NCC Group Limited and subsidiaries. Condensed Consolidated Interim Financial Information For the Six Months Ended 30 June 2013 (UNAUDITED)

Transcription

1 NCC Group Limited and subsidiaries Condensed Consolidated Interim Financial Information For the Six Months Ended 30 June 2013 (UNAUDITED)

2 TABLE OF CONTENTS Page STATEMENT OF MANAGEMENT S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONDENSED CONSOLIDATED 1 INDEPENDENT AUDITORS REPORT ON REVIEW OF INTERIM FINANCIAL 2 INFORMATION CONDENSED CONSOLIDATED AS OF AND : Condensed consolidated interim statement of comprehensive income and loss 3 Condensed consolidated interim statement of financial position 4 Condensed consolidated interim statement of changes in equity 5 Condensed consolidated interim statement of cash flows 6 Selected explanatory notes to the condensed consolidated interim financial information 7-20

3 STATEMENT OF MANAGEMENT S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONDENSED CONSOLIDATED Management is responsible for the preparation of the condensed consolidated interim financial information that present fairly in all material respects the consolidated interim financial position of NCC Group Limited and its subsidiaries (the Group ) as of 30 June 2013, the consolidated interim results of its operations, cash flows and changes in equity for the six months 30 June 2013, in compliance with International Accounting Standard 34 Interim Financial Reporting ( IAS 34 ). In preparing the condensed consolidated interim financial information, management is responsible for: Properly selecting and applying accounting policies; Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; Providing additional disclosures when compliance with the specific requirements in International Financial Reporting Standards ( IFRS ) are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group s consolidated financial position and financial performance; Making an assessment of the Group s ability to continue as a going concern. Management, within its competencies, is also responsible for: Designing, implementing and maintaining an effective and sound system of internal controls, throughout the Group; Maintaining adequate accounting records that are sufficient to show and explain the Group s transactions and disclose with reasonable accuracy at any time the consolidated financial position of the Group, and which enable them to ensure that the condensed consolidated interim financial information of the Group comply with IAS 34; Maintaining statutory accounting records for the Group s entities in compliance with the legislation and accounting standards of the Russian Federation and other jurisdictions in which the Group s entities are established and operates; Taking such steps as are reasonably available to them to safeguard the assets of the Group; and Preventing and detecting fraud and other irregularities. The accompanying condensed consolidated interim financial information of the Group for the six months 30 June 2013 was authorized for issue on 20 September 2013 by the Group s management. On behalf of the Board of Directors: 1

4 ZAO Deloitte & Touche CIS 5 Lesnaya Street Moscow, Russia Tel: +7 (495) Fax: +7 (495) INDEPENDENT AUDITORS REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To: Shareholders and the Board of Directors of NCC Group Limited Introduction We have reviewed the accompanying condensed consolidated interim statement of financial position of NCC Group Limited and its subsidiaries (the Group ) as of 30 June 2013 and the related condensed consolidated interim statements of comprehensive income and loss, changes in equity and cash flows for the six-month period then, and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with International Accounting Standard ( IAS ) 34, Interim Financial Reporting. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information is not prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting. 20 September 2013 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see for a detailed description of the legal structure of Deloitte CIS ZAO Deloitte & Touche CIS. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

5 CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME AND LOSS Notes 30 June June REVENUE 5 131, ,610 COST OF SALES 6 (36,753) (34,637) GROSS PROFIT 95,048 84,973 Selling, general and administrative expenses 7 (7,913) (7,678) Depreciation and amortization expenses (17,703) (14,646) Other (expenses)/income, net 8 (2,545) (5,087) Finance income 9 16,840 21,165 Finance costs 10 (62,892) (35,340) Foreign exchange loss, net (6,873) (2,373) PROFIT BEFORE INCOME TAX EXPENSE 13,962 41,014 INCOME TAX EXPENSE 11 (9,848) (10,436) PROFIT FOR THE PERIOD 4,114 30,578 Items to be subsequently reclassified to profit or loss: Exchange differences on translating foreign operations (25,237) (6,218) OTHER COMPREHENSIVE LOSS FOR THE PERIOD (25,237) (6,218) TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD (21,123) 24,360 PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO: Shareholders of the Parent 9,345 34,900 Non-controlling interest (5,231) (4,322) 4,114 30,578 Total comprehensive (loss)/income for the period attributable to: Shareholders of the Parent (16,750) 28,345 Non-controlling interest (4,373) (3,985) (21,123) 24,360 On behalf of the Board of Directors: The selected explanatory notes on pages 7 to 20 are an integral part of this condensed consolidated interim financial information. 3

6 CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2013 ASSETS Notes 30 June December NON-CURRENT ASSETS: Goodwill 13 98, ,127 Property, plant and equipment , ,478 Finance lease receivables 1,555 1,833 Loans receivable , ,271 Deferred tax assets 3, Other non-current assets 14 2,578 1,741 Total non-current assets 1,213,595 1,257,774 CURRENT ASSETS: Inventories 2,573 3,064 Trade and other receivables 15 24,321 19,844 Advances paid and prepaid expenses 2,289 3,306 Finance lease receivables Taxes reimbursable and prepaid ,807 Prepaid current income tax 44 2,404 Loans receivable and time deposits , ,988 Cash and cash equivalents 18 43,561 36,971 Total current assets 246, ,864 TOTAL ASSETS 1,460,098 1,482,638 EQUITY AND LIABILITIES SHAREHOLDERS EQUITY: Share capital 9 9 Share premium 294, ,995 Retained earnings 199, ,303 Foreign currency translation reserve (76,558) (50,463) Equity attributable to shareholders of the Parent 418, ,844 Non-controlling interest (12,602) (8,229) TOTAL SHAREHOLDERS EQUITY 405, ,615 NON-CURRENT LIABILITIES: Liability on currency and interest rate swap 24 29,211 - Loans and borrowings , ,706 Deferred tax liabilities 34,347 36,953 Long-term obligations under finance leases 1,851 2,094 Total non-current liabilities 942, ,753 CURRENT LIABILITIES: Trade and other payables 1,514 3,139 Loans and borrowings , ,035 Taxes payable 20 2,275 1,576 Current income tax payable 1,075 - Short-term obligations under finance leases Other current liabilities and accrued expenses 5,158 4,118 Total current liabilities 112, ,270 TOTAL LIABILITIES 1,054,309 1,052,023 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 1,460,098 1,482,638 On behalf of the Board of Directors: Director The selected explanatory notes on pages 7 to 20 are an integral part of this condensed consolidated interim financial information. 4

7 CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY Notes Share capital Share premium Retained earnings Foreign currency translation reserve Total shareholders equity Noncontrolling interest Total equity Balance as of 1 January 9 294, ,983 (68,174) 419,813 (1,547) 418,266 Profit/(loss) for the period ,900-34,900 (4,322) 30,578 Other comprehensive income/(loss) for the period (6,555) (6,555) 337 (6,218) Total comprehensive income/(loss) for the period ,900 (6,555) 28,345 (3,985) 24,360 Distribution to shareholders through dividends paid - - (15,000) - (15,000) - (15,000) Balance as of 30 June 9 294, ,883 (74,729) 433,158 (5,532) 427,626 Balance as of 1 January , ,303 (50,463) 438,844 (8,229) 430,615 Profit for the period - - 9,345-9,345 (5,231) 4,114 Other comprehensive (loss)/income for the period (26,095) (26,095) 858 (25,237) Total comprehensive income/(loss) for the period - - 9,345 (26,095) (16,750) (4,373) (21,123) Distribution to shareholders through acquisition of subsidiary from an entity under common control (Note 25) - - (3,099) - (3,099) - (3,099) Effect of initial recognition at fair value of loans receivable from shareholders (Note 16) - - (604) - (604) - (604) Balance as of 30 June , ,945 (76,558) 418,391 (12,602) 405,789 On behalf of the Board of Directors: The selected explanatory notes on pages 7 to 20 are an integral part of this condensed consolidated interim financial information. 5

8 CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS CASH FLOW FROM OPERATING ACTIVITIES 30 June June Receipts from customers 129, ,991 Other receipts 5,842 27,272 Payments to suppliers and employees (37,880) (37,678) Other payments (11,611) (14,852) Cash generated by operations 85,695 98,733 Interest paid (37,346) (34,285) Income tax paid (9,573) (15,781) Net cash generated by operating activities 38,776 48,667 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (5,270) (12,521) Acquisition of subsidiary under common control net of cash acquired 516 (237) Payments of loans given (17,015) (13,000) Interest received Net cash used in investing activities (21,522) (25,234) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 518,521 37,000 Principal payments on borrowings (525,130) (58,603) Payments for financial lease (318) (163) Dividends paid and other distributions to shareholders (Note 21, 25) (3,099) (15,000) Net cash used in financing activities (10,026) (36,766) Effect of foreign exchange rate changes (638) (1,760) NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS 7,228 (13,333) CASH AND CASH EQUIVALENTS, at the beginning of the period 36,971 60,388 CASH AND CASH EQUIVALENTS, at the end of the period 43,561 45,295 NON CASH TRANSACTIONS Property, plant and equipment acquired under finance lease - 2,957 On behalf of the Board of Directors: The selected explanatory notes on pages 7 to 20 are an integral part of this condensed consolidated interim financial information. 6

9 1. NATURE OF BUSINESS First Quantum Holding Limited was incorporated in Cyprus as a limited liability company on 2 August The company s name was changed to NCC Group Limited (the Company ) on 26 January NCC Group Limited and its subsidiaries (the Group ) operate container terminals in the Russian Federation and provide cargo handling, stevedoring, container storage and rental, and related port services and facilities. The legal address of NCC Group Limited is Thermopylon, 8, Paliometocho, P.C. 2682, Nicosia, Cyprus. The main operating facilities of the Group are located in Saint-Petersburg, the Russian Federation. The Directors of the Parent during six months 30 June 2013 were Max Ferdinand Gross and Vadim Kryukov. No changes in Group structure occurred during six months 30 June 2013, except the acquisition of insignificant subsidiary from an entity under common control as described in Note ADOPTION OF NEW AND REVISED STANDARDS IFRS 13 Fair Value Measurement IFRS 13 Fair Value Measurement establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures amount fair value measurements, except in specified circumstances. Application of IFRS 13 resulted in more extensive disclosures in the financial statements (Note 24). IAS 19 (as revised in 2011) Employee Benefits The amendments to IAS 19 Employee Benefits change the accounting for defined benefit plans and termination benefits and a definition of short-term benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur and hence eliminate the corridor approach permitted under the previous version of IAS 19 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus. Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a net-interest amount, which is calculated by applying the discount rate to the net defined benefit liability or asset. Application of the Amendments to IAS 19 did not result in significant changes to the Group s interim consolidated financial statements. 7

10 Amendments to IAS 1 Presentation of Financial Statements Presentation of Items of Other Comprehensive Income The Group has applied the amendments to IAS 1 Presentation of Financial Statements Presentation of Items of Other Comprehensive Income. The amendments require items of other comprehensive income to be grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis. Application of the amendments resulted in minor disclosure changes in the Group s interim consolidated financial statements. Application of these amendments did not result in significant changes to the Group s financial position or results of operations. Several other amendments including am IFRS 7 Financial Instruments: Disclosures Disclosures Offsetting Financial Assets and Financial Liabilities and amendments resulting from Annual Improvements to IFRSs ( cycle) were applied for the first time in these interim consolidated financial statements. Application of these amendments did not result in significant changes to the Group s financial position or results of operations. The Annual Improvements to IFRSs Cycle include a number of amendments to various IFRSs as follows: Amendments to IAS 32 Financial Instruments : Presentation clarify that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction should be accounted for in accordance with IAS 12 Income Taxes. Amendments to IAS 16 Property Plant and Equipment clarify that major spare parts and servicing equipment that meet the definition of property plant and equipment are not inventory. Amendments to IAS 34 Interim Financial Reporting align the disclosure requirements for total segment assets with total segment liabilities in interim financial statements and also align certain interim disclosures with annual disclosures. IFRS and IFRIC interpretations not yet effective Below is a list of new and revised IFRSs that have been issued but are not yet mandatorily effective and have not been adopted and disclosed in the Group s condensed consolidated interim financial information: IAS 36 Recoverable amount disclosures for non-financial assets (effective 1 Jan 2014); IAS 39 Novation of derivatives and continuation of hedge accounting (effective 1 Jan 2014); IFRIC 21 Levies (effective 1 Jan 2014). 3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Statement of compliance This condensed consolidated interim financial information for the six months 30 June 2013 (the condensed consolidated financial information ) has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. Accounting policies The accounting policies applied are consistent with those adopted and disclosed in the Group s financial statements for the year 31 December, with the exception of certain amendments to accounting standards or new interpretations issued by the International Accounting Standards Board, which were applicable from 1 January 2013 and are noted for accounting policy changes above. 8

11 Foreign currencies The individual interim financial information of each of the Group s entities is prepared in the currency of the primary economic environment in which the entity operates (its functional currency). The functional currency for Russian subsidiaries of the Group is the Russian Ruble ( RUB ), and for Cypriot and British Virgin Islands ( BVI ) subsidiaries, it is the United States Dollar ( USD ). For purposes of the condensed consolidated interim financial information, the results and financial position of each Group s entity are presented in USD, which is the functional currency of the Parent and the presentation currency for the condensed consolidated interim financial information. For translation of foreign operations into presentation currency the Group used the following exchange rates: RUB/USD exchange rates Closing rate Average rate for the period 30 June Year 31 December June Acquisitions from entities under common control as described in Note 25, there has been business combination arising from transfer of interests in entities that are under the control of the shareholders that controls the Group. The assets and liabilities of subsidiaries acquired from entities under common control are recorded in these consolidated financial statements at pre-acquisition carrying values. Any difference between the carrying value of net assets of these subsidiaries and the consideration paid by the Group is accounted for in these consolidated financial statements as an adjustment to equity. The results of the acquired entities are reflected as though the acquisition had occurred at the beginning of the earliest period presented, unless they are immaterial. Derivative financial instruments The Group enters into derivative financial instrument arrangements to manage its exposure to interest rate and foreign exchange rate risks, including interest rate and cross currency swaps and such instruments are not designated as hedges. Further details of derivative financial instruments are disclosed in Note 24. Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately. 4. SEASONALITY The Group s sales are the subject to seasonal fluctuations. The major revenue-generating activities are carried in St. Petersburg sea port. Accordingly, during winter months the volume of Group s operations decreases due to adverse weather conditions in St. Petersburg. 5. REVENUE During the six months 30 June 2013 and revenue was as follows: 30 June June Cargo, handling and storage services 124, ,558 Rental income (Note 22) 2,928 2,845 Other 4,377 1,207 Total 131, ,610 9

12 The major factors of revenue increase during six months 2013 were the following: Expansion of operating activity of one of major subsidiary OJSC ULCT as new terminal in Ust-Luga port was just put in use in December 2011 and 2013 was the second year of its operation that leads to growth of revenue from cargo, handling and storage services during the six months 2013 in comparison with the six months. ULCT's throughput grew by 9 times within January-June 2013 as compared to January-June. The volume handled by FCT increased by 3%. The growth at NCC Group terminals, CJSC FCT and OJSC ULCT together, was 6,5% within the six months of 2013 compared with the same period of. 6. COST OF SALES During the six months 30 June 2013 and cost of sales was as follows: 30 June June Staff costs and related taxes 17,186 15,417 Property insurance 6,078 4,982 Inventory costs 4,967 4,736 Services 4,559 5,650 Rent 2,453 2,634 Repair and maintenance Other expenses Total 36,753 34, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES During the six months 30 June 2013 and selling, general and administrative expenses were as follows: 30 June June Staff costs and related taxes 4,986 5,231 Consulting services Rent Other third parties services Bank charges Repairs and maintenance Communication expenses Other expenses Total 7,913 7,678 10

13 8. OTHER (EXPENSES)/INCOME, NET During the six months 30 June 2013 and other income and expenses were as follows: 30 June June Taxes other than income tax (2,087) (3,771) Loss on disposal of property, plant and equipment (87) (840) Other (expenses)/income, net (371) (476) Total (2,545) (5,087) 9. FINANCE INCOME During the six months 30 June 2013 and finance income was as follows: 30 June June Interest income on loans due from related parties (Note 21) 16,620 20,634 Interest income on bank deposits Total 16,840 21, FINANCE COSTS During the six months 30 June 2013 and finance costs were as follows: 30 June June Interest expense on bank loans and loans due to third parties 33,963 33,541 Interest expense on borrowings due to related parties (Note 21) 1,332 1,799 Unrealized loss on interest rate and cross currency swap fair value (Note 24) 29,211 - Realized gain on interest rate and cross currency swap settlements (1,614) - Total 62,892 35, INCOME TAXES Tax for the six months 30 June 2013 is charged at 70.53% (six months 30 June : 25.44%; year 31 December : 25.78%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period. The difference between income tax expense reported in the accompanying condensed consolidated interim financial information and income before tax for the six months 30 June 2013, multiplied by the Russian statutory tax rate, is mainly due to non-deductibility of certain expenses for income tax purposes and accumulation of additional tax losses of USD 4,122 thousand by OJSC ULCT for which no deferred tax assets have been recognized. 11

14 12. PROPERTY, PLANT AND EQUIPMENT As of 30 June 2013, 31 December, 30 June and 31 December 2011 property, plant and equipment, net of accumulated depreciation, was as follows: Land and buildings Machinery and equipment Transportation vehicles Other Construction-inprogress Total Cost as of 31 December 359, ,943 3,366 2,310 63, ,761 Additions during the period ,530 4,027 Transfers from construction-inprogress 11, (11,768) - Reclassification to other noncurrent assets (Note 14) (990) (990) Disposals during the period (8) (1,322) (9) (10) (106) (1,455) Translation difference (26,257) (17,492) (219) (173) (4,055) (48,196) Cost as of 30 June , ,535 3,201 2,177 50, ,147 Accumulated depreciation as of 31 December (32,935) (58,247) (1,690) (1,411) - (94,283) Charge for the period (8,216) (9,115) (236) (136) - (17,703) Eliminated on disposal 1 1, ,358 Translation difference 2,778 4, ,583 Accumulated depreciation as of 30 June 2013 (38,372) (61,473) (1,788) (1,412) - (103,045) Carrying value as of 31 December 326, ,696 1, , ,478 Carrying value as of 30 June , ,062 1, , ,102 Cost as of 31 December , ,265 2,645 2, , ,348 Additions during the period 5 3, ,431 20,781 Transfers from construction-inprogress 24,009 6, (30,988) - Disposals during the piod - (1,753) (149) (2) (597) (2,501) Translation difference (6,766) (4,824) (87) (78) (1,096) (12,851) Cost as of 30 June 292, ,221 3,109 2,096 94, ,777 Accumulated depreciation as of 31 December 2011 (19,725) (36,235) (1,295) (1,049) - (58,304) Charge for the period (5,516) (8,709) (248) (173) - (14,646) Eliminated on disposal Translation difference 596 1, ,877 Accumulated depreciation as of 30 June (24,645) (43,038) (1,368) (1,188) - (70,239) Carrying value as of 31 December , ,030 1,350 1, , ,044 Carrying value as of 30 June 267, ,183 1, , ,538 12

15 Assets pledged as collateral The carrying value of property, plant and equipment that was pledged to secure loans and borrowings granted to the Group as of 30 June 2013 was USD 149,470 thousand (31 December : USD 246,734 thousand) (Note 19). For the six months 30 June 2013 and 30 June borrowing costs of USD 134 thousand and USD 2,140 thousand, respectively, were capitalized to construction-in-progress. 13. GOODWILL As of 30 June 2013 and 31 December goodwill was as follows: 30 June December Carrying amount of goodwill allocated to each CGU CJSC First Container Terminal 98, ,127 Total 98, ,127 Cost Balance at the beginning of the six months period 106,127 98,223 Effect of foreign currency exchange differences (7,580) 7,904 Balance at the end of the six months period 98, , OTHER NON-CURRENT ASSETS As of 30 June 2013 and 31 December other non-current assets were as follows: 30 June December Spare parts for machinery and equipment 1,089 - Prepaid rent expenses (leasehold improvement) 933 1,390 Value added tax reimbursable Other Total 2,578 1,741 Prepaid rent expenses represent prepayments made by OJSC ULCT for a long-term operating land lease. 15. TRADE AND OTHER RECEIVABLES As of 30 June 2013 and 31 December trade and other receivables were as follows: 30 June December Trade receivables 24,145 19,641 Other receivables Total 24,321 19,844 13

16 16. CURRENT AND NON-CURRENT LOANS RECEIVABLE Non-current loans receivable represent a loan provided by CJSC First Container Terminal to Perlen Holding Ltd in the total amount of USD 650,000 thousand measured at amortized cost using effective interest rate of 5.13% per annum and interest payable at the repayment date of the loan. The loan s maturity date is 15 July No interest is accrued on the amount of unpaid interest. Current loans receivable represent two equal loans given to Perlen Holding Ltd and FQ International Ltd at interest rate of 0.25% and maturity 31 December The fair value of these loans as of origination date was determined using fair market rate of 5.8% (effective interest rate for subsequent measurement of the loans). For the six month 30 June 2013 two additional tranches of USD 8,500 thousand each at 0.25% per annum were provided to Perlen Holding Ltd and FQ International Ltd within the existing loan agreements maturing 31 December 2013 and accounted for at amortised cost using effective interest rate of 6.9% with net effect on initial recognition at fair value (estimated using discounting cash flow technique) recognised in equity, net of income tax effect, in the amount of USD 604 thousand. 17. TAXES REIMBURSABLE AND PREPAID As of 30 June 2013 and 31 December taxes reimbursable and prepaid were as follows: 30 June December Value added tax reimbursable 958 3,034 Taxes other than corporate income tax Total 976 3, CASH AND CASH EQUIVALENTS As of 30 June 2013 and 31 December cash and cash equivalents were as follows: 30 June December Cash on current accounts in banks 40,374 16,564 Deposits in banks ( % interest rate with original maturity less than 3 months) 3,175 20,387 Cash on hand Total 43,561 36,971 14

17 19. LOANS AND BORROWINGS As of 30 June 2013 and 31 December borrowings were as follows: Currency Interest rates 30 June 2013 Interest rates 31 December Short-term borrowings Secured Short-term borrowings third parties RUB 10.5% % 690 Short-term borrowings third parties EUR 3.2% 12, % 13,288 Short-term borrowings third parties USD 4.2% 64, % 259,664 Total secured short-term borrowings 77, ,642 Unsecured Short-term borrowings related parties (Note 21) USD nil % 135 Short-term borrowings third parties USD 5.7% 24, % 29,258 Total unsecured short-term borrowings 24,715 29,393 Total short-term borrowings 101, ,035 Long-term borrowings Secured Long-term borrowings third parties RUB 10.5% 196, % 211,191 Long-term borrowings third parties EUR 3.2% 2, % 8,164 Long-term borrowings third parties USD 6.8% 632, % 437,420 Total secured long-term borrowings 831, ,775 Unsecured Long-term borrowings third parties USD 8.8% 45, % 43,931 Total unsecured long-term borrowings 45,648 43,931 Total long-term borrowings 876, ,706 Total 978,468 1,003,741 In May 2013, NCC Group refinanced its existing loan facility from one of Russian banks with a principal amount of USD 288 million, effectively extending the maturity to 2020 and making some of the financial covenants more favorable to the borrower. The terms of the new loan provide for repayments to begin in 2017, with the majority of repayments falling due in 2018 and In June 2013 the Group entered into loan agreement with one of Russian banks for the amount of USD 230 million with final maturity in The loan was used to refinance existing loans in order to provide a better repayment schedule and more favorable covenant requirements for the Group. The terms of the loan provide for repayments to begin in 2017, with the majority of repayments falling due in 2018 and

18 As of 30 June 2013, borrowings were secured by: Property, plant and equipment of CJSC FCT, OJSC ULCT with a carrying value of USD 149,470 thousand (: USD 246,734 thousand). 0% of the CJSC Logistika-Terminal shares (: 100% of the CJSC Logistika-Terminal shares); 65% (plus 1 share) of the CJSC FCT shares (: 90% (plus 1 share) of the CJSC FCT shares); 30% (plus 2 shares) of the OJSC ULCT shares (: 60% of the OJSC ULCT shares). Subsequently to 30 June 2013 the Group additionally provided as collateral 25% (plus 1 share) of CJSC FCT shares. As of 30 June 2013 all borrowings provided by minority shareholder of OJSC ULCT with off-market interest rates have been stated at amortized cost using effective interest rate of 7.21%, based on estimates of market rates on initial recognition. The majority of Group's borrowings contain covenants imposed on the Company and certain subsidiaries of the Group. The borrowing agreements require the borrower to comply with certain general and financial covenants and reporting requirements. The general covenants include maintaining a certain level of borrowings, revenue turnover through bank account, and cash outflows, and the financial covenants include maintaining certain levels of liquidity, profitability, efficiency, debt coverage, and net assets ratios. As of 30 June 2013 the Group was in compliance of all debt covenants. 20. TAXES PAYABLE As of 30 June 2013 and 31 December taxes payable were as follows: 30 June December Value added tax payable Other taxes 1,967 1,516 Total 2,275 1,576 16

19 21. RELATED PARTY TRANSACTIONS AND OUTSTANDING BALANCES During the six months 30 June 2013 and the Group entered into the following transactions with related parties that are not part of the Group: Type of relationship Nature of Transaction 30 June June Companies controlled by the same shareholders as the Group Shareholders of NCC Group Management services rendered 2, Cargo, handling and storage services rendered Resale of goods Rental income IT services acquired (518) (473) Rental expenses* (316) (264) Other goods and services acquired (29) (97) Interest income: nominal and effect of discounting 3 - Interest income: nominal and effect of discounting 16,620 20,634 Nominal and effect of discounting (1,332) (1,799) Dividends and other distributions to Shareholders 3,099 15,000 * These amounts have been omitted in the condensed consolidated financial information for the six months 30 June and respective disclosure has been appropriately corrected herein. As of 30 June 2013 and 31 December balances due to or from related parties were as follows: Type of relationship Type of balances 30 June December Companies controlled by the same shareholders as the Group Shareholders of NCC Group Trade and other receivables from cargo, handling and storage services rendered 5,139 4,368 Trade and other receivables from management services rendered 21 - Trade and other receivables from rent Trade and other payables due to related parties Borrowings from related parties Loans receivable from related parties 755, ,259 No allowances against loans receivable or trade and other receivables from related parties were created during the six months 30 June 2013 and. Short-term employee benefits to key management personnel for the six months 30 June 2013 was USD 992 thousand (for the six months 30 June : USD 1,138 thousand). 22. COMMITMENTS AND CONTINGENCIES Capital commitments The Group entered into a number of contracts in connection with the construction of container terminals and the expansion of existing facilities during the period. Outstanding commitments in respect of these contracts as of 30 June 2013 amounted to USD 10 million (31 December : USD 16 million). 17

20 Operating leases Group as a lessee The Group leases certain equipment and office premises. Future minimum rental payments under non-cancellable operating leases at the reporting date are as follows: 30 June December Not later than one year 3,354 3,778 Later than one year and not later than five years 11,529 12,595 Later than five years 69,061 76,546 83,944 92,919 Operating leases Group as a lessor The Group leases certain non-residential premises and land plots. Rental income earned by the Group from its leased property is set out in Note 5. The respective operating lease arrangements are mostly cancellable and have an average life of about one year. Non-cancellable arrangements have terms from 1 to 5 years. Future minimum lease receivables under non-cancellable operating leases at the reporting date are as follows: 30 June December Not later than one year 2,615 3,148 Later than one year and not later than five years 1,617 3,301 4,232 6, FINANCIAL INSTRUMENTS The Group's Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk, and liquidity risk. There have been no changes in risk management policies since year end. 18

21 24. FAIR VALUE The fair values of financial assets and financial liabilities are determined as described in the Group s annual consolidated financial statements for. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurement are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Except as detailed in the following table, the management considers that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values. 30 June December Financial liabilities Carrying amount Fair value Carrying amount Fair value Borrowings from third parties 978, ,336 1,003,606 1,015,371 Total financial liabilities 978, ,336 1,003,606 1,015,371 The estimation of the above financial instruments fair value was made in accordance with valuation pricing models based on discounted cash flow analysis using market inputs and management judgments given high volatility of interest rates available on the market within the six months 30 June 2013 and year 31 December. For the third party borrowings, the fair value using level 2 inputs was calculated using market rates based on the range from 4.78% to 6.93% (31 December : average 5.26%) per annum interest rate under which the Group could get financing based on currency and maturity diversification. Certain of the Group's financial instruments as outlined below are measured at fair value at the end of reporting period. The following table gives information about how the fair values of these financial instruments are determined (in particular, the valuation technique and inputs used). There were no transfers between fair value hierarchy levels within the six months 30 June 2013 and year 31 December. 19

22 In March 2013, NCC Group also entered into a swap arrangement (the Swap Arrangement ) with an affiliate of one of Russian banks to swap the payments under a Rouble-denominated loan into US dollars and to swap the floating rate of interest on that loan to a fixed rate. This arrangement was entered into to fix the interest costs under the relevant loan and to manage NCC Group s Rouble currency exposure as its revenues are largely in US dollars. Financial assets/ financial liabilities Fair value as of 30 June 2013 Fair value hierarchy Valuation technique and key inputs Significant unobservable inputs Relationship of unobservable inputs to fair value Currency and interest rate swap (see Note 10) Liabilities (not designated for hedging) USD 29,211 thousand Level 2 Discounted cash flow. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of counterparties, and forward interest rates (from observable yield curves at the end of the reporting period) and contract interest rates, discounted at a rate that reflects the credit risk of counterparties. N/a N/a 25. ACQUISITION OF SUBSIDIARY FROM AN ENTITY UNDER COMMON CONTROL On 4 April 2013 CJSC Logistica-Terminal acquired 100% share in equity of LLC Rolis, a software development company, controlled by the Group s shareholders, for a cash consideration of USD 3.5 million. At the acquisition date the net assets of LLC Rolis amounted to USD 401 thousand. The excess amount of consideration paid over the current value of net assets for USD 3,099 thousand has been recorded as distribution to shareholders. 26. EVENTS SUBSEQUENT TO THE REPORTING DATE On 1 September 2013 shareholders of NCC Group Limited librinio Establishment Limited and Polozio Enterprises Limited have entered into binding arrangements with GLOBAL PORTS INVESTMENTS PLC to sell 100% of the share capital of NCC Group Limited for a cash consideration of USD 291 million and new shares representing approximately 18% of the enlarged share capital of Global Ports Group to be issued to Ilibrinio Establishment Limited and Polozio Enterprises Limited in equal proportions. On 28 August 2013 NCC Group Limited acquired 100% share in equity of LLC Baltcontainer, controlled by the Group s shareholders for USD APPROVAL OF CONDENSED CONSOLIDATED This condensed consolidated interim financial information was approved by the Board of Directors and authorised for issue on 20 September