29 Apr 2014 17:00
For immediate release 29 April 2014
Global Ports Investments PLC
PUBLICATION OF 2013 ANNUAL REPORT AND ACCOUNTS
Global Ports Investments PLC ("the Company" and, together with its subsidiaries and joint ventures, "Global Ports" or "the Group"), the leading container terminal operator serving Russian cargo flows (LSE ticker: GLPR) today publishes its 2013 Annual Report and Accounts ("the Annual Report for 2013"). The Group's Full Year 2013 Financial Results are included as Appendix 1 of the Annual Report for 2013.
The Annual Report for 2013 is available for viewing or downloading in pdf format at:
http://www.rns-pdf.londonstockexchange.com/rns/7798F_-2014-4-29.pdf
The Annual Report for 2013 will be also 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 2013 and should be read in conjunction with the Group's Full Year 2013 Financial Results Announcement issued on 17 March 2014. 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 2013 and page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the Annual Report for 2013.
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 2013, pages 53 - 55 of the Annual Report for 2013.
The Company's risk management efforts are focused on mitigating the potential negative impact on its business from changes in the external and internal environment. That is despite the Group ensuring it has as well-balanced a structure as possible in which sites are owned in partnership with world industry leaders and having managers who have been in place since its foundation over 15 years ago.
We believe that identifying and managing risk is central to achieving the corporate objective of delivering long-term value to shareholders.
The Group's key risks are being regularly discussed with the members of the Group's Board of Directors. Risks are defined as the possibility that an action, or inaction, would adversely affect the achievement of corporate goals. The Board has delegated the oversight of risk management to the Audit and Risk Committee. In addition, it delegated to the Chief Executive Officer responsibility for the effective and efficient implementation and maintenance of the risk management system. The Board members, through the Audit and Risk Committee, review the effectiveness of systems that have been established for this purpose. The Board has adopted a Risk Management Policy and a Risk Management Standard that provide a consistent framework for the identification, assessment and management of the risks. The Group's risk management system is subject to a continual improvement process.
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 the 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 is 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 the potential impact. The Group's business involves a certain number of risks, the most notable of which are presented here.
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.
For more detail on some of the risks set forth here, see the prospectus dated 20 December 2013 ('Risk Factors', pages 22-58), available for viewing on the corporate website of Global Ports at www.globalports.com/globalports/investors/reporting-transactions/corporate-transactions.
STRATEGIC RISKS
· The Group is dependent on the growth of trade volumes and, accordingly, on economic growth and the liberalisation of trade;
· 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. 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's growth on certain terminals depends on substantial capital investment and it may not have sufficient capital to make, or may be restricted by covenants in financing agreements from making, future capital expenditures and other investments as it deems necessary or desirable;
· The NCC Acquisition and other possible expansions through acquisition entail certain risks, and the Group may be exposed to unexpected risks and experience problems realising the intended benefits of the NCC Acquisition or other potential 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;
· The Group's ability to discover, evaluate and select among alternatives to allocate financial and human resources for effective development and execution of strategic plan to achieve the strategic objectives of the Group;
· Exposure to social and political factors within a market environment that affect the ability to sell products and services.
· The political instability in Ukraine, tension between Russia and Ukraine and the sanctions imposed by the United States, the European Union and other countries and potential imposition of further sanctions, asset freezes, travel limitations and certain other measures could adversely affect our ability to deal with certain persons and entities in Russia, trade volumes, the Russian economy or demand for commodities.
OPERATIONAL RISKS
· The Group is dependent on a limited number of shipping lines and customers for a significant portion of its business;
· 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 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 GPI Group's terminals have been in the past, regulated by the Russian federal government and, as a result, the tariffs charged for such services are subject to a maximum tariff rate unless the Group obtains permission to increase the maximum tariff rate;
· 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;
· The risk of safety incidents is inherent in the Groupʼs businesses.
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 is subject to foreign exchange risk arising from various currency exposures primarily with respect to the Euro, 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 (mainly debt).
· 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;
· Group's borrowings are subject to certain covenants and restrictions, and no assurance can provided that the Group or the terminals can promptly monitor and forecast compliance with such conditions through adequate controls and monitoring processes.
GENERAL BUSINESS RISKS
· The Group's inability to maintain and monitor labour relations with Labour Unions;
· Failure of information systems to adequately protect the critical data and infrastructure from theft, corruption and unauthorized usage.
ENQUIRIES
Global Ports Investor Relations
Mikhail Grigoriev
+357 25 503 163
Email: ir@globalports.com
Global Ports Media Relations
Anna Vostrukhova
+357 25 503 163
E-mail: media@globalports.com
StockWell Communications
Laura Gilbert/ Zoe Watt
+44 20 7240 2486
E-mail: globalports@stockwellgroup.com.
NOTES TO EDITORS
Global Ports
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 Terminal1 and Moby Dik2 in the St. Petersburg and Ust-Luga port cluster, and Vostochnaya Stevedoring Company in the Vostochny Port) and two container terminals in Finland3 (Multi-Link Terminals Helsinki and Multi-Link Terminals Kotka). Global Ports also owns Yanino Logistics Park4 and inland Logistika-Terminal, both located in the vicinity of St. Petersburg, and has a 50% stake in the major oil product terminal, AS Vopak E.O.S., in Estonia. Global Ports completed the acquisition of the NCC Group in the end of 2013.
In 2013, gross container throughput of Global Ports and NCC Group on an Illustrative Combined basis was 2,774 thousand TEU, a 2.9% increase compared to 2012 gross container throughput5. Global Ports 2013 revenue on an Illustrative Combined basis was USD 736.8 million, with an Adjusted EBITDA6 on an Illustrative Combined basis in 2013 of USD 420.0 million.
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 B.V. is a global terminal network of 65 operating port facilities and 160 inland services operations, giving APM Terminals B.V. a global presence in 68 countries. 20.5% of Global Ports shares are held in the form of global depositary receipts listed on the Main Market of the London Stock Exchange (LSE ticker: GLPR). Ilibrinio Establishment Limited and Polozio Enterprises Limited (former owners of NCC Group) each own 9% of the share capital of Global Ports.
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 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 specifically related to Global Ports and its operations.
1 In which Eurogate currently has a 20% effective ownership interest.
2 In which Container Finance currently has a 25% effective ownership interest.
3 In each of which Container Finance currently has a 25% effective ownership interest.
4 In which Container Finance currently has a 25% effective ownership interest.
5 Russian Ports and Finnish Ports segments on an Illustrative Combined basis
6 Adjusted EBITDA is defined as profit for the period before income tax expense, finance costs, finance income, depreciation of property, plant and equipment, amortisation of intangible assets, other gains/(losses)-net, impairment charge of property, plant and equipment and impairment charge of goodwill.