GLPR.L Regulatory News (GLPR)

For immediate release 27 April 2017

Global Ports Investments PLC

Publication of 2016 Annual Report and Accounts

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 publishes its 2016 Annual Report and Accounts ("the Annual Report for 2016").

The Group's Full Year 2016 Financial Results are included as an Appendix to the Annual Report for 2016. The Annual Report for 2016 is available for viewing or downloading in pdf format at:

http://www.globalports.com/globalports/upload_docs/reports/Global_Ports_Annual_Report_2016.pdf

or here:

http://www.rns-pdf.londonstockexchange.com/rns/5378D_-2017-4-27.pdf

The Annual Report for 2016 will also be available in hard copy at the registered office of the Company at Omirou 20, Agios Nikolaos, CY-3095 Limassol, Cyprus, and a copy will be submitted to the National Storage Mechanism, available for inspection at http://www.morningstar.co.uk/uk/NSM.

In compliance with DTR 6.3.5, the following information is extracted from the Annual Report for 2016 and should be read in conjunction with the Group's Full Year 2016 Financial Results Announcement issued on 17 March 2017. Together, these constitute the material required by DTR 6.3.5 to be communicated to the media in full-unedited text through a Regulatory Information Service. This material is not a substitute for reading the Annual Report for 2016 and page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the Annual Report for 2016.

Principal risks and uncertainties

The following description of principal risks and uncertainties is extracted from the "Risk Management" section of the Annual Report for 2016, pages 38 - 41 of the Annual Report for 2016.

The risk management process at Global Ports is focused on mitigating or, to the extent possible, eliminating the potential negative impact on the business caused by changes in the external and internal business, financial, regulatory and operating environment. It is based on a series of well-defined risk management principles, derived from experience, best practices and corporate governance principles. The Group updates and improves its risk management system on a regular basis.

The Board has established risk management rules and procedures for identifying risks critical to the Group's performance and delivery of its strategy at an early stage, and taking proactive steps to assess, monitor and manage the risks identified. . After identifying and assessing a risk, the Group identifies remediation measures aimed at reducing the likelihood of its occurrence and/or potential impact.

The Board delegates to the CEO the responsibility for the effective and efficient implementation and maintenance of the risk management system. The Audit and Risk Committee of the Board is in charge of the routine oversight of risk management and review of the effectiveness of the systems that have been established for this purpose.

The Group's business involves a number of risks, the most notable of which are listed below. The order in which the risks are presented is not intended to be an indication of the probability of their occurrence or the magnitude of their potential effects. Additional risks that are not known to the Group or recognised as risks at this time, or that it currently believes are immaterial, could also have a material adverse effect on the Group's business, financial position, results of operations or future prospects and the trading price of the GDRs and Bonds.

For more detail on some of the risks detailed here, as well as a more complete description of known risk factors, see the notes to the financial statements, attached to the Annual Report for 2016, or refer to the September 2016 prospectus for the Group's guaranteed notes1.

Strategic risks

- The Group is dependent on trade volumes, in particular container volumes, and, accordingly, on the strength of the Russian economy. The country's container market throughput has historically demonstrated a very strong correlation with the volume of imports of goods, which in turn is driven by domestic consumer demand. The Group has and may continue to be subject to significant container market deterioration as economic growth and consumer demand in Russia also deteriorate;

- The Group may be subject to increasing competition from other existing or newly developed container terminals through the introduction of new capacity or consolidation between container terminal operators and container shipping companies, which could result in intensified price competition, lower utilisation and a potential reduction of profitability. In recent years, both competitors and new market entrants have introduced or announced that they plan to introduce significant new container handling capacity to the Russian market. For example, a new port terminal has been constructed in the Port of Bronka, which commenced commercial operations in January 2016 and competes with the Group's ports in the Baltic Sea Basin. In particular, strategic international investors may develop or acquire stakes in existing competitor Russian container terminals, which could bring new expertise into the market and lure customers and cargoes away from the Group;

- The Group's ability to maintain or increase throughput volumes depends on the ongoing improvement, development and maintenance of railway and road infrastructure at or connected to its terminals, and the ability of private and state-controlled rail and truck operators to arrange inbound and outbound transportation of sufficient cargo flows. In addition, Russia's physical infrastructure is in poor condition, which could disrupt or impair the Group's normal business activity, and any efforts by the government to improve such infrastructure may increase the Group's costs;

- Instability in the Russian economy and exposure to social and political factors could create an uncertain operating environment and affect the Group's ability to sell its services due to significant economic, political, legal and legislative risks. Certain government policies or the selective and arbitrary enforcement of such policies could make it more difficult for the Group to compete effectively and/or impact its profitability;

- Political instability in Ukraine, heightened levels of tension between Russia and other states, increased military activity on its border with Russia and the imposition by the US, the EU and other countries of sanctions, asset freezes, travel limitations and certain other restrictive measures against specified Ukrainian and Russian individuals and legal entities, including a number of Russian banks, and the imposition by Russia of sanctions, including import and travel restrictions, has had in the past, and may continue to have in the future, an adverse effect on the Russian economy and demand for commodities. Such factors also could adversely affect the Group's ability to obtain financing on favourable terms and to deal with certain persons and entities in Russia or in other countries.

Operational risks

- The Group leases a significant amount of the land and quays required to operate its terminals from government agencies and any revision or alteration of the terms of these leases or the termination of these leases, or changes to the underlying property rights under these leases, could adversely affect the Group's business;

- The Group is dependent on the performance of services by third parties outside its control, including the performance by all other participants in the logistics chain, such as customs inspectors, supervisory authorities and others, and the performance of security procedures carried out at other port facilities and by its shipping line customers;

- Changes in costs in any part of the logistics chain in which the Group operates could affect the Group's competitive position;

- Inflation could increase the Group's cost base and the Group may be adversely affected by wage increases in Russia;

- The Group's oil products business could be affected by changes in Russia's exports of oil products and handling of such exports at its oil products terminal in Estonia, a decline in global demand for oil products or in Russian oil product export volumes or any change in trade relationships with Estonia;

- Tariffs for certain services at certain of the Group's terminals were in the past regulated by the Russian Federal Antimonopoly Service as they are classified as natural monopolies under Russian law. Recently, following an investigation into several Russian seaport terminal operators, including the Group's FCT, VSC and PLP terminals, the FAS found that such terminals were in breach of antimonopoly laws in relation to the pricing of their stevedoring services during 2015 and ordered the payment to the Russian government of amounts equivalent to the income that, according to the FAS, such terminals derived from the activity in question in 2015 (totaling RUB 7 billion in the case of the Group's terminals) and for the terminals to set "economically justified" rouble-denominated terminal handling charges (THC). The Group intends to challenge this order but there can be no assurance that such challenge will be successful or that the penalties referred to above will not have to be paid and requirements as to how to set THC in the future will not have a significant impact on pricing for the Group's terminal handling services or that, individually or in the aggregate, such penalties and requirements will not have a material adverse effect on the Group;

- The Group's competitive position and prospects depend on the expertise and experience of its key managers and its ability to continue to attract, retain and motivate qualified personnel;

- Accidents involving the handling of hazardous materials and oil products at the Group's terminals could disrupt its business and operations and/or subject the Group to environmental and other liabilities. The risk of safety incidents is inherent in the Group's businesses. The Group's operations could be adversely affected by terrorist attacks, natural disasters or other catastrophic events beyond its control.

Regulatory risks

- The Group is subject to a wide variety of regulations, standards and requirements and may face substantial liability if it fails to comply with existing or future regulations applicable to its businesses. The Group's terminal operations are subject to extensive laws and regulations governing, among other things, the loading, unloading and storage of hazardous materials, environmental protection and health and safety;

- Changes to existing regulations or the introduction of new regulations, procedures or licensing requirements are beyond the Group's control and may be influenced by political or commercial considerations not aligned with the Group's interests. Any expansion of the scope of the regulations governing the Group's environmental obligations, in particular, would likely involve substantial additional costs, including costs relating to maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of its ability to address environmental incidents or external threats. Adverse determination of pending and potential legal actions involving the Group's subsidiaries could have an adverse effect on the Group's business, revenues and cash flows and the price of the GDRs.

Compliance and shareholder risk

- The Group's controlling beneficial shareholders may have interests that conflict with those of the holders of the GDRs or notes;

- Adverse determination of pending and potential legal actions involving the Group's subsidiaries could have an adverse effect on the Group's business, revenues and cash flows and the price of the GDRs. Weaknesses relating to the Russian legal system and Russian law create an uncertain environment for investment and business activity and legislation may not adequately protect against expropriation and nationalisation. The lack of independence of certain members of the judiciary, the difficulty of enforcing court decisions and governmental discretion claims could prevent the Group from obtaining effective redress in court proceedings.

Financial risks

- The Group is a holding company and its ability to pay dividends or meet costs depends on the receipt of funds from its subsidiaries;

- The Group is subject to foreign-exchange risk arising from various currency exposures, primarily the Russian rouble and the US dollar. Foreign-exchange risk is the risk to profits and cash flows of the Group arising from movement of foreign-exchange rates due to inability to appropriately plan for and react to fluctuations in foreign-exchange rates. Risk arises from revaluation of assets and liabilities denominated in foreign currency;

- Russian transfer pricing rules may affect the Group's results of operations and due to uncertainties in the interpretation of Russian transfer pricing legislation, no assurance can be given that the Russian tax authorities will not challenge prices of transactions of the Group and make adjustments, which could adversely affect the Group's tax position;

- The Group may be subject to credit risk due to its dependence on key customers and suppliers;

- The Group's indebtedness or the enforcement of certain provisions of its financing arrangements could affect its business or growth prospects. The Group has high leverage and a substantial amount of its borrowings are secured and subject to covenants, which could be breached.

General business risks

- Industrial action or adverse labour relations could disrupt the Group's business operations and have an adverse effect on operating results;

- Failure of information systems to adequately protect critical data and infrastructure from theft, corruption and unauthorised usage.

Directors Responsibility Statements

Each of the Directors confirms to the best of his or her knowledge that:

(a) the consolidated and parent company financial statements and report of the Board of Directors (included in the Annual Report for 2016) have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and give a true and fair view of the financial position, financial performance and cash flows of the Company and the undertakings included in the consolidation taken as a whole; and

(b) the Annual Report for 2016 includes a fair review of the development and performance of the business and the position of Global Ports Investments PLC and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

ENQUIRIES

Global Ports Investor Relations

Mikhail Grigoriev / Yana Gabdrakhmanova

+7 495 989 4769

Email: ir@globalports.com

Global Ports Media Relations

Anna Vostrukhova

+7 495 989 4769

E-mail: media@globalports.com 

Teneo Blue Rubicon

Laura Gilbert / Sabine Pirone

+44 20 7260 2700

E-mail: globalports@teneobluerubicon.com

NOTES TO EDITORS

Global Ports Investments PLC is the leading operator of container terminals in the Russian market.

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 Terminal2 and Moby Dik3 in the Russian Baltics, and Vostochnaya Stevedoring Company in the Russian Far East) and two container terminals in Finland4 (Multi-Link Terminals Helsinki and Multi-Link Terminals Kotka). Global Ports also owns inland container terminals Yanino Logistics Park5 and Logistika-Terminal, both located in the vicinity of St. Petersburg, and has a 50% stake in the major oil products terminal AS Vopak E.O.S.6 in Estonia.

Global Ports' Revenue for 2016 was USD 331.5 million and Adjusted EBITDA was USD 224.3 million*. Consolidated Marine Container Throughput was 1,128 thousand TEU* in 2016.

Global Ports' major shareholders are Transportation Investments Holding Limited (operating under the brand name of N-Trans), one of the largest private transportation and infrastructure groups 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 73 ports and 140 inland services facilities, giving the company a global presence in 69 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. Global Ports wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Global Ports does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. 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.