GLPR.L Regulatory News (GLPR)

For immediate release 30 April 2012

Global Ports Investments PLC

Publication of 2011 Annual Report and Accounts

Global Ports Investments PLC ("Global Ports", and together with its subsidiaries and joint ventures, "the Group"), (LSE ticker: GLPR) today publishes its 2011 Annual Report and Accounts ("the Annual report for 2011").

Further to the announcement of its full year results for the year ended 31 December 2011, Global Ports announces today the publication of its 2011 Annual Report and Accounts for the same period. The Group's Full Year 2011 Financial Results are included as Appendix 1 of the Annual Report for 2011.

The Annual Report for 2011 is available for viewing at http://www.rns-pdf.londonstockexchange.com/rns/4058C_-2012-4-30.pdf.

The Annual Report for 2011 will also be available to view or download in pdf format from the Company's website (www.globalports.com) and 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 2011 and should be read in conjunction with the Group's Full Year 2011 Financial Results Announcement issued on 26 March 2011. 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 2011 and page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the Annual Report for 2011.

PRINCIPAL RISKS AND UNCERTAINTIES

The following description of principal risks and uncertainties is extracted from "Risk Management Process, Principal Risks and Uncertainties" section of the Annual Report for 2011, pages 54 - 57 of the Annual Report for 2011.

The Group bases its risk management activity on a series of well-defined risk management principles, derived from experience, best practice and corporate governance principles. Effective risk management is critical to achieving the Group's strategic objectives. Global Ports has comprehensive risk control and management systems in place to prevent potential adverse effects of changes in its environment or situation.

In order to manage risks, The Board of Directors has established a risk management process comprising the necessary organisational rules and procedures for identifying risks at an early stage, and taking proactive steps to manage the risks inherent to any commercial activity. The Board of Directors systematically monitors and undertakes an assessment of risks critical to the Group's performance and strategic delivery. After identifying and assessing the risk, the Company then defines control measures aimed at reducing the likelihood of its occurrence and/or the potential impact. The Group's business involves a certain number of risks, the most notable of which are presented below. The order in which the following 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 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.

Strategic Risks

§ The Group is dependent on the growth of trade volumes and, accordingly, on economic growth and the liberalisation of trade;

§ The introduction of significant new capacity planned by the Group's competitors could result in surplus capacity and subject the Group to intensified price competition and lower utilisation;

§ The Group may be subject to increasing competition from other container and oil products terminals, and consolidation between container terminal operators and container shipping companies may enable the Group's competitors to compete more effectively with Global Ports;

§ The Group's growth depends on substantial capital investment it may not have sufficient capital to make, or may be restricted by covenants in financing agreements from making sufficient future capital expenditures;

§ Expansion through acquisition entails certain risks, and the Group may experience problems in integrating and managing new acquisitions;

§ The Group's current operations and future expansion may depend on the construction of new quays, dredging of existing quays and canals, and maintenance of quay drafts, which are governed by port and other governmental authorities and are outside of the Group's control;

§ The Group's ability to substantially increase throughput volumes depends on the ongoing improvement and development of railway and road infrastructure.

Operational Risks

§ The Group is dependent on a limited number of shipping lines and customers for a significant portion of its business;

§ Failure to meet customer expectations could damage the Group's customer relationships and business reputation;

§ The Group is subject to a wide variety of regulations and standards requirements and may face substantial liability if it fails to comply with existing or future regulations applicable to its businesses;

§ 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 could adversely affect the Group's business;

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

§ Inflation could increase the Group's cost base;

§ The Group may be adversely affected by wage increases in Russia;

§ The Group's insurance policies may be insufficient to cover certain losses;

§ 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;

§ Failure of the operational information and technology systems at the Group's terminals could result in disruptions to the services it provides;

§ 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.

Compliance and Shareholder Risks

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

§ The Group is exposed to risks in connection with its interests in joint venture and strategic partnership businesses;

§ Adverse determination of pending and potential legal actions involving the Company's subsidiaries could have an adverse effect on the Group's business, revenues, cash flows and the price of the GDRs;

§ The lack of independence of certain members of the judiciary, the difficulty of enforcing court decisions and governmental discretion in instigating, joining and enforcing claims could prevent the Group from obtaining effective redress in court proceedings.

Financial Risks

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

§ The Group may be subject to foreign exchange risk arising from various currency exposures primarily with respect to the euro, the Russian rouble and the US dollar;

§ The Group is subject to interest rate risk due to floating rate liabilities in relation to its leases and long-term borrowings. Increases in interest rates may adversely affect the Group's financial condition;

§ 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.

RELATED PARTY TRANSACTIONS

The Group is controlled by Transportation Investments Holding Limited incorporated in Cyprus, which controls 75% of the Company's shares (2010: 90%). The ultimate controlling party of the Group is Mirbay International Inc., a company incorporated in Bahamas.

For the purposes of these financial statements, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operational decisions as defined by IAS 24 "Related Party Disclosures". In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. Related parties may enter into transactions, which unrelated parties might not, and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between unrelated parties.

The following transactions were carried out with related parties:

(a) Sale of services

(b) Profit from sale of property, plant and equipment

(c) Purchase of property, plant and equipment

(d) Purchases of services

(e) Interest income and expenses

(f) Trade, other receivables and prepayments

(g) Trade and other payables

(h) Key management compensation/directors' remuneration

(i) Loans to related parties

The details of loans provided to common ownership companies are presented below (see also Note 19 of the Directors' report and consolidated financial statements for the year ended 31 December 2011 in Appendix 1 of the Annual Report for 2011):

The loans are not secured, bear interest at 3.8 - 8.1% (2010: 3.8 - 8.1%) and are repayable between 2012 and 2018. 

[Footnote 1: In 2011 AS VEOS repurchased 10% of its share capital in total equally from its two venturers. The redemption of shares was partly settled in cash and the unsettled balance was converted to an interest bearing loan repayable by 31 December 2012. This asset comprises of the amount owed by AS VEOS to the Group that is attributable to the other venturer. The balance of the unsettled amounts as at 31 December 2011 was US$13,985 thousand.settled in cash and the unsettled balance was converted to an interest bearing loan repayable by 31 December 2012. This asset comprises of the amount owed by AS VEOS to the Group that is attributable to the other venturer. The balance of the unsettled amounts as at 31 December 2011 was US$13,985 thousand.]

The details of loans provided to other related parties are presented below:

(j) Loans from related parties

The details of loans received from TIHL by the various Group entities are presented below:

The loans were provided at interest rates of 7-10% (2010: 7-10%) with repayment dates during 2012-2018.

(k) Guarantees and pledges

During 2009 two entities within Russian ports segment granted a corporate guarantee covering the non-performance by TIHL in respect of a bank loan with a balance US$40 million on 31 December 2010. The guarantee was provided free of charge and was valid for 18 months.

In April 2010 the guarantee was prolonged for a further period of two years. The prolongation of the guarantee was recognised at an estimated fair value of US$3,000 thousand (deferred tax - US$600 thousand; net of deferred tax - US$2,400 thousand), through retained earnings in equity as it was a transaction with the shareholders.

In November 2008 the Company has pledged its 25% shareholding in Multi-Link Terminals Limited as security for a loan obtained by a common ownership company. The loan was repaid in full in September 2010. The gain on amortization of the guarantee amounted to US$125 thousand in 2010 within 'Other (losses)/gains - net' (see Note 7 of the Directors' report and consolidated financial statements for the year ended 31 December 2011 in Appendix 1 of the Annual Report for 2011).

In May 2011, the guarantees granted by entities within Russian ports segment in respect of TIHL's indebtedness under a bank loan were released. The amortisation charged through the income statement amounted to US$2,000 thousand in 2011 (2010: US$2,335 thousand, see Note 7 of the Directors' report and consolidated financial statements for the year ended 31 December 2011 in Appendix 1 of the Annual Report for 2011).

DIRECTORS' RESPONSIBILITY STATEMENTS

§ Each of the Directors confirms that, to the best of his or her knowledge, the Management Report (sections "Our Strategy", "Market Review" and "Business Review") 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;

§ Each of the Directors confirms that, to the best of his or her knowledge, the consolidated financial statements (which are presented on pages 12 to 69 of the Annual Report for 2011) have been prepared in accordance with IFRS as adopted by the EU and the requirements of the Cyprus Companies Law, Cap. 113, and give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as whole.

ENQUIRIES

Global Ports Investor Relations

Sergey Stikharev

+357 25 503 163

Email: irteam@globalports.com

Global Ports Media Relations

Anna Vostrukhova

+357 25 503 163

Email: media@globalports.com 

Holloway & Associates

Laura Gilbert

+44 20 7240 2486

Email: globalports@rholloway.com

NOTES TO EDITORS

Global Ports Investments PLC is the leading operator of container terminals in the Russian market. Global Ports accounts for 30% [2] of the total container volumes in the Russian ports and 23% [3] of the total exports of fuel oil from the former Soviet Union countries. Global Ports is part of N-Trans group, one of the largest private transportation and infrastructure operators in Russia. Global Ports' terminals are located in the Baltic and Far East Basins, key regions for foreign trade cargo flows. Global Ports operates three container terminals in Russia (Petrolesport and Moby Dik in St. Petersburg, Vostochnaya Stevedoring Company in the Vostochny Port) and two container terminals in Finland (Multi-Link Helsinki and Multi-Link Kotka). Global Ports also includes Yanino Logistics Park located in the vicinity of St. Petersburg and a major oil terminal Vopak E.O.S. in Estonia.

Global Ports' consolidated revenue for the year ended 31 December 2011 was USD 501.3 million (up 31% year on year). Adjusted EBITDA for the year ended 31 December 2011 was USD 282.2 million (up 37% on the year ended 31 December 2010). The Group's Russian Ports segment handled a total container throughput of approximately 1,344 thousand TEUs in 2011 (excluding Yanino), a 44% increase on 2010. In June 2011 Global Ports listed its GDRs at the Main Market of the London Stock Exchange (GLPR).

For more information please see: www.globalports.com

Footnotes:

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 the Company. 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. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company 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 the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations.