GLPR.L Regulatory News (GLPR)

For immediate release 20 September 2019

Global Ports Investments PLC

2019 Interim Results

Global Ports Investments PLC ("Global Ports" or the "Company", together with its subsidiaries and joint ventures, the "Group" or the "Global Ports Group"; LSE ticker: GLPR) today announces its operational results and publishes its interim condensed consolidated financial information (unaudited) for the six month period ended 30 June 2019.

Certain financial information which is derived from the management accounts is marked in this announcement with an asterisk {*}. 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 announcement. 

Interim condensed consolidated financial information (unaudited) for the six month period ended 30 June 2019 is available here: http://www.rns-pdf.londonstockexchange.com/rns/0265N_1-2019-9-19.pdf

1H 2019 RESULTS SUMMARY

● Revenue up 3.4% to USD 181.2 million (+6.5% like-for-like[1])

● Adjusted EBITDA of USD 116.0 million (+6.7% y-o-y)

● Adjusted EBITDA margin improved to 64% (+201 bp)

● Profit for the period of USD 36.2 million (loss of USD 3.3 million in 1H 2018)

● Free Cash Flow increased 2.4% to USD 74.4 million

● Consolidated marine container throughput up 4.9% to 714 thousand TEU against 4.7% growth in Russian container market in the same period

● Consolidated bulk throughput of 1,963 thousand tonnes (+22.9%)

● Net Debt to Adjusted EBITDA decreased to 3.5x (-0.1x compared to 31 December 2018)

Vladimir Bychkov, CEO of Global Ports Management, commented:

"Global Ports has delivered a solid performance in the first half. Both the container and non-container segments of our businesses are performing well, resulting in steady growth and enabling us to continue deleveraging.

"We continue to see rapid growth of containerised export. In the first half of 2019, full dry container export exceeded full dry container import by 13% in the Big Port of Saint-Petersburg - an exceptional result in a market that was completely import-driven only a few years ago. We are very excited to see this trend as it reduces volatility in the market, improves capacity utilisation, and opens up additional opportunities for well-equipped large specialised terminals with good railway infrastructure, such as ourselves. Accordingly, in the first half of the year, we have focused on offering our clients excellent productivity at our terminals and unrivalled customer service to ensure that we're well placed to benefit from this trend. These areas will remain our key priorities going forward.

"We approach the second half of the year with cautious optimism. While we see some cooling down in the growth rates of import, we expect to see further growth in full container export, which will provide further support to the market."

Group financial and operational highlights for the six months ended 30 June 2019

Unless otherwise stated, all comparisons below are for the six month period corresponding to 1H 2019 with comparisons to 1H 2018.

Operational Highlights

● The Russian container market grew 4.7% in the first half of 2019 driven by the growth of full container export of 7.7% and supported by growth in full container import of 2.7%, resulting in total Russian container market throughput of 2.54 million TEU.

● The Group's Consolidated Marine Container Throughput increased 4.9% to 714 thousand TEU.

● Consolidated Marine Bulk Throughput increased by 22.9% to 1.96 million tonnes driven by growth in bulk cargoes at PLP and ULCT.

Financial Highlights

● Consolidated revenue increased by 3.4% to USD 181.2 million. 1H 2018 consolidated revenues included revenues of USD 5.2 million* attributable to Logistika Terminal (LT[2]), which was consolidated in 1H 2018. Excluding the impact of LT, like-for-like revenue grew by 6.5% driven by an increase in both container and non-container revenue.

● In line with the statement made in March 2019, like-for-like Revenue per TEU decreased by 1.9% to USD 182.9*.

● Gross profit increased 5.6% to USD 110.5 million.

● Adjusted EBITDA increased by 6.7% to USD 116 million* mainly due to the growth in throughput and strict cost control.

● Adjusted EBITDA margin expanded by 201 bp from 62.0%* in the first half of 2018 to 64.0%* in the first half of 2019.

● Profit before income tax for the six month period was USD 55.8 million compared to a Loss before income tax of USD 0.2 million in the first half of 2018. This was mainly driven by the depreciation of the Russian rouble in the first half of 2018 which resulted in a loss on revaluation of US dollar-denominated borrowings (from Group and non-Group entities) due to the Group's Russian subsidiaries having the Russian rouble as their functional currency.

● The Group's capital expenditure was USD 5.7 million and was focused on planned maintenance projects, scheduled upgrades of existing container handling equipment and customer service improvement initiatives. Total maintenance CAPEX for 2019 is expected to remain in line with the Group's mid-term guidance of USD 30-35 million per annum.

● The Group reduced Net Debt by USD 1.8 million* over the six month period. As a result of the adoption of IFRS 16 standards, the Group recognised USD 23.4 million* of lease liabilities into Total and Net Debt as at 30 June 2019. Adjusted for IFRS 16, Net Debt decreased by USD 25.2 million* to USD 755.2 million*. The Group continues to prioritise deleveraging over dividend distribution.

● Net Debt to Adjusted EBITDA decreased from 3.6x* to 3.5x*.

● In April 2019 the Group sold its stake in the VEOS, the oil products terminal, to Liwathon. As a result of this transaction the Group reported USD 11.8 million proceeds in the Statement of Cash Flow and a loss of USD 33.5 million in Other gain-losses in the Profit & Loss Statement that was reclassified from the currency translation reserve. This is the amount related to VEOS that was previously recognised in other comprehensive income and accumulated in the equity.

Further information is available in the following Appendices:

● Appendix 1: Results of operations for Global Ports for the six months ended 30 June 2019;

● Appendix 2: Reconciliation of Additional data (non-IFRS) to the Consolidated Financial Statement;

● Appendix 3: Definitions and Presentation of Information;

● Appendix 4: Investor Presentation.

 http://www.rns-pdf.londonstockexchange.com/rns/0265N_2-2019-9-19.pdf

Market data

Market data used in this press-release, 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 (the "CBR") and the Russian Federal State Statistics Service ("Rosstat"), among others.

Other

Pursuant to Article 2.1(i) (ii) of the Transparency Directive (2004/109/EC) and Rule 6.4.2 of the Disclosure Guidance and Transparency Rules of the UK Financial Conduct Authority, the Company confirms that it has chosen the United Kingdom as its Home State.

Downloads

The interim condensed consolidated financial information (unaudited) for the six month period ended 30 June 2019 for Global Ports are available for viewing and downloading at http://www.globalports.com/globalports/investors/reporting-transactions/annual-interim-results.

Analyst and Investor Conference call

The publication of these results will be accompanied by an analyst and investor conference call hosted by:

·; Vladimir Bychkov, Chief Executive Officer, Global Ports Management LLC;

·; Alexander Roslavtsev, Chief Financial Officer, Global Ports Management LLC;

·; Brian Bitsch, Chief Commercial Officer, Global Ports Management LLC;

·; Alexander Iodchin, General Manager of Global Ports Investments PLC;

·; Dirk van Assendelft, General Manager of Multi-Link Terminals.

Date: Friday, 20 September 2019

Time: 13.00 UK / 08.00 US (EST) / 15.00 Moscow

To participate in the conference call, please dial one of the following numbers and ask to be put through to the "Global Ports" call:

Standard International Access: +44 20 3003 2666

UK Toll Free: 0808 109 0700

USA Toll Free: +1 866 966 5335

Russia Toll Free: 8 10 8002 4902044

ENQUIRIES

NOTES TO EDITORS

Global Ports Investments PLC

Global Ports Investments PLC is the leading operator of container terminals in the Russian market by capacity and container throughput[3].

Global Ports' terminals are located in the Baltic and Far East Basins, key regions for foreign trade cargo flows. Global Ports operates five container terminals in Russia (Petrolesport, First Container Terminal, Ust-Luga Container Terminal[4] and Moby Dik[5] in the Russian Baltics, and Vostochnaya Stevedoring Company in the Russian Far East) and two container terminals in Finland[6] (Multi-Link Terminals in Helsinki and Kotka). Global Ports also owns inland container terminal Yanino Logistics Park[7] located in the vicinity of St. Petersburg.

Global Ports' revenue for the first half of 2019 was USD 181.2 million and Adjusted EBITDA was USD 116.0 million*. Consolidated Marine Container Throughput was 714 thousand TEU in the first half of 2019.

Global Ports' major shareholders are Delo Group, one of the largest private transportation and logistics holding companies in Russia (30.75%), and APM Terminals B.V. (30.75%), whose core expertise is the design, construction, management and operation of ports, terminals and inland services. APM Terminals operates a global terminal network of 74 ports and 117 inland services facilities, giving the company a global presence in 58 countries. 20.5% of Global Ports shares are traded in the form of global depositary receipts listed on the Main Market of the London Stock Exchange (LSE ticker: GLPR).

For more information please see: www.globalports.com

LEGAL DISCLAIMER

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Global Ports. You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" or the negative of such terms or other similar expressions. Any forward-looking statement is based on information available to Global Ports as of the date of the statement and, other than in accordance with its legal or regulatory obligations, Global Ports does not intend or undertake to update or revise these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements involve known and unknown risks and Global Ports wishes to caution you that these statements are only predictions and that actual events or results may differ materially from what is expressed or implied by these statements. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Global Ports, including, among others, general political and economic conditions, the competitive environment, risks associated with operating in Russia and market change in the industries Global Ports operates in, as well as many other risks related to Global Ports and its operations. All written or oral forward-looking statements attributable to Global Ports are qualified by this caution.

Appendix 1: Results of operations for Global Ports for the six months ended 30 June 2019

The financial information presented in this appendix is extracted from the Interim condensed consolidated financial information (unaudited) for the six month period ended 30 June 2019, prepared in accordance with IFRS as adopted by the European Union (EU) applicable to interim financial reporting (International Accounting Standard 34 "Interim Financial Reporting". This appendix 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 Appendix 3 (Definitions and Presentation of Information) and the section entitled "Non-IFRS Measures: Adjusted EBITDA and Adjusted EBITDA Margin" below. Readers of this appendix should read the entire announcement together with the Global Ports Group Interim condensed consolidated financial information also released on the date hereof, and not just rely on the summary information set out below.

Certain financial information which is derived from the management accounts is marked in this announcement with an asterisk {*}.

Rounding adjustments have been made in calculating some of the financial and operational information included in this presentation. As a result, numerical figures shown as totals in some tables may not be exact arithmetic aggregations of the figures that precede them.

Operating 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.

In September 2018 the Group completed the previously announced sale of its holding in JSC «Logistika-Terminal», one of the Group's two inland terminals. The table below includes the financial results of LT for the first half 2018.

The Russian container market grew 4.7% in the first half of 2019 driven by the growth of full container export of 7.7% and supported by growth in full container import of 2.7%, resulting in total Russian container market throughput of 2.54 million TEU.

After a strong double-digit recovery in 2017-2018, growth of containerised import returned to normalised GDP-driven growth rates of 2.7%.

Throughput of full export containers at Russian terminals continued its rapid growth (+7.7% year-on-year), mainly due to increased exports and the wider use of containers in Russia. Full exports increased by 76% between 2013-2018 supported by increased exports and the containerisation of export supply chains.

As a result of the export growth, the gap between full dry container import and full dry container export is rapidly narrowing, thereby shifting the market towards an import-export balance. In the first half of 2019 the ratio between full dry container export and full dry container import was 67%, while the Baltic Basin has already become export driven: dry full container export exceeded dry container import by 13% in the first half of 2019.

The rapid growth of full container export over the last five years supports the increase of capacity utilisation in the industry due to the higher capacity requirements on container yards and berths. A key impact for terminal operators has been an overall reduction in the yard capacity of container terminals as full export containers require significantly longer dwell time compared to full import containers or empty export containers, which in turn lengthens the turnover time of the container storage yard. Currently the Group estimates that the average container handling capacity utilisation for the Russian market in the first half of 2019 was approximately 75%[8] and 67% for Global Ports on consolidated basis.

In addition, the growth of full container export combined with the ongoing growth in vessel size is driving client preference for large well equipped, efficient terminals and is withdrawing excess capacity from the market.

Growth of containerised import is also driving demand for empty containers. As a result empty containers import grew 51% in the first half of 2019 to 75 thousand TEU.

The market has continued to grow since the end of the reporting period: over June-August 2019, container throughput on the Russian container market increased by 5.4% compared to the same period in 2018, bringing the 8 months 2019 market growth to 4.9%.

The Group's Consolidated Marine Container Throughput increased 4.9% to 714 thousand TEU in the first half of 2019 compared to 681 thousand TEU in the same period of 2018. In July-August 2019 the Group's Consolidated Marine Container Throughput grew 4.1% delivering 4.7% growth for the first eight months of 2019 compared to the first eight months of 2018.

As a result of the market trends mentioned above, Moby Dik no longer meets the market requirements of a modern container terminal due to the absence of a railway and insufficient equipment. Moby Dik remains a business unit of the Group with opportunities in bulk handling and additional services.

In 2019 the Group continued to focus on offering a strong value proposition to its clients and maintaining competitive pricing in order to take advantage of the opportunities offered by the growing market. Even though capacity utilisation is increasing, competition in the industry remains strong with headline pricing and mix of services expected to drive single digit decrease in Revenue per TEU in the second half of 2019 compared to the first half 2019.

The Group continued to focus on increasing bulk cargo volumes to improve utilisation rates at its terminals. As a result, Consolidated Marine Bulk Throughput increased by 22.9% (366 thousand tonnes) to 1,963 thousand tonnes. This growth in Consolidated Marine Bulk Throughput was primarily driven by the growth in export in metal and other export bulk cargo handling at PLP as well as by the start of coal handling at ULCT in December 2018. The new coal handling capacity at ULCT had a high level of utilisation of 85% utilised in the first half of 2019.

The Group's passenger car handling volumes and high and heavy Ro-Ro handling decreased by 7.9% and 5.9% in the first half respectively, reflecting slowing down in Russian consumer demand.

Results of operations of Global Ports for the six months ended 30 June 2019 and 2018

The following table sets out the principal components of the Group's interim condensed consolidated income statement and certain additional non-IFRS data of the Group for the six months ended 30 June 2019 and 2018.

Revenue

The following table sets forth the components of the consolidated revenue for the six months ended 30 June 2019 and 2018.

In the first half of 2019 like-for-like revenue increased by 6.5% to USD 181.2 million* from USD 170.2 million* in the first half of 2018 driven by higher revenue from container handling adjusted for LT and strong growth in other revenue adjusted for LT.

Revenue from container handling adjusted for LT increased 3.0%, or USD 3.8 million*, to USD 130.7 million*. This change was driven by an increase in Consolidated Container Throughput of 4.9% which was partially offset by a 1.9% decrease in consolidated Revenue per TEU adjusted for LT driven by a low single digit change in tariffs, as well as a lower share of imports and a change in customer and service mix.

Other revenue adjusted for LT increased by 16.8%, or USD 7.3 million*, to USD 50.5 million*, driven by growth in coal and other bulk cargo handling revenue.

In September 2018 the Group sold "Logistika-Terminal" (LT). As a result of the transaction, the Group's consolidated revenue of 1H 2019 does not include LT revenue (USD 5.2 million* in 1H 2018).

The share of Consolidated Non-Container Revenue in consolidated revenue of the Group increased from 25.9%* in the first half of 2018 to 27.9%* in the first half of 2019.

Cost of sales

The following table sets out a breakdown by expense of the Cost of sales for the first half of 2019 and 2018:

Cost of sales increased by USD 0.1 million, or 0.1%, from USD 70.7 million in the first half of 2018 to USD 70.8 million in the first half of 2019. The change was primarily driven by the appreciation of the Russian Ruble against USD dollar, deconsolidation of LT and the change in accounting policies as a result of adopting IFRS 16 Leases (resulted in decrease of lease expenses), which were offset by growth in certain cost items (primarily Purchased services) related to the start of coal handling at ULCT in December 2018, and growth in throughput and inflation.

Gross profit

Gross profit increased by USD 5.8 million, or 5.6%, from USD 104.7 million in the first half of 2018 to USD 110.5 million in the first half of 2019. 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 decreased by USD 2.0 million, or 9.3%, from USD 21.1 million in the first half of 2018 to USD 19.1 million in the first half of 2019. This was primarily due to a decrease of USD 0.7 million, or 83.2%, in lease expenses as a result of adopting IFRS 16 Leases as well as the USD 1.3 million or 40.8% decrease in other Administrative and selling expenses mainly due to lower impairment charge for receivables.

Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA in the first half 2019 increased 6.7% or USD 7.3 million to USD 116.0 million* from USD 108.7 million* in the first half 2018 mainly due to the growth in throughput and strict control over cash costs. In addition, adoption of IFRS 16 Leases resulted in a higher Adjusted EBITDA as the new treatment of leases results in a decrease in lease expenses. The Group estimated the impact of IFRS 16 on Adjusted EBITDA in the first half 2019 to be approximately USD 1.8 million*.

Adjusted EBITDA margin improved by 201 basis points from 62.0%* in the first half of 2018 to 64.0%* in the first half of 2019.

Share of profit/(loss) of joint ventures accounted for using the equity method

The Group's share of profit from joint ventures increased by USD 1.2 million or 68.9% from USD 1.7 million in the first half of 2018 to USD 2.9 million in the first half of 2019.

In April 2019 the Group completed the disposal of its 50% holding in VEOS, one of the Group's joint ventures and operating segments, to Liwathon. As previously announced, the proceeds from the sale went towards further deleveraging. As a result, there was no contribution to the Share of profit/(loss) of joint ventures from VEOS in the first half of 2019 compared to USD 0.3 million in the first half 2018.

The share of profit from MLT decreased by USD 1.1 million, or 38.8%, from USD 2.8 million in the first half of 2018 to USD 1.7 million in the first half of 2019. The result was primarily driven by decline in throughput at Moby Dik due to the reduction of cargo volumes.

The change in the share of result from CD Holding, from a loss of USD 1.4 million in the first half of 2018 to a profit of USD 1.2 million, was mainly driven by the appreciation of the Russian Rouble against US Dollar in 1H 2019. This resulted in a revaluation of the US Dollar nominated borrowings of YLP.

Other gains/(losses)-net

Other gains/(losses) amounted to a net loss of USD 34.6 million in the first half of 2019, compared to a profit of USD 4.8 million in the first half of 2018.

In 2018 the Group disposed of a subsidiary with net liabilities of USD 0.94 million for a cash consideration of USD 0.86 million. The main asset of the subsidiary was loading equipment. The transaction did not have any adverse effect on the operations of the Group. The transaction resulted in an overall gain of USD 4.6 million booked within 'Other gains/(losses) - net', comprising a USD 1.8 million gain from sale of the subsidiary and USD 2.8 million of foreign translation differences that were reclassified from the translation reserve to the income statement.

As a result of the disposal of VEOS, a USD 50 thousand loss is reflected within 'other gains/(losses) - net'. In addition, USD 33.5 million loss was recycled to 'other gains/(losses) - net' from the currency translation reserve. This is the amount related to VEOS that was previously recognised in other comprehensive income and accumulated in the equity.

Operating profit/(loss)

The Group's operating profit decreased from USD 90.2 million in the first half of 2018 to USD 59.6 million in the first half of 2019 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

Finance income/(costs) -net decreased from a cost of USD 90.3 USD million in the first half of 2018 to a cost of USD 3.9 million in the first half of 2019. This move was primarily due to a foreign exchange loss from financing activities of USD 39.0 million in the first half of 2018 changing to a profit of USD 34.5 million in the first 2019. This was a result of the appreciation of the Russian rouble[9], which in turn led to a change from the loss to a gain on revaluation of US dollar-denominated borrowings in the Group's Russian subsidiaries. Further, the change in fair value of derivative instruments[10] turned from a loss of USD 8.7 million in the first half of 2018 to a loss of USD 0.5 million as the Group cancelled a swap arrangement in relation to its Russian rouble bonds in the second half of 2018.

Profit/(loss) before income tax

Profit before income tax amounted to USD 55.8 million in the first half of 2019 compared to a loss of USD 0.2 million in the first half of 2018. This change is due to the factors described above under Operating profit/(loss) and Finance income/(costs)-net.

Income tax expense

In the first half of 2019 the income tax expense was USD 19.5 million, compared to USD 3.1 million in the first half of 2018. The difference in the effective tax rate from the normally applicable Russian statutory tax rate of 20% was largely driven by the impact of expenses and losses not deductible for tax purposes, withholding tax on undistributed profits and non‑taxable results of joint ventures as well as the tax effect of a disposal of assets held for sale.

Profit/(loss) for the period

The company reported a profit of USD 36.2 million in the first half of 2019 compared to a loss of USD 3.3 million in the first half 2018 due to the factors described above.

Liquidity and capital resources

General

As at 30 June 2019, the Group had USD 139.4 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 operating costs of its operations. In the first half of 2019 the Group's liquidity needs were met primarily by cash flows generated from its operating activities. The Group expects to fund its liquidity requirements in both the short and medium term with cash generated from operating activities and borrowings.

As a result of the shareholding or joint venture agreements at Moby Dik, the Finnish Ports and Yanino, the cash generated from the operating 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 30 June 2019, the Group had USD 917.9 million* of total borrowings (including lease liabilities and derivative financial instruments), of which USD 22.6 million* comprised current borrowings and USD 895.3 million* comprised non‑current borrowings.

As a result of adoption of IFRS 16 the Lease liabilities for the total amount of USD 23.4 million* were recognised in the balance sheet as of 30 June 2019.

As at June 30 June 2019, the Group had no meaningful undrawn borrowing facilities. See also "Capital resources".

Cash flows

The following table sets out the principal components of the Group's consolidated cash flow statement for the first half of 2019 and 2018:

Net cash from operating activities

Net cash from operating activities decreased by USD 6.1 million, or 7.1%, from USD 86.2 million in the first half of 2018 to USD 80.1 million in the first half of 2019. Decline in Net cash from operating activities was primarily due to a USD 2.9 million, or 2.9%, decrease in the Cash generated from operations, as growth of financial result from operations described above was partially offset by USD 9.8 million* growth in Trade and other receivables. Growth in Trade and other receivables was primarily driven by the fact that payment for Group's services for the approximate amount of USD 4.9 million* was made by one of the customers after the reporting date as well as by depreciation of Russian Rouble.

In addition, Tax paid increased by USD 1.4 million in the first half of 2019 compared to the first half of 2018 due to the growth in Net profit described above.

There were no Dividend payments received from joint ventures due to a decline in throughput at Moby Dik, which also contributed to the decline in Net cash from operating activities.

Net cash used in investing activities

Net cash used in investing activities changed from cash outflow of USD 13.0 million in the first half of 2018 to cash inflow of USD 7.0 million in the first half of 2019. This change was driven by a decrease in Purchases of property, plant and equipment by USD 7.8 million from USD 13.5 million in the first half of 2018 to USD 5.7 million in the first half of 2019. This decrease was primarily driven by the completion of the majority of the investment at the coal handling facility in ULCT that commenced operations in December 2018. The Purchases of property, plant and equipment for 2019 are expected to be in line with the mid-term CAPEX guidance of USD 30-35 million* per annum.

The USD 11.8 million Disposal of subsidiary mainly reflects the proceeds from the sale of VEOS in April 2019.

Net cash used in financing activities

Net cash used in financing activities decreased by USD 36.6 million, or 47.5%, from USD 77.1 million in the first half of 2018 to USD 40.4 million in the first half 2019 due to the reduction in the repayment of borrowings by USD 41.0 million as there were no borrowings due in the reporting period. In the first half of 2019 the Group bought back some of its own Eurobonds. In August 2019 financial arrangements have been made to purchase an aggregate principal amount of USD 52.8 million* of Global Ports (Finance) Plc's USD 350 million 6.872 per cent. notes due 2022, which were issued on 18 April 2016. The 2022 Notes purchased by the Group will be held, and there is no current intention for them to be reissued, resold or cancelled. The aggregate principal amount of the 2022 Notes outstanding after the purchase will be USD 273.1 million*. The purchase was funded by the Group's cash flow from operations, reflecting the Group's continued strategic focus on deleveraging.

Capital resources

The Group's financial indebtedness consists of bank borrowings, bonds and lease liabilities and amounted to USD 917.9 million* as at 30 June 2019. As of that date, all of the Group's borrowings were secured by guarantees and suretyships granted by certain Group members. 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.

As a result of adoption of IFRS 16 the Lease liabilities for the total amount of USD 23.4 million* were recognised in the balance sheet as of 30 June 2019.

The weighted average effective interest rate of the Group's debt portfolio is 7.0%* for USD nominated borrowings and 13.2%* for Russian Rouble nominated borrowings.

As 30 June 2019, the Group had leverage of Net debt to Adjusted LTM EBITDA ratio of 3.5x* (compared to a ratio of 3.6x* as at 31 December 2018). The Group's Net debt to Adjusted LTM EBITDA adjusted for adoption of IFRS 16 would be approximately 3.3x* as of 30 June 2019.

The following table sets out the maturity profile of the Group's total borrowings (including lease liabilities and derivative financial instruments) as at 30 June 2019.

As at June 2019, the carrying amounts of the Group's borrowings (including lease liabilities and derivative financial instruments) were denominated in the following currencies:

During the six month period ended 30 June 2019 the Group entered into several RUR/USD currency forward contracts to acquire USD 144.4 million in the period 2019-2022 in order to hedge part of foreign exchange risk associated with its USD denominated non-convertible unsecured bonds (which have been provided as loans to the Russian operating subsidiaries). As of 30 June 2019 there are outstanding forward contracts to acquire USD 139.7 million.

Appendix 2: Reconciliation of Additional data (non-IFRS) to the condensed consolidated financial information for the twelve-month period ended 31 December 2018

Reconciliation of Adjusted EBITDA to Profit for the period

Reconciliation of Adjusted EBITDA Margin

Reconciliation of Total Operating Cash Costs to Cost of sales and administrative, selling and marketing expenses

Reconciliation of Cash Costs of Sales to Cost of sales

Reconciliation of Cash Administrative, Selling and Marketing Expenses to Administrative, selling and marketing expenses

Reconciliation of Net Debt and Total Debt to borrowings and lease liabilities

Reconciliation of Free Cash Flow to Net cash from operating activities

Reconciliation of LTM Adjusted EBITDA

Appendix 3: Definitions and Presentation of Information

DEFINITIONS

Terms that require definitions are marked with capital letters in this announcement 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 of property, plant and equipment, depreciation and impairment of right-of-use assets, amortisation of intangible assets, share of profit/(loss) of joint ventures accounted for using the equity method, other gains/(losses)-net and impairment of goodwill and property, plant and equipment and intangible assets.

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

Adjusted LTM EBITDA (a non-IFRS financial measure) is Adjusted EBITDA for the last twelve months, calculated as a sum of Adjusted EBITDA for the first half of 2019 and Adjusted EBITDA for the second half of 2018.

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

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

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

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

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

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

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

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

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

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

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

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

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

Gross Container Throughput represents total container throughput of a Group's terminal or a Group's operating segment shown on a 100% basis. For the Russian Ports segment it excludes the container throughput of the Group's inland container terminal - Yanino.

Logistika Terminal (LT) is an inland container terminal providing a comprehensive range of container freight station and dry port services at one location. The terminal is located to the side of the St. Petersburg - Moscow road, approximately 17 kilometres from FCT and operates in the Shushary industrial cluster. In September 2018 the Group completed the previously announced[11] sale of its holding in JSC "Logistika-Terminal", one of the Group's two inland terminals, to PJSC TransContainer for a consideration of 1.9 billion Russian roubles.

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

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

Net Debt (a non-IFRS financial measure) is defined as the sum of current borrowings, non-current borrowings, current and non-current lease liabilities (following adoption of IFRS 16) and derivative financial instruments 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.

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.

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 Container Finance currently has a 25% effective ownership interest), as well as certain other entities. The results of Moby Dik and Yanino are accounted in the Global Ports' consolidated financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

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 adoption of IFRS 16) and derivative financial instruments.

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

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

Vopak E.O.S. (VEOS) includes AS V.E.O.S. and various other entities (including an intermediate holding) that own and manage an oil products terminal in Muuga port near Tallinn, Estonia. The Group owned a 50% effective ownership interest in Vopak E.O.S. The remaining 50% ownership interest was held by Royal Vopak. In April 2019 the Group sold its stake in the VEOS oil products terminal to Liwathon.

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

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

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

Appendix 4: Investor Presentation

http://www.rns-pdf.londonstockexchange.com/rns/0265N_2-2019-9-19.pdf

An investor presentation is available at http://www.globalports.com/globalports/investors/reporting-transactions/corporate-presentations