Global Ports Investments Plc. Interim condensed consolidated financial information (unaudited) for the six month period ended 30 June 2016

Transcription

1 Interim condensed consolidated financial information (unaudited) for the six month period ended 30 June 2016

2 Table of contents Interim condensed consolidated income statement... 3 Interim condensed consolidated statement of comprehensive income... 4 Interim condensed consolidated balance sheet... 5 Interim condensed consolidated statement of cash flows... 6 Interim condensed consolidated statement of changes in equity... 7 Notes to the interim condensed consolidated financial information General information Basis of preparation Accounting policies Estimates Financial risk management Seasonality of operations Segmental information Expenses by nature Other losses net Finance income/(costs) - net Income tax Property, plant and equipment and intangible assets Trade and other receivables Dividends Borrowings Derivative financial instruments Trade and other payables Investments in joint ventures Earnings per share Related party transactions Events after the reporting period Independent Auditor s Review Report

3 Interim condensed consolidated income statement Six month period ended 30 June Note Revenue 7 163, ,329 Cost of sales 8 (55,057) (116,272) incl. impairment of property, plant and equipment - (46,686) Gross profit 108,650 98,057 Administrative, selling and marketing expenses 8 (19,415) (21,384) Share of profit/(loss) of joint ventures accounted for using the equity method 18 2,241 4,541 Other losses - net 9 (31,265) (7,014) Operating profit 60,211 74,200 Finance income Finance costs (44,987) (36,059) Change in fair value of derivative financial instruments 30,209 - Net foreign exchange gains on financing activities 106,910 6,146 Finance income/(costs) - net 10 92,649 (28,998) Profit before income tax 152,860 45,202 Income tax expense 11 (39,440) (19,768) Profit for the period 113,420 25,434 Profit attributable to: Owners of the Company 113,287 34,744 Non-controlling interests 133 (9,310) 113,420 25,434 Basic and diluted earnings per share for profit attributable to the owners of the Company during the period (expressed in US$ per share) The notes on pages 9 to 37 are an integral part of this interim condensed consolidated financial information. 3

4 Interim condensed consolidated statement of comprehensive income Six month period ended 30 June Note Profit for the period 113,420 25,434 Other comprehensive income/(loss): Items that may be reclassified subsequently to profit or loss Currency translation differences 6,094 12,128 Currency translation differences - joint ventures accounted for using the equity method 18 6,654 (10,688) Fair value gains on cash flow hedge - 7,057 Reclassification to income statement of a loss on cash flow hedge termination 16 29,839 - Reclassification to currency translation reserve of a loss on cash flow hedge termination 16 1,334 - Reclassification of realised gains on cash flow hedge to income statement 16 - (3,596) Total items that may be reclassified subsequently to profit or loss 43,921 4,901 Items that may not be reclassified subsequently to profit or loss Currency translation differences attributable to noncontrolling interest 1, Total items that may not be reclassified subsequently to profit or loss 1, Other comprehensive income/(loss) for the period, net of tax 45,702 5,266 Total comprehensive income/(loss) for the period 159,122 30,700 Total comprehensive income/(loss) for the period attributable to: Owners of the Company 157,208 39,645 Non-controlling interests 1,914 (8,945) 159,122 30,700 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 9 to 37 are an integral part of this interim condensed consolidated financial information. 4

5 Interim condensed consolidated balance sheet As at Note 30 June December 2015 ASSETS Non-current assets 1,501,317 1,360,300 Property, plant and equipment , ,145 Intangible assets , ,686 Investments in joint ventures , ,815 Prepayments for property, plant and equipment 5,130 3,357 Deferred tax assets 51,483 66,021 Derivative financial instruments 16 11,326 - Trade and other receivables 13 6,580 1,276 Current assets 183, ,478 Inventories 4,356 3,825 Derivative financial instruments 16 15,795 - Trade and other receivables 13 35,917 29,800 Income tax receivable 7,855 2,718 Cash and cash equivalents 119, ,135 TOTAL ASSETS 1,684,440 1,519,778 EQUITY AND LIABILITIES TOTAL EQUITY 331, ,932 Equity attributable to the owners of the Company 315, ,701 Share capital 57,317 57,317 Share premium 923, ,511 Capital contribution 101, ,300 Currency translation reserve (822,187) (834,935) Cash flow hedge reserve (87,609) (118,782) Transactions with non-controlling interest (209,122) (209,122) Retained earnings 352, ,412 Non-controlling interest 15,145 13,231 TOTAL LIABILITIES 1,353,386 1,347,846 Non-current liabilities 1,230,079 1,217,605 Borrowings 15 1,058,657 1,062,371 Derivative financial instruments 16 2,450 5,360 Deferred tax liabilities 168, ,874 Current liabilities 123, ,241 Borrowings 15 92, ,029 Trade and other payables 17 30,280 26,897 Current income tax liabilities TOTAL EQUITY AND LIABILITIES 1,684,440 1,519,778 The notes on pages 9 to 37 are an integral part of this interim condensed consolidated financial information. 5

6 Interim condensed consolidated statement of cash flows Six month period ended 30 June Note Cash flows from operating activities Cash generated from operations 114, ,424 Dividends received from joint ventures 18 3,181 7,499 Tax paid (21,861) (26,968) Net cash from operating activities 95, ,955 Cash flows from investing activities Purchases of intangible assets 12 (69) (94) Purchases of property, plant and equipment 7 (4,575) (4,717) Proceeds from sale of property, plant and equipment 325 3,449 Loans granted to related parties 20(g) (6,950) (3,470) Loan repayments received from related parties 20(g) Interest received from third parties, bank balances and deposits Investment in bank deposits with maturity over 90 days Net cash used in investing activities (10,481) (3,604) Cash flows from financing activities Proceeds from borrowings ,934 - Repayments of borrowings 15 (538,007) (52,178) Finance lease principal payments to third parties 15 (1,257) (3,169) Proceeds from derivative financial instruments not used for hedging* 16 2,667 - Interest paid 15 (33,494) (35,929) Net cash used in financing activities (84,157) (91,276) Net increase in cash and bank overdrafts 1,030 39,075 Cash and bank overdrafts at beginning of the period 123,135 78,808 Exchange losses on cash and bank overdrafts (4,965) (510) Cash and bank overdrafts at end of the period 119, ,373 *The whole amount represents the interest component of swap instruments. The notes on pages 9 to 37 are an integral part of this interim condensed consolidated financial information. 6

7 Interim condensed consolidated statement of changes in equity Note Share capital Share premium Attributable to the owners of the Company Cash Transactions Currency flow with noncontrolling Capital translation hedge contribution reserve reserve interest Retained earnings Total Noncontrolling interest Total Balance at 1 January , , ,300 (834,935) (118,782) (209,122) 239, ,701 13, ,932 Total other comprehensive income ,748 31, ,921 1,781 45,702 Profit/(loss) for the period , , ,420 Total comprehensive income for the six month period ended 30 June ,748 31, , ,208 1, ,122 Balance at 30 June , , ,300 (822,187) (87,609) (209,122) 352, ,909 15, ,054 The notes on pages 9 to 37 are an integral part of this interim condensed consolidated financial information. 7

8 Interim condensed consolidated statement of changes in equity Note Share capital Share premium Attributable to the owners of the Company Cash Transactions Currency flow with noncontrolling Capital translation hedge contribution reserve reserve interest Retained earnings Total Noncontrolling interest Total Balance at 1 January , , ,300 (686,761) (84,479) (209,122) 264, ,316 25, ,727 Total other comprehensive income ,440 3, , ,266 Profit/(loss) for the period ,744 34,744 (9,310) 25,434 Total comprehensive income for the six month period ended 30 June ,440 3,461-34,744 39,645 (8,945) 30,700 Balance at 30 June , , ,300 (685,321) (81,018) (209,122) 299, ,961 16, ,427 The notes on pages 9 to 37 are an integral part of this interim condensed consolidated financial information. 8

9 Notes to the interim condensed consolidated financial information 1. General information Country of incorporation (hereinafter the Company ) was incorporated and domiciled in Cyprus on 29 February 2008 as a private limited liability company in accordance with the provisions of the Companies Law, Cap The address of the Company's registered office is 20, Omirou Avenue, 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 and the Company was converted into a public limited liability company in accordance with the provisions of the Companies Law, Cap 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. 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 oil products terminals in Russia and the Baltics. 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, First Container Terminal, Ust-Luga Container Terminal and Moby Dik in St. Petersburg and Ust-Luga port cluster, and Vostochnaya Stevedoring Company in Port of Vostochny, - two container terminals in Finland Multi-Link Terminals Helsinki and Multi-Link Terminals Kotka, - inland Yanino Logistics Park and inland Logistika-Terminal, both located in the vicinity of St. Petersburg, - oil product terminal AS Vopak E.O.S. that is located in Estonia. See also Note 5 of the annual consolidated financial statements for the year ended 31 December 2015 for the description of segmental information of the Group. The Company fully controls all of the above terminals except as described below: - MLT and CD Holding groups are joint ventures with Container Finance Ltd OY where the Company has 75% effective ownership interest. Moby Dik (a container terminal in the vicinity of St-Petersburg) and Multi-Link Terminals Ltd Oy (terminal operator in Vuosaari (near Helsinki, Finland) and Kotka, Finland) constitute the MLT group. Yanino Logistics Park (an inland terminal in the vicinity of St-Petersburg), CD Holding and some other entities constitute CD Holding group. 9

10 1. General information (continued) - AS Vopak E.O.S. and its subsidiaries (VEOS) is a joint venture with Royal Vopak, world's largest independent tank storage provider, specialized in the storage and handling of liquid chemicals, gasses and oil products, where the Company has 50% effective ownership interest (Note 18). VEOS facilities are located in Estonia. - Ust-Luga Container Terminal (located in Ust-Luga, North-West Russia) is a 80% subsidiary where Eurogate, one of the leading container terminal operator in Europe has 20% noncontrolling interest. Approval of the interim condensed consolidated financial information This interim condensed consolidated financial information was approved for issue by the Board of Directors on 8 September This interim condensed consolidated financial information has been reviewed by the external auditors of the Company, not audited. 2. Basis of preparation This interim condensed consolidated financial information for the six month period ended 30 June 2016 has been prepared in accordance with IFRS as adopted by the European Union (EU) applicable to interim financial reporting (International Accounting Standard 34 Interim Financial Reporting ). The interim condensed consolidated financial information should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2015 which have been prepared in accordance with IFRS as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap Accounting policies The accounting policies adopted are consistent with those of the previous financial year, except as described below: Taxes on income Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected annual earnings for each material tax jurisdiction and applied individually to the interim period pre-tax income of the relevant jurisdiction. Adjustments due to changes in estimates of prior year taxes are not taken into account in the calculation of the estimated average annual tax rate but are charged in full in the period in which it becomes probable that such adjustment is needed. New and amended standards adopted and not yet adopted by the Group The Group 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 This adoption did not have a material effect on the accounting policies of the Group. After the Group has published its last annual consolidated financial statements for the year ended 31 December 2015 till to date, there are no any new standards and interpretations issued that could have a material impact on the accounting policies of the Group. 10

11 4. Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. Impairment or reversal of impairment The Group follows its accounting policies to test goodwill and other non-financial assets for possible impairment or reversal of impairment. In the course of the preparation of the interim condensed financial information for the six month period ended 30 June 2016 forecasts used for estimating discounted future cash flows for impairment testing purposes have been updated. For all CGUs, except for ULCT, cash flow projections cover a period of five years based on the assumptions of the next 12 months. In case of ULCT cash flow projections cover eight year period reflecting the fact that this terminal started its operations recently and still remains in its ramp-up stage. Cash flows beyond that five-year (nine-year period in case of ULCT) 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 a terminal growth rate of 3% has been applied (2015: 3%). For projections prepared for VEOS CGU a terminal growth rate of 2% was applied (2015: 2%). The discount rate applied for Russian ports CGUs in projections prepared as at 30 June 2016 is 12.1% (2015: 12.1%) and for VEOS the discount rate is 9.1% (2015: 9.1%). Key assumptions for all CGUs 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. The growth rates for VEOS revenues are conservatively estimated to be very moderate in view of the competitive environment. For CGUs in the Russian ports segment 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. 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. Based on the results of the impairment tests, the Board of Directors believes that there is no requirement for further impairments or indications for reversal of impairments recognised in previous periods for nonfinancial assets other than goodwill. For all CGUs except for ULCT and VEOS management believes that any reasonably possible change in the key assumptions on which these units recoverable amounts are based would not cause carrying amounts of these units to exceed their recoverable amounts. For ULCT and VEOS CGUs minor changes in any of the abovementioned parameters may lead to substantial changes in the recoverable amount of this CGU. In ULCT, the recoverable amount calculated based on value in use exceeded carrying value by US$13 million. A decrease of handling volumes by 11% each year as opposed to volume projections used by the management or an increase of discount rate by 2.5% or a decrease in the average price per unit by 8% each year as opposed to the used in projections would remove the remaining headroom. In VEOS, the recoverable amount calculated based on value in use exceeded carrying value by US$17 million. A decrease of handling volumes by 13% each year as opposed to volume projections used by the management or an increase of discount rate by 1% or a decrease in the average price per unit by 8% each year as opposed to the used in projections would remove the remaining headroom. 11

12 4. Estimates (continued) Contingencies and commitments In the first half of 2016 the financial markets continued to be volatile and are characterised by frequent significant price movements and increased trading spreads. Subsequent to 31 December 2015: - the Cenral Bank of the Russian Federation ( CBRF ) exchange rate fluctuated between RUB per USD and RUB per USD and between RUB per EUR and RUB per EUR; - the CBRF key interest rate decreased from 11.0% p.a. to 10.5% p.a. The Group has significant financial assets and liabilities in foreign currencies and as a result of the movement in the exchange rates the Group has recognised foreign exchange gains amounting to US$107 million. These events may have a further significant impact on the Group's future operations and financial position, the effect of which is difficult to predict. Substantial part of Russian seaport operators, including PLP, VSC and FCT are classified as natural monopolies under Russian law. As a matter of Russian law, tariffs for stevedoring services, including cargo handling and storage services, rendered by natural monopolies, are subject to regulation by the Federal Antimonopoly Service (the FAS ). Recently FAS has undertaken certain actions, in particular: - FAS has developed a draft methodology in respect of tariffs to be charged for stevedoring and storage services which is currently being discussed between market participants and governmental authorities. The methodology contemplates the introduction of maximum allowed tariffs. - FAS draft methodology also stipulates that some tariffs shall be denominated in RUR (it is an industry long-term practice to denominate most of port tariffs in USD); - FAS has commenced investigation in respect of several Russian seaport operators, including PLP, VSC and FCT, alleging potential breach of antimonopoly laws in relation to the pricing of stevedoring services at Russia s ports. All these developments may have adverse effect on operating, financial and investing activities of the Group. However, given that currently all these developments are at an early stage, it's not possible to make any reasonable estimates about the likelihood, effect and magnitude of these developments on the financial performance and financial position of the Group. There are no other significant contingencies and commitments as at 30 June 2016 than those disclosed in the annual consolidated financial statements for the year ended 31 December In preparing these interim condensed consolidated financial statements, other significant judgements made by management in applying the group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2015, with the exception of the changes in estimates that are required in determining the provision for taxes on income, see Note 3 for more information. 5. 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. 12

13 5. Financial risk management (continued) The condensed interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual consolidated financial statements; they should be read in conjunction with the Group s annual consolidated financial statements as at 31 December There have been no changes in the risk management policies since the year end. Liquidity risk Management controls current liquidity based on expected cash flows and expected revenue receipts. In the long term perspective the liquidity risk is determined by forecasting future cash flows at the moment of signing new credit, loan or lease agreements and by budgeting procedures. The management of the Group believes that is successfully managing the exposure of the Group to liquidity risk. In 2016 the Group continued with the restructuring of its debt portfolio with the aim of facilitating greater financial flexibility and diversification of the debt portfolio of the Group. Refer to Note 15 (Borrowings) for further information. Fair value estimation According to management estimates the fair value of the following financial assets and liabilities do not materially differ from their carrying amounts: trade and other receivables, bank deposits with maturity over 90 days, trade and other payables, bank loans and finance lease liabilities. The fair value of unsecured bonds as of 30 June 2016 is US$606,073 thousand (31 December 2015: US$68,784 thousand) and is within Level 1 of the fair value hierarchy. 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 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 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 only financial instruments carried at fair value are derivative financial instruments representing cross-currency swap arrangements that are valued using Level 2 valuation techniques. As of 30 June 2016 the net fair value of these swaps was positive US$24,671 thousand (31 December 2015: negative - US$(5,360) thousand), see Note 16. There were no changes in valuation techniques during the period. 6. Seasonality of operations The demand for the Group s services and certain of its expenses tend to be seasonal. Historically, unless impacted by other factors, the Group s container throughput has been lower during the first half of each year (and in particular, the first quarter of each year) and higher in the second half of the year. This has been due primarily to higher demand for consumer goods in the months prior to the winter holiday season. In the case of VEOS segment, gas consumption is normally higher in the winter period. 13

14 7. Segmental information Group operations consist of several major business units which are usually and 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; the accounting records are all prepared using the same accounting policies as those used for the preparation of the annual financial statements therefore there are no arbitrary allocations between segments. Certain business units are operating with one major operating company and with some supporting companies. The chief operating decision-maker (CODM) has been identified as the Board of Directors. The Directors review the group s internal reporting in order to assess performance and allocate resources. The operating segments were determined based on these reports. 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 and the netting of deferred tax assets and liabilities. For the purposes of the internal reporting, joint ventures are assessed on a 100% ownership basis. Therefore there are no changes in the basis of measurement of segment profit or loss compared to the prior years. Assets are allocated based on the operations of the segment and the physical location of the asset. The segments are consistent with segments presented in the annual financial statements for the year ended 31 December For segmental reporting purposes the Group s consolidated financial position and consolidated results are continued to be presented by using the proportionate consolidation in relation to interests in joint ventures (VEOS and MLT and CD groups). There are additional disclosures to reconcile segmental information with the consolidated income statement and the consolidated balance sheet. According to this method of accounting, the Group combined 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 recognised 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 venturers were eliminated to the extent of the Group s interest in the joint venture. Unrealised losses were also eliminated unless the transaction provided evidence of an impairment of the asset transferred. 14

15 7. Segmental information (continued) The segment results for the six month period ended 30 June 2016 are as follows: Russian ports VEOS Finnish ports Total operating segments Holdings Reconciliation adjustments Effect of proportionate Other consolidation adjustments Group as per proportionate consolidation Sales to third parties 177,937 38,085 8, ,593 - (24,747) - 199,846 Inter-segment revenue (6) (44) - Total revenue 177,965 38,085 8, ,643 - (24,753) (44) 199,846 Cost of sales (61,486) (31,782) (7,749) (101,017) - 19, (81,563) Administrative, selling and marketing expenses (6,861) (4,063) (522) (11,446) (13,299) 2, (22,385) Other gains/(losses) - net (30,926) (423) 95 (31,254) 100, (101,204) (31,436) Operating profit 78,692 1, ,926 87,525 (2,786) (101,203) 64,462 Finance income/(costs) - net 94,886 (388) (92) 94,406 (164) (246) (136) 93,860 incl. interest income 2, ,533 1,765 (11) (3,822) 465 incl. interest expense (47,280) (400) (94) (47,774) (2,173) 436 3,822 (45,689) incl. change in the fair value of derivative financial instruments 30, , ,209 incl. foreign exchange gains on financing activities 109, , (671) (136) 108,875 Profit before income tax 173,578 1, ,332 87,361 (3,032) (101,339) 158,322 Income tax expense (40,868) (1,921) (61) (42,850) 297 1,259 - (41,294) Profit for the period 132,710 (492) ,482 87,658 (1,773) (101,339) 117,028 CAPEX* on cash basis 4,469 2, , (1,448) - 6,193 *CAPEX is purchases of property, plant and equipment Included within Other adjustments on the line Other gains/(losses) - net is the elimination of intragroup dividends. 15

16 7. Segmental information (continued) The reconciliation of results for the six month period ended 30 June 2016 calculated with proportionate consolidation to the results presented in interim condensed consolidated income statement above is as follows: Group as per proportionate consolidation Equity method and other adjustments Group as per equity method consolidation of joint ventures Sales to third parties 199,846 (36,139) 163,707 Inter-segment revenue Total revenue 199,846 (36,139) 163,707 Cost of sales (81,563) 26,506 (55,057) Administrative, selling and marketing expenses (22,385) 2,970 (19,415) Share of profit/(loss) of joint ventures accounted for using the equity method - 2,241 2,241 Other gains/(losses) - net (31,436) 171 (31,265) Operating profit 64,462 (4,251) 60,211 Finance income/(costs) - net 93,860 (1,211) 92,649 incl. interest income incl. interest expenses (45,689) 702 (44,987) incl. change in the fair value of derivative financial instruments 30,209-30,209 incl. foreign exchange gains on financing activities 108,875 (1,965) 106,910 Profit before income tax 158,322 (5,462) 152,860 Income tax expense (41,294) 1,854 (39,440) Profit for the period 117,028 (3,608) 113,420 CAPEX on cash basis 6,193 (1,618) 4,575 16

17 7. Segmental information (continued) The segment operating expenses for the six month period ended 30 June 2016 are as follows: Total operating segments Holdings Reconciliation adjustments Effect of proportionate Other consolidation adjustments Group as per proportionate consolidation Russian ports VEOS Finnish ports Depreciation of property, plant and equipment 17,658 9,787 1,155 28, (5,592) - 23,067 Amortisation of intangible assets 6, ,806 - (258) - 6,548 Staff costs 21,530 8,117 3,590 33,237 8,749 (5,546) - 36,440 Transportation expenses 3,704 8,058 1,097 12,859 - (4,445) - 8,414 Fuel, electricity and gas 3,298 4, ,190 3 (2,492) - 5,701 Repair and maintenance of property, plant and equipment 3,679 1, ,231 1 (1,269) - 4,963 Total 56,207 32,683 7,033 95,923 8,812 (19,602) - 85,133 Other operating expenses 12,140 3,162 1,238 16,540 4,487 (2,167) (45) 18,815 Total cost of sales, administrative, selling and marketing expenses 68,347 35,845 8, ,463 13,299 (21,769) (45) 103,948 17

18 7. Segmental information (continued) The reconciliation of operating expenses for the six month period ended 30 June 2016 calculated with proportionate consolidation to the results presented in interim condensed consolidated income statement above is as follows: Group as per proportionate consolidation Equity method and other adjustments Group as per equity method consolidation of joint ventures Depreciation of property, plant and equipment 23,067 (6,991) 16,076 Amortisation of intangible assets 6,548 (311) 6,237 Staff costs 36,440 (8,518) 27,922 Transportation expenses 8,414 (5,182) 3,232 Fuel, electricity and gas 5,701 (2,866) 2,835 Repair and maintenance of property, plant and equipment 4,963 (2,166) 2,797 Total 85,133 (26,034) 59,099 Other operating expenses 18,815 (3,442) 15,373 Total cost of sales, administrative, selling and marketing expenses 103,948 (29,476) 74,472 18

19 7. Segmental information (continued) The total segment assets and liabilities as at 30 June 2016 are presented below: Russian ports Finnish ports Total operating segments Reconciliation adjustments Effect of proportionate Other consolidation adjustments Group as per proportionate consolidation VEOS Holdings Property, plant and equipment (including prepayments for property, plant and equipment) 592, ,084 7, , (94,904) - 673,850 Investments in joint ventures ,844 - (165,844) - Intangible assets 725,016 55,785 3, ,598 - (9,139) - 775,459 Other non-current assets 47, , ,555 1,070,440 (30,933) (1,188,222) 14,840 Inventories 5,104 1,789-6,893 - (1,081) - 5,812 Trade and other receivables (including income tax prepayment and cash deposits over 90 days) - current 57,474 6,261 2,062 65,797 19,405 (3,445) (18,203) 63,554 Cash and cash equivalents 121,800 21,713 4, ,663 4,023 (13,544) - 138,142 Total assets 1,549, , ,603 1,936,758 1,260,214 (153,046) (1,372,269) 1,671,657 Long-term borrowings 1,142,646 5,355 3,808 1,151,809 24,891 (7,782) (102,514) 1,066,404 Other long-term liabilities 124,938 3, ,215 - (2,908) (1,525) 124,782 Trade and other payables current 26,252 15,364 1,936 43,552 6,307 (7,468) (5,056) 37,335 Short-term borrowings 120,288 13,884 1, , (10,591) (14,844) 110,682 Other short-term liabilities 205 2,163-2, (1,129) - 1,291 Total liabilities 1,414,329 40,643 7,341 1,462,313 31,998 (29,878) (123,939) 1,340,494 Non-controlling interest 15, , ,145 Included within Russian ports, Finnish ports and Holdings segments Other non-current assets are investments in subsidiaries in the total amount of US$8,096 thousand, US$115,484 thousand and US$989,807 thousand respectively (fully eliminated on consolidation). Included within Russian ports and Holdings segments there are intragroup Other non-current assets, Trade and other receivables and Borrowings in the total amount of US$121,728 thousand which are fully eliminated on consolidation. 19

20 7. Segmental information (continued) The reconciliation of total segment assets and liabilities as at 30 June 2016 calculated with proportionate consolidation to the results presented in interim condensed consolidated income statement above is as follows: Group as per proportionate consolidation Equity method and other adjustments Group as per equity method consolidation of joint ventures Property, plant and equipment (including prepayments for PPE) 673,850 (116,626) 557,224 Investments in joint ventures - 175, ,169 Intangible assets 775,459 (75,924) 699,535 Other non-current assets 14,840 54,549 69,389 Inventories 5,812 (1,456) 4,356 Trade and other receivables (including income tax prepayment) 63,554 (3,987) 59,567 Cash and cash equivalents 138,142 (18,942) 119,200 Total assets 1,671,657 12,783 1,684,440 Long-term borrowings 1,066,404 (7,747) 1,058,657 Other long-term liabilities 124,782 46, ,422 Trade and other payables 37,335 (7,055) 30,280 Short-term borrowings 110,682 (17,727) 92,955 Other short-term liabilities 1,291 (1,219) 72 Total liabilities 1,340,494 12,892 1,353,386 Non-controlling interest 15,145-15,145 20

21 7. Segmental information (continued) The segment results for the six month period ended 30 June 2015 are as follows: Russian ports VEOS Finnish ports Total operating segments Holdings Reconciliation adjustments Effect of proportionate Other consolidation adjustments Group as per proportionate consolidation Sales to third parties 231,622 50,993 9, ,335 - (32,255) 5 260,085 Inter-segment revenue (6) (57) - Total revenue 231,663 50,993 9, ,398 - (32,261) (52) 260,085 Cost of sales (123,909) (37,806) (8,568) (170,283) - 22, (147,306) incl. impairment of property, plant and equipment (46,686) - - (46,686) (46,686) Administrative, selling and marketing expenses (9,238) (4,299) (503) (14,040) (13,033) 2, (24,561) Other gains/(losses) - net (6,262) 59 (710) (6,913) 6, (7,381) (7,737) Operating profit 92,254 8,947 (39) 101,162 (6,698) (6,604) (7,379) 80,481 Finance income/(costs) - net (26,674) (715) (157) (27,546) 566 (62) (45) (27,087) incl. interest income ,569 (27) (2,378) 944 incl. interest expense (39,374) (718) (150) (40,242) (875) 1,108 2,377 (37,632) incl. foreign exchange gains on financing activities 11,940 (17) (7) 11,916 (1,128) (1,143) (44) 9,601 Profit before income tax 65,580 8,232 (196) 73,616 (6,132) (6,666) (7,424) 53,394 Income tax expense (21,378) 10 (48) (21,416) (715) (21,539) Profit for the period 44,202 8,242 (244) 52,200 (6,847) (6,074) (7,424) 31,855 CAPEX* on cash basis 4,840 2,073 1,947 8, (1,569) - 7,349 *CAPEX is purchases of property, plant and equipment Included within Other adjustments on the line Other gains/(losses) - net is the elimination of intragroup dividends. 21

22 7. Segmental information (continued) The reconciliation of results for the six month period ended 30 June 2015 calculated with proportionate consolidation to the results presented in interim condensed consolidated income statement above is as follows: Group as per proportionate consolidation Equity method and other adjustments Group as per equity method consolidation of joint ventures Sales to third parties 260,085 (45,756) 214,329 Inter-segment revenue Total revenue 260,085 (45,756) 214,329 Cost of sales (147,306) 31,034 (116,272) incl. impairment of property, plant and equipment (46,686) - (46,686) Administrative, selling and marketing expenses (24,561) 3,177 (21,384) Share of profit/(loss) of joint ventures accounted for using the equity method - 4,541 4,541 Other gains/(losses) - net (7,737) 723 (7,014) Operating profit 80,481 (6,281) 74,200 Finance income/(costs) - net (27,087) (1,911) (28,998) incl. interest income 944 (29) 915 incl. interest expenses (37,632) 1,573 (36,059) incl. foreign exchange gains on financing activities 9,601 (3,455) 6,146 Profit before income tax 53,394 (8,192) 45,202 Income tax expense (21,539) 1,771 (19,768) Profit for the period 31,855 (6,421) 25,434 CAPEX on cash basis 7,349 (2,632) 4,717 22

23 7. Segmental information (continued) The segment operating expenses for the six month period ended 30 June 2015 are as follows: Total operating segments Holdings Reconciliation adjustments Effect of proportionate Other consolidation adjustments Group as per proportionate consolidation Russian ports VEOS Finnish ports Depreciation of property, plant and equipment 24,465 10,443 1,095 36, (6,012) - 30,012 Amortisation of intangible assets 7, ,293 - (288) - 8,005 Impairment of property, plant and equipment 46, , ,686 Staff costs 26,929 8,502 3,642 39,073 9,554 (5,859) (1) 42,767 Transportation expenses 3,803 10,305 1,228 15,336 - (5,614) - 9,722 Fuel, electricity and gas 4,163 7, ,417 3 (4,189) - 8,231 Repair and maintenance of property, plant and equipment 4,010 1, ,019 3 (1,033) (4) 4,985 Total 117,825 38,944 7, ,827 9,581 (22,995) (5) 150,408 Other operating expenses 15,322 3,161 2,013 20,496 3,452 (2,440) (49) 21,459 Total cost of sales, administrative, selling and marketing expenses 133,147 42,105 9, ,323 13,033 (25,435) (54) 171,867 23

24 7. Segmental information (continued) The reconciliation of operating expenses for the six month period ended 30 June 2015 calculated with proportionate consolidation to the results presented in interim condensed consolidated income statement above is as follows: Group as per proportionate consolidation Equity method and other adjustments Group as per equity method consolidation of joint ventures Depreciation of property, plant and equipment 30,012 (7,591) 22,421 Amortisation of intangible assets 8,005 (342) 7,663 Impairment of property, plant and equipment 46,686-46,686 Staff costs 42,767 (9,076) 33,691 Transportation expenses 9,722 (6,273) 3,449 Fuel, electricity and gas 8,231 (4,671) 3,560 Repair and maintenance of property, plant and equipment 4,985 (1,825) 3,160 Total 150,408 (29,778) 120,630 Other operating expenses 21,459 (4,433) 17,026 Total cost of sales, administrative, selling and marketing expenses 171,867 (34,211) 137,656 24

25 7. Segmental information (continued) The total segment assets and liabilities as at 31 December 2015 are presented below: Russian ports Finnish ports Total operating segments Reconciliation adjustments Effect of proportionate Other consolidation adjustments Group as per proportionate consolidation VEOS Holdings Property, plant and equipment (including prepayments for property, plant and equipment) 535, ,912 8, , (96,349) - 619,635 Investments in joint ventures ,844 - (165,844) - Intangible assets 645,249 55,758 3, ,730 - (8,981) - 695,749 Other non-current assets 1,151, ,644 1,266,770 1,156,437 (30,893) (2,390,471) 1,843 Inventories 4,430 2,304-6,734 - (1,303) - 5,431 Trade and other receivables (including income tax prepayment and cash deposits over 90 days) - current 72,282 26,947 3, ,432 18,005 (14,083) (58,861) 47,493 Cash and cash equivalents 117,883 4,248 2, ,065 9,944 (4,028) - 130,981 Total assets 2,526, , ,417 2,921,623 1,350,322 (155,637) (2,615,176) 1,501,132 Long-term borrowings 1,145,352 12,052 4,178 1,161, ,852 (11,154) (216,455) 1,078,825 Other long-term liabilities 93,634 1, ,918 - (1,940) (904) 93,074 Trade and other payables current 21,403 21,051 2,436 44,890 18,899 (10,381) (16,413) 36,995 Short-term borrowings 130,954 13,623 1, ,328 29,119 (10,632) (43,829) 120,986 Other short-term liabilities 278 2, , (1,373) - 1,870 Total liabilities 1,391,621 51,240 8,790 1,451, ,180 (35,480) (277,601) 1,331,750 Non-controlling interest 13, , ,231 Included within Russian ports, Finnish ports and Holdings segments Other non-current assets are investments in subsidiaries in the total amount of US$1,004,924 thousand, US$115,484 thousand and US$1,082,211 thousand respectively (fully eliminated on consolidation). Included within Russian ports and Holdings segments there are intragroup Other non-current assets, Trade and other receivables and Borrowings in the total amount of US$129,627 thousand which are fully eliminated on consolidation. 25

26 7. Segmental information (continued) The reconciliation of total segment assets and liabilities as at 31 December 2015 calculated with proportionate consolidation to the results presented in interim condensed consolidated income statement above is as follows: Group as per proportionate consolidation Equity method and other adjustments Group as per equity method consolidation of joint ventures Property, plant and equipment (including prepayments for PPE) 619,635 (117,133) 502,502 Investments in joint ventures - 167, ,815 Intangible assets 695,749 (73,063) 622,686 Other non-current assets 1,843 65,454 67,297 Inventories 5,431 (1,606) 3,825 Trade and other receivables (including income tax prepayment) 47,493 (14,975) 32,518 Cash and cash equivalents 130,981 (7,846) 123,135 Total assets 1,501,132 18,646 1,519,778 Long-term borrowings 1,078,825 (16,454) 1,062,371 Other long-term liabilities 93,074 62, ,234 Trade and other payables 36,995 (10,098) 26,897 Short-term borrowings 120,986 (17,957) 103,029 Other short-term liabilities 1,870 (1,555) 315 Total liabilities 1,331,750 16,096 1,347,846 Non-controlling interest 13,231-13, Expenses by nature Six month period ended 30 June Staff costs 27,922 33,691 Depreciation of property, plant and equipment (Note 12) 16,076 22,421 Amortisation of intangible assets (Note 12) 6,237 7,663 Impairment of property, plant and equipment (Note 12) - 46,686 Transportation expenses 3,232 3,449 Fuel, electricity and gas 2,835 3,560 Repair and maintenance of property, plant and equipment 2,797 3,160 Taxes other than on income 2,419 3,752 Legal, consulting, auditing and other professional services 3,414 2,609 Operating lease rentals 2,156 2,898 Purchased services 2,352 2,398 Other expenses 5,032 5,369 Total cost of sales, selling and administrative expenses 74, ,656 26

27 8. Expenses by nature (continued) Cost of sales Six month period ended 30 June Staff costs 16,119 20,405 Depreciation of property, plant and equipment 15,748 22,044 Amortisation of intangible assets 6,226 7,650 Impairment of property, plant and equipment - 46,686 Transportation expenses 3,141 3,185 Fuel, electricity and gas 2,721 3,423 Repair and maintenance of property, plant and equipment 2,584 2,704 Taxes other than on income 1,953 2,851 Operating lease rentals 1,124 1,659 Purchased services 2,352 2,398 Other expenses 3,089 3,267 Total cost of sales 55, ,272 Administrative and selling expenses Six month period ended 30 June Staff costs 11,803 13,286 Depreciation of property, plant and equipment Amortisation of intangible assets Transportation expenses Fuel, electricity and gas Repair and maintenance of property, plant and equipment Taxes other than on income Legal, consulting and other professional services 3,414 2,609 Operating lease rentals 1,032 1,239 Other expenses 1,943 2,102 Total administrative and selling expenses 19,415 21,384 27

28 9. Other losses net Six month period ended 30 June Other gains/(losses) net 19 (105) Currency exchange gains/(losses) on non-financing activities net (see also Note 16) (31,284) (6,909) Total (31,265) (7,014) 10. Finance income/(costs) - net Six month period ended 30 June Included in finance income: Interest income on bank balances Interest income on short-term bank deposits Interest income on loans to related parties (Note 20(g)) Finance income total Included in finance costs: Interest expenses on bank borrowings (28,740) (35,194) Interest expenses on finance lease (692) (840) Interest expense on bonds (15,534) - Interest expenses on loans from third parties (21) (25) Finance costs total (44,987) (36,059) Included in change in fair value of derivative financial instruments: Interest component 5,666 - Foreign currency exchange component 24,543 - Total change in fair value of derivatives (Note 16) 30,209 - Net foreign exchange gains on financing activities 106,910 6,146 Finance income/(costs) net 92,649 (28,998) 11. Income tax Income tax expense is recognised based on management's best estimates of annual effective income tax rates determined for each taxing jurisdiction and applied individually to the interim period pre-tax income of each jurisdiction. 28

29 11. Income tax (continued) Six month period ended 30 June Profit before tax 152,860 45,202 Tax calculated at the applicable tax rates 20% 30,572 9,040 Tax effect of expenses not deductible for tax purposes 8,530 4,227 Deferred tax assets not recognised - 9,337 Tax effect of share of profit/(loss) of joint ventures (448) (908) Withholding tax on undistributed profits 786 (1,403) Tax effect of reduced tax rates of entity in Russian ports segment* - (525) Tax charge 39,440 19,768 * The statutory tax rate for an entity within Russian ports segment was 18.5% in six months ended 30 June 2015 because of tax benefits granted by the authorities of St. Petersburg (the normal tax rate in Russia is 20%). The effect of this benefit is shown in the tax reconciliation note above as Tax effect of reduced tax rates of entity in Russian ports segment. 12. Property, plant and equipment and intangible assets Period ended 30 June 2016 Property, plant and equipment Intangible assets Opening net book amount as at 1 January , ,686 Additions 3, Disposals (75) - Depreciation and amortisation (Note 8) (16,076) (6,237) Write offs (322) - Exchange differences 65,743 83,017 Closing net book amount as at 30 June , ,535 Period ended 30 June 2015 Opening net book amount as at 1 January , ,247 Additions 5, Disposals (3,050) - Depreciation and amortisation (Note 8) (22,421) (7,663) Impairment (Note 8) (46,686) - Write offs (176) - Exchange differences 9,207 10,604 Closing net book amount as at 30 June , ,282 29

30 12. Property, plant and equipment and intangible assets (continued) Additions to property, plant and equipment and to intangible assets are of ordinary nature in both periods. Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows: As at 30 June December 2015 Property, plant and equipment 13,650 7, Trade and other receivables As at 30 June December 2015 Trade receivables - third parties 14,455 14,032 Trade receivables - related parties (Note 20(e)) 7,765 4,763 Other receivables - third parties Other receivables - related parties (Note 20(e)) 4,179 3,990 Prepayments for goods and services - third parties 5,388 4,251 Prepayments for goods and services - related parties (Note 20(e)) Loans to third parties Loans to joint ventures (Note 20(g)) 6,684 1,629 VAT and other taxes recoverable 2,721 1,553 Total trade and other receivables 42,497 31,076 Less non-current portion: Loans to related parties (6,580) (1,193) Other receivables - third parties - (83) Total non-current portion (6,580) (1,276) Current portion 35,917 29, Dividends No dividends were declared or paid in 2015 and during the first half of