Your SlideShare is downloading. ×
Global ports strategy_update_presentation_2014
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Global ports strategy_update_presentation_2014

572

Published on

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
572
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
20
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Global Ports Investments PLC Reinforcing leadership 19 June 2014, St. Petersburg
  • 2. DISCLAIMER Information contained in this presentation concerning Global Ports Investments PLC, a company organised and existing under the laws of Cyprus (the “Company”, and together with its subsidiaries and joint ventures, “Global Ports” or the “Group”), is for general information purposes only. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. The Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. This presentation includes Unaudited Selected Illustrative Combined Financial Metrics representing selected information prepared based on estimates and assumptions deemed appropriate by the Group. Global Ports together with NCC Group are referred to as the “Enlarged Group” or “Enlarged Global Ports”. The information is limited to certain key indicators, remains preliminary, is unaudited, and provided for illustrative purposes only. It does not purport to represent what the actual operational information results of operations or cash flows of the Enlarged Group would have been had the NCC Group acquisition occurred on 1 January 2013, nor is it necessarily indicative of the operational information results or cash flows of any part of the Enlarged Group. Because of their nature, selected combined information is based on a hypothetical situation and, therefore, do not represent the actual operational information results of operations or cash flows of the Enlarged Group. The actual results of operations or cash flows of the Enlarged Group may differ significantly from the illustrative combined amounts reflected herein. These materials may contain forward-looking statements regarding future events or the future financial performance of the Enlarged Group. You can identify forward looking statements by terms such as “expect”, “believe”, “estimate”, “anticipate”, “intend”, “will”, “could”, “may”, or “might”, the negative of such terms or other similar expressions. These forward-looking statements include matters that are not historical facts and statements regarding the Company’s and its shareholders’ intentions, beliefs or current expectations concerning, among other things, the Enlarged Group’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that the Enlarged Group’s actual results of operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which the Company operates may differ materially from those described in or suggested by the forward-looking statements contained in these materials. In addition, even if the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in these materials, those results or developments may not be indicative of results or developments in future periods. The Company does not assume any obligation 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 forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, market change in the Russian transportation industry or particularly in the ports operation segment, as well as many other risks specifically related to the Company and its operations. These materials do not constitute an offer or an advertisement of any securities in any jurisdiction. 2Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40
  • 3. REFERENCE TO ACCOUNTS AND OPERATIONAL INFORMATION Unless stated otherwise all financial information in this presentation is extracted from the consolidated financial information of the Company for the year ended 31 December 2013 and prepared in accordance with International Financial Reporting Standards adopted by the European Union (“IFRS”) and the requirements of Cyprus Companies Law, Cap. 113, and from the consolidated financial information of NCC (together with its subsidiaries and joint ventures “NCC” or “the NCC Group”) for the year ended 2013, prepared in accordance with IFRS and the requirements of Cyprus Companies Law, Cap. 113. The Global Ports Group’s audited consolidated financial statements for the year ended 31 December 2013 and NCC Group Limited and subsidiaries Consolidated Financial Statements for the Year Ended 31 December 2013 are available at the Global Ports Group’s corporate website (www.globalports.com). The financial information is presented in US dollars, which is also the functional currency of the Company and certain other entities in the Group. The functional currency of the Group’s operating companies for the periods under review was (a) for the Russian Ports segment, the Russian rouble, (b) for Oil Products Terminal segment and for the Finnish Ports segment, Euro. The functional currency for Russian subsidiaries of the NCC Group is the Russian Ruble, and for Cypriot subsidiaries, the United States Dollar (“USD”). For purposes of the consolidated financial statements, the results and financial position of each NCC Group’s entity are expressed in USD, which is the functional currency of the Parent and the presentation currency for the consolidated financial statements. Certain financial information which is derived from management accounts is marked in this presentation with an asterisk {*}. In this presentation the Group has used certain non-IFRS financial information as supplemental measures of the Group’s operating performance. Information (including non-IFRS financial measures) requiring additional explanation or defining is marked with initial capital letters and the explanations or definitions are provided at the end of this presentation. 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. Market share data has been calculated using the information published by the Association of Sea Commercial Ports (“ASOP”), www.morport.com, ARGUS Nefte Transport and Drewry Financial Research Services Ltd (“Drewry”). 3Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40
  • 4. TODAY’S SPEAKERS 4 Alexander Nazarchuk, Chief Executive Officer Aliona Ashurkova, Deputy Chief Executive Officer Mikhail Loganov, Chief Financial Officer Evgeny Zaltsman, Head of Business Development Roy Cummins, Chief Commercial Officer Anders Kjeldsen, Chief Operational Officer Eduard Chovushyan, Managing Director of Petrolesport Alexander Tikhov, Managing Director of First Container Terminal Arnout Dirk Lugtmeijer, General Manager of Vopak E.O.S.
  • 5. CONTENTS 5Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Page I. Establishing leadership: 2008-2013 6 II. Evolution of external environment 15 III. Strategy going forward 20 IV. Key takeaways 30 Appendices 31
  • 6. 2008 2013 2008 2013 ESTABLISHING LEADERSHIP: 2008 – 2013 6 MLT-Helsinki Ust-Luga Container Terminal Logistika-Terminal Vostochnaya Stevedoring Company Yanino Vopak E.O.S. First Container Terminal PetrolesportMoby Dik MLT-Kotka FAR EAST BASIN BALTIC BASIN BLACK SEA BASIN Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 (1) Source: ASOP, Drewry, Company estimates (2) Capacity as at the beginning of 2008 and 2014, throughput data for full year 2008 and 2013; 2013 data includes NCC Group data From a small regional player to the #1 container terminal operator in Eastern Europe measured by throughput and capacity(1) • 7 marine container terminals in Russia and Finland. Terminals are located in Russia’s key container gateways, 2 inland container facilities • Almost one in two containers in Russia was handled by Global Ports in 2013 compared to one in three in 2008 Track record of successful navigation through economic cycles Marine container throughput and capacity(2) millionTEU 1.84 1.33 2.77 4.06 Throughput Capacity 2.1x 2.2x
  • 7. 2008 Capacity PLP MD Finnish Ports Global Ports standalone 2013 PLP VSC NCC Total Global Ports 2014 EXPANSION AND UPGRADE OF CONTAINER FACILITIES Invested and already in operation Invested and expected to be commissioned shortly M&A Group’s marine container capacity development(1) 1.84 2.37 0.4 0.1 0.5 0.35 0.12 0.06 C. USD 513 million invested over last six years into existing facilities including: ● PLP converted from old timber port into modern container facility with 1 mln TEU capacity, further 400 thousand TEU already constructed ● Car handling capacity of 190 thousand cars and heavy Ro-Ro for 30 thousand units at PLP constructed from scratch ● The largest reefer container yard in the Baltics created ● Coal handling facility of 1 mt established at VSC ● Moby Dik capacity expanded by 44% to 400 thousand TEU ● Inland container depot (Yanino) developed Following double-digit volume growth VSC is approaching capacity (550 thousand TEUs): ● 100 thousand TEU capacity to be added in 2014 ● Long-term capacity expansion master plan being reviewed, current land plot enables to increase capacity to over 2 million TEUs Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 4.06 1.69 7 millionTEU (1) Capacity as at the beginning of 2008 and 2014, throughput data for full year 2008 and 2013.
  • 8. Car sales in Russia 2008 Car sales in Russia 2013 New cars import 2008 New cars import 2013 2008 2009 2010 2011 2012 2013 Car handling at PLP ENTREPRENEURIAL USE OF SPACE IN MAJOR FACILITIES Car and Ro-Ro handling facility built at PLP in 2008-2009(1), long-term contract with market leader Rolf ● Car throughput increased 3 times between 2008 and 2013 despite declining car import market ● PLP handled 13% of total imports of new cars into Russia in 2013 compared to 2% in 2008 ● Yard also designed to handle containers when needed ● Investments are expected to be fully paid back this year Coal handling started at VSC in 2011 to optimise terminal land usage and generate complementary revenue stream ● Current capacity is 1 million tones p.a. and is not expected to increase due to rapid growth in container throughput at VSC ● Investment in coal facility already fully paid back Continue to handle scrap metal and other bulk cargo at PLP until crowded out by containers thousandunits 36 28 43 67 105 108 -4% -46% Russian car market 2.7 2.6 1.5 0.8 Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 numberofcars 8 (1) Further upgrades in 2010-2013 Source: PwC
  • 9. 2008 2009 2010 2011 2012 2013 GOING BEYOND SHIP-TO-SHORE OPERATIONS 9 Development of inland container depot business to add value outside of seaports (stuffing and unstuffing and value-added operations) ● Development of Yanino Logistic Park ● Logistika Terminal was added to portfolio with NCC acquisition Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 VSC initiated block train service in late 2008 to increase terminal’s attractiveness through predictable and reliable rail service ● Quality and pricing of railway dispatching from VSC is key to its competitive positioning as 80% of containers leave terminal by rail; ● Allowed to keep railway costs for VSC customers under control in Ruble terms More than 60% of all import containers leave the terminal on trains organized by VSC ● VSC operates today c. 400 of its own flatcars Developed block train service is a strong competitive advantage for VSC ● Block train dispatches are cheaper and quicker ● Scheduled delivery with predictable price to Moscow, Novosibirsk, Ekaterinburg and other key regions Number of block trains organized by VSC 615 117 791 1,342 965 Units 0
  • 10. 2008 2009 2010 2011 2012 20132008 2013 2008 2013 2008 2013 2008 2013 OPTIMIZING OPERATIONS 10 Number of employees Throughput, ‘000 TEU Focus on performance improvement, increasing productivity and efficiency to differentiate from competition ● PLP productivity almost doubled over 5 years to c. 30 STS moves per hour in 2013 making it one of the most efficient terminals in Eastern Europe Headcount(1) optimization and outsourcing of support functions ● PLP headcount reduced by 36% while container throughput grew by 34% between 2008 and 2013 ● VSC headcount reduced by 4% while container throughput grew by 18% along with start of coal operations between 2008 and 2013 Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 PLP VSC 1,998 532 711 656 629 401 475 -36% +34% -4%1,272 +18% (1) Calculated as the sum of production staff and administrative staff headcount 65.7% 51.0% 59.9% 62.6% 64.1% Russian Ports Segment EBITDA margin Sustainably high EBITDA margin largely driven by strict focus on efficiency of operations ● Margin above 50% achieved even in challenging environment of 2009 Incremental increases in EBITDA margin in each of the last 4 years 65.1%
  • 11. Net cash from operating activities Interest paid Cash CAPEX Free cash flow 1.0 1.1 1.2 1.3 1.4 1.5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Oil production Oil refining Depth of oil refining Fuel oil production EXPLOITING WINDOW OF OPPORTUNITY IN FUEL OIL 11 Rapid growth of fuel oil production and export in Russia… …created a window of opportunity for Vopak E.O.S. to monetize its unique features Demand driven growth in oil refining along with stable refining depth increased fuel oil output ● Created strong demand for fuel oil export terminals Global Ports consolidated smaller players in the port of Muuga building the leading fuel oil transhipment hub by 2008 ● Common user facility with premium infrastructure providing for value-added services Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Vopak E.O.S. generated high free cash flow ● Total FCF of USD 444 million(1) generated in 2008-2013 Distributions to Global Ports, a 50% shareholder of Vopak E.O.S. amounted to USD 166 million between 2011 and 2013 Vopak E.O.S. cash flow generation in 2008-2013(1) (1) Vopak E.O.S. 100% basis Source: Minenergo, Company’s estimate 606 444 33 129 USDmillion
  • 12. GROWING THE BUSINESS THROUGH IMPROVED CUSTOMER SERVICE 12 Centralized commercial function to reach all levels of client’s decision making process ● Ability to access different levels of decision making process as needed ● APM Terminals as a co-controlling shareholder helps to strengthen long-term relationships with clients through its global commercial network ● Position Global Ports as premium facility with best quality service Expansion of customer base: focus on building relationships with main line operators (MLOs) vs. servicing feeder traffic, establishing deeper cooperation ● Share of MLO throughput increased from 42% in 2008 to 77% in 2013 Successful pricing campaigns for four consecutive years Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Share of main line operators in throughput(1) 2008 2009 2010 2011 2012 2013 42% 34% 42% 55% 62% 77% (1) 2013 data provided is on the illustrative combined basis, including NCC Group results in 2013
  • 13. 2.5 3.1 2.2 1.7 2.3 3.4 2008 2009 2010 2011 2012 2013 Net debt (Adjusted for NCC transaction) Net debt/Adjusted EBITDA (Adjusted for NCC transaction) Prudent capital allocation MAINTAINING FINANCIAL FLEXIBILITY AND PRUDENT CAPITAL ALLOCATION Financial flexibility provides for strategic advantages Maintain low leverage ● Historically low leverage, target Gearing Ratio of 1.5-2.0 times Net Debt / Adjusted EBITDA established in 2012 Focus on best practice in corporate governance and transparency ● Understandable and credible player for all financing partners Access to equity and debt financing ROCE as the key investment criteria both for organic and non-organic growth ● Constantly high ROCE in 2010-2013: above 16% Minimum dividend payout of 30% as stipulated in the dividend policy Regular dividend of USD 84.6 million paid for 2012 and USD 58.4 million for 2013, excess free cash flow distributed to shareholders in the form of special dividends ● Additional USD 79 mln special dividend in 2012 Ability to invest in growth when competitors are constrained due to over-leverage Quick execution of lucrative transactions (e.g. purchase of remaining 25% of VSC) IPO provided ability to consummate sizable transactions including equity component (e.g. NCC acquisition) (1) Adjusted for NCC acquisition 2013 leverage was equal to 0.9x. Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Maintaining low leverage(1) 271 204 140 66 230 1,419 NCC acquisition 13
  • 14. 2008-2013 STRATEGY SUCCESSFULLY EXECUTED 14 Clear strategy and reliable execution = market leadership Utilize the window of opportunity of lack of fuel oil export facilities Leverage unique features of Vopak E.O.S. Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Expansion and upgrade of container assets Entrepreneurial use of space in major facilities (Ro-Ro, cars, coal, scrap metal) Go beyond ship-to-shore (block train service in VSC, inland facilities) Focus on customer segmentation and services Optimize operations to improve the profitability of the business Maintaining low leverage and access to equity and debt financing enabled GPI to invest when competitors were constrained Value accretive M&A  Growth in container volumes and market share  Free cash flow generation and dividend distribution from VEOS  Consistently high EBITDA margin  High ROCE
  • 15. EVOLUTION OF EXTERNAL ENVIRONMENT 15
  • 16. 2000-2008 CAGR 2011 2012 2013 5m14 CURRENT ECONOMIC CYCLE, REDUCED DWELL TIME IMPACTING INDUSTRY 16 Russian GDP growth Throughput of container terminals in Russia Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 28.9% 5.3% 1.9% 4.3% 3.4% 1.3% 0.5% 2.7x 4.1x 3.9x Russian container market / GDP growth multiplier Container market growth rate is slowing as growth of Russia’s economy decelerates ● Ongoing containerization: the container market grows at a multiple of around 4 times GDP Capacity utilization of the market remains high (above 70%) ● No known sizeable capacity additions in the Russian market in 2014 except by Global Ports Market capacity utilization rate(1), % Source: ASOP, Rosstat (1) Capacity utilization rate is defined as container throughput in the corresponding period divided by container handling capacity for the period expressed as a percentage. (2) CB RF estimate for full year 2014 Average number of storage days decreased across industry in recent years due to introduction of electronic customs clearance and overall customs and logistic chains efficiency improvements ● Negatively impacting storage revenue Decrease in storage days removes ‘handbrake’ on trade and promotes further containerization ● Quicker and cheaper container supply chain vs. alternative transportation modes (2) 9.1% 29.7% 6.6% 4.5x 6.7x 75% 73% 75% Growth in electronically cleared customs documentsContainer market grows at a high multiple to GDP 9% 96% Share of electronically cleared customs documents Source: Federal Customs Service 2009 2013
  • 17. 5m13 5m14Russia World Average Turkey North America Europe RUSSIA REMAINS SUBSTANTIALLY UNDERCONTAINERISED Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Containerisation level 2013, TEU per 1000 capita Throughput of laden export containers increased 26% y-o-y during 5 months of 2014 Significant potential in further containerisation of Russia’s export flows Containerisation level remains low in Russia: 42 TEU per thousand capita(1) in 2013 compared to(1) : ● 90 TEU per thousand capita world average ● 95 TEU per thousand capita in Turkey ● 134 TEU per thousand capita in North America ● 135 TEU per thousand capita in Europe(2) 17 (1) Source: Drewry; some 2013 numbers are estimated (2) 2013 per capita data for Europe are for all of Europe (not just the European Union) and is not comparable to the numbers mentioned in GPI’s disclosure materials in 2012 (3) Source: ASOP Growth of laden export in Russia (in thousand TEU) (3) Source: Drewry Source:ASOP 42 90 95 134 135 +26% 392 310
  • 18. 57% 98% 68% 99% 86% 93% Russia Brazil Turkey US EU Global 15% 33% 60% 68% 65% 47% Russia Brazil Turkey US EU Global 53% 71% 56% 78% 80% 78% Russia Brazil Turkey US EU Global HIGH CONTAINERISATION POTENTIAL ACROSS INDUSTRIES1 Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 18 Temperature or Climate Control (frozen food and fish, perishable cargo etc.) Chemicals & Products Foodstuffs & Beverages for human consumption Consumables Plastics & rubbers Consumer fashion, personal & household goods Manufactured metal & semi-manufactured industrial consumables Machinery parts. Components, supplies & manufactures, n.e.s. (1) Source: Seabury, calculated as total containerised ocean trade in tonnes divided by total trade by country/region in tonnes (2) Selected cargo groups represent more than 50% of Russian import measured in TEU’s (3) Selected cargo groups represent around 45% of Russian export (excluding liquids) measured in tonnes Chemicals & Products Containerisation of import(2) Containerisation of export(3) 34% 65% 37% 71% 51% 65% Russia Brazil Turkey US EU Global 45% 86% 37% 83% 84% 75% Russia Brazil Turkey US EU Global 4% 31% 31% 29% 47% 36% Russia Brazil Turkey US EU Global 25% 30% 19% 31% 31% 36% Russia Brazil Turkey US EU Global 8% 25% 26% 66% 34% 35% Russia Brazil Turkey US EU Global 8% 12% 67% 13% 39% 32% Russia Brazil Turkey US EU Global
  • 19. 5m 2013 5m 2014 Ust-Luga and NMT annual handling capacity Total Russian fuel oil export, 2013 BUSINESS ENVIRONMENT FOR VEOS HAS BECOME MORE CHALLENGING 19 New entrants to the market Change of global marketplace Increased ship deliveries, trend to handle more in Russia Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Share of ship deliveries in VEOS New capacity additions 5918 (1) Fuel oil 3.5%S RMG NWE barge - Fuel oil 3.5% barge swap ARA month 3. milliontones(mt) -15 -5 5 15 09/13 11/13 01/14 03/14 05/14 Backwardation reduces demand for storage Fuel oil spot price - 3m forward price(1) USD/ton Backwardation Contango Source: Argus European Products 30%1% Less profitable ship deliveries to bordering countries have increased Trend of cargo owners is to handle more product within Russia Fuel oil market remains in backwardation (futures price being less than spot price) reducing the storage demand created by traders New fuel oil terminal capacity built since 2008 represents 1/3 of fuel oil export from Russia ● Ust-Luga terminal commissioned in 2011 with capacity of 14 million tones ● Novorossiysk terminal (NMT) commissioned in 2012 with capacity of 4 million tones
  • 20. STRATEGY GOING FORWARD 20
  • 21. STRATEGIC FOCUS 21 Strategy largely unchanged: focus on highest safety standards, maximum value extraction from core assets, investment discipline and complementary services Maximize shareholder value Focus on containers ● Maximize value extraction from core assets ● Generate new revenue streams ● Optimize portfolio of inland terminals Optimize CAPEX ● USD 35-45 million annual CAPEX over the next few years excluding potential expansion ● Invest in efficiency to optimize costs Performance and cost control ● Utilize potential of the enlarged operations for productivity improvement, repair and maintenance optimization and centralization ● Further increase share of variable costs ● Restructure oil products business Focus on FCF and deleveraging, maintain dividend ● ROCE driven investments, to be immediately cash generative ● Deleverage to reach target gearing of 2.0x Net Debt / Adjusted EBITDA ● Continue paying dividends as per dividend policy of 30% of imputed consolidated net profit Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40
  • 22. INCREASE FOCUS ON CORE CONTAINER ASSETS 22 Focus on large container assets – FCT, PLP, VSC Expand VSC which is gaining market share on a growing market Improve operational processes further Deepen commercial relationships - “value-based selling” and promote and monetize network benefits Divest minor non-core assets and operations (e.g. trucking business) 86% of EBITDA Container Operations Historically a good business when there’s a shortage of maritime container capacity Now high competition driven by low entry barriers ● Low EBITDA margin of inland container facilities decreasing attractiveness of inland concept Group has space for ancillary services in ports post the NCC acquisition Optimize inland terminals, seek alternative uses 4% of EBITDA Inland Terminals Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40
  • 23. NEW OPPORTUNITIES AND REVENUE BOOSTERS 23Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Develop a value- based selling strategy to leverage the strength of GPI’s terminal portfolio Strengthen customer service: centralize commercial team post NCC integration Define intermodal strategy: replicate the success of the VSC rail strategy in the North-West Explore IT solutions to generate new revenue streams New revenue streams (road and rail charges, new tariff structures) Continue developing non- containerized cargoes where capacity allows Utilize opportunities of the current asset base
  • 24. CONTINUE TO REDUCE COSTS AND FOCUS ON OPERATIONAL EFFICIENCY 24 Long-term maintenance program to ● optimise CAPEX and maintenance cost ● maximize return from previous investments and useful life of equipment Optimize equipment inside network of terminals Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Long-term view on maintenance Centralization of handling equipment procurement completed, centralization of top 10 OPEX spending is ongoing ● Cost savings of more than 10% of 2014 procurements achieved Further centralisation of procurement for projects in infrastructure, commodities, and IT Further centralization where needed Carefully benchmark productivity and efficiency of terminals and compare to APM Terminals’ global network using numerous criteria to realize potential Ensure business units deliver maximum productivity at lowest cost according to best international standards Benchmark against network terminals Mitigate volatility by creating stronger variable portion of the cost structure Potential for further variable cost improvement in staff cost and fuel costs Increase share of variable costs Continue to build and deliver highest safety and social responsibility standards in the marketHSSE/CSR
  • 25. OPTIMIZING OPERATIONS: NCD CASE STUDY 25Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 FCT layout NCD Empty containers dropped off by clients at NCD FCT delivers box to berth Loading of empty box to vessel Empty containers drop- off by clients directly at FCT or PLP Loading of empty box to vessel FCT operations pre-acquisition New process of operations after optimization NCD previous activity was eliminated, releasing land plot for other revenue uses Potential savings of more than USD 1 million per annum achieved
  • 26. 5m 2013 5m 2014 VOPAK E.O.S. RESTRUCTURING LAUNCHED 26Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 10% of EBITDA Oil Products Throughput milliontones(mt) 4.9 3.5 Business environment of Vopak EOS has become even more challenging ● Throughput volumes decreased 27% YoY in 5m 2014 ● Share of less profitable ship deliveries have increased to 30% Vopak E.O.S. initiated a restructuring program to address the change ● Staff reduced more than 10% in 2014, multi tasking of staff to increase flexibility and in-source ● CAPEX and expansion halted ● System of four interconnected terminals enables switching off of excess terminal capacity The impact of the recent restructuring is difficult to quantify at this stage ● However the anticipated continuation of a very challenging business environment is currently expected to lead to a further material decline in Vopak E.O.S.’ 2014 results
  • 27. VSC PLP FCT ULCT MD Global Ports 2008 2009 2010 2011 2012 2013 2014 2015 AVAILABLE CAPACITY ALLOWS CAPEX SAVINGS 27 2013 container throughput and capacity Container throughput Available capacity Capacity to be added in 2014 2013 utilization rate(1), % 86% 71% 87% 14% 55% 70% Cash CAPEX(3) Russian Ports segment VEOS Finnish Ports segment Budget estimate 180 59 52 132 80 79 66 35-45 USDmillion thousandTEU Total available capacity of 1.1 million TEU or 30% of 2013 throughput 100 thousand TEU of additional capacity to be added at VSC in 2H 2014 400 thousand TEU of additional capacity at PLP already constructed, to be put into operation in the near future 475 711 1,084 2,551 62 219 378 181 166 1,089 289 400 75 100 Available capacity post NCC acquisition and well- invested terminals allow further decrease of CAPEX 2014 CAPEX likely to be below USD 66 million announced previously 2015-2016 CAPEX expected to decrease to USD 35-45 million excluding potential expansion 500 Preliminary estimate of maintenance CAPEX (1) Capacity utilization rate is defined as container throughput in the corresponding period divided by container handling capacity for the period expressed as a percentage. (2) Russian Ports Segment (3) 2013 data includes NCC Group cash CAPEX Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 (2)
  • 28. 2013 Cash and deposits 2014 2015 2016 FOCUS ON FCF GENERATION AND DELEVERAGING 28 Focus on Free Cash Flow generation Deleveraging schedule(1) Pro forma net cash flow from operating activity 2013 Cash and deposits(2) as of 31/12/13 Debt repayment(1) Strong Free Cash Flow generation due to: ● Process optimization driven by cost control ● Further reduction in CAPEX ● Expansion CAPEX only if meets return requirements and be cash generative quickly after implementation Comfortable leverage and debt repayment schedule ● Providing for swift deleveraging to Target Gearing Ratio of 1.5-2.0x Net Debt / EBITDA No change in dividend policy, minimum 30% of imputed consolidated net profit to be distributed as dividends 375 133 139 179 191 Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 (1) As of 31/01/14, based on management accounts, excluding interest (2) Including deposits with the maturity over 90 days USDmillion
  • 29. CHANGE IN JOINT VENTURE ACCOUNTING 29 Revenue Adjusted EBITDA(3) Net Debt 57.0% 3.4x 3.5x (1) 2013 data provided is on the illustrative combined basis, including NCC Group results in 2013 (2) 2013 financial metrics calculation is preliminary and may be revised within audit of 2014 results (3) Including share of net profit of joint ventures (4) Including dividends received from joint ventures, net of tax The option to proportionately consolidate joint ventures has been eliminated starting from January 1st 2014 due to adoption of IFRS 11 Group’s joint ventures Vopak E.O.S, Moby Dik, Yanino Logistics Park and Finnish Ports are now consolidated using the equity method starting from January 1st 2014 ● Proportional share of net profit of joint ventures contributes to the “Share of profit of joint ventures” reported below EBITDA ● EBITDA of joint ventures is deconsolidated Group will continue to disclose segmental information as a note to IFRS statements, to ensure continued comparability The principal impact on Global Ports’ reported financial information as a result of adopting these standards are shown below Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 USDmillion Net Income Operating cash flow(4) 737 589 420 100 Adjusted EBITDA margin, % Net Debt / EBITDA 378 64.1% 1,323 375 406 Illustrative combined for 2013(1) Illustrative combined for 2013 based on new JV accounting(2) Vopak E.O.S. Moby Dik Yanino LP MLT Helsinki MLT Kotka Joint ventures of Global Ports 50% 25%50% 75% 100 1,419 Impact of IFRS 11 implementation
  • 30. Focused on FCF, deleveraging and dividend payments KEY TAKEAWAYS 30Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Clear strategy Increase focus on key container assets Utilize the scale advantage for taking costs out (productivity, maintenance, centralization etc.) Optimize CAPEX further Russian market is underconteinerized (1) Source: Drewry; some 2013 numbers are estimated Fundamentally under-containerized market with good long-term structural growth prospects Significant containerization gap across a broad range of industries TEU per capita 2.1x(1) lower than global average, 2.3x(1) lower than Turkey GPI is the leader in terms of size, experience and governance Unparalleled network of 7 marine terminals in Russia and Finland, 2 inland facilities, strong presence in two key basins for Russian trade: Baltic basin and Far East Track record and experience of successfully navigating economic cycles Strong governance culture with APM Terminals and N Trans as co-controlling shareholders Focus on FCF generation Deleverage to target gearing of 2.0x Net Debt / EBITDA Continue paying dividend per dividend policy of minimum 30% of imputed net profit
  • 31. APPENDICES 31
  • 32. SELECTED COMBINED OPERATIONAL INFORMATION FOR 5 MONTHS1 32 (1) All information derived from management accounts; (2) Total throughput of Russian Ports excludes the throughput of Yanino which, in 5m 2013 and 5m2014 was 25 thousand TEUs and 34 thousand TEUs respectively and the throughput of LT which, in 5m 2013 and 5m 2014 was 43 thousand TEUs and 41 thousand TEUs respectively. Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 5M 2013 5M 2014 5M 2013 5M 2014 Gross throughput Gross throughput Russian Ports segment Finnish Ports segment Global Ports containerised cargo (thousand TEUs) PLP 310 282 Containerised cargo (thousand TEUs) 88 101 VSC 186 202 FCT 444 408 Moby Dik 93 96 Oil Products Terminal segment ULCT 14 42 Total Russian Ports segment2 1,047 1,031 Oil products Gross Throughput (million tonnes) 4.9 3.5 Non-containerised cargo Ro-ro (thousand units) 8 11 Cars (thousand units) 45 52 Bulk cargo (thousand tonnes) 450 354
  • 33. To Kick off GMR Implementation, Safety reviews were done on all Sites, based on the Global Ports GMR Manual which includes GMR description, Accident lessons learnt and APM Terminals Practices: Global Ports Safety Improvement Plan for 2014 33 Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 3 pillars of the safety Improvement plan for 2014 Initial Safety Reviews in Q2 lead to terminal action plans Minimum Safety Requirement Implementation Prioritized based on the 4 high risk areas for terminals: ● Traffic ● Falling objects ● Working at heights ● Compressed energy GMRs covering main general HSSE requirements added Incident Investigation Kelvin Topset methodology to be rolled out as the standard for Incident investigation, ensuring Root Cause analysis and lessons learnt Incident Classification Standard for incident classifications will be implemented according to international standard to ensure continued focus on High risk areas Focus on implementation of Minimum Safety Requirements, Incident investigation training and Incident classification
  • 34. Best practice governance standards established since 2008 ● Quick and unbureaurcatic decision making processes enabling Group to capitalise on market opportunities Strong and professional Board of Directors including experienced INED’s ● Strong Board committees chaired by INEDs Entrepreneurial and experienced management team ● Proper split of responsibilities between head office and terminal management STRONG AND EFFECTIVE GOVERNANCE 34 Global Ports governance structure Capt. Bryan Smith Senior INED (since 2008) Chairman of Nominations and Remuneration committees Siobhan Walker INED (since 2011) Chairman of Audit and Risk committee General meeting of shareholders Remuneration Committee Nomination Committee Audit and Risk Committee Internal Auditor KEY EXECUTIVE MANAGEMENTTERMINALS VICTORIA SCHERBAKOVA- SLUSARENKO, General Manager of Yanino EDUARD CHOVUSHYAN, Managing Director of PLP VALERY MESTULOV, Managing Director of VSC ALEXANDER DUDKO, General Manager of Moby Dik DIRK VAN ASSENDELFT, General Manager of Multi- Link Terminals VITALY MISHIN, General Manager of Logistika Terminal ALEXANDER TIKHOV, Managing Director of FCT ARNOUT DIRK LUGTMEIJER, General Manager of VEOS ANDREY BOGDANOV, General Manager of ULCT ALIONA ASHURKOVA, Deputy Chief Executive Officer MIKHAIL LOGANOV, Chief Financial Officer EVGENY ZALTSMAN, Head of Business Development ROY CUMMINS, Chief Commercial Officer ANDERS KJELDSEN, Chief Operating Officer Board of Directors ALEXANDER NAZARCHUK, Chief Executive Officer Appointment of the members of terminals’ Board of Directors and General Managers Coordination of respective activities and policies Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40
  • 35. GLOBAL PORTS CORPORATE STRUCTURE 35 Entity Partner Share Partner Profile Vopak E.O.S. Royal Vopak 50% • Global market leader in independent bulk liquid storage terminals • 77 terminals with a combined storage capacity of nearly 30.5 million cubic meters in 29 countries1 Moby Dik, Finnish Ports, Yanino Container Finance Ltd Oy 25% in each • Finnish investment company with extensive experience in transportation • Shareholder of door-to-door European container transport company Containerships ULCT Eurogate 20% • One of the largest and the most reputable European container-terminal groups, operating ten sea terminals on the North Sea, in the Mediterranean region as well as on the Atlantic • Handled over 14.2 million TEUs in 2013 Enlarged Russian Ports segment(2) Global Ports VSC PLP Moby Dik 75%100%100% Yanino 75% Finnish Ports 75% Vopak E.O.S. 50% 9% Polozio Enterprises Limited TIHL 30.75% APM Terminals 9%30.75% FCT ULCT LT 100%100% 80% Ilibrinio Establishment Limited 20.5% Free Float Source: Companies’ data. (1) As of 16 March 2014. (2) In enlarged Russian Ports segment post transaction: including Russian Ports segment of Global Ports and NCC. Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40
  • 36. WELL INVESTED TERMINALS IN KEY GATEWAYS Source: Drewry, open sources, Company analysis, as of 31.12.2013. Note: Gross container handling capacity with respect to container terminals of the Group as of 31 December 2013. Black Sea Basin 15% of Russian market 2013 throughput Russia • Capacity: 440 ths. TEU NCSP Novorossiysk Black Sea Turkey Ukraine • Capacity: 350 ths. TEU NUTEP (Delo) Baltic Sea Basin 56% of Russian market 2013 throughput Russia Finland Finnish transit Baltic countries’ transit • Capacity: 400 ths. TEU Moby Dik • Capacity: 1,000 ths. TEU PLP St. Petersburg Region Estonia Latvia Kaliningrad Region Baltic Sea Lithuania • Capacity: 440 ths. TEU Ust-Luga • Capacity: 510 ths. TEU BSC (NCSP) and Kaliningrad SCP • Capacity: 1,250 ths. TEU FCT • Capacity: 430 ths. TEU CT St-Petersburg (UCL Holding) Far East Basin 27% of Russian market 2013 throughput • Capacity: 550 ths. TEU VSC • Capacity: 650 ths. TEU VMTP (FESCO) Vladivostok Okhotsk Sea Moscow Ilychevsk • Capacity: 850 ths. TEU • Capacity: 200 ths. TEU VSFP Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40 Russia China 36
  • 37. PLP: TERMINAL LAYOUT(1) 37 Metal Scrap Area #48 #47 #46 Dedicated Container Berths Berths#42-43 Berths #49-50 Car Ro-Ro Terminal Traditional Ro-Ro Berths #64 #63 #62 #61 #60 Tunnel Western Speed Diameter Reefers Loaded containers Empty containers 400 thousand TEU of new capacity Key characteristics Total Area: 129 ha Number of berths: 13 Quay length: 2,201 m Maximum ship draft: 11 m Railway track length: 7,616 m Container throughput in 2013: 711,000 TEU Capacity Containers: 1,000,000 TEU Other bulk cargo: 900,000 tonnes Cars: 190,000 units Ro-Ro terminal capacity: 30,000 units Reefer sockets: 3,630 (1) As of 31.12.2013 Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40
  • 38. Key characteristics The largest container terminal in Russia and the CIS by throughput(1) and capacity(2) Container throughput in 2013: 1,084,000 TEU Container capacity ● Current – 1,250,000 TEU ● Potential – 1,500,000 TEU Terminal area: 89 ha 4 operational berths of 780 m length, depth alongside – 11.5 meters 3.3 km of railway tracks 2,905 reefer plugs FCT: TERMINAL LAYOUT(1) 38 (1) Based on 2013 data , according to Association of Sea Commercial Ports (ASOP); (2) Based on 2013 data , according to Company’s estimates; Definitions for terms marked in this presentation with capital letters provided in the Appendices at pages 39-40
  • 39. DEFINITIONS 39 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, amortisation of intangible assets, other gains/(losses)-net, impairment charge of property, plant and equipment and impairment charge of goodwill; for NCC Group is defined as profit for the period before income tax expense, foreign exchange gains/(loss), net, finance costs, finance income and depreciation and amortisation expenses adjusted further certain non-cash or one-off nonrecurring gains and losses included within “other income/(expenses), net” in Note 8 of the NCC Group Financial Information for the year ended 31 December 2013. Adjusted EBITDA Margin (a non-IFRS financial measure) is calculated as Adjusted EBITDA divided by revenue, expressed as a percentage. Average Storage Capacity is a storage capacity available at Vopak E.O.S. oil products terminals, averaged for the beginning and end of the year. Baltic Sea Basin: the geographic region of northwest Russia, Estonia and Finland surrounding the Gulf of Finland on the eastern Baltic Sea, including St. Petersburg, Tallinn, Helsinki and Kotka. Container Throughput in Russia is defined as total container throughput of the ports located in the Russian Federation excluding transit cargo volumes. Far East Basin: 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. FCT includes First Container Terminal ZAO, that owns and manages a container terminal in St. Petersburg port, North-West Russia. The Global Ports Group owns a 100% effective ownership interest in FCT. Finnish Ports segment consists of two terminals in Finland, MLT Kotka and MLT Helsinki (in port of Vuosaari), in each of which Container Finance currently has a 25% effective ownership interest. Fuel Oil Export Market is defined as the export of fuel oil from ports located in the Former Soviet Union countries. 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. Gross Container Throughput of NCC Group represents total container throughput of the NCC Group’s terminals shown on a 100% basis, it excludes the container throughput of the NCC Group’s inland container terminal, Logistika Terminal. Gross Throughput is throughput shown on a 100% basis for each terminal, including terminals held through joint ventures and proportionally consolidated. Logistika Terminal (LT) includes NCC Logistika OOO that owns and manages a container terminal, located to the side of the St. Petersburg - Moscow road, approximately 17 kilometres from FCT and operates in the Shushary industrial cluster. The Global Ports Group owns a 100% effective ownership interest in FCT. LTM Adjusted EBITDA (a non-IFRS financial measure) represents Adjusted EBITDA for the last twelve months. NCC means NCC Group Limited and its subsidiaries Net Debt (a non-IFRS financial measure) is defined as a sum of current borrowings and non-current borrowings, less cash and cash equivalents and bank deposits with maturity over 90 days. Oil Products Terminal segment consists of the Group’s 50% ownership interest in Vopak E.O.S. (in which Royal Vopak currently has a 50% effective ownership interest).
  • 40. DEFINITIONS 40 PLP includes Petrolesport OAO, OOO Farwater and various other entities (including some intermediate holdings) that own and manage a container terminal in St. Petersburg port, North-West Russia. The Group owns a 100% effective ownership interest in PLP. Revenue per CBM of Storage is defined as the total revenue of Oil Products Terminal segment (Vopak E.O.S.) for a respective period divided by Average Storage Capacity during that period. Revenue per Tonne of Throughput is defined as the total revenue of Oil Products Terminal segment for a respective period divided by Oil Products Terminal segment’s Gross Throughput in tonnes. ROCE (Return on capital employed, a non-IFRS financial measure) is defined as operating profit adjusted for impairment for the last twelve months divided by the sum of Net Debt and total equity, averaged for the beginning and end of the last twelve month period. Ro-Ro, roll on-roll off: cargo that can be driven into the belly of a ship rather than lifted aboard. Includes cars, buses, trucks and other vehicles. Russian Ports segment consists of the Group’s 100% interest in PLP, 100% interest in VSC, and 75% interest in Moby Dik and Yanino (in each of which Container Finance currently has a 25% effective ownership interest). Russian Ports segment of the Enlarged Global Ports Group consists of the Group’s 100% interest in PLP, FCT and VSC and Logistika Terminal, 80% interest in ULCT (in which Eurogate currently has a 20% effective ownership interest), 75% interest in Moby Dik and Yanino (in each of which Container Finance currently has a 25% effective ownership interest). Operating Cash Costs of Russian Ports is defined as cost of sales and administrative, selling and marketing expenses of Russian Ports segment for the period less (a) depreciation of property, plant and equipment, (b) amortisation of intangible assets, (c) impairment of property, plant and equipment and (d) impairment of goodwill. Operating Cash Costs of Oil Products Terminal is defined as cost of sales and administrative, selling and marketing expenses for the period less (a) depreciation of property, plant and equipment, (b) amortisation of intangible assets, (c) impairment of property, plant and equipment and (d) impairment of goodwill. 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 Operational Cash Costs is defined as cost of sales and administrative, selling and marketing expenses for the period less (a) depreciation of property, plant and equipment, (b) amortisation of intangible assets, (c) impairment of property, plant and equipment and (d) impairment of goodwill. Transaction is the acquisition of 100% of the share capital of NCC Group Limited, announced on 2 September 2013 and completed on 27 December 2013 ULCT includes Ust‐Luga Container Terminal OAO that owns and manages a container terminal in the large multi-purpose Ust-Luga port cluster on the Baltic Sea, Russia. The Global Ports Group owns a 80% effective ownership interest in ULCT, Eurogate currently has a 20% effective ownership interest. Vopak E.O.S. 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 owns a 50% effective ownership interest in Vopak E.O.S.. The remaining 50% ownership interest is held by Royal Vopak. VSC includes Vostochnaya Stevedoring Company OOO and various other entities (including some intermediate holdings) that own and manage a container terminal in Vostochny port near Nakhodka, Far-East Russia. The Group owns a 100% effective ownership interest in VSC.
  • 41. INVESTOR RELATIONS 41 Mikhail Grigoriev Tatyana Stepanova Phone: +357 25 313 475 E-mail: ir@globalports.com Web: www.globalports.com

×