cast significant doubt ontheGroup’s
ability tocontinue asagoing concern should thenature and/or theduration ofthesanctions imposed onRussia differ significantly totheGroup’s expectations.
Consolidated financial statements
TheCompany has also prepared consolidated financial statements inaccordance withInternational Financial Reporting Standards asadopted bytheEU
fortheCompany andits subsidiaries (the“Group”). Acopy oftheconsolidated financial statements isavailable attheCompany’s registered office
andattheCompany’s website atwww.globalports.com.
Users ofthese separate financial statements oftheparent company should read them together withtheGroup’s consolidated financial statements
asatandfortheyear ended 31December 2021inorder toobtainaproper understanding ofthefinancial position, thefinancial performance
andthecash flows oftheCompany andtheGroup.
New Standards, interpretations andamendments adopted bytheCompany
TheCompany adopted all new andrevised IFRSs asadopted bytheEU that arerelevant toits operations andareeffective foraccounting periods
beginning on1January 2021. This adoption did not haveamaterial effect ontheaccounting policies oftheCompany.
New standards andinterpretations not yet adopted bytheCompany
Atthedate ofapproval ofthese financial statementsanumber ofnew standards andamendments tostandards andinterpretations areeffective
forannual periods beginning after 1January 2021andhave not been applied inpreparing these financial statements. None ofthese isexpected
tohaveasignificant effect onthese financial statements.
Revenue recognition
Revenues earned bytheCompany arerecognised onthefollowing bases:
(i) Interest income
Interest income onfinancial assets atamortised cost iscalculated byapplying theeffective interest rate tothegross carrying amount ofafinancial asset
except forfinancial assets that subsequently become credit impaired (Stage 3financial assets– see below). Forcredit– impaired financial assets
theeffective interest rate isapplied tothenet carrying amount ofthefinancial asset (after deduction oftheloss allowance).
(ii) Dividend income
Dividend income isrecognised when theright toreceive payment isestablished.
Employee benefits
TheCompany andtheemployees contribute totheCyprus Government Social Insurance Fund, which isadefined contributions plan, based
onemployees’ salaries. TheCompany’s contributions areexpensed asincurred andareincluded instaff costs.
Foreign currency translation
(i) Functional andpresentation currency
Items included inthefinancial statements oftheCompany aremeasured using thecurrency oftheprimary economic environment inwhich theentity
operates (‘thefunctional currency’). Thefinancial statements arepresented inUnited States dollars (US$), which istheCompany’s functional
andpresentation currency.
(ii) Transactions andbalances
Foreign currency transactions aretranslated intothefunctional currency using theexchange rates prevailing atthedates ofthetransactions. Foreign
exchange gains andlosses resulting from thesettlement ofsuch transactions andfromthe
Notes tothefinancial statements (continued)
2. Summary ofsignificant accounting policies (continued)
33 34
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Foreign currency translation (continued)
(ii) Transactions and balances (continued)
translation atperiod end exchange rates ofmonetary assets andliabilities denominated inforeign currencies arerecognised inthestatement
ofcomprehensive income.
Foreign exchange gains andlosses that relate toborrowings arepresented inthestatement ofcomprehensive income within “finance cost”. Foreign
exchange gains andlosses that relate toloans receivable andcash andcash equivalents arepresented inprofit orloss within “finance income-net”. All
other foreign exchange gains andlosses arepresented inthestatement ofcomprehensive income within “other gains/(losses)– net”.
Current anddeferred income tax
Thetax expense fortheperiod comprises current anddeferred tax. Tax isrecognized inprofit orloss, except totheextent that it relates toitems recognized
inother comprehensive income ordirectly inequity. Inthis case, thetax isalso recognized inother comprehensive income ordirectly inequity, respectively.
Thecurrent income tax iscalculated onthebasis ofthetax laws enacted orsubstantively enacted atthebalance sheet date inthecountry inwhich
theCompany operates andgenerates taxable income. Management periodically evaluates positions taken intax returns withrespect tosituations
inwhich applicable tax regulation issubject tointerpretation. If applicable tax regulation issubject tointerpretation, it establishes provision where
appropriate onthebasis ofamounts expected tobepaid tothetax authorities.
Deferred income tax isrecognized using theliability method, ontemporary differences arising between thetax bases ofassets andliabilities andtheir
carrying amounts inthefinancial statements. However, thedeferred income tax isnot accounted forif it arises frominitial recognition ofanasset orliability
inatransaction other thanabusiness combination that atthetime oftransaction affects neither accounting nor taxable profit orloss. Deferred income
tax isdetermined using tax rates andlaws that have been enacted orsubstantially enacted bythebalance sheet date andareexpected toapply when
therelated deferred income tax asset isrealized orthedeferred income tax liability issettled.
Deferred income tax assets arerecognized totheextent that it isprobable that future taxable profits will beavailable against which thetemporary
differences can beutilised.
Deferred income tax assets andliabilities areoffset when there isalegally enforceable right tooffset current tax assets against current tax liabilities
andwhen thedeferred income tax assets andliabilities relate toincome taxes levied bythesame taxation authority ontheCompany where there
isanintention tosettle thebalances onanet basis.
Property, plant andequipment
Property, plant andequipment arestated athistorical cost less accumulated depreciation andanyaccumulated impairment losses. Historical cost includes
expenditure that isdirectly attributable totheacquisition ofproperty, plant andequipment.
Depreciation onproperty, plant andequipment iscalculated using thestraight-line method toallocate their cost totheir residual values, overtheir
estimated useful lives. Theannual depreciation rates areasfollows:
%
Motor vehicles 20
Office equipment 50
Theassets’ residual values anduseful lives arereviewed, andadjusted if appropriate, ateach balance sheet date.
Anasset’s carrying amount iswritten down immediately toits recoverable amount if theasset’s carrying amount isgreater than its estimated recoverable
amount.
Expenditure forrepairs andmaintenance ofproperty, plant andequipment ischarged toprofit orloss oftheyear inwhich they wereincurred.
Thecost ofmajor renovations andother subsequent expenditure areincluded inthecarrying amount oftheasset orrecognised asaseparate asset,
asappropriate, only when it isprobable that future economic benefits associated withtheitem will flow totheCompany andthecost oftheitem can
bemeasured reliably.
Gains andlosses ondisposal ofproperty, plant andequipment aredetermined bycomparing proceeds withcarrying amount andarerecognised
in“other gains/(losses)– net” inprofit orloss.
Notes tothefinancial statements (continued)
2. Summary ofsignificant accounting policies (continued)
Investments insubsidiaries
Subsidiaries areall entities (including special purpose entities) overwhich theCompany has control. TheCompany controls anentity overwhich it
has power, has exposure orrights tovariable returns fromits involvement withtheentity andhas theability toaffect those returns through its power
overtheentity. Investments insubsidiaries arecarried atcost less anyimpairment.
TheCompany recognizes dividend income frominvestments insubsidiaries totheextent that theCompany receives distributions fromsubsidiaries which
constitute return onthecost ofinvestment. Capital reductions anddividend distributions bysubsidiaries which constitute return ofcost ofinvestment
asopposed toreturn oncost ofinvestment arerecognised asareduction inthecost ofinvestment insubsidiary.
TheCompany accounts forgroup reorganisations (i.e. when subsidiaries/ intermediate holding companies merge) that have no impact ontheCompany’s
effective interest inthesubsidiaries andno exposure tothetotal cash flow expectations from thesubsidiaries involved insuch reorganisations by
reallocating thecarrying values between investments insubsidiaries withno gain/loss being recognised intheCompany’s financial statements andno
impact onthetotal carrying amount oftheCompany’s investments insubsidiaries. Inthecases where subsidiaries aremerged intotheCompany (surviving
entity inthemerger), theCompany accounts fortheassets andliabilities ofthemerged subsidiary inits financial statements using pre-merger IFRS carrying
amounts using uniform accounting policies. Theexcess ofthecost oftheinvestment ofthemerged subsidiary overthecarrying amount ofthetransferred
net assets isrecorded inmerger reserve inequity.
Investments injoint arrangements
Investments injoint arrangements areclassified aseither joint operations orjoint ventures depending onthecontractual rights andobligations each
investor has rather than thelegal structure ofthejoint arrangements. TheCompany has assessed thenature ofits joint arrangements anddetermined them
tobejoint ventures. Investments injoint ventures arecarried atcost less anyimpairment. Investments injoint ventures arereviewed forimpairment whenever
events orchanges incircumstances indicate that thecarrying amountmay not berecoverable.
Impairment ofnon-financial assets
Assets that have anindefinite useful life arenot subject toamortisation andaretested annually forimpairment. Assets that aresubject todepreciation
oramortisation arereviewed forimpairment whenever events orchanges incircumstances indicate that thecarrying amountmay not berecoverable.
Animpairment loss isrecognised through profit orloss fortheamount bywhich theasset’s carrying amount exceeds its recoverable amount. The
recoverable amount isthehigher ofanasset’s fair value less costs tosell andvalue inuse. Animpairment loss recognised inprior years isreversed where
appropriate if there has beenachange intheestimates used todetermine therecoverable amount. Forthepurposes ofassessing impairment, assets
aregrouped atthelowest levels forwhich there areseparately identifiable cash flows (cash generating units). Nonfinancial assets that have suffered
animpairment arereviewed forpossible reversal oftheimpairment ateach reporting date.
Financial instruments
a. Classification
I. Financial assets
Oninitial recognition, theCompany classifies its financial assets inthefollowing measurement categories:
• Those tobemeasured subsequently atfair value (either through OCI, orthrough profit orloss), and
• Those tobemeasured atamortised cost.
Theclassification depends ontheGroup’s business model formanaging thefinancial assets andthecontractual terms ofthecash flows.
All financial assets oftheGroup areheld within thebusiness model whose objective istohold financial assets inorder tocollect contractual cash flows,
except equity instruments. Equity instruments oftheGroup areheld within thebusiness model whose objective isachieved byboth collecting contractual
cash flows andselling financial assets.
Notes tothefinancial statements (continued)
2. Summary ofsignificant accounting policies (continued)
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PARENT COMPANY FINANCIAL STATEMENTS
Financial instruments (continued)
a. Classification (continued)
I. Financial assets (continued)
TheCompany classifiesafinancial asset asmeasured atamortised cost if it meets both ofthefollowing conditions andisnot designated asatFVTPL: it
isheld withinabusiness model whose objective istohold assets tocollect contractual cash flows andits contractual terms give rise onspecified dates
tocash flows that aresolely payments ofprincipal andinterest ontheprincipal amount outstanding.
All financial assets oftheCompany that arenot classified asmeasured atamortised cost orFVOCI aremeasured atFVTPL. This includes all derivative
financial assets. Oninitial recognition, theCompanymay irrevocably designateafinancial asset that otherwise meets therequirements tobemeasured
atamortised cost oratFVOCI asatFVTPL if doing so eliminates orsignificantly reduces anaccounting mismatch that would otherwise arise.
Adebt investment ismeasured atFVOCI if it meets both ofthefollowing conditions andisnot designated asatFVTPL: it isheld withinabusiness model
whose objective isachieved byboth collecting contractual cash flows andselling financial assets andits contractual terms give rise onspecified dates
tocash flows that aresolely payments ofprincipal andinterest ontheprincipal amount outstanding.
Oninitial recognition ofanequity investment that isnot held fortrading, theCompanymay irrevocably elect topresent subsequent changes inthe
investment’s fair value inOCI. This election ismade onaninvestment-by-investment basis.
Theclassification depends ontheCompany’s business model formanaging thefinancial assets andthecontractual terms ofthecash flows. Financial
assets arenot reclassified subsequent totheir initial recognition unless theCompany changes its business model formanaging financial assets, inwhich
case all affected financial assets arereclassified onthefirst day ofthefirst reporting period following thechange inthebusiness model.
II. Financial liabilities
TheCompany classifies financial liabilities asmeasured atamortised cost orFVTPL. Afinancial liability isclassified asatFVTPL if it isclassified asheld-for-
trading, it isaderivative orit isdesignated assuch oninitial recognition.
b. Recognition, derecognition andinitial measurement
Trade receivables anddebt securities issued areinitially recognised when they areoriginated. All other financial assets andfinancial liabilities areinitially
recognised when theCompany becomesaparty tothecontractual provisions oftheinstrument. Afinancial asset (unless it isatrade receivable without
asignificant financing component) orfinancial liability isinitially measured atfair value plus orminus, foranitem not atFVTPL, transaction costs that
aredirectly attributable toits acquisition orissue. Atrade receivable withoutasignificant financing component isinitially measured atthetransaction price.
Cash andcash equivalents arecarried atamortised cost using theeffective interest method. Cash andcash equivalents include cash inhand anddeposits
held atcall withoriginal maturity up to90days withbanks. Trade payables arerecognised initially atfair value andsubsequently measured atamortised
cost using theeffective interest method. Borrowings arerecognised initially atfair value, net oftransaction costs incurred.
TheCompany derecognisesafinancial asset when thecontractual rights tothecash flows from thefinancial asset expire orit transfers therights toreceive
thecontractual cash flows inatransaction inwhich either substantially all oftherisks andrewards ofownership ofthefinancial asset aretransferred
ortheCompany neither transfers nor retains substantially all oftherisks andrewards ofownership andit does not retain control ofthefinancial asset.
TheCompany derecognisesafinancial liability when its contractual obligations aredischarged orcancelled orexpire. TheCompany also
derecognisesafinancial liability when its terms aremodified andthecash flows ofthemodified liability aresubstantially different, inwhich caseanew
financial liability based onthemodified terms isrecognised atfair value.
Onderecognition ofafinancial liability, thedifference between thecarrying amount extinguished andtheconsideration paid (including anynon-cash
assets transferred orliabilities assumed) isrecognised inprofit orloss within ‘finance income/(costs)– net’.
Notes tothefinancial statements (continued)
2. Summary ofsignificant accounting policies (continued)
Financial instruments (continued)
c. Subsequent measurement
Financial assets atFVTPL aresubsequently measured atfair value. Net gains andlosses, including anyinterest ordividend income, arerecognised inprofit
orloss andpresented net within ‘other gains/(losses)-net’ intheperiod inwhich it arises.
Financial assets atamortised cost aresubsequently measured atamortised cost using theeffective interest method. These areassets that areheld
forcollection ofcontractual cash flows where those cash flows represent solely payments ofprincipal andinterest aremeasured atamortised cost.
Theamortised cost isreduced byimpairment losses which arepresented asseparate line item inthestatement ofprofit orloss. Interest income, foreign
exchange gains andlosses andimpairment arerecognised inprofit orloss. Anygain orloss onderecognition isrecognised inprofit orloss andpresented
in‘other gains/(losses)-net’, together withforeign exchange gains andlosses. Financial assets measured atamortised cost comprise cash andcash
equivalents, loans receivable, trade receivables andother financial assets atamortised cost.
Assets that areheld forcollection ofcontractual cash flows andforselling thefinancial assets, where theassets’ cash flows represent solely payments
ofprincipal andinterest, aremeasured atFVOCI. Debt investments atFVOCI aresubsequently measured atfair value. TheCompany does not hold
anysuch instruments.
Financial liabilities atFVTPL aremeasured atfair value andnet gains andlosses, including anyinterest expense, arerecognised inprofit orloss. Other
financial liabilities aresubsequently measured atamortised cost using theeffective interest method. Interest expense andforeign exchange gains
andlosses arerecognised inprofit orloss. Anygain orloss onderecognition isalso recognised inprofit orloss.
Borrowings aresubsequently stated atamortised cost. Anydifference between theproceeds (net oftransaction costs) andtheredemption value is
recognised inprofit orloss overtheperiod oftheborrowings, using theeffective interest method, unless they aredirectly attributable totheacquisition,
construction orproduction ofaqualifying asset, inwhich case they arecapitalised aspart ofthecost ofthat asset.
Fees paid ontheestablishment ofloan facilities arerecognised astransaction costs oftheloan totheextent that it isprobable that someorall ofthefacility
will bedrawn down. Inthis case, thefee isdeferred until thedrawdown occurs. Totheextend there isno evidence that it isprobable that someorall
ofthefacility will bedrawn down, thefee iscapitalised asaprepayment andamortised overtheperiod ofthefacility towhich it relates.
Borrowing costs areinterest andother costs that theCompany incurs inconnection withtheborrowing offunds, including interest onborrowings,
amortisation ofdiscounts orpremium relating toborrowings, amortisation ofancillary costs incurred inconnection withthearrangement ofborrowings
andexchange differences arising fromforeign currency borrowings totheextent that they areregarded asanadjustment tointerest costs.
Borrowing costs directly attributable totheacquisition, construction orproduction ofanasset that necessarily takesasubstantial period oftime toget
ready forits intended use orsale arecapitalised andamortised overtheuseful life oftheasset. Other borrowing costs arerecognised asanexpense
inthereporting period incurred. Interest iscapitalised atarate based ontheCompany’s weighted average cost ofborrowing orattherate onproject
specific debt, where applicable.
Borrowings areclassified ascurrent liabilities, unless theCompany has anunconditional right todefer settlement oftheliability foratleast twelve months
after thebalance sheet date.
Anexchange between theCompany andits original lenders ofdebt instruments withsubstantially different terms, aswellassubstantial modifications
oftheterms andconditions ofexisting financial liabilities, areaccounted forasanextinguishment oftheoriginal financial liability andtherecognition
ofanew financial liability. Theterms aresubstantially different if thediscounted present value ofthecash flows under thenew terms, including anyfees
paid net ofanyfees received anddiscounted using theoriginal effective interest rate, isatleast 10% different from thediscounted present value
oftheremaining cash flows oftheoriginal financial liability.
Modifications ofliabilities that do not result inextinguishment areaccounted forasachange inestimate usingacumulative catch-up method,
withanygain orloss recognised inprofit orloss.
Notes tothefinancial statements (continued)
2. Summary ofsignificant accounting policies (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Financial instruments (continued)
d. Offsetting
Financial assets andfinancial liabilities areoffset andthenet amount presented inthestatement offinancial position when, andonly when, theCompany
currently hasalegally enforceable right toset off theamounts andit intends either tosettle them onanet basis ortorealise theasset andsettle theliability
simultaneously.
e. Impairment
Ateach reporting date, theCompany assesses whether financial assets carried atamortized cost arecredit-impaired. Afinancial asset is“credit-impaired”
when one ormore events that haveadetrimental impact ontheestimated future cash flows ofthefinancial asset have occurred. Evidence thatafinancial
asset iscredit-impaired includes thefollowing observable data:
• significant financial difficult ofthedebtor;
• abreach ofcontract such asadefault orbeing more than 90days past due;
• therestructuring ofaloan oradvance bytheCompany onterms that theGroup would not consider otherwise; or
• it isprobable that thedebtor will enter bankruptcy orother financial reorganisation.
TheCompany assesses onaforward-looking basis theexpected credit losses associated withits debt instruments carried atamortised cost andFVOCI
andcash andcash equivalents. TheCompany measures expected credit losses (‘ECL’) andrecognises credit loss allowance ateach reporting date.
Theimpairment methodology applied depends onwhether there has beenasignificant increase incredit risk.
Thecarrying amount ofthefinancial assets isreduced through theuse ofanallowance account, andtheamount oftheloss isrecognised intheincome
statement within ‘net impairment losses onfinancial andcontract assets’. Fortrade receivables, theCompany applies thesimplified approach
permitted byIFRS 9, which requires expected lifetime losses toberecognised frominitial recognition ofthereceivables. Forall other financial assets
that aresubject toimpairment under IFRS 9theCompany appliesageneral approach– three-stage model forrecognizing andmeasuring expected
losses based onchanges incredit quality sinceinitial recognition. Afinancial instrument that isnot credit-impaired oninitial recognition isclassified
inStage 1. Financial assets inStage 1have their ECL measured atanamount equal totheportion oflifetime ECL that results fromdefault events possible
within thenext 12months oruntil contractual maturity, if shorter (‘12 Months ECL’). If theCompany identifiesasignificant increase incredit risk (‘SICR’)
sinceinitial recognition, theasset istransferred toStage 2andits ECL ismeasured based onECL onalifetime basis, that is, up until contractual maturity
but considering expected prepayments, if any(‘Lifetime ECL’). Refer toNote 3, Credit risk section foradescription ofhow theCompany determines
whenaSICR has occurred. If theCompany determines thatafinancial asset iscredit-impaired, theasset istransferred toStage 3andits ECL ismeasured
asaLifetime ECL.
Additionally, fordebt instruments that qualify aslow credit risk, theloss allowance islimited to12months expected credit losses. Foradescription ofhow
theCompany determines low credit risk financial assets refer toNote 3, Credit risk section below.
Transactions withequity owners andsubsidiaries
TheCompany enters intotransactions withshareholders andsubsidiaries. When such transactions arenot conducted atarm’s length, theCompany’s
accounting policy istorecognise (a) anyexcess gains orlosses onsuch transactions directly through equity andconsider these transactions asthereceipt
ofadditional capital contributions ordistributions; and(b) anylosses withsubsidiaries ascost ofinvestment insubsidiaries. Similar transactions withnon-
equity holders orsubsidiaries arerecognised inprofit orloss inaccordance withIFRS 9 “Financial Instruments”.
Share capital, share premium andcapital contribution
Ordinary shares areclassified asequity.
Anyexcess ofthefair value ofconsideration received overthepar value ofshares issued isrecognized asshare premium. Share premium issubject
totheprovisions oftheCyprus Companies Law onreduction ofshare capital.
Incremental costs directly attributable totheissue ofnew shares areshown inequity asadeduction, net oftax, from theproceeds.
Notes tothefinancial statements (continued)
2. Summary ofsignificant accounting policies (continued)
Share capital, share premium and capital contribution (continued)
Capital contribution represents contributions bytheshareholders directly inthereserves oftheCompany. TheCompany does not have anycontractual
obligation torepay these amounts.
Dividend distribution
Dividend distribution totheCompany’s shareholders isrecognised asaliability intheperiod inwhich theshareholders’ right toreceive them isestablished,
i.e when they areapproved, appropriately authorised andareno longer atthediscretion oftheCompany.
More specifically, interim dividends arerecognised asliability intheperiod inwhich these areauthorised bytheBoard ofDirectors andinthecase offinal
dividends, they arerecognised intheperiod inwhich these areapproved bytheCompany’s shareholders.
Merger reserve
Merger reserve arises frommerger oftheCompany withits direct subsidiary (dissolving company). Merger reserve represents thedifference between
therecognised carrying value ofnet assets ofdissolving company andthederecognised carrying value oftheinvestment intodissolving company.
Provisions andcontingent liabilities
Provisions arerecognised when theCompany hasapresent legal orconstructive obligation asaresult ofpast events, it ismore likely than not that
anoutflow ofresources will berequired tosettle theobligation, andtheamount has been reliably estimated. Provisions arenot recognised forfuture
operating losses.
Where there areanumber ofsimilar obligations, thelikelihood that anoutflow will berequired insettlement isdetermined byconsidering theclass
ofobligations asawhole. Aprovision isrecognised even if thelikelihood ofanoutflow withrespect toanyone item included inthesame class of
obligationsmay besmall.
Provisions aremeasured atthepresent value oftheexpenditure expected toberequired tosettle theobligation usingapre-tax rate that reflects current
market assessments ofthetime value ofmoney andtherisks specific totheobligation. Theincrease intheprovision due topassage oftime isrecognised
asinterest expense.
Provisions areonly used tocover those expenses which they had been set up for. Other possible orpresent obligations that arise frompast events but it
isnot probable that anoutflow ofresources embodying economic benefits will berequired tosettle theobligation; ortheamount oftheobligation cannot
bemeasured withsufficient reliability, aredisclosed inthenotes tothefinancial statements ascontingent liabilities.
Financial guarantee contracts
Financial guarantee contracts arecontracts that require theissuer tomake specified payments toreimburse theholder foraloss it incurs because
aspecified debtor fails tomake payments when due, inaccordance withtheterms ofadebt instrument.
Financial guarantees arerecognised asafinancial liability atthetime theguarantee isissued. Financial guarantees areinitially recognised attheir fair
value. Thefair value offinancial guarantees isdetermined based onthepresent value ofthedifference incash flows between thecontractual payments
required under thedebt instrument andthepayments that would berequired without theguarantee, ortheestimated amount that would bepayable
toathird party forassuming theobligations. This amount isamortised onastraight-line basis overthelife oftheguarantee in“other gains/(losses)– net”
inprofit orloss.
Where guarantees inrelation toloans orother payables ofsubsidiaries areprovided forno compensation, thefair values areaccounted
forascontributions andrecognised aspart ofthecost oftheinvestment.
Attheend ofeach reporting period, theguarantee issubsequently measured atthehigher of:
• theamount oftheloss allowance determined inaccordance withtheexpected credit loss model under IFRS 9 Financial Instruments; and
• theamount initially recognised less, where appropriate, thecumulative amount ofincome recognised inaccordance withtheprinciples ofIFRS 15
“Revenue fromContracts withCustomers”.
Notes tothefinancial statements (continued)
2. Summary ofsignificant accounting policies (continued)
39 40
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
3. Financial risk management
Financial risk factors
TheCompany’s activities expose it toavariety offinancial risks: market risk (including foreign exchange risk, fair value interest rate risk andcash flow
interest rate risk), credit risk andliquidity risk.
TheCompany’s risk management programme focuses ontheunpredictability offinancial markets andseeks tominimise potential adverse effects onthe
Company’s financial performance.
a. Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions orrecognised assets orliabilities (mainly other receivables, cash andcash equivalents
andborrowings) aredenominated inacurrency that isnot theCompany’s functional currency.
Had Euroexchange rate strengthened/weakened by20% (2020: 20%) against theUS dollar andall other variables remained unchanged, theposttax
loss oftheCompany fortheyear ended 31December 2021would have increased/decreased byUS$22thousand (2020: post-tax profit would have
increased/decreased byUS$56thousand). This ismainly due toforeign exchange gains andlosses arising upon retranslation ofborrowings, cash
inbank, other receivables andpayables denominated inEuros.
Management monitors theexchange rate fluctuations onacontinuous basis andacts accordingly.
(ii) Cash flow andfair value interest rate risk
TheCompany isexposed tofair value interest rate risk asall ofits borrowings areissued atfixed rates. Asall oftheCompany’s fixed rate borrowings
arecarried atamortised cost, anyreasonably possible change intheinterest rates asof31December 2021and31December 2020would not
have anysignificant impact ontheCompany’s post-tax profit/(loss) fortheyear. TheCompany’s management monitors theinterest rate fluctuations
onacontinuous basis andacts accordingly.
b. Credit risk
Financial assets, which potentially subject theCompany tocredit risk, consist principally ofother receivables andcash andcash equivalents witha
carrying amount ofUS$3,074thousand (2020: US$2,943). Financial liabilities, which potentially subject theCompany tocredit risk, consist principally
offinancial guarantees provided totheCompany’s direct andindirect subsidiaries.
Cash andcash equivalents:
TheCompany’s cash andcash equivalents which have investment grade credit ratings withatleast one major rating agency areconsidered tohave low
credit risk, andtheloss allowance toberecognised during theperiod wastherefore limited to12months expected losses.
Other receivables:
Tomeasure theexpected lifetime credit losses, theCompany performed theassessment onanindividual basis forits major other receivables based
ondays past due andthecorresponding historical credit losses experienced bytheCompany withthose receivables. Forthose receivables who
areindependently rated, theCompany monitors their credit quality based ontheexternal credit ratings. Otherwise, if there isno independent rating,
theCompany monitors thecredit quality ofother receivables onthebasis ofpast experience andalso byreference tothedays past due.
At31December 2021and2020, theCompany did not identify anymaterial expected credit losses withrespect totheCompany’s financial assets
andissued guarantees that aresubject toIFRS 9impairment model, other than inrespect totheissued financial guarantees overtheobligations ofadirect
subsidiary inrelation toits issued Eurobonds andoutstanding forward contracts withfinancial institutions, asfurther detailed below.
At31December 2021, issued financial guarantee liabilities withcarrying amount ofUS$4,158thousand arewithin Stage 1oftheIFRS 9general
impairment model (2020: US$2,199thousand). Theidentified ECL onthese wasimmaterial. At31December 2021, issued financial guarantee liabilities
withcarrying amount ofUS$18,406
thousand (2020: US$14,495) arewithin Stage 3oftheIFRS 9general impairment model andaremeasured
attheamount oftheloss allowance determined inaccordance withtheexpected credit loss model.
Notes tothefinancial statements (continued)
Financial risk factors (continued)
b. Credit risk (continued)
All oftheCompany’s financial assets atamortised cost arewithin Stage 1ofIFRS 9general impairment model.
Financial assets arewritten-off when there isno reasonable expectation ofrecovery, such asadebtor failing toengage inarepayment plan
withtheCompany.
Thecredit quality ofcash andcash equivalents andother receivables isdisclosed inNote 12.
c. Liquidity risk
Thetable below analyses theCompany’s financial liabilities intorelevant maturity groupings based ontheremaining period atthebalance sheet tothe
contractual maturity date. Theamounts disclosed inthetable arethecontractual undiscounted cash flows. Balances due within 12months equal their
carrying balances astheimpact ofdiscounting isnot significant.
(inthousands ofUS dollars) Less than 1year 1–2years 2–5years Over5years Total
Asof31December 2021
Other payables 981 – – – 9 81
Financial guarantee
1
856969 – – – 856969
Borrowings – – 177909 – 177909
Total 857950 – 177909 – 1035859
Asof31December 2020
Other payables 714 – – – 714
Financial guarantee
1
317299 335730 317343 – 970372
Borrowings 1337 1337 21773 – 24447
Total 319350 337067 339116 – 995533
1
Full amount payable if theloans, bonds andforward contracts guaranteed arenon-performing (Note 21(k)).
Management controls current liquidity based onexpected cash outflows andexpected receipts fromdividends andinterest.
d. Capital risk management
TheCompany’s main objective when managing capital istomaintain theability tocontinue asagoing concern inorder toensure theprofitability its
operations, maintain optimum equity structure andreduce its cost ofcapital.
TheCompany monitors capital based onborrowings tototal capitalization ratio. Total capitalization iscalculated asthesum ofthetotal borrowings
andequity atthedate ofcalculation. Themanagement does not currently have anyspecific target fortherate ofborrowings tototal capitalisation.
Therate ofborrowings tototal capitalisation isasfollows:
(inthousands ofUS dollars) Asat31December
2021 2020
Total borrowings 136727 19099
Total capitalisation 754516 629612
Total borrowings tototal capitalisation ratio (percentage) 18 % 3%
Notes tothefinancial statements (continued)
3. Financial risk management (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Notes tothefinancial statements (continued)
3. Financial risk management (continued)
Financial risk factors (continued)
e. Fair value estimation
Fair value istheamount atwhichafinancial asset could beexchanged oraliability settled inatransaction between knowledgeable willing parties
inanarm’s length transaction, other than inaforced sale orliquidation, andisbest evidenced byanactive quoted market price.
Thefair value offinancial liabilities andassets fordisclosure purposes isestimated bydiscounting thefuture contractual cash flows atthecurrent market
interest rate that isavailable toforsimilar financial instruments.
Theestimated fair values offinancial instruments have been determined bytheCompany, using available market information, where it exists,
andappropriate valuation methodologies andassistance ofexperts. However, judgment isnecessarily required tointerpret market data todetermine
theestimated fair value. TheRussian Federation continues todisplay somecharacteristics ofanemerging market andeconomic conditions continue
tolimit thevolume ofactivity inthefinancial markets. Market quotationsmay beoutdated orreflect distress sale transactions andtherefore do not always
represent thefair values offinancial instruments. TheCompany has used all available market information inestimating thefair value offinancial instruments.
Thefair value offloating rate instruments isnormally their carrying amount. Theestimated fair value offixed interest rate instruments isbased onestimated
future cash flows expected tobereceived, discounted atcurrent interest rates forinstruments withsimilar credit risk andremaining maturity. Discount rates
used depend oncredit risk ofthecounterparty.
Theestimated fair value offixed interest rate instruments withstated maturity, forwhichaquoted market price isnot available, wasestimated based
onexpected cash flows, discounted atcurrent interest rates fornew instruments withsimilar credit risk andremaining maturity.
Thedisclosure ofthefair value offinancial instruments carried atamortised cost isdetermined byusing thefollowing valuation methods:
Level 1– Quoted prices (unadjusted) inactive markets foridentical assets orliabilities.
Level 2– Thefair value offinancial instruments that arenot traded inanactive market isdetermined using valuation techniques. These valuation techniques
maximise theuse ofobservable market data where it isavailable andrely aslittle aspossible onCompany’s specific estimates.
Level 3– Inputs fortheasset orliability that arenot based onobservable market data (that is, unobservable inputs).
Carrying amounts ofbank balances, other receivables andother payables which aredue within twelve months approximate their fair values
at31December 2021and2020. Thecarrying amount ofborrowings (including fixed rate instruments) asat31December 2021and2020also
approximates their fair value.
4. Critical accounting estimates andjudgments
Estimates andjudgments arecontinually evaluated andarebased onhistorical experience andother factors, including expectations offuture events that
arebelieved tobereasonable under thecircumstances.
Critical accounting estimates andassumptions
TheCompany makes estimates andassumptions concerning thefuture. Theresulting accounting estimates will, bydefinition, seldom equal therelated
actual results. Theestimates andassumptions that haveasignificant risk ofcausingamaterial adjustment tothecarrying amounts ofassets andliabilities
within thenext financial year arediscussed below:
TheCompany reviews investments, long-lived assets orgroups ofassets forimpairment whenever events orchanges incircumstances indicate
that thecarrying amountmay not berecoverable. Events that can trigger assessments forpossible impairments include, but arenot limited to(a)
significant decreases inthemarket value ofanasset, (b) significant changes intheextent ormanner ofuse ofanasset, and(c)aphysical change
intheasset. Because ofCOVID-19outbreak theCompany performed updated tests oftheestimated recoverable amount forall CGUs inthecourse
ofthepreparation ofthefinancial statements fortheyear ended 31December 2021. Models areprepared based ontheCompany’s best estimates
andlatest budgets available asattheyear end. If theestimated recoverable amount isless than thecarrying amount oftheasset orgroup ofassets,
theasset isnot recoverable andtheCompany recognises animpairment loss forthedifference between theestimated recoverable amount andthe
carrying value oftheasset orgroup ofassets.
Critical accounting estimates and assumptions (continued)
Estimated impairment ofinvestments
Estimating discounted future cash flows requires making judgments about long-term forecasts offuture revenues andcosts related totheassets subject
toreview. These forecasts areuncertain asthey require assumptions about volumes, prices fortheproducts andservices, future market conditions
andfuture technological developments. Significant andunanticipated changes inthese assumptions could requireaprovision forimpairment inafuture
period.
TheRussian ports consist ofthefollowing cash generating units (“CGUs”): 1. Vostochnaya Stevedoring Company (VSC), 2. First Container
Terminal (FCT), Petrolesport andFarvater (PLP), 3. Ust-Luga Container Terminal (ULCT), 4. Moby Dik (MD), 5. Yanino Logistics Park (YLP).
TheFinnish ports consist ofthefollowing CGU: Multi-Link Terminals Ltd Oy (MLT OY).
Therecoverable amounts ofinvestments inPetrolesport andFarvater (PLP/FCT andULCT CGUs) andVostochnaya Stevedoring Company (VSC CGU)
andacomponent ofMulti-Link Terminals Limited (MLT OY CGU) weredetermined based onvalue inuse derived fromdiscounted future cash flows
models (refer tonotes 14and15forthedefinition oftheunderlying CGUs oftheCompany). Therecoverable amount ofanother component ofMulti-
Link Terminals Limited (MD CGU) andCD Holding OY (YLP CGU) wasdetermined withthefair value less costs tosell method, based oncombination
ofthemarket approach based onrecent sales ofsimilar assets andthecost approach (Level 2).
Forall CGUs tested based ondiscounted future cash flows, cash flow projections coveraperiod offive years based ontheassumptions ofthenext
12months. Cash flows beyond that five-year period have been extrapolated usingasteady terminal growth rate. Theterminal growth rate used does
not exceed thelong-term average growth rate forthemarket inwhich entities operate. Forprojections prepared forCGUs inRussian ports segments
asat31December 2021aterminal growth rate of3% (31December 2020: 3%) andthediscount rate 8.8% (31December 2020: 9.4%) have
been applied. Forprojections prepared forFinnish ports CGUs asat31December 2021aterminal growth rate of2% (31December 2020: 2%)
andthediscount rate 8.8% (31December 2020: 9.7%) have been applied.
Key assumptions forRussian ports andFinish ports CGUs tested based ondiscounted future cash flows arethroughput volume, price per unit, growth
rates, anddiscount rates. Theprojected volumes reflect past experience adjusted bythemanagement view ontheprospective market developments.
Volume growth isestimated tobeinline withthelong-term market development, position ofeach terminal onthemarket andits pricing power. ForCGUs
intheRussian ports segment, assupported byhistorical market performance andinview ofrelatively low containerisation level inRussia, thelong-term
average throughput growth rate fortheRussian container market ishigher than indeveloped markets.
In2021anassessment oftheestimated recoverable amount ofinvestment intoMulti-Link Terminals Limited (MLT OY andMD CGUs) indicatedaneed
forimpairment. Asaresult, theinvestment inMulti Link Terminals Limited wasimpaired byUS$4,277thousand (see Note 15). Adecrease intheaverage
container tariffs byapproximately 0.3% each year orcontainer handling volumes byapproximately 0.7% each year orthediscount rate of9.4% orthe
terminal growth of1.2%, asopposed tothose used inprojections would increase animpairment byUS$750thousand.
In2021, following thefact that performance ofPLP/FCT inthereporting period wasstronger than previously expected, aswellaspositive changes
inthebusiness ofULCT coming fromstrong market demand forcoal handling, theGroup reassessed its estimates andreversed animpairment loss
recognised forinvestment inJSC Petrolesport in2016and2020intheamount ofUS$132,206thousand. Thereversal resulted inanincrease invalue
oftheinvestment byUS$132,206thousand asof31December 2021 (Note 14). If theterminal growth rate would have been 1.0% lower andthediscount
rate 1.0% higher, simultaneously, animpairment intheamount ofUS$33,604thousand would have been required instead ofthereversal ofimpairment
noted above.
Therecoverable amount oftheCompany’s investment inGlobal Ports (Finance) Plc wasdetermined based onits net asset value which approximates
its fair value less cost tosell. Based ontheresults oftheimpairment testing, animpairment amounting toUS$4,783thousand wasrecognised in2020
withrespect totheinvestment inGlobal Ports (Finance) Plc which wasfully impaired asit wasinanet liability position asof31December 2020and2021
(see Note 14).
Based ontheresults oftheimpairment tests carried out inrespect ofother investments insubsidiaries andjoint ventures, theBoard ofDirectors did not
identify anyimpairment losses asof31December 2021. Forall other investments, management believes that anyreasonably possible change inthekey
assumptions onwhich recoverable amounts arebased, would not cause thecarrying amounts toexceed therecoverable amounts.
Notes tothefinancial statements (continued)
4. Critical accounting estimates andjudgments (continued)
43 44
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Critical accounting estimates and assumptions (continued)
Critical judgments inapplying theCompany’s accounting policies
There wereno critical judgments inapplying theCompany’s accounting policies.
Notes tothefinancial statements (continued)
4. Critical accounting estimates andjudgments (continued)
5. Finance income– net
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Interest income oncash balances – 1
Total interest income calculated using effective interest rate method – 1
Net foreign exchange gains/(losses) oncash andcash equivalents andloans
receivable
1
(10) 3
Total (10) 4
1
Thetotal net foreign exchange gain recognised inthestatement ofcomprehensive income amounted toUS$22thousand (2020: loss US$15thousand). Refer also toNote 7 andNote 9.
6. Administrative expenses
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Legal, consulting andother professional services 823 1044
Staff costs (Note 8) 1600 1408
Travelling expenses 237 141
Taxes other than onincome 2 4
Auditors’ remuneration 262 438
Advertising andpromotion – –
Insurance 258 210
Bank charges 12 13
Depreciation ofproperty, plant andequipment andright-of-use assets 15 142
Operating lease rentals 78 15
Loyalty bonuses 299 -
Other expenses 12 7 12 4
Total 3713 3539
Thetotal fees ofthestatutory auditor forthestatutory audit oftheannual financial statements oftheCompany fortheyear ended 31December
2021amounted toUS$223thousand (2020: US$234thousand). Thetotal fees charged bytheCompany’s statutory auditor intheyear ended
31December 2021forother assurance services amounted toUS$nilthousand (2020: US$57thousand). Fortax andVAT advisory services amounted
toUS$Nilthousand (2020: US$47thousand) andother non-audit services amounted toUS$Nilthousand (2020: US$4thousand).
7. Other gains/(losses)– net
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Net foreign exchange transaction (losses)/gains onnon-financing activities 32 (87)
Loss onremeasurement offinancial guarantee (Note 21(d) and(k)) (4691) (13371)
Amortisation andderecognition offinancial guarantee (Note 21(d) and(k)) 1375 1269
Other gains/(losses)– net 4 13 0
Total (3280) (12059)
8. Staff costs
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Salaries 1460 1264
Social insurance costs 133 13 6
Other staff costs 7 8
Total 1600 1408
Average number ofstaff employed during theyear 5 6
9. Finance costs
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Interest expense onloans fromrelated parties (Note 21(c)) 3043 1211
Interest expense onlease liabilities – 9
Net foreign exchange (gains)/losses onrelated parties borrowings – (69)
Total 3043 1151
10. Income tax expense
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Withholding tax ondividends – 30
Income tax (1) -
Defence contribution – -
Total income tax (1) 30
Notes tothefinancial statements (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Thetax ontheCompany’s profit before tax differs from thetheoretical amount that would arise using theapplicable tax rate asfollows:
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Profit/(loss) before tax 119245 (16935)
Tax calculated attheapplicable corporation tax rate of12.5% 14906 (2117)
Tax effect ofexpenses not deductible fortax purposes 1281 2861
Tax effect ofallowances andincome not subject totax (16188) (740)
Withholding tax ondividends – 30
Tax effect ofgroup relief – (4)
Tax charge (1) 30
TheCompany issubject tocorporation tax ontaxable profits attherate of12.5%.
Brought forward losses ofonly five yearsmay beutilized.
11. Financial instruments bycategory
(inthousands ofUS dollars) Asat31December
2021 2020
Financial assets atamortised cost
Financial assets asper balance sheet
Other receivable
1
1703 2363
Cash andbank balances 1371 580
Total financial assets 3074 2943
Financial liabilities measured atamortised cost
Financial liabilities asper balance sheet
Other payables (excluding accrued expenses) 496 489
Borrowings (Note 21(h)) 136727 19099
Total financial liabilities 137223 19588
1
Other receivables do not include prepayments.
Notes tothefinancial statements (continued)
10. Income tax expense (continued) 12. Credit quality offinancial assets
Thecredit quality offinancial assets that areneither past due nor impaired can beassessed byreference toexternal credit ratings (if available).
Cash atbank andshort-term bank deposits:
(inthousands ofUS dollars) Asat31December
Cash andbank 2021 2020
A3 (Moody’s) 14 9 367
Aa3 (Moody’s) 1173 191
B1 (Moody’s) 49 -
B3 (Moody’s) – 22
Total 1371 580
Other receivables amounting toUS$1,300thousand arerelated tohighly reputable counterparties withAa1credit rating byMoody’s Investors Service
asat31December 2021 (31December 2020: US$1,300thousand).
13. Property, plant andequipment
(inthousands ofUS dollars) Motor vehicles andother equipment
At1January 2020
Cost 132
Accumulated depreciation (57)
Net book amount 75
Additions –
Depreciation charge for2020 (50)
Closing net book amount at31December 2020 25
At31December 2020/1January 2021
Cost 132
Accumulated depreciation (107)
Net book amount 25
Merger withsubsidiary 18
Depreciation charge for2021 (15)
Closing net book amount at31December 2021 28
At31December 2021
Cost 189
Accumulated depreciation (161)
Net book amount 28
Notes tothefinancial statements (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
14. Investments insubsidiaries
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Atbeginning ofyear 618994 624347
Additions – 44
Repayment ofcapital bysubsidiaries – (2205)
Merger withasubsidiary 530 -
Guarantees provided (Note 21(k)) 2554 1692
(Impairment charge)/reversal ofimpairment 132206 (4884)
Atend ofyear 754284 618994
TheCompany’s direct interests insubsidiaries, all ofwhich areunlisted, wereasfollows:
Name Principal activity Country
ofincorporation
2021
% holding
2020
% holding
Vostochnaya Stevedoring Company LLC Stevedoring services andcontainer
handling
Russia 100 -
Farvater LLC Ownership ofland Russia 100 -
JSC Petrolesport Stevedoring services andcontainer
handling
Russia 100 -
Shakhovo18 LLC Ownership ofland Russia 10 0 -
NCC Group Limited Holding company Cyprus - 100
Global Ports (Finance) Plc Provision ofloans torelated parties
from theproceeds raised fromissued
Eurobonds
Cyprus 99.98 99.98
Global Ports Advisory Eesti OU Consulting services Estonia 100 100
Global Ports Management LLC Management andconsulting services Russia 100 10 0
Rolis LLC Software development andmaintenance Russia 100 10 0
Alocasia CO. Ltd
1
Holding company Cyprus 4.76 4.76
National Container Holding Company
Limited
Holding company Cyprus - 10 0
1
Alocasia CO. Ltd isaccounted forasasubsidiary because theCompany has indirect control, sinceits subsidiaries hold theremaining shareholding.
Theprincipal activities oftheindirect subsidiaries held bythedirect subsidiaries listed above, aretheoperation oftwo container terminals inRussia (First
Container Terminal (FCT) andUst-Luga Container Terminal (ULCT)). All oftheabove terminals are100% subsidiaries except ULCT (asubsidiary inwhich
theGroup controls 80%).
All oftheabove terminals represent separate CGUs, withtheexception ofPLP andFCT which work asone unit fromcommercial andoperational
standpoints andareconsidered asone CGU. Thetwo terminals haveacommon managing director andcommon senior management team and
theGroup management andtheBoard ofDirectors oftheCompany look atPLP andFCT asone combined terminal andmonitor its performance
asasingle unit, without being legally merged together andremaining two separate legal entities.
Notes tothefinancial statements (continued)
InJanuary 2020, theCompany acquired 99.98% direct interest inGlobal Ports (Finance) Plc fromits 100% direct subsidiary NCC Pacific Investments
Limited foratotal cash consideration amounting toUS$33thousand. Upon theinitial recognition oftheinvestment inGlobal Ports (Finance) Plc,
theCompany transferred theamount ofUS$4,749thousand previously capitalised aspart ofthecost oftheinvestment inNCC Pacific Investments
Limited tothecost oftheinvestment inGlobal Ports (Finance) Plc, withno impact onthetotal carrying amount ofinvestments insubsidiaries. This amount
represents thecapitalised guarantees issued bytheCompany inprior years overtheobligations ofGlobal Ports (Finance) Plc under its issued Eurobonds
andvarious forward contracts entered withfinancial institutions. At31December 2020, theinvestment inGlobal Ports (Finance) Plc wasfully impaired
asthesubsidiary wasinanet liability position attheyear-end (Notes 4 and21 (k)).
On19May 2020 Intercross Investments B.V. wasdissolved andpart ofthedistributions receivable from thesubsidiary aspart oftheliquidation process
intheamount ofUS$901thousand wasaccounted forasreturn ofcapital against thecost oftheinvestment.
On29June 2020theBoard ofDirectors oftheCompany approved thelegal merger ofArytano Holdings Limited (andits 100% subsidiary Cormarys
Investments Ltd) andNCC Pacific Investments Ltd (the“Dissolving Companies”) withNational Container Holding Company Ltd (the“Absorbing
Company”) asthesurviving entity. TheDissolving Companies transmitted byvirtue oftheCourt Order which approved theMerger Plan (the“Plan”),
thetotal oftheir assets andliabilities totheAbsorbing Company andtheDissolving Companies weredissolved without going intoliquidation. Inexchange
fortheassets andliabilities transmitted totheAbsorbing Company, theAbsorbing Company issued shares toGlobal Ports Investments Plc, which became
thesole shareholder ofNational Container Holding Company Ltd; previously theremaining shareholding inNational Container Holding Company
Ltd washeld byGPI’s direct subsidiary NCC Pacific Investments Ltd andtheshares held byNCC Pacific Investments Limited intheshare capital
oftheAbsorbing Company werecancelled throughareduction ofcapital procedure aspart ofthemerger. Themerger did not affect theunderlying
activities andoperations ofthedissolving companies andtheactivities ofthedissolving companies werecontinued bytheAbsorbing Company. TheLegal
Merger wascompleted on4December 2020. Inaccounting forthemerger transaction, theCompany transferred thecarrying values oftheinvestments
intheDissolving companies tothecost oftheinvestment inNational Container Holding Company Ltd, withno impact onthetotal carrying amount
ofinvestments insubsidiaries.
On25September 2020theCompany purchased 4.76% direct interest inAlocasia CO. Ltd fromsubsidiary NCC Group Limited foratotal cash
consideration ofUS$11thousand.
Amembers’ voluntary liquidation ofNCC Group Limited wasinitiated inlate 2020. TheCompany recognised distributions receivable byNCC Group
Limited aspart oftheliquidation process inthetotal amount ofUS$1,304thousand asreturn ofcapital against thecost oftheinvestment inNCC Group
Limited andtheremaining carrying amount oftheinvestment ofUS$101thousand wasfully impaired.
On25May 2021theBoard ofDirectors oftheCompany approved thelegal merger ofNational Container Holding Company Ltd (the“Dissolving
Company”) withtheCompany (the“Absorbing Company”) asthesurviving entity. TheDissolving Company transmitted byvirtue oftheCourt Order
which approved theMerger Plan (the“Plan”), thetotal ofits assets andliabilities totheAbsorbing Company andtheDissolving Company wasdissolved
without going intoliquidation. Themerger did not affect theunderlying activities andoperations oftheDissolving Company which werecontinued
intotheAbsorbing Company. TheLegal Merger wascompleted on11October 2021. Inaccounting forthemerger transaction, theCompany
derecognised thecarrying value oftheinvestment intotheDissolving Company andrecognised cost oftheinvestments intoVostochnaya Stevedoring
Company LLC, Farvater LLC, JSC Petrolesport andShakhovo18 LLC witharesulting merger reserve ofUS$(111,970).
15. Investments injoint ventures
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Atbeginning ofyear 24847 24847
Additions 9 –
Impairment charge (Note 4) (4277) -
Atend ofyear 20579 24847
Notes tothefinancial statements (continued)
14. Investments insubsidiaries (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
TheCompany’s interests injoint ventures, all ofwhich areunlisted, areasfollows:
Name Principal activity Country
ofincorporation
2021
% holding
2020
% holding
CD Holding OY Holding company Finland 75 75
Multi-Link Terminals Limited Holding company Ireland 75 75
M.L.T Container Logistics Ltd Holding company Cyprus 75 75
Theprincipal activities ofthejoint ventures listed above aretheoperation oftwo container terminals inFinland (MLT OY CGU) andacontainer terminal
inthevicinity ofSt. Peterburg (Moby Dik CGU) which areheld through Multi-Link Terminals Limited andaninland container terminal inthevicinity ofSt.
Peterburg (Yanino Logistics Park CGU (YLP)) which isheld through CD Holding OY.
16. Other receivables
(inthousands ofUS dollars) Asat31December
2021 2020
Other receivables 1703 2363
Prepayments– third parties 92 211
Prepayments– related parties 4 -
Other receivables 1799 2574
Less non-current other receivables – (403)
Other receivables 1799 2171
Thefair values ofother receivables approximate their carrying amounts astheimpact ofdiscounting isnot significant. Thecarrying amount
oftheCompany’s other receivables denominated inUS dollars amount toUS$1,759thousand (31December 2020: US$2,472thousand). Thecarrying
amount oftheCompany’s other receivables denominated inEuros amount toUS$40thousand (31December 2020: US$102thousand).
17. Cash andbank balances
(inthousands ofUS dollars) Asat31December
2021 2020
Cash atbank 1371 580
Total 1371 580
Cash andcash equivalents aredenominated inthefollowing currencies:
(inthousands ofUS dollars) Asat31December
2021 2020
Currency:
US dollar 1228 427
Euro 143 153
Total 1371 580
Notes tothefinancial statements (continued)
15. Investments injoint ventures (continued)
Non-cash transactions
Thefollowing non-cash transactions weremade in2021:
1. Transfer ofthefollowing assets andliabilities due tomerger withsubsidiary (Note 14):
a. Investments insubsidiaries inamount ofUS$530thousand (Note 14);
b. Property, plant andequipment inamount ofUS$18thousand (Note 13);
c. Borrowings fromrelated parties inamount ofUS$112,854thousand (Note 21(h));
d. Trade andother payables inamount ofUS$58thousand.
Thefollowing non-cash transactions weremade in2020:
1. Set-off ofdistributions receivable fromIntercross Investments B.V. against borrowings ofGPI inamount ofUS$3,409thousand (Note 21(h)); and
2. Set-off ofdistributions receivable fromNCC Group Limited against consideration payable byGPI forassignment ofthird party receivable
inamount ofUS$1,393thousand.
18. Share capital anddividends
(inthousands ofUS dollars) Share capital Share premium Total
At1January 2020/31December 2020/31December 2021 57317 923511 980828
Authorised share capital
Theauthorised share capital oftheCompany amounts toUS$175,000,000.00divided into750,000,000ordinary shares and1,000,000,000ordinary
non-voting shares withapar value ofUS$0.10each.
Issued share capital
Theissued share capital oftheCompany amounts toUS$57,317,073.10divided into422,713,415ordinary shares and150,457,316ordinary non-voting
shares withapar value ofUS$0.10each. All issued shares arefully paid.
Theordinary shares andtheordinary non-voting shares rank pari passu inall respects save that, theordinary non-voting shares do not have theright
toreceive notice, attend orvote atanygeneral meeting, nor tobetaken intoaccount forthepurpose ofdetermining thequorum ofanygeneral meeting.
Dividends
There wereno dividends declared orpaid in2021and2020.
Notes tothefinancial statements (continued)
17. Cash andbank balances (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
19. Other payables
(inthousands ofUS dollars) Asat31December
2021 2020
Other payables 14 0 182
Accrued expenses 485 225
Payroll payable 356 307
Total trade andother payables 9 81 714
Thefair value oftrade andother payables which aredue within one year approximates their carrying amount atthebalance sheet date astheimpact
ofdiscounting isnot significant. Thecarrying amount oftheCompany’s other receivables aredenominated inthefollowing currencies:
(inthousands ofUS dollars) Asat31December
2021 2020
US dollar 485 –
Euro 478 714
Russian rouble 18 –
Total trade andother payables 9 81 714
20. Contingencies andcommitments
Operating environment
TheGroup’s operations areprimarily located intheRussian Federation. Consequently, theGroup isexposed totheeconomic andfinancial markets
oftheRussian Federation, which display thecharacteristics ofanemerging market. Thelegal, tax andregulatory frameworks continue development, but
aresubject tovarying interpretations andfrequent changes which contribute together withother legal andfiscal impediments tothechallenges faced
byentities operating intheRussian Federation.
Starting in2014, theUnited States ofAmerica, theEuropean Union andsomeother countries have imposed andgradually expanded economic sanctions
againstanumber ofRussian individuals andlegal entities. Theimposition ofthesanctions has led toincreased economic uncertainty, including more
volatile equity markets,adepreciation oftheRussian rouble,areduction inboth local andforeign direct investment inflows andasignificant tightening
intheavailability ofcredit. Asaresult, someRussian entitiesmay experience difficulties accessing theinternational equity anddebt markets andmay
become increasingly dependent onstate support fortheir operations.
InFebruary 2022, following commencement ofmilitary operations inUkraine bytheRussian Federation, additional sanctions wereintroduced bythe
United States ofAmerica, theEuropean Union andsomeother countries against Russia. Moreover, there isanincreased risk that even further
sanctionsmay beintroduced. Thismay have significant adverse impact onRussia’s economy. These events have led todepreciation oftheRussian rouble,
increased volatility offinancial markets andsignificantly increased thelevel ofeconomic uncertainty intheRussian business environment.
Though there isincreased risk that new sanctionsmay beintroduced, their nature andduration andhence theultimate impact that these will have
ontheRussian economy ingeneral andtheoperations oftheGroup inparticular andbyimplication theultimate impact ontheoperations oftheCompany
cannot atpresent beforeseen.
Finland represents established market economy withmore stable political systems anddeveloped legislation based onEU directives andregulations.
TheCOVID-19coronavirus pandemic has continued tocreate additional uncertainty inthebusiness environment.
Theconsolidated financial statements reflect management’s assessment oftheimpact oftheRussian business environment ontheoperations
andthefinancial position oftheGroup. Thefuture business environmentmay differ frommanagement’s assessment.
Notes tothefinancial statements (continued)
Guarantees granted tosubsidiaries
Refer toNote 21(k) fordetails ofguarantees granted todirect andindirect subsidiaries.
Commitments
There wereno material commitments asof31December 2021and31December 2020.
21. Related party transactions
TheCompany isjointly controlled byLLC Management Company “Delo” (“Delo Group”), one ofRussia’s largest privately owned transportation
companies, andAPM Terminals B.V. (“APM Terminals”),aglobal port, terminal andinland services operator.
Forthepurposes ofthese financial statements, parties areconsidered toberelated if one party has theability tocontrol theother party orexercise
significant influence overtheother party inmaking financial andoperational decisions asdefined byIAS 24 “Related Party Disclosures”. Inconsidering
each possible related party relationship, attention isdirected tothesubstance oftherelationship, not merely thelegal form.
Thefollowing transactions werecarried out withrelated parties:
a. Revenue
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Management fees from:
Subsidiaries 62 103
Total 62 103
b. Dividend income
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Subsidiaries – 3291
Total – 3291
During 2020thedividends receivable fromIntercross Investments B.V. inamount ofUS$2,685thousand wereset-off against borrowings ofGPI (Note21(h)).
c. Interest expenses
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Interest expense:
Subsidiaries 3043 1211
Total interest expenses 3043 1211
Notes tothefinancial statements (continued)
20. Contingencies andcommitments (continued)
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
d. Other gains/(losses)– net
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Subsidiaries (Note 7 and21(k)) (3316) (12102)
Total (3316) (12102)
e. Purchases ofservices
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Subsidiaries 227 220
Total 227 220
f. Acquisitions/disposals ofsubsidiaries/joint ventures
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Additions/contributions:
Subsidiaries – 44
Joint ventures 9 –
Total 9 44
Distributions ofequity/repayment ofcapital:
Subsidiaries – 2205
Total – 2205
g. Key management personnel compensation
Thecompensation ofkey management personnel andthetotal remuneration oftheDirectors (included inthekey management personnel compensation)
wereasfollows:
(inthousands ofUS dollars) Fortheyear ended 31December
2021 2020
Key management compensation:
Salaries, fees, payroll taxes andother short-term employee benefits 1330 1029
Directors’ remuneration:
Fees 278 244
Total 278 244
Notes tothefinancial statements (continued)
21. Related party transactions (continued)
h. Borrowings fromrelated parties
Loans fromsubsidiaries:
(inthousands ofUS dollars)
Fortheyear ended 31December
2021 2020
Atbeginning ofyear 19099 20381
Loans advanced during theyear 5073 15921
Principal andinterest repaid during theyear (3342) (14936)
Interest charged 3043 1211
Set-off against distributions receivable fromsubsidiary
(Notes 14, 17 and21(b))
– (3409)
Merger withasubsidiary (Note 14) 112854 -
Foreign exchange differences – (69)
Atend ofyear 136727 19099
Theborrowings fromrelated parties at31December 2021areUSD-denominated (2020: USD-denominated), bear effective interest attherate
7%-7.125% (2020: 7%), areunsecured andrepayable in2024-2026 (2020: in2024).
Thefair values ofborrowings asat31December 2021and2020approximate their carrying value.
Asof31December 2021, theCompany had undrawn loan facilities inthetotal amount ofUS$5,838thousand (2020: US$10,360thousand).
i. Other receivables andprepayments
(inthousands ofUS dollars) Asat31December
2021 2020
Entities under control ofowners ofcontrolling entities (Note 16) 4 –
Total 4 –
Thecarrying amount oftheCompany’s other receivables from andprepayments torelated parties denominated inEuros amount toUS$4thousand
(31December 2020: US$nil).
j. Other payables
(inthousands ofUS dollars) Asat31December
2021 2020
Payroll payable (Note 19) 340 284
Total 340 284
Thecarrying amount oftheCompany’s other payables torelated parties denominated inEuros amount toUS$340thousand (31December 2020:
US$284thousand).
Notes tothefinancial statements (continued)
21. Related party transactions (continued)
55 56
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
k. Guarantees granted tosubsidiaries
During 2015and2016theCompany granted anirrevocable public offer topurchase bonds issued byanindirect subsidiary oftheCompany,
intheeventadefault occurs inrespect ofthose bonds. These bonds hadabalance ofUS$9,477
thousand (including interest accrued)
asat31December 2021 (31December 2020: US$148,967thousand). Atinception thefair value ofthese guarantees wasUS$2,575thousand.
Asat31December 2021theunamortised balance ofthis guarantee wasUS$115thousand (31December 2020: US$247thousand).
During 2016theCompany andits indirect subsidiaries granted guarantees totheindirect subsidiary (from 2020adirect subsidiary) oftheCompany,
which issued theEurobonds, intheevent ofdefault inrespect ofthose bonds withabalance ofUS$507,679thousand (including interest accrued)
asat31December 2021 (31December 2020: US$507,679thousand). Atinception thefair value oftheguarantee wasUS$3,588thousand. During
2019theCompany andits indirect subsidiaries granted additional guarantees totheindirect subsidiary (from 2020adirect subsidiary) inrespect
offorward contracts toacquire US$114,800thousand asat31December 2021 (31December 2020: US$122,400thousand). Atinception thefair
value oftheguarantee wasUS$1,162thousand. Attheend of2020these guarantees wereremeasured based on100% oftheamount oftheloss
allowance determined inaccordance withtheIFRS 9 ECL model which wasdetermined tobehigher than theunamortised balance oftheguarantees
asof31December 2021byUS$4,691thousand (31December 2020: US$13,371thousand) (Note 7). Asat31December 2021theaggregate
unamortised balance ofthese guarantees wasUS$18,406thousand (31December 2020: US$14,495thousand).
During 2019theCompany andits indirect subsidiaries granted guarantee toanindirect subsidiary oftheCompany inrespect ofabank loan ofabalance
ofUS$59,918thousand (including interest accrued) asat31December 2021 (31December 2020: US$60,288thousand). Atinception thefair value
oftheguarantee wasUS$355thousand. Asat31December 2021theunamortised balance ofthis guarantee wasUS$210thousand (31December
2020: US$280thousand).
During 2020 Company granted anirrevocable public offer topurchase bonds issued byanindirect subsidiary oftheCompany, intheeventadefault
occurs inrespect ofthose bonds. These bonds hadabalance ofUS$67,579thousand (including interest accrued) asat31December 2021
(31December 2020: US$67,948thousand). Atinception thefair value oftheguarantee wasUS$1,692thousand. Asat31December
2021theunamortised balance ofthis guarantee wasUS$1,332thousand (31December 2020: US$1,672thousand).
During 2021 Company granted anirrevocable public offer topurchase bonds issued byadirect subsidiary oftheCompany, intheeventadefault occurs
inrespect ofthose bonds. These bonds hadabalance ofUS$101,956thousand (including interest accrued) asat31December 2021. Atinception
thefair value oftheguarantee wasUS$2,554thousand. Asat31December 2021theunamortised balance ofthis guarantee wasUS$2,501thousand.
22. Events after thebalance sheet date
On02March 2022, theBoard ofDirectors oftheCompany recommended tothemembers toapprove thereduction oftheshare premium account
oftheCompany bycrediting theamount ofUS$550million totheretained earnings reserve. Anysurplus remaining intheretained earnings reserve shall
beavailable tobeused astheCompany deems appropriate fromtime totime. Theshare premium reduction issubject toratification bytheCyprus Courts
andshall become effective upon registration withtheCyprus registrar ofcompanies.
Although 2021has beenasuccessful year fortheGroup andtheGroup experienced +20% volume growth inthroughput inthefirst two months of2022,
thecurrent geopolitical situation andconflict surrounding Russia andUkraine (asexplained innote 20) has thepotential toaffect operations oftheGroup
andits financial position very adversely.
Themanagement oftheGroup isaware ofthefact that someshipping lines have announced that they temporarily suspend delivery/dispatch ofvarious
containerised cargoes to/from Russian Federation. It ispossible that other shipping lines will follow withsimilar restrictions. This adversely affects operations
ofterminals oftheGroup intheshort term, but inthelong-term theGroup believes fundamental undercontainerisation ofRussian trade will support volumes
anddrives shipping lines desire toresume their services toRussia. Inaddition, based onthecurrently announced sanctions, theshare ofsanctioned goods
issmall, which should not significantly impact thethroughput.
Notes tothefinancial statements (continued) Notes tothefinancial statements (continued)
21. Related party transactions (continued) 22. Events after thebalance sheet date (continued)
Following already imposed sanctions onRussian Central Bank, its restrictions forcapital movements outside Russian Federation andother related
developments oftheconfrontation, there aresignificant uncertainties overtheavailable options forrefinancing inSeptember 2023when payment
ofEurobonds 2023falls due. Ontheother hand, theGroup hasastrong track record inpromptly meeting all its debt obligations, successful refinancing
anddeleveraging andenjoys high credibility inlocal andinternational banking andcapital markets that we expect should support theGroup inits
efforts torefinance inSeptember 2023orearlier. TheGroup also has US$128million ofcash equivalent balances on02March 2022, most ofwhich
isdenominated inUS$.
Total impact ofsanctions inconnection withtheescalating confrontation andincrease oftensions between Russia, andtheUnited States, United Kingdom
andtheEuropean Union remains uncertain, but thepresence inFar Eastern basin should partially mitigate theimpact ofsanctions ontheterminals located
intheNorth-West ofRussia.
TheGroup’s management isdoing everything possible toensure sustainability oftheGroup’s operations. Themanagement understands what needs
tobedone under current circumstances andbelieves that it has required resources andability tolead theGroup through these difficult times.
57 58
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Report ontheaudit oftheseparate financial statements
Opinion
We have audited theaccompanying separate financial statements oftheparent company Global Ports Investments Plc (the‘’Company’’), which
arepresented onpages 29and58andcomprise thebalance sheet asat31December 2021, andthestatements ofprofit orloss andother
comprehensive income, changes inequity andcash flows fortheyear then ended, andnotes totheseparate financial statements, includingasummary
ofsignificant accounting policies.
Inour opinion, theaccompanying separate financial statements giveatrue andfair view ofthefinancial position oftheparent company Global Ports
Investments Plc asat31December 2021, andofits financial performance andits cash flows fortheyear then ended inaccordance withInternational
Financial Reporting Standards asadopted bytheEuropean Union (‘’IFRS-EU’’) andtherequirements oftheCyprus Companies Law, Cap. 113,
asamended fromtime totime (the‘’Companies Law, Cap.113’’).
Basis foropinion
We conducted our audit inaccordance withInternational Standards onAuditing (‘’ISAs’’). Our responsibilities under those standards arefurther
described inthe‘’Auditors’ responsibilities fortheaudit oftheseparate financial statements’’’ section ofour report. We areindependent oftheCompany
inaccordance withtheInternational Code ofEthics (Including International Independence Standards) forProfessional Accountants oftheInternational
Ethics Standards Board forAccountants (‘’IESBA Code’’) together withtheethical requirements inCyprus that arerelevant toour audit oftheseparate
financial statements, andwe have fulfilled our other ethical responsibilities inaccordance withthese requirements andtheIESBA Code. We believe that
theaudit evidence we have obtained issufficient andappropriate toprovideabasis forour opinion.
Material uncertainty relating togoing concern
We draw attention toNotes 2, 20and22totheseparate financial statements which describe therecent developments inRussia’s operating environment
andthematerial uncertainty that exists thatmay cast significant doubt ontheGroup’s andtherefore theCompany’s ability tocontinue asagoing
concern should thenature andduration ofthesanctions imposed onRussia differ significantly totheGroup’s andtheCompany’s expectations. TheBoard
ofDirectors continues toadopt thegoing concern basis ofpreparation as, onthebasis oftheir current assessment oftheimpact oftheaforesaid
developments based ontheir expectations asexplained innote 22, they consider that theGroup has adequate resources tomeet its liabilities asthey fall
due andtocontinue inoperation fortheforeseeable future.
Our opinion isnot modified inrespect ofthis matter.
Independent auditors’ report
tothemembers ofGlobal Ports
Investments Plc
Key audit matters
Inaddition tothematter described inthematerial uncertainty related togoing concern section, we have determined thematters described below
tobethekey audit matters tobecommunicated inour report.
Key audit matters arethose matters that, inour professional judgment, wereofmost significance inour audit oftheseparate financial statements
ofthecurrent period. These matters wereaddressed inthecontext ofour audit oftheseparate financial statements asawhole, andinforming our opinion
thereon, andwe do not provideaseparate opinion onthese matters.
Impairment assessment ofinvestments insubsidiaries andjoint ventures
Refer toNote 2, Note 4, Note 14, Note 15
Key audit matter How thekey audit matter wasaddressed inour audit
Significant judgement isrequired bymanagement indetermining whether there
areanyindications for, orreversal of, impairment pertaining toinvestments insubsidi-
aries andjoint ventures and, where such indications exist, inassessing therecoverable
amount thereof.
We focused onthis area because COVID-19has continued tocreate additional uncer-
tainty inthebusiness environment andbecause of
• thesignificance ofthecarrying amount oftheinvestments insubsidiaries andjoint
ventures;
• theinherent uncertainty andsubjectivity involved intheassessment oftheir recove-
rable amounts due tothecomplexity andsubjective judgements required infore-
casting anddiscounting future cash flows andintheestimation offair value less
costs tosell, which arethebasis ofthemanagement’s assessments.
Inparticular, we focused our audit effort onmanagement’s impairment assessment
oftheinvestments inJSC Petrolesport (“PLP”) (subsidiary) andMulti-Link Terminals
Limited (“MLT”) (joint venture), due tothefact that these arematerial investments that
hold operating assets, andanimpairment assessment wasperformed bymanagement
fortheir underlying cash-generating units (“CGUs”) due toidentified impairment/re-
versal ofimpairment indications. Theunderlying CGUs ofPLP andMLT arepresented
inNotes 4, 14and15; specifically, theunderlying CGUs that we focused onarePLP/
FCT andULCT GCUs forPLP andMLT Oy andMD CGUs forMLT.
Therecoverable amount ofthePLP/FCT, ULCT, andMLT Oy CGUs weredetermined
based onthevalue inuse method, derived fromdiscounted future cash flow models,
whilst therecoverable amount oftheMD CGU wasdetermined based onfair value less
costs tosell method.
Based ontheresults oftheimpairment assessments, theinvestment inMLT wasimpaired
byUS$4,277thousand andareversal ofaprevious impairment loss intheamount
ofUS$132,206thousand increased thecarrying value oftheinvestment inPLP.
We assessed whether thevalue inuse calculations wereperformed attheappropriate
level ofCGU andwe evaluated thevaluation inputs andassumptions, methodologies
andcalculations adopted bytheCompany’s Board ofDirectors indetermining theCGUs’
recoverable amounts. Inorder toassist us inour audit we involved valuation experts that
have theknowledge andexperience intheindustry andcountry ofoperation oftheun-
derlying CGUs toassist us inevaluating themethodology, models andassumptions used
invalue inuse calculations.
ForMD CGU, we evaluated whether thefair value less costs tosell approach ismore
appropriate than thevalue inuse approach todetermine theCGU’s recoverable amount
given thespecific circumstances oftheCGU. We further evaluated thework oftheva-
luation expert used bymanagement byassessing theexpert’s objectivity, competence
andcapabilities andthemethodology, model andinputs used.
Withrespect tothevalue inuse models used forPLP/FCT, ULCT andMLT Oy CGUs, we
challenged andevaluated thecomposition ofthefuture cash flow forecasts inthemodels
including comparing them tothelatest budgets approved bytheBoard ofDirectors.
We have also challenged andevaluated:
• management assumptions forthekey inputs, such asvolume andprice, andcom-
pared them tohistorical results, economic andindustry forecasts;
• thediscount rate applied tothese cash flows, byassessing theweighted average
cost ofcapital, andconsidering territory specific factors;
• themacroeconomic assumptions used bymanagement, bycomparing them tomarket
benchmarks andpublicly available information;
• theadequacy ofmanagement’s sensitivity calculations overtherecoverable amounts
oftheinvestments inPLP andMLT andtheassumptions that created themost variabil-
ity intheunderlying CGUs, being assumptions foraverage tariffs, handling volumes,
andtheterminal growth anddiscount rates.
We also performed look-back procedures bycomparing previous budgets used invalue
inuse calculations toactual results.
We evaluated theadequacy ofdisclosures, including disclosures about sensitivities
andmajor sources ofestimation uncertainty.
Nicosia
P.O. Box 21121, 1502
T.: +357 22 209000
F.: +357 22 678200
Paphos
P.O. Box 60288, 8101
T.: +357 26 943050
F.: +357 26 943062
Polis Chrysochous
P.O. Box 66014, 8330
T.: +357 26 322098
F.: +357 26 322722
Larnaca
P.O. Box 40075, 6300
T.: +357 24 200000
F.: +357 24 200200
Paralimni / Ayia Napa
P.O. Box 33200, 5311
T.: +357 23 820080
F.: +357 23 820084
KPMG Limited
Chartered Accountants
11, June 16th 1943 Street, 3022 Limassol, Cyprus
P.O.Box 50161, 3601 Limassol, Cyprus
T: +357 25 869000, F: +357 25 363842
KPMG Limited, a private company limited by shares, registered in Cyprus under registration number HE 132822 with its registered office at 14,
Esperidon Street, 1087, Nicosia, Cyprus.
59 60
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Other information
TheBoard ofDirectors isresponsible fortheother information. Theother information comprises theManagement Report.
Our opinion ontheseparate financial statements does not cover theother information andwe do not express anyform ofassurance conclusion thereon,
except asrequired bytheCompanies Law, Cap.113.
Inconnection withour audit oftheseparate financial statements, our responsibility istoread theother information and, indoing so, consider whether
theother information ismaterially inconsistent withtheseparate financial statements orour knowledge obtained intheaudit orotherwise appears
tobematerially misstated. If, based onthework we have performed, we conclude that there isamaterial misstatement ofthis other information, we
arerequired toreport that fact.
Withregards totheManagement Report, our report inthis regard ispresented inthe‘’Report onother legal requirements’’ section.
Responsibilities oftheBoard ofDirectors forandthose charged withgovernance fortheseparate
financial statements
TheBoard ofDirectors isresponsible forthepreparation ofseparate financial statements that giveatrue andfair view inaccordance withIFRS-EU
andtherequirements oftheCompanies Law, Cap. 113, andforsuch internal control astheBoard ofDirectors determines isnecessary toenable
thepreparation ofseparate financial statements that arefree frommaterial misstatement, whether due tofraud orerror.
Inpreparing theseparate financial statements, theBoard ofDirectors isresponsible forassessing theCompany’s ability tocontinue asagoing concern,
disclosing, asapplicable, matters related togoing concern andusing thegoing concern basis ofaccounting, unless there isanintention toeither liquidate
theCompany ortocease operations, orthere isno realistic alternative but todo so.
TheBoard ofDirectors andthose charged withgovernance areresponsible foroverseeing theCompany’s financial reporting process.
Auditors’ responsibilities fortheaudit oftheseparate financial statements
Our objectives aretoobtain reasonable assurance about whether theseparate financial statements asawhole arefree frommaterial misstatement,
whether due tofraud orerror, andtoissue anauditors’ report that includes our opinion. Reasonable assurance isahigh level ofassurance, but
isnotaguarantee that anaudit conducted inaccordance withISAs will always detectamaterial misstatement when it exists. Misstatements can arise
fromfraud orerror andareconsidered material if, individually orintheaggregate, they could reasonably beexpected toinfluence theeconomic
decisions ofusers taken onthebasis ofthese separate financial statements.
Aspart ofanaudit inaccordance withISAs, we exercise professional judgment andmaintain professional skepticism throughout theaudit. We also:
• Identify andassess therisks ofmaterial misstatement oftheseparate financial statements, whether due tofraud orerror, design andperform audit
procedures responsive tothose risks, andobtain audit evidence that issufficient andappropriate toprovideabasis forour opinion. Therisk ofnot
detectingamaterial misstatement resulting fromfraud ishigher than forone resulting fromerror, asfraudmay involve collusion, forgery, intentional
omissions, misrepresentations, ortheoverride ofinternal control.
• Obtain anunderstanding ofinternal control relevant totheaudit inorder todesign audit procedures that areappropriate inthecircumstances, but not
forthepurpose ofexpressing anopinion ontheeffectiveness oftheCompany’s internal control.
Auditors’ responsibilities fortheaudit oftheseparate financial statements (continued)
• Evaluate theappropriateness ofaccounting policies used andthereasonableness ofaccounting estimates andrelated disclosures made bytheBoard
ofDirectors.
• Conclude ontheappropriateness oftheBoard ofDirectors’ use ofthegoing concern basis ofaccounting and, based ontheaudit evidence obtained,
whetheramaterial uncertainty exists related toevents orconditions thatmay cast significant doubt ontheCompany’s ability tocontinue asagoing
concern. If we conclude thatamaterial uncertainty exists, we arerequired todraw attention inour auditors’ report totherelated disclosures
intheseparate financial statements or, if such disclosures areinadequate, tomodify our opinion. Our conclusions arebased ontheaudit evidence
obtained up tothedate ofour auditors’ report. However, future events orconditionsmay cause theCompany tocease tocontinue asagoing
concern.
• Evaluate theoverall presentation, structure andcontent oftheseparate financial statements, including thedisclosures, andwhether theseparate
financial statements represent theunderlying transactions andevents inamanner that achievesatrue andfair view.
We communicate withthose charged withgovernance regarding, among other matters, theplanned scope andtiming oftheaudit andsignificant audit
findings, including anysignificant deficiencies ininternal control that we identify during our audit.
We also provide those charged withgovernance withastatement that we have complied withrelevant ethical requirements regarding independence,
andtocommunicate withthem all relationships andother matters thatmay reasonably bethought tobear onour independence, andwhere applicable,
actions taken toeliminate threats orsafeguards applied.
From thematters communicated withthose charged withgovernance, we determine those matters that wereofmost significance intheaudit
oftheseparate financial statements ofthecurrent period andaretherefore thekey audit matters. We describe these matters inour auditors’ report.
Report onother legal requirements
Pursuant totheadditional requirements oftheAuditors Law 2017, L.53(I)/2017, asamended fromtime totime (‘’Law L.53(I)/2017’’), andbased
onthework undertaken inthecourse ofour audit, we report thefollowing:
• Inour opinion, theManagement Report, thepreparation ofwhich istheresponsibility oftheBoard ofDirectors, has been prepared inaccordance
withtherequirements oftheCompanies Law, Cap 113, andtheinformation given isconsistent withtheseparate financial statements.
• Inthelight oftheknowledge andunderstanding ofthebusiness andtheCompany’s environment obtained inthecourse oftheaudit, we have not
identified material misstatements inthemanagement report.
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Global Ports Investments PLC Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Other matters
Reporting responsibilities
This report, including theopinion, has been prepared forandonly fortheCompany’s members asabody inaccordance withSection 69ofLaw
L.53(I)/2017andforno other purpose. We do not, ingiving this opinion, accept orassume responsibility foranyother purpose ortoanyother person
towhose knowledge this reportmay come to.
Consolidated financial statements
We have reported separately ontheconsolidated financial statements oftheCompany andits subsidiaries fortheyear ended 31December 2021.
Comparative figures
Theseparate financial statements oftheCompany fortheyear ended 31December 2020wereaudited byanother auditor who expressed anunmodified
opinion onthose separate financial statements on5March 2021.
Theengagement partner ontheaudit resulting inthis independent auditors’ report isSylvia Loizides.
Certified Public Accountant andRegistered Auditor forandonbehalf of
KPMG Limited
Certified Public Accountants andRegistered Auditors
11 , 16
th
June 1943 Street
3022, Limassol
Cyprus
2March 2022
63
GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE
Global Ports Investments PLC
Additional information
Directors’ Responsibility Statement
We confirm that tothebest ofour knowledge:
This Annual Report includes afair, balanced andunderstandable 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
Terms that require definitions aremarked withcapital letters inthis
Report andthedefinitions ofwhich areprovided below inalphabetical
order. Thenon-IFRS financial measures defined below arepresented
assupplemental measures oftheGroup’s operating performance, which
theGroup uses askey performance indicators oftheGroup’s business
andtoprovideasupplemental tool toassist inevaluating current business
performance. TheGroup believes these metrics arefrequently used
bysecurities analysts, investors andother interested parties intheevaluation
ofcompanies intheRussian market andglobal ports sector. These
non-IFRS financial measures aremeasures oftheGroup’s operating
performance that arenot required by, orprepared inaccordance
with, IFRS. All ofthese non-IFRS financial measures have limitations
asanalytical tools, andinvestors should not consider anyone ofthem
inisolation, oranycombination ofthem together, asasubstitute foranalysis
oftheGroup’s operating results asreported under IFRS andshould
not beconsidered asalternatives torevenues, profit, operating profit,
oranyother measures ofperformance derived inaccordance withIFRS
orasalternatives tocash flow fromoperating activities orasmeasures
oftheGroup’s liquidity. Inparticular, thenon-IFRS financial measures
should not beconsidered asmeasures ofdiscretionary cash available
totheGroup businesses.
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.
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) isdefined asadministrative, selling andmarketing
expenses, adjusted for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.
Cash Cost ofSales (anon-IFRS financial measure) isdefined ascost
ofsales, adjusted for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.
CD Holding Group consists ofYanino Logistics Park (aninland terminal
inthevicinity ofSt. Petersburg) andCD Holding Oy. Theresults ofCD
Holding Group areaccounted intheGlobal Ports’ financial information
using equity method ofaccounting (proportionate share ofthenet profit
shown below Adjusted EBITDA).
Definitions
Consolidated Container Revenue isdefined asrevenue generated
fromcontainerised cargo services.
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the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 Eastern 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country.
TheGlobal Ports Group ownsa100% effective ownership interest
inFCT. Theresults ofFCT arefully consolidated.
Finnish Ports segment consists oftwo terminals inFinland, MLT Kotka
andMLT Helsinki (intheport ofVuosaari), ineach ofwhich CMA
Terminals currently hasa25% effective ownership interest. Theresults
oftheFinnish Ports segment areaccounted intheGlobal Ports’ financial
information using the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 net cash used ininvesting activities
andinterest paid onborrowings andlease liabilities.
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 and(b) fortheFinnish Ports segment, theEuro.
Gross Container Throughput represents the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 terminal– Yanino.
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Global Ports Investments PLC Annual Report 2021
High andHeavy 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.
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 theequity method ofaccounting
(proportionate share ofthe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, CMA Terminals currently hasa25% effective ownership
interest. Theresults ofMD areaccounted intheGlobal Ports’ financial
information using theequity method ofaccounting (proportionate share
ofthenet profit shown below EBITDA).
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 theadoption ofIFRS 16) andswap derivatives
less cash andcash equivalents andbank deposits withmaturity
over90days.
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.
Russian Ports segment consists oftheGlobal Ports Group’s interests
inPLP (100%), VSC (100%), FCT (100%), ULCT (80%) (inwhich Eurogate
currently hasa20% effective ownership interest), Moby Dik (75%),
Yanino (75%) (ineach ofMoby Dik andYanino, CMA Terminals 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 theequity method ofaccounting
(proportionate share ofthenet profit shown below EBITDA).
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, current andnon-current lease
liabilities (following theadoption ofIFRS 16) andswap derivatives.
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, write-off andimpairment
ofproperty, plant andequipment, less depreciation andimpairment
ofright-of-use assets, less amortisation, write-off 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.
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, CMA Terminals currently
hasa25% effective ownership interest. Theresults ofYLP areaccounted
intheGlobal Ports’ financial information using theequity method
ofaccounting (proportionate share ofthenet profit shown below
EBITDA).
Global Ports Investments PLC
Legal Address
Omirou 20
Agios Nikolaos CY-3095 Limassol, Cyprus
Postal Address
Christodoulides Business Centre, office No.31, 3rd floor
8 Alassias Street, CY-3095 Limassol, Cyprus
Investor Relations
Mikhail Grigoriev
Head ofCapital Markets andInvestor Relations
Tel: +78124594242
Mob: +79169917396
Tatiana Khansuvarova
Investor Relations Analyst
E-mail: ir@globalports.com
Media Relations
Margarita Potekhina
Head ofMedia Relations
Tel: +78124594242ext. 2889
Mob: +79219635427
E-mail: media@globalports.com
Depositary
J.P. Morgan Depositary Receipts
383 Madison Avenue, Floor
11 New York, NY 10179
www.adr.com/contact/jpmorgan
Stock Exchange
London Stock Exchange PLC
10 Paternoster Square, London EC4M 7LS, UK Tel:
+442077971000
www.londonstockexchange.com
Shareholder information
andkeycontacts
Independent Auditors
KPMG Limited
11, 16thJune 1943 Str.
3022 Limassol, Cyprus
Tel: +35725869000
Fax: +35725363842
Customer Service Department
Service Call Centre
Tel: +78123357777
88002012424
Е-mail: customer_service@globalports.com
Client portal
www.globalports.com
GP Tools client app
Google Play
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GLOBAL PORTS AT A GLANCE STRATEGIC REPORT CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Global Ports Investments PLC Annual Report 2021