2012

H A R B O U R O F O F P R O S P E R O U S B U S I N E S S

N C S P G R O U P

A N N U A L R E P O R T

1.2 Group’s Assets

Azov-Black Sea basin/Novorossiysk Port

Share of cargo group of NCSPin 2012

Share of revenue group of NCSPin 2012

Specialization

Terminal area

Harbor area

Number / length of berths

Depth at berths

Maximum ship deadweight

Equipment

Crude oil, oil products, grain, ore, fertilizer, cement, coal, metals, containers

95.6 ha

510,000 m2

44/ 9.4 km

up to 24.0 m

-

Electric forklifts 1.5-2.5 t: 10;

forklifts up to 5 t: 114;

forklifts 5-10 t: 27;

forklifts 10-20 t: 25;

forklifts 20-42 t: 21;

reachstackers: 12;

roll trailers: 70;

hauling trucks: 41;

front end loaders: 0.8 m3: 3;

front end loaders 1.8 m3: 9;

front end loaders 4.3 m3: 6;

universal loaders: 5;

bulldozers: 7;

mobile cranes 45-124 t: 16;

portal cranes 5-63 t: 47;

overhead cranes 10 t: 1.

Timber, containers

59.75 ha

153,000 m2

11/ 1.4 km

up to 13.9 m

34,000 t

STS cranes 42 t: 2;

RMG cranes 41 t: 1;

RTG cranes 41 t: 2;

mobile cranes 36-104 t: 3;

overhead cranes 12.5 t: 6;

gantry cranes 10 t: 1;

portal cranes 5-20 t: 10;

forklifts up to 5 t: 37;

forklifts 5-10 t: 9;

forklifts 10-20 t: 20;

reachstackers: 11;

roll trailers: 6.

Metals

30 ha

690,000 m2

10/ 1.7 km

up to 11.0 m

70,000 t

Mobile cranes 14-36 t: 7;

overhead cranes 30-32 t: 5;

overhead cranes 5-10 t: 3;

gantry cranes 30-50 t: 2;

portal cranes 20-40 t: 10;

forklifts up to 5 t: 4;

forklifts 5-10 t: 3;

forklifts 10-20 t: 6;

forklifts 20-30 t: 9;

forklifts 30 t: 3;

hauling trucks 32 t: 11;

roll trailers 60 t: 38.

Grain

7.049 ha

-

2/0.4 km

up to 13.3 m

63,000 t

Grain loading machines, 800 t/h: 2.

Oil products, other liquid cargo

9.9 ha

-

3/ 0.9 km

up to 13.0 m

56,000 t

12 tanks with total capacity of 118,000 m3:

7 diesel fuel tanks, 82,000 m3 total;

2 liquid fertilizer (UAN) tanks, 25,000 m3 total;

2 fuel oil tanks for bunkering, 10,000 m3 total;

1 diesel tanks for bunkering, 1,000 m3.

Company Region of operations

NCSP IPP NGTNLE NSRZ

41%

32%

2% 2%

2%

3%

4%

3%

9%7%

Baltic basin

Share of cargo group of NCSPin 2012

Share of revenue group of NCSPin 2012

Specialization

Terminal area

Harbor area

Number / length of berths

Depth at berths

Maximum ship deadweight

Equipment

Containers

11.5 ha

25,000 m2

1/ 0.2 km

up to 10.3 m

20,000 t

Mobile cranes 104 t: 3;

RTG cranes 40 t: 6;

hauling trucks: 12, of which 10 with multi-trailer systems;

forklifts 28 t: 1;

forklifts 3 t: 2;

forklifts 1.5-1.8 t: 4;

empty container handers up to 12 t: 1;

reachstackers: 5;

roll trailers: 10.

Crude oil, oil products

54 ha

63,600 m2

6/ 1.6 km

11.6 m - 17.8 m

150,000 t

4 tanks for fuel oil, total capacity 20,000 m3

-

Port �eet services

-

-

-

-

-

7 azimuth tugboats built in 2004-2012 with 3500 – 5500 hp power.

Company

Region of operations

Baltiysk Port Primorsk Port

BSC PTP SFP

-

Port �eet services

-

-

-

-

-

47 ships:

24 tugboats up to 5,712 hp power;

1 �re boat;

6 oil/oil product tankers 250-3,000 t;

2 water tankers;

14 auxiliary vessels (environmental protection, bilge water collectors, passenger ships, pilot boats)

NCSPFleet

Azov-BlackSea basin

47%

1%

1% 4%20% 20%

1.3. Highlights of the Year

OperationsIn April, NCSP signed an agreement to increase cement handling by some 200,000 tonnes with one of Europe’slargest producers of white and gray cement, Turkey’s Cimsa.

On July 6-7, employees of PJSC NCSP, NCSP Fleet and other Group companies successfully localized and remediatedthe damage from the flooding in the city of Novorossiysk. Port operations were restored within 24 hours.

In August, PJSC NCSP began handling steam coal targeting up to 125,000 tonnes per month in the long-term.

In August PJSC IPP started to handle new cargo — Euro-5 standard low sulfur diesel fuel — targeting up to 150,000tonnes per month in the long-term.

Over the course of the year, a suite of organizational and operational measures was developed and implementedto increase the operating efficiency of Group companies at the Novorossiysk Port.

The Group introduced technology for accelerated processing container trains that enabled it to double throughputfor rail shipments of containers from Novorossiysk Port.

PJSC NCSP acquired three container loaders with capacity of up to 45 tonnes; two forklifts with capacityof 20 tonnes; six automatic loaders with capacity of 12 tonnes, as well as other equipment to update equipmentat its Eastern Pier

Strategic developmentIn the first quarter, LLC PTP launched a bunkering complex with capacity of up to 360,000 tonnes per year.

In the second quarter, the Group completed construction of LLC Novorossiysk Fuel Oil Terminal facilities withcapacity of up to 4 million tonnes per year and the overhaul of PJSC NCSP’s Pier No. 4 to handle oil products fromthis terminal.

The first phase of the expansion of LLC BSC’s container terminal was completed, increasing throughput capacityto 200,000 TEU.

In February 2013 PJSC NCSP, PJSC NLE, PJSC NSRZ and PJSC NGT together with FGUP Rosmorport concludedagreement of cooperation on design and engineering works under the Novorossiysk Sea Port ModernisationProgramme, which consists of preparing designs for dredging works and construction of new cargo terminals.

Also in February 2013 PJSC NCSP, PJSC NGT and PJSC United Grain Company signed an agreement of intent to buildspecialized seed oils storage and transshipment terminal with up to 2 million tonnes per year capacity.

Federal Tariff Service by its order dated 26 March 2012 has terminated direct price regulation on all cargoes,except crude oil and oil products, for a number of stevedoring companies operating at port of Novorossiysk,including PJSC NCSP, OJSC NLE, and OJSC NSRZ.

Corporate developmentIn March, Moody’s Investors Service affirmed the Ba3 credit rating of PJSC NCSP with a stable outlook.

In March, PJSC NCSP’s Board of Directors approved a ruble bond program consisting of five series. Bond series BO-01, BO-02, BO-03, BO-4 and BO-05 amounted to respectively 5 billion rubles, 4 billion rubles, 4 billion rubles, 3 billionrubles and 2 billion rubles accordingly.

In May PJSC NCSP conducted market placement of its ruble bonds Seies BO-02 for the amount of 4 bln. rubles.

In May, Novorossiysk Port Capital S.A. redeemed a $300 million issue of five-year Loan Participation Notes.

In June by the Board of Director’s decision the Internal Control Service of PJSC NCSP was reorganized into theInternal Audit Department.

On March 19, 2013, PJSC NCSP’s Board of Directors made the following decisions:

— To elect Transneft Senior Vice President Maxim Grishanin as Chairman of the Board of Directors of PJSC NCSP

— To suspend the powers of PJSC NCSP CEO Rado Antolovic

— To appoint PJSC NCSP Executive Director Yury Matvienko as interim CEO of PJSC NCSP

— To appoint Igor Terentyev as PJSC NCSP Executive Director

— To determine the size of PJSC NCSP’s Management Board at five members and elect the new Management Board.

4

Social policyIn the end of 2011 and in early 2012 production personnel wages were raised at some of the Group’s companiesas part of new social policy.

In July the Group actively participated in a public effort to remediate the damage from flooding in the Krasnodarregion and provided charity donations to families that suffered from the disaster.

In September,PJSC NCSP Fleet celebrated its 20th anniversary.

In December, LLC BSC celebrated its tenth anniversary.

In December, PJSC NCSP and the Novorossiysk city administration signed an agreement on the NovorossiyskCommercial Sea Port’s involvement in the social and economic development of the city.

On March 22, 2013, PJSC NCSP signed a new collective agreement with employees for the period to 2016.

5

1.4. Letter from the Chairman

Dear shareholders,NCSP Group is a unique example of successful integration of a broad portfolio of different cargoes into a singlebusiness, and this represents the Group’s strongest competitive advantage. Combined with the Group’s geographicaldiversification across the Black and Baltic seas, this creates a great potential for development.

In 2012, the Group overcame challenging market conditions to once again demonstrate the strengths of its businessmodel, with growth in EBITDA and net profit and an improved EBITDA margin.

NCSP Group has a clear strategic direction and understanding of how to achieve its goals. The Group’s developmentstrategy is updated on an on-going basis and management continually seeks out new market opportunities.

Today the core of NCSP Group’s cargo turnover is liquid cargoes, including crude oil and oil products, which areone of the Group’s areas of growth as well as a sustainable source of revenue.

It is on this foundation that the Group is building its strategy of further diversification of its cargo base and rangeof additional services. The Group’s development programme features a consistent balance between projectsin liquid, bulk, general and container cargo.

Of particular importance to NCSP Group was the agreement signed with FGUP Rosmorport on the reconstructionand modernisation of Novorossiysk Sea Port. Today large-scale infrastructure projects cannot be implementedwithout an effective public-private partnership, and this agreement may well open a whole new page in the historyof NCSP Group and the Russian port industry.

Yours sincerely,Maxim GrishaninChairman of the Board of Directors of PJSC NCSP

6

1.5. Letter from the CEO

Dear shareholders,NCSP Group the leading ports and logistics company in Russia. Yet leadership comes with great responsibility, and in2012 we did well to pass the leadership test.

Neither prolonged storms early in the year, nor flooding in mid-summer, not the collapse of the grain market andharsher competition for oil and iron ore cargo could not undermine the positive trend in NCSP Group development.Amid challenging market conditions, the Group delivered cargo volume growth of 1.9 million tonnes, helping us torecord a good financial result. While revenue was almost flat, coming in at $ 1,034 million, the Group achievedEBITDA growth of 7.4%, to $ 591.5 million, and an improved EBITDA margin up to 57.2%

Though the year we paid great attention implementing Group's medium- and long-term development program. Ourspending on the investment program implementation in 2012 totalled $89.3 million.

In 2012 we brought online the LLC PTP bunkering facility and new capacity at LLC Novorossiysk Fuel Oil Terminal,while progressing with the reconstruction of OJSC IPP bunkering facility and tank farm. We also started handlingnew cargoes including coal and low-sulphur fuel.

PJSC NCSP and OJSC NLE developed and implemented a suite of measures to increase operating efficiency, withcore operational functions including project management, budgeting and financial reporting, HR, legal andcorporate governance all centralised at Group level.

NCSP Group’s 2012 results once again confirm the Company’s ability not only to maintain but also develop itsleadership of the sector across the board, including level of service, advanced technologies and socialresponsibility.

Yours sincerely,Yuriy MatvienkoActing CEO, PJSC NCSP

7

Contents

About the GroupGroup’s Assets 2Highlights of the Year 4Chairman’s Address 6CEO Address 7

Strategy & ResultsMarket Review 12Operating Review 17Financial Review 28Strategy Review 35

GovernanceGroup’s Management 40Corporate Governance 43Shareholder Capital & Debt Securities 54

Social ResponsibilityHR Policy 58Procurement Policy 62Environment 62Charity & Sponsorship 64

Consolidated Financial StatementsStatement Of Management’s Responsibilities 68Independent Auditor’s Report 69Consolidated Financial Statements 70

8

Disclamer

Responsibility statetementI hereby confirm that to the best of my knowledge this Report includes a fair review of the development andperformance of the business and the position of PJSC NCSP and the subsidiaries included in the consolidation takenas a whole (NCSP Group), together with a description of the principal risks and uncertainties that the Group faces.

Acting CEO of PJSC NCSPYuriy Matvienko

Forward-looking statementsThis annual report was written using the information available to NCSP Group (PJSC NCSP and its subsidiaries)(hereinafter also the Group") at the time of its preparation. Some of the statements in this Annual Report regardingthe Group’s business activities, economic indicators, financial position, business and operating performance, plans,projects and expected results, as well as tariff trends, costs, anticipated expenses, development prospects,industry and market forecasts, individual projects and other factors are forwardlooking statements, i.e. they are notestablished facts.

The forward-looking statements which the Group may make from time to time (but which are not included in thisdocument) may also contain planned or expected data on revenue, profits (losses), dividends and other financialindicators and ratios. The words “intends ”, “aims”, “projects”, “expects”, “estimates”, “plans”, “believes ”,“assumes”, “may”, “should”, “will”, “will continue” and similar expressions usually indicate forward-lookingstatements. However, this is not the only way to denote the forward-looking character of information.

Due to their specific nature, forward-looking statements are associated with inherent risk and uncertainty, bothgeneral and specific, and there is the danger that assumptions, forecasts and other forward-looking statements willnot actually come to pass. In light of these risks, uncertainties and assumptions, the Group cautions that, owingto the influence of a wide range of material factors, actual results may differ from those indicated, directlyor indirectly, in the forward-looking statements, which are only valid as at the time of preparation of this AnnualReport. NCSP Group neither affirms nor guarantees that the performance results set forth in the forward-lookingstatements will be achieved.

The Group accepts no liability for losses which may be incurred by individuals or legal entities who act on the basisof the forward-looking statements. In each particular case, the forward-looking statements represent only oneof many possible development scenarios, and should not be seen as the most probable. Except in those casesdirectly stipulated by applicable legislation and the Listing Rules of the UK Listing Authority, the Group assumesno obligation to publish updates and amendments to the forward-looking statements to reflect new informationor subsequent events.

Source of operating data and certain financial informationOperating data and certain financial information (e.g. cargo turnover analysis, storage volumes, capacities, EBITDAand number of personnel) used in this Annual financial report and are based on the Group management accountingdata which is subject to the management judgment and presentation.

The financial information presented in a number of tables in this document has been rounded to the nearest wholenumber or the nearest decimal place. Therefore, the sum of the numbers in a column may not conform exactlyto the total figure given for that column. In addition, certain percentages presented in the tables and charts in thisdocument ref lect calculations based upon the underlying information prior to rounding, and, accordingly, may notconform exactly to the percentages that would be derived if the relevant calculations were based upon therounded numbers.

9

12

17

28

35

2.1. Market Review

About NCSP GroupNCSP Group is the leading stevedoring company in Russia and the third largest European port operator by cargoturnover. NCSP Group includes ten specialized stevedoring companies operating at ports in the Azov-Black Sea andBaltic basins.

NCSP Group includes Russia’s two largest ports by cargo turnover — Novorossiysk on the Black Sea and Primorskon the Baltic Sea — making it a leader in the country’s stevedoring services market.

Novorossiysk Port is the largest port in the Azov-Black Sea basin and in Russia as a whole. The port’s cargo turnoverwas 86.8 million tonnes in 2012, of which NCSP Group handled 83.0 million tonnes. NCSP Group companies handle95.6% of the cargo at Novorossiysk Port and 47.0% of the cargo shipped through all ports in the Azov-Black Sea basin.

Primorsk is Russia’s second largest port by cargo turnover and one of the biggest in the Baltic. It handled 74.9million tonnes of cargo in 2012, representing 13.2% of total turnover at Russian seaports and 36.1% of cargo at portsin the Baltic basin. LLC Primorsk Trade Port, an NCSP Group company, handles 100% of the cargo at the portof Primorsk (data from the Association of Commercial Seaports of Russia, or ASOP).

The Group’s second asset on the Baltic is the LLC Baltic Stevedoring Company’s container terminal at the portof Baltiysk in Kaliningrad Region, which currently handles half of all containers in the Baltic exclave. The terminalhandled 185,100 TEU in 2012, amounting to 1.0 million tonnes or 7.8% of all cargo in the region, according to ASOP.

Russian stevedoring services market reviewCargo turnover through Russian seaports totalled 567.1 million tonnes in 2012, as growth accelerated to 5.9% from1.8% in 2011, according to ASOP. Russian seaports handled 7.4% more bulk cargo, 3.7% more general cargo, 4.7% moreliquid cargo and 8.3% more cargo in containers in 2012.

Cargo turnover at Russian seaports, mln. tonnes

Containers

General

Bulk

Liquid

Total

4343

6969

140140

315315

567567

3939

6767

129129

301301

536536

3333

6666

113113

314314

526526

2012 2011 2010

Source: Association of Commercial Seaports, 2012

The growth of bulk cargo traffic through Russian seaports was driven by 13.9% increase in coal volumes to 89.2million tonnes. Turnover of ferrous metals grew by 4.8% to 25.6 million tonnes, while nonferrous metals rose by 1.9%to 4.2 million tonnes, supporting the overall growth of general cargo transhipment. Transhipment of liquid cargo alsoincreased: crude oil volumes grew by 2.6% to 198.4 million tonnes of crude oil, and oil products by 8.0% to 114.0million tonnes.

Container cargo turnover grew 8.3% to 12.8 million tonnes in 2012, which was equivalent to 623,700 TEU, up 4.4%from 2011.

Export cargo turnover jumped by 9.3% to 447.7 million tonnes and import cargo grew by 6.3% to 47.5 million tonnes.However, transit cargo fell by 18.4% to 40.2 million tonnes and coastwise cargo saw a slight decline of 0.9% to 31.8million tonnes.

12

Export cargo, at 447.7 million tonnes, accounted for 78.9% of total cargo turnover at Russian ports in 2012, up by 2.4percentage points from 2011. Import cargo rose 0.1 percentage points to account for 8.4% of the total (47.5 milliontonnes).

Seaports in the Baltic, Azov-Black Sea and Pacific regions handled 36.6%, 31.2% and 23.6%, respectively, of cargoturnover through all Russian seaports in 2012. Cargo turnover grew 11.6% to 207.2 million tonnes at ports in theBaltic in 2012, 7.1% to 134.4 million tonnes in the Pacific and 2.3% to 176.7 million tonnes in the Azov-Black Sea basin.

Since ports in each of these regions specialize by cargo type and by geography of export and import shipments,they do not compete directly with one another. Ports in the Baltic, for example, predominantly handle and lead theRussian stevedoring services market for container cargo and crude oil/oil products, handling 57.6% of containersand 42% of oil cargo. Ports in the Azov-Black Sea basin, meanwhile, handle 92.1% of grain shipments and a thirdof oil/oil product cargo.

Europe's largest seaports by cargo turnover in 2012, mln. tonnes

Le Havre

Primorsk

Bremen

Marseille

Novorossiysk*

Algeciras

Amsterdam

Hamburg

NCSP Group

Antwerp

Rotterdam

6363

7575

8484

8686

8787

8989

9494

131131

160160

184184

442442

6868

7575

8181

8888

8484

8282

9393

132132

157157

187187

435435

2012 2011

* Cargo turnover of Novorossiysk Port does not include ZAO CPC-R.

Source: Port of Rotterdam rating, ports data.

13

Russia's largest seaports by cargo turnover in 2012, mln. tonnes

Kaliningrad

Vladivostok**

Vysotsk

Nakhodka

Tuapse

Vanino

Murmansk

Vostochny

Ust-Luga

St. Petersburg

Primorsk

Novorossiysk*

NCSP Group

1313

1313

1414

1717

1818

2020

2424

4343

4747

5858

7575

8787

159159

1313

1212

1313

1515

1919

1919

2626

3838

2323

6060

7575

8484

157157

2012 2011

* Cargo turnover of Novorossiysk Port does not include ZAO CPC-R.

** Cargo turnover of Vladivostok Port does not include Posyet

Source: Association of Commercial Seaports, 2012

14

NCSP Group share in cargo traffic by sea basins, 2012, mln. tonnes

Сompetitive environmentNCSP Group still competes in the Azov-Black Sea basin with the Tuapse Port and other smaller ports in southernRussia (Temryuk, Yeisk, Taganrog, Azov, Rostov and Kavkaz), as well as with ports in Ukraine (Odessa, Nikolaev andIlichyovsk). However, Novorossiysk Port is far ahead of its rivals across the whole range of cargo and competitionis more in niche areas. Ports in the Sea of Azov, for example, have considerable natural limitations in terms of thedraft of ships and difficult ice conditions in the winter, while Tuapse Port specializes in handling oil products fromRosneft’s Tuapse Oil Refinery.

NCSP Group’s competitiveness in the Azov and Black Sea region is the result of numerous key factors: year-roundoperation of Novorossiysk Port, the depth of the port’s waters, its extensive waterfront, ample warehouse spaceand modern loading equipment. Novorossiysk Port offers higher loading and unloading productivity, a high levelof service and the convenience of not having to cross national borders to deliver cargo to port, giving it an edgeover Ukrainian ports in servicing Russian cargo.

Competition from Ukrainian ports becomes more significant when there is a lack of loading capacity in Novorossiysk.For example, in 2012 the Ukrainian port of Yuzhne introduced technology for loading bulk cargo (iron ore) in theharbour, enabling the port to accommodate bulk carriers with deadweight of 100,000-110,000 tonnes. The resultingincrease in the port’s throughput capacity in the short-term drew some ore away from Novorossiysk. NCSP Groupbegan introducing similar technology for large-capacity Cape Size bulk carriers in 2013, which will enableit to restore its position in this segment of ore cargo.

The main competitors of NCSP Group’s LLC Primorsk Trade Port in the Baltic basin are still the Big Port of St.Petersburg and the ports of Vysotsk and Ust-Luga. However, Primorsk remains the market leader thanks to itscompetitive advantages such as year-round operation and shipping, a natural depth of up to 17.8 meters, shortlength of navigational channel and convenient berths for large vessels with deadweight up to 150,000 tonnes. Theavailability of land for new port terminals and their further development offers additional potential for the growthof Primorsk Port and NCSP Group as a whole.

15

The most pressing issue at the moment is the lack of a rail link to Russia’s biggest oil terminal. Oil is shippedto Primorsk by pipeline, while oil products are delivered by pipeline, by sea and by road (bunkering fuel). Thisproblem could be solved with the planned construction of the new Losevo-Kamennogorsk railroad and themodernization of the Ruchyi-Losevo and Vyborg-Primorsk-Yermilovo sections of railroad. The Losevo-Kamennogorskline is intended to take freight trains going to ports on the Gulf of Finland (Primorsk and Vysotsk) to the Ruchyi-Petyayarvi-Losevo-Kamennogorsk-Vyborg line in light of the launch of high-speed passenger services on the St.Petersburg-Helsinki line.

Industry regulationIn line with a Russian government order to consider the advisability of deregulating stevedoring companies, the firstphase of this process — elimination of price regulation — is now underway. Stevedoring companies are being giventhe opportunity to independently set prices for cargo handling services, while Russia’s Federal Tariff Service (FTS)monitors prices.

The FTS ruled on February 5, 2013 to eliminate price regulation for three Russian ports: Temryuk, Taganrog andArkhangelsk.

Federal Tariff Service by its order № 52-t/1, dated 26 March 2012 and registered by the Ministry of Justice as of 18April 2013 under registration number №28181, has terminated direct price regulation on all cargoes, except crudeoil and oil products, for a number of stevedoring companies operating at port of Novorossiysk, including PJSC NCSP,OJSC NLE, and OJSC NSRZ. The order shall come in force in due course.

The abandonment of direct rate-setting and maintenance of monitoring will increase transparency while also makingit possible for market participants to conduct a flexible pricing policy based on prevailing market conditions.

2.2. Operating Review

Consolidated cargo turnoverNCSP Group’s consolidated cargo turnover grew by 1.9 million tonnes or 1.2% compared to 2011 to 158.9 milliontonnes in 2012. Cargo transhipment increased by 2.5% at NCSP Group companies operating at the Novorossiysk Portand by 19.3% at the Baltiysk Port, while remaining relatively stable at the Primorsk Port. There were no substantialchanges in individual companies’ share of the Group’s consolidated cargo turnover in 2012.

NCSP Group cargo turnover 2011-2012

‘000 tonsChange, ‘000 tons Change, %

2012 2011

Cargo turnover, total 158 905.1 156 986.3 1 918.8 1.2%

Liquid cargo, total 131 105.5 130 447.0 658.5 0.5%

Crude oil 110 829.7 113 393.9 -2 564.2 -2.3%

Oil products 19 396.0 16 516.8 2 879.2 17.4%

UAN 464.0 432.3 31.8 7.3%

Seed oils 415.8 104.1 311.7 299.6%

Bulk cargo, total 11 592.2 12 580.0 -987.8 -7.9%

Grain 7 963 5 776 2 187 37.9%

Mineral fertilizers 871 2 088 -1 217 -58.3%

Sugar 643 1 581 -938 -59.3%

Iron ore and ore concentrate 1 756.1 2 906.3 -1 150.2 -39.6%

Scrap Metal 37.4 80.4 -43.0 -53.5%

Cement 321.7 148.8 172.9 116.2%

General cargo, total 11 120.3 9 030.0 2 090.3 23.1%

Ferrous metals 8 652.1 6 855.6 1 796.5 26.2%

Timber 730.0 602.2 127.8 21.2%

Timber. thsd. cubic meters 1 319.5 1 094.9 224.6 20.5%

Non-ferrous metals 1 092.6 1 105.2 -12.6 -1.1%

Perishable cargo 241.4 353.4 -112.0 -31.7%

Other 404.2 113.5 290.7 256.0%

Containers 5 087.2 4 929.4 157.8 3.2%

Containers 5 087.2 4 929.4 157.8 3.2%

Containers, thsd. TEU 623.6 597.5 26.1 4.4%

Transhipment volumes in 2012 grew by 17.4% for oil products, 37.9% for grain, 26.2% for ferrous metals, 21.2% forforest products, 3.2% in tonnes and 4.4% in TEU for containers, 7.3% for liquid fertilizer, as well as 299.8% forvegetable oil and 116.2% for cement, among other cargo. The Group exceeded average industry growth rates forcargo such as oil products, grain, forest products and ferrous metals. This enabled the Group to completely offsetthe decline in transhipment of crude oil (-2.3%), bulk mineral fertilizer (-58.3%), iron ore (-39.6%), raw sugar (-59.3%)and other cargo. The Group maintained its leading market positions in transhipment of crude oil and oil products,grain and sugar, ferrous metals and timber.

17

These dynamics were the result of a range of external factors and management’s prompt action to offset negativetrends and adjust the Group’s operating and marketing efforts accordingly. External factors that affected theGroup’s performance included:

Over 715 hours or 29 days of stormy weather at the port of Novorossiysk in the first quarter of 2012;Suspension of traffic to Novorossiysk during July 7-12 2012 due to railways damaged by the flooding of July 6-72012, and 50% reduction of traffic to Novorossiysk during July 13-15 2012 due to extensive repairs on the NorthCaucasus Railway;Prioritization of traffic destined to Olympic projects in Sochi on the North Caucasus Railway;Changes in schedules for oil shipments via trunk pipelines in Russia in order to supply new export routes;Fluctuations in international demand for iron ore, the reduction of Russian exports of this commodity andgreater competition with Ukrainian ports for this type of cargo;Early cessation of 2011-2012 grain export season, poor grain crop in 2012 due to droughts and flooding, andhigher domestic prices, which drained grain exports in the second half of 2012.

In order to maintain overall cargo turnover, to offset these negative factors and to develop promising areasof business in 2012, the Group took a number of steps to increase operating efficiency and consolidate marketingefforts, and implemented new cargo projects, including:

The launch of a bunkering complex at the Primorsk Port with capacity of up to 360,000 tonnes in the firstquarter of 2012;The completion of construction of LLC Novorossiysk Fuel Oil Terminal (NMT) facilities with capacityof up to 4 million tonnes per year in the second quarter of 2012 and the subsequent launch of the terminal,as well as the completion of the overhaul of PJSC NCSP’s Pier No. 4 to handle oil products from this terminal;The signing of an agreement in April 2012 with Turkey’s Cimsa, one of Europe’s largest producers of white andgrey cement, to increase cement transhipment by 200,000 tonnes per year;The diversification of the cargo base with the organization of steam coal transhipment of up to 125,000 tonnesper month on a long-term basis starting in August 2012;The diversification of the oil product transhipment business with the launch of a facility to handle low-sulphurfuel at PJSC IPP with capacity of up to 150,000 tonnes per month in August 2012;The implementation of accelerated technology for processing container trains, making it possible to double thethroughput capacity for rail shipments of containers from Novorossiysk Port and to reduce the average storagetime of containers at terminals.

18

Cargo turnover of NCSP Group, mln. tonnes

Containers

General cargo

Bulk cargo

Liquid cargo

Cargo turnover, total

5.15.1

10.910.9

11.811.8

131.1131.1

158.9158.9

4.94.9

9.09.0

12.612.6

130.4130.4

157.0157.0

3.83.8

10.610.6

11.811.8

127.3127.3

82.082.0

2012 2011 2010*

* 2010 figures do not include LLC PTP

Change in cargo turnover in 2012 compared to 2011, mln. tonnes

157.0

2.88

2.19

1.800.60 0.16 0.13 0.03 -0.01 -0.94

-1.15

-1.22

-2.56

158.9

Car

go v

olum

e 20

11

Oil

pro

duct

s

Gra

in

Ferr

ous

met

als

and

pig-

iron

Oth

er

Con

tain

er c

argo

s

Fore

st p

rodu

cts

UAN

Non

ferr

ous

met

als

Suga

r

IORM

/ IO

C

Min

eral

fer

tili

zers

Cru

de o

il

Car

go v

olum

e 20

12

19

Geographic structure of cargo turnoverExports remained the mainstay of NCSP Group’s cargo turnover, accounting for 95.5% of total turnover in 2012. Themain export cargos are crude oil and oil products, ferrous and nonferrous metals, grain, forest products, bulk andliquid mineral fertilizers, ore and coal. Traditionally container cargo accounts for some 42% of all imported trafficat NCSP Group. Other imports include raw sugar and perishable goods.

The main export destination is Europe, which accounted for 81.1% or 123.0 million tonnes of export cargo in 2012.Crude oil and oil products are primarily shipped to European countries. The second most important exportdestination, with 11.4% or 17.3 million tonnes of cargo in 2012, is Asia, to which Russia primarily exports ferrousmetals, pig iron, oil products and grain. There were no major changes in the geographic distribution of export cargoin 2012.

Geographic structure of NCSP Group Export Cargo Turnover in 2012, mln. tonnes

0.9% 1.7% 4.9%

11.4%

81.0%

152mln. tonnes

South America North America Africa Asia Europe

20

Crude oil

0.4% 0.5% 0.6% 2.6%

95.9%

110 830thsd tonnes

North America Africa South America Asia Europe

Oil products

1.0% 3.7%

18.0%

77.3%

18 244thsd tonnes

South America Africa Asia Europe

21

Ferrous metals

2.6%6.9%

16.1%

20.7%

53.7%

8 275thsd tonnes

Africa North America South America Asia Europe

Grain

1.0% 1.5% 1.6%

34.6%

61.3%

7 963thsd tonnes

South America North America Europe Asia Africa

22

Iron ore

1.3% 6.9%

25.6%

66.2%

1 579thsd tonnes

North America Africa Europe Asia

Fertilizers*

14.6%

14.9%

17.6%24.6%

28.4%

1 224thsd tonnes

Africa South America Europe Asia North America

* Includes liquid and bulk fertilizers.

23

Cargo turnover by type of cargoNCSP Group’s cargo turnover is dominated by crude oil, the share of which shrank to 69.7% of the total in 2012 from72.2% a year earlier. The second largest cargo is oil products, which grew to 12.2% of the total in 2012 from 10.5%in 2011. Despite the difficult market situation and poor harvest, the share of grains in the Group’s cargo turnovergrew to 5.0% in 2012 from 3.7% in 2011 on the back of a substantial increase in transhipment. The share of ferrousmetals rose to 5.4% of the Group’s cargo turnover in 2012 from 4.4% in 2011, while the share of containers and othercargo was virtually unchanged.

NCSP Group Cargo Turnover Structure in 2012

Crude oilCrude oil transshipments at NCSP Group companies fell by 2.564 million tonnes or by 2.3% to 110.83 million tonnes.

PJSC NCSP handled 42.585 million tonnes of oil and LLC PTP handled 68.245 million tonnes, which is 682,600 tonnesand 1.882 million tonnes less than in 2011, respectively.

The main reason for the volatility of oil volumes was the change in pumping schedules in Russia’s system of trunkpipelines in order to ensure supplies to new export routes.

Nonetheless, NCSP Group remains the undisputed leader in transhipment of oil among Russian ports, with a marketshare of 55.9% in 2012.

The Group’s oil export cargo traffic by destination breaks down as follows: 106.3 million tonnes or 95.9% of the totalwas shipped to Europe; 2.9 million tonnes or 2.6% to Asia; 0.6 million tonnes or 0.5% to Africa; 0.7 million tonnesor 0.6% to South America; and 0.4 million tonnes or 0.4% to North America. Exports surged by 150% to Africa and71.7% to Asia in 2012, but fell by 83.1% to North America and 2.0% to Europe.

0.2%

0.2%0.4% 0.5%

0.5%1.1%

1.5%3.2%

5.0%

5.4%

12.2%

69.7%

158 905thsd tonnes

Coal

Other

Cement

Container cargos

Sugar

Grain

Forest products

Ferrous metals

Mineral fertilizers

Oil products

Iron ore

Crude oil

24

Russia’s leading oil companies export crude through the Group’s terminals, including Rosneft, Lukoil, TNK-BP,Surgutneftegas, Gazpromneft, Tatneft, Russneft and Bashneft.

Crude oil, mln. tonnes

2011

2012

43.343.3

42.642.6

70.170.1

68.268.2

113.4

110.8

NSCP PTP

Oil productsOil product transhipment made a major contribution to the Group’s operating results, growing 17.4% to 19.4 milliontonnes in 2012. The Group’s growth in this segment far outstripped the industry average. Oil product transhipmentat Russian seaports rose by 6.4% in 2012.

Transhipment of diesel fuel at LLC PTP grew to 6.524 million tonnes in 2012 from 4.998 million tonnes in 2011, but fellby 1.587 million tonnes to 3.368 million tonnes at PJSC IPP. NMT handled 2.347 million tonnes of fuel oil in 2012.PJSC NCSP at Sheskharis handled 2.528 million tonnes of diesel and 3.884 million tonnes of fuel oil, 580,300 tonnesand 162,600 tonnes more than in 2011, respectively.

Bunkering in 2012 amounted to 41,200 tonnes of diesel and 584,800 tonnes of fuel oil at the Novorossiysk Port, and177,600 tonnes of fuel oil at the Primorsk Port.

Of the total volume of oil products handled by the Group, 77.3% was exported to Europe, 18.0% to Asia, 3.7%to ports in Africa and 1.0% to South America. Shipments to European countries surged 40.5% while shipmentsto ports in South America plunged 76.3% compared to 2011, and shipments to ports in Asia and Africa were downby 33.0% and 12.1% respectively.

Oil product shippers include major Russian oil companies and refiners such as Rosneft, Lukoil, Tatneft and Russneft.

Oil products, mln. tonnes

2011

2012

6.06.0

8.88.8

5.05.0

6.66.6

5.55.5

4.04.0

16.5

19.4

NSCP PTP IPP

Ferrous metalsThe Group’s transhipment of ferrous metals and pig iron surged 26.2% to 8.652 million tonnes in 2012, while ferrousmetal volumes at Russian ports in general grew by 8.0%.

Of the total amount of ferrous metals and pig iron handled in 2012, 53.7% was exported to Asia, 20.7% to NorthAmerica, 16.1% to Europe, 6.9% to Africa and 2.6% to South America. The steepest increase in exports was 113.6%to South America, and shipments also grew 51.5% to ports in North America, 28.6% to Asia and 25.6% to Europe, whileshipments to ports in Africa fell 32.0%.

The main exporters of ferrous metals were Novolipetsk Steel (NLMK), Evraz, Magnitogorsk Iron & Steel Works, TMK,Mechel, and Metalloinvest.

25

GrainDespite a difficult situation on the grain market, NCSP Group increased grain transhipment by 37.9% to 7.963 milliontonnes in 2012, while grain transhipment at Russian ports in general grew by only 22.7%.

PJSC NGT handled 4.613 million tonnes of grain and PJSC NCSP handled 3.16 million tonnes in 2012, which was 1.294million tonnes and 915,300 tonnes more than in 2011, respectively.

Of the export grain handled by NCSP Group in 2012, 4.9 million tonnes or 61.3% of the total was shipped to portsin Africa; 2.8 million tonnes or 34.6% went to ports in Asia; 0.1 million tonnes or 1.6% to ports in Europe; 0.1 milliontonnes or 1.5% to ports in North America; and 0.1 million tonnes or 1.0% to South America. The most dramaticincrease in grain exports in 2012 was 346.6% to North America, while the steepest drop was 37.3% to Europeancountries.

The Group’s largest grain clients include United Grain Company, International Grain Company, Bunge, Louis DreyfusCommodities and Cargill, among others.

Grain, mln. tonnes

2011

2012

3.33.3

4.64.6

2.52.5

3.43.4

5.8

8.0

NGT NSCP

Container cargoContainer cargo handling grew 4.4% to 623,600 TEU in 2012 from 597,500 TEU in 2011. This included 438,500 TEUhandled at the terminals of PJSC NCSP and PJSC NLE in Novorossiysk. The LLC BSC terminal at the Baltiysk Port ledthe Group in terms of growth, increasing container turnover by 23.5% to 185,100 TEU in 2012 from 161,600 TEU a yearearlier.

Of the total amount of containers handled by the Group, 72.4% were exported to Asia, 14.6% to Africa, 12.8%to European ports, and 0.2% to North and South America. Container cargo exports to North American ports jumped68.0%, while shipments to South America fell 66.7% compared to the previous year, and shipments were down 2.4%to Asia and 31.7% to Europe.

The Group’s container terminals handle vessels from the world’s leading shipping lines, including MediterraneanShipping Company, ZIM, Maersk, ARKAS, Nippon Yusen Kaisha Line, Hapag Lloyd, Evergreen, Norasia, PacificInternational Lines, and Fesco.

Containers, thsd. TEU

2011

2012

169.2169.2

166.1166.1

266.7266.7

272.4272.4

161.6161.6

185.1185.1

597.5

623.6

NSCP NLE BSC

26

Additional port services and ship repairNCSP Group also provides a broad range of other port services, such as storage and repacking of cargo, processingof customs and shipping documents, as well as auxiliary port fleet services such as bunkering, tug and mooringservices, firefighting services and waste collection.

Towing services (nominal total volume of ships) amounted to 912.8 million cubic meters in 2012, including 532.7million cubic meters by NCSP Fleet at ports in the Azov-Black Sea basin, and 380.1 million cubic meters by SFPat ports in the Baltic basin. Diesel fuel and fuel oil bunkering, drinking water supply services, firefighting servicesand waste collection services provided by NCSP Fleet in 2012 amounted to 312,500 tonnes, 1.1 million tonnes, 137.6million cubic meters and 6.8 million cubic meters respectively.

The NSRZ shipyard carried out contracts to repair 16 ships in 2012, including five ships for NCSP Fleet, two for theRussian Federal Security Service’s Border Department for Krasnodar Territory, and nine ships for other customers.

Remediating the consequences of the flooding of 6-7 July 2012Professional and courageous actions of all NCSP Group employees in Novorossiysk enabled advanced warning of theflooding and swift emergency response actions on the night of July 6-7, 2012.

As soon as warning of the flood was received, a 24-hour emergency response center was set up at the port. Theemergency rescue teams of PJSC NCSP and other Group companies worked alongside the emergency services of thecity and port’s administration.

On the night of July 6-7 PJSC NCSP Fleet’s vessels were able to localize and clean up oil products spills in theTsemes Bay almost immediately. Meanwhile, the rapid response of workers at oil terminals onshore preventedpossible contamination of land and harbor.

In most challenging conditions NCSP Group employees managed to maintain equipment in an operational state evenwithin the flood zone, enabling the Group to restore power supply quickly, and resume loading operations within24 hours, as well as get treatment facilities running again, clean up the ports and pump water from floodedbuildings.

Operations were restored on July 7 at PJSC NLE, PJSC NSRZ, and PJSC IPP. Loading operations with water-resistantcargo were resumed at PJSC NCSP’s container terminal and the Western pier.

The Administration of the Novorossiysk Sea Port expressed its gratitude to NCSP Group companies for their well-coordinated and professional emergency response effort during the flooding.

27

2.3. Financial Results

USD mln or % unless otherwise stated 2012 2011 Change (%)

Revenue 1,033.7 1,049.5 (1.5%)

Cost of services 435.7 495.4 (12.1%)

SG&A 87.5 78.2 12.0%

EBITDA* 591.5 550.3** 7.4%

EBITDA margin 57.2% 52.5% 4.8pp

Profit 316.0 130.3 142.5%

Investments (CAPEX)*** 89.3 115.6 (22.8%)

Group debt 2,262 2,506 (9.7%)

Net debt** 2,019.0 2,378.7 (15.1%)

Net debt/EBITDA 3.4x 4.3x —

* EBITDA is calculated as profit for the period before finance costs, income tax and D&A, impairment of goodwill,PP&E write-offs, interest income and foreign exchange gain/(loss), net

** Net debt is calculated as Total debt less Cash & cash equivalents

*** According to management reporting data, including VAT

NMTP Group’s revenue in 2012 was US$ 1,033.7 mln. Cost of services and SG&A expenses totalled US$ 435.7 mln andUS$ 87.5 mln, respectively. Group EBITDA increased by 7.4% to US$ 591.5 mln, and the EBIDTA margin was 57.2%. TheGroup’s debt fell by 10% during the accounting period to US$ 2,262 mln. The net debt/EBITDA ratio at the endof 2012 stood at 3.4x.

RevenueThe Group’s revenue from stevedoring services totaled $827.9 million in 2012, compared to $857.5 million in theprevious year. Revenue from additional port services grew by $6.4 million to $89.9 million. Revenue from port fleetservices increased by $8 million to $100.9 million.

The growth of transshipment volumes for a number of types of cargo increased stevedoring revenueby $60.3 million*, including:

Grain shipments increased by 2 mln tons, and revenue in the segment jumped by US$ 30.9 mln.*;Shipments of oil products grew by 2.9 mln tons, driven among other factors by the introduction of newcapacity, and generated an additional US$ 7.4 mln.* in revenue;A 1.8 mln ton increase in shipments of ferrous metals created US$ 14.7 mln.* of additional revenue.Growth of container transshipments by 26,000 TEU, which increased revenue on such cargo by another$7.3 mln.*

On the other hand revenue from stevedoring services in 2012 was affected by the following negative factors:

Foreign exchange loss in the amount of $26.8 mln.* resulting from the effect of translation of ruble revenues intopresentation currency and from exchange rate differences between 2012 and 2011;A drop of $6.7 mln.* in crude oil revenues resulting from 2.6 mln. tonnes reduction of volumes;Bulk fertilizers revenues were down $9.7 mln.* following 1.2 mln. tonnes decrease in volumes;Iron ore revenues reduced by $6.9 mln.* on the back of 1.2 mln. tonnes drop in volumes;Aggregated reduction in volumes of other cargoes resulted in reduction of stevedoring revenue by $39.8 mln.*

* Not IFRS indicator, cited according to management reporting data.

28

NCSP Group revenue by cargo and services in 2011

1.0% 1.0% 4.0%6.0%

6.0%

8.0%

8.0%

9.0%

9.0%

20.0%

28.0%

$1 049.5mln.

NCSP Group revenue by cargo and services in 2012

1.0%1.0% 5.0%5.0%

7.0%

9.0%

9.0%

10.0%11.0%

15.0%

27.0%

$1 033.7mln.

Containers

Ferrous metals

Additional port services

Oil products

Fleet services

Ore and ore concentrate

Other cargoes

Bunkering

Other services

Grain

Crude oil

Other services Containers

Other cargoes

Oil products Additional port services

Fleet services

Grain

Ore and ore concentrate

Ferrous metals

Bunkering Crude oil

29

Cost of servicesIn 2012 the Group‘s cost of services fell by $ 59,7 mln., or 12.1% year-on-year, to $ 435.7 mln. The biggest reductionof $ 71.6 mln. was in expense on fuel for resale and own consumption as a result of reduced procurementof bunkering fuel.

Depreciation and amortization increased by $4.4 million due to the launch of new facilities, including a bunkeringcomplex at LLC PTP.

Personnel costs grew by $5.6 million with the increase in salaries for operational staff at a number of Groupcompanies at the end of 2011 and beginning of 2012 as part of a new social policy.

Group’s expense on repairs and maintenance of plant and equipment rose by $3.9 million, including dueto unscheduled repairs in the wake of the flooding in Krasnodar region on July 6-7, 2012.

Combined changes in other cost items reduced the Group’s cost of sales by $2.06 million.

The Group’s selling, general and administrative expenses increased by $9.4 million or 12.0% in 2012 to $87.5 million.This was primarily due to an $8.6 million increase in staff expenses following the introduction of a new pay andincentive system. Other items of SG&A rose by a total of $1.3 million.

NCSP Group cost of services and SG&A breakdown, 2011, $ mln.*

1.0%1.0%

1.0%2.0%

4.0%

12.0%

13.0%

14.0%15.0%

37.0%

Cost of service$435.7 mln.

SG&A$87.5 mln.

* Includes cost of services and SG&A.

Raw materials

Repairs and maintenance

Energy and utilities

Rent

Other

D&A

Subcontractors

SG&A

Personnel expenses

Fuel

30

NCSP Group cost of services and SG&A breakdown, 2012, $ mln.*

1.0%1.0%

2.0%

2.0%5.0%

13.0%

15.0%

17.0%

17.0%

27.0%

Cost of service$495.4 mln.

SG&A$78.2 mln.

* Includes cost of services and SG&A.

Energy and utilities

Repairs and maintenance

Other

Rent

Raw materials

D&A

Subcontractors

Personnel expenses

SG&A

Fuel

31

EBITDAGroup EBITDA in the reporting period rose to $ 591.5 mln. from $550.3 mln. in 2011. The EBITDA margin was 57.2%,against 52.5% in 2011, driven by growth in volumes of higher-margin products and the introduction of new capacities.

The main driver of EBITDA growth was 1.9 mln. tonnes increase in cargo volumes and changes to cargo mix,accounting for US$ 44.8 mln.* EBITDA from bunkering operations grew by $ 4.4 mln.* Higher volumes of additionalservices produced a $ 13.7 mln.* increase in EBITDA, while new capacities brought online contributed $ 11.9 mln.*Net change to cost of services (excluding expense on bunkering fuel and variable costs of grain handling) produceda negative impact on EBITDA of $ 33.5 mln.*

* Not IFRS indicator, cited according to management reporting data.

NCSP Group EBITDA bridge, $ mln.

550.3

44.80 -33.50

4.40

13.70

11.90 591.5

EBIT

DA

201

1

Net

cha

nge

in r

even

ue

Net

cha

nge

in c

osts

(le

ss b

unke

ring

and

gra

in)

Cha

nge

in b

unke

ring

mar

gins

Add

itio

nal

serv

ices

rev

enue

New

cap

acit

y

EBIT

DA

201

2

32

Net profitThe Group’s net profit for 2012 was $316 million. Impairment of goodwill on the acquisition of LLC PTP in the amountof $89.5 million had a major impact on the net profit. Net profit adjusted for this factor amounted to $388 million.The impact of the Russian ruble’s appreciation against the U.S. dollar on the Group’s assets and liabilitiesdenominated in foreign currency in 2012 resulted in an exchange rate gain of $130 million compared to an exchangerate loss of $168 million in 2011.

Investment programNCSP Group’s spending on its investment program totaled $89.3 million* in 2012 (according to management reportingdata, including VAT), including $55.6 million* on development projects and $33.7 million* on equipment upgradesin the course of current operations.

* Not IFRS indicator. Cited according to management reporting data, includes VAT.

DebtThe Group’s debt as of 31 December 2012 totalled $ 2,262 mln., a 9.7% reduction from the end of 2011. Net debtas of the end of 2012 comprised $ 2,019 mln., against US$ 2,379 at the end of 2011.

The Net debt/EBITDA ratio was 3.4 at the end of the reporting period, well below the maximum of 3.75 for 2012stipulated by the covenants of Group loans. As at 31 December 2012, the average effective borrowing rate relatingto the Group’s debt was 5.79% per annum compared to 5.73% per annum as at 31 December 2011.

NCSP Group debt portfolio in 2012

6.0%

7.8%

86.2%

Total debt$2 262 mln.

Ruble bonds Ruble loans Sberbank loan

On 4 March 2012 the Board of Directors of PJSC NCSP approved a programme of rouble bonds to be issued in fiveseries. Series BO-01, BO-02, BO-03, BO-04 and BO-05 are nominated in the amount of RUB 5 bln., RUB 4 bln., RUB4 bln., RUB 3 bln., and RUB 2 bln. respectively. On 3 April 2012 the Group completed registration of the programme,and the bonds were included in the list of securities admitted to trading on the Moscow Exchange.

33

The Group placed rouble bonds Series BO-02 for the amount of 4 billion rubles ($136 million) and maturing April 29,2015, in a public offering on May 2, 2012. The bonds have a 9% annual coupon rate payable every 182 days, with thefirst payment on October 31, 2012.

At the time of roble bonds placement PJSC NCSP has also entered into a currency swap agreement to hedge itscurrency risk, by balancing the currency structure of its liabilities and revenues. The currency swap agreementallowed PJSC NCSP an effective borrowing rate on the bonds of less than 4.0% per annum.

On 15 May 2012, NMTP Group repaid in full its five-year Eurobond issue in the amount of $300 mln. The Eurobond,in the form of loan participation notes (LPN), was placed on 17 May 2012 through the Luxembourg-registered SPVNovorossiysk Port Capital S.A. The notes had an annual coupon of 7% with semi-annual payments.

Redemption of the Eurobond was financed in part from own funds and partly through the placement of roublebonds Series BO-02 for RUB 4 bln.

NCSP Group debt repayment schedule, $ mln.

2018

2017

2016

2015

2014

2013

122122

365365

486486

617617

583583

8585

NCSP Group seeks to optimize its debt portfolio in terms of cost and duration of borrowings in order to maintainoptimum liquidity for the Group. Therefore the Group is considering a changing of the terms of or refinancing a loanof $1.950 mln. received from Sberbank of Russia in 2011 to finance the acquisition of LLC PTP, to improve on fixedinterest rate of 7.48% per annum which will be applied to this loan as of January 2014.

34

2.4. Strategy Review

Strategic goalsIn 2012 NCSP Group presented its long-term development strategy. The strategy was described through coreprinciples of Group’s development, and proposed projects which the Group may implement in various combinationsdepending on the market conditions.

NCSP Group strategic goals are:

To become the leading operator of port assets in Russia, including in terms of economic and technologicalefficiency;To maintain leading market positions by cargo turnover in Russia and Europe and ensure sustainable growthof cargo turnover in the long term;To build up shareholder value over the long term.

Core principles of NCSP Group’s strategic development are:

To make a transition from developing projects in the framework of individual companies to designing integrateddevelopment projects organized around the cargo flows; To leverage market opportunities by developingspecialized terminals for high-margin cargo while maintaining a balance of multipurpose transhipment capacity;To maximize utilization and efficiency of existing terminals as prerequisite to implementation of newdevelopment projects.

NCSP Group’s strategy is structured into three phases

Short-term strategy till 2012: Increase operating efficiency of existing assets;Medium-term strategy till 2015: Develop infrastructure at existing terminals, upgrade technology, completionof brownfield and expansion projects based on existing assets;Long-term strategy till 2020: Develop new terminals for handling containers, oil products and bulk cargo, whilealso pursuing diversification.

Progress on strategy in 2012In 2012 the Group implemented main points of its short-term strategy. Its medium-term strategy was also brought up-to-date with the changing market trends.

Together with McKinsey, the Group implemented a number of organizational and operational measures in 2012to eliminate bottlenecks and increase the operations’ efficiency among other:

Additional storage space of 950 square meters and 1,500 square meters was arranged for iron ore products andferrous metals by optimizing warehouse space at PJSC NCSP.New technology for accelerated processing of container trains was implemented in PJSC NCSP’s joint effort withfreight forwarders, customs brokers, the North Caucasus Railway and Transcontainer; the processing time forone container train was reduced to 24 hours, doubling the capacity for container rail shipments out of theport.PJSC NCSP and PJSC NLE reached agreement with the customs on longer working hours for customs officesat container terminals, as well as on the introduction of a 24-hour work schedule for customs when cargo trafficreaches 500,000 TEU per year or as required.Crane utilization at PJSC NCSP and PJSC NLE was increased by reducing the duration of operator shift changesto 20 minutes.PJSC NCSP acquired and put into operation three container loaders with capacity of up to 45 tonnes; twoforklifts with capacity of 20 tonnes; six automatic loaders with capacity of 12 tonnes and other equipment.

In March 2013 PJSC NCSP signed new collective agreement with employees for the period to 2016. It sets out newincentives for employees, including a 5% annual indexation of wages and the linking of further pay increases,particularly in piece rates, to the achievement of targets for labour productivity and cargo transhipment volumes.

The Group also carried out several investment projects in 2012 in line with its short-term strategy.

Construction of a fuel oil terminal and overhaul of Pier No. 4

Construction was completed of a fuel oil terminal with an annual capacity of 4 million tonnes under a 50/50 jointventure between PJSC NCSP and a major oil trader.

PJSC NCSP completed the overhaul of its previously unused Pier No. 4, including dredging to 13.5 meters, enablingit to accommodate tankers with displacement of up to 45,000 tonnes.

The new terminal handled 2.347 million tonnes of fuel oil in 2012.

35

Expansion of LLC BSC container terminal

The first phase of terminal expansion was completed, increasing throughput capacity 200,000 TEU. The terminal’scontainer turnover amounted to 185,000 TEU in 2012.

Development of LLC PTP

The construction of a bunkering facility at LLC PTP with annual capacity of 360,000 tonnes per year was completedin the first quarter of 2012 and commercial operation of the terminal began. The project will strengthen theGroup’s position on the bunkering market in the Baltic basin, improve the quality and lower the price of bunkeringservices while also reducing environmental risks. In future, the terminal could also be used for export shipmentsof oil products.

NCSP Group medium-term strategyThe renovation and modernization of equipment at PJSC NCSP’s Sheskharis oil terminal is the largest investmentproject in the Group’s medium-term strategy. Works on the project remained on schedule in 2012. The mainobjective of the project is to refurbish Berth No. 1, including the construction of a backup loading area capableof maintaining current oil transhipment while Area B is closed for renovations.

While updating its medium-term strategy in 2012 in line with the changing market environment, the Group mademajor changes to a number of projects.

In light of greater competition for bulk cargo, particularly iron ore, the Group began developing a project in 2012to set up roadstead loading of bulk cargo, which will allow clients to use larger vessels with displacementof up to 120,000 tonnes.

With the aim of further diversification of its cargo base the Group is considering construction of a specializedterminal for handling vegetable oils with capacity of up to 2 million tonnes per year. The Group signed a letterof intent on this project with United Grain Company (UGC) in February 2013.

The Group also developed a plan in 2012 to build a terminal for roll-on/roll-off (Ro-Ro) cargo specializing in unloadingautomobiles at PJSC NSRZ. The terminal could handle up to 30,000 vehicles in the first year of the project’simplementation, 60,000 in the second year and 90,000 in the third.

The project to expand the capacity of the PJSC NLE container terminal was revised in 2012. The revised projectcalls for expanding the terminal to 330,000 TEU per year by 2015 through modernization. The prospect of furtherexpansion of the terminal is being considered within the context of the Group’s long-term strategy.

Two mobile cranes were delivered to NLE in 2012, and a contract has been signed for the delivery of an RTG cranemade by Liebherr.

The full list of Group investment projects for the period to 2015 includes:

Modernization of Sheskharis oil terminal at PJSC NCSP;Construction of roofed terminal for transhipment of up to 2 million tonnes of mineral fertilizer per yearat PJSC NCSP’s Eastern Pier;Equipment renovation at PJSC NSRZ and PJSC NCSP’s Eastern Pier to develop transhipment of bulk and generalcargo;Construction of Ro-Ro terminal at PJSC NSRZ to handle up to 90,000 automobiles per year;Construction of a vegetable oil terminal with annual capacity of up to 2 million tonnes in partnership with UGC;Reconstruction of facilities at PJSC IPP, including the expansion of the tank farm and facilities for receiving oilproducts from trains.Modernization of NLE container terminal to expand annual throughput capacity from 266,000 TEU to 330,000 TEU;Expansion of LLC BSC container terminal to 400,000 TEU per year.

In February 2013 PJSC NCSP, OJSC NLE, OJSC NSRZ, and PJSC NGT signed a landmark agreement with FGUPRosmorport state enterprise on cooperation in design of hydraulic engineering facilities and new cargo terminalsin the framework of the Novorossiysk Sea Port Reconstruction and Modernization project. The agreement is aimedat the development of the marine elements of the port, including planning for dredging and construction of newtransshipment terminals. The implementation of these plans will enable NCSP Group to receive bulk carriers withdeadweight of up to 100,000 tonnes and container carriers of up to 6,000 TEU at the Novorossiysk Port.

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NCSP Group long-term strategyThe Group’s long-term strategy calls for a transition from development projects in the frameworks of individualcompanies to a new integrated development concept with focus on cargo flows.

Possible development projects for the Group include:

The second phase of modernization of the Sheskharis Oil Terminal;Construction of a container terminal with capacity till 500,000 TEU at PJSC NLE;Construction of a container terminal on PJSC NCSP’s Western pier, which will expand container capacityat PJSC NCSP to 700,000 TEU from 170,000 TEU;Expansion of PJSC NGT capacity by 2 million tonnes;Construction of a terminal to handle iron ore and/or coal with capacity of up to 12 million tonnes, withan option to handle other bulk cargo and reverse operation at PJSC NCSP Wide pier No. 2.

Development of a multi-purpose deepwater port on the basis of LLC PTP, including terminals for oil products,containers, general and bulk cargo.

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3.1. Group’s Management

Yury Matvienko

Marat Shaydaev

Ruslan Nikitin

Denis Afanasov

Acting Chief Executive Officer of PJSC NCSP

Yury Matvienko was appointed acting CEO of PJSC NCSP on February 20, 2013, prior to whichhe had held the post of Executive Director at the company since June 2011.

In 2009-2011 he was General Director of LLC BalttransService, and from 2005 to 2009 he wasGeneral Director of LLC PTP. From 2003 to 2005 he was First Deputy General Director andthen General Director of CJSC Marine Port Service. He worked at JSC Sakhalin ShippingCompany from 1987 to 1994, when he joined JSC Novorossiysk Shipping Company, where heworked until 2003.

Mr. Matvienko graduated from the Novorossiysk Higher Marine Engineering College with amajor in marine navigation and the qualification of engineer and navigator. In 2010 hecompleted an MBA degree at the St. Petersburg International Management Institute (IM ISP).

First Deputy CEO of PJSC NCSP

Marat Shaydaev held senior positions at the Summa Group in 2009-2011. He was head of CJSCTrans-Flot in 2005-2009, prior to which, in 2004, he was appointed General Director of LLCSumma.

Mr. Shaydaev graduated from the Soviet Defense Ministry's M ilitary KrasnokazarmennyInstitute in 1990 with a major in law. In 2007 he graduated from the Russian PresidentialAcademy of Civil Service with a major in public administration. He has worked at judicialbodies.

Deputy CEO for Commerce of PJSC NCSP

Ruslan Nikitin was appointed Deputy CEO for Commerce of PJSC NCSP in 2011, prior to whichhe had been General Director of JSC NSRZ since June 2008. At NSRZ, Mr. Nikitin was asenior economist and then head of economic security in the department for protection ofinterests and property in 1999-2001; deputy head of the legal affairs department in 2001-2002; chief manager for development and external relations and head of the chief manager’sservice from 2002 to 2004; first deputy general director and head of the chief manager’sservice in July 2004; commercial director from August 2004 to May 2006; and first deputygeneral director and director of business support in 2006-2008.

Mr. Nikitin graduated from the Novorossiysk State Marine Academy in 1999, and from theRussian Presidential Academy of Civil Service in 2005.

Deputy CEO for Legal and Corporate Affairs of PJSC NCSP

Denis Afanasov was appointed Deputy CEO for Legal and Corporate in 2012. He has heldmanagement positions at major companies since 2006, including as head of the legaldepartment at the Sodruzhestvo Group, and has experience in international law, including inBritish arbitration courts.

Mr. Afanasov graduated from the law faculty of Moscow State University in 2002 and thefaculty of international relations at the Diplomatic Academy of the Russian Foreign Ministryin 2004.

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German Kachan

Igor Terentyev

Oleg Boichenko

Mikhail Stepanko

Deputy CEO for Finance and Economics of PJSC NCSP

German Kachan assumed current position in 2012, prior to which he had been ChiefAccountant at PJSC NCSP since 2005. He was an accountant at PJSC NCSP from 1999 to 2004,when he was promoted to first deputy chief accountant.

Mr. Kachan graduated from the Minsk Radio Engineering Institute with a major insemiconductors and dielectrics, and the Kabardino-Balkaria State University with a major inaccounting and audit.

Executive Director of PJSC NCSP

Igor Terentyev was appointed Executive Director in February 2013, prior to which he wasFirst Deputy General Director for infrastructure projects at CJSC Transneft Service from2011. He was deputy head of marine shipping at LLC Rosinteragroservis from 2006 to 2011,deputy director of LLC MMA-Delta from 2004 to 2006, and head of LLC Russky Standart from2002 to 2004. He headed CJSC STELS in 1999-2000, and was the head of agent services at LLCSeasco and then at state company Rostek-Novorossiysk in 2001-2002.

Mr. Terentyev graduated from the Novorossiysk Higher Marine Engineering College as atransport radio equipment engineer in 1997.

Technical Director of PJSC NCSP

Oleg Boichenko was appointed Technical Director in 2011. He was chief engineer at theAzov-Black Sea Branch of state company Rosmorport (until April 2011, Novorossiysk Branch ofRosmorport) from January 2007 to June 2008, when he was promoted to director, a post heheld until 2011.

Mr. Boichenko graduated from the Leningrad Komarovsky Higher Military ConstructionEngineering School in 1990 with a major in building construction and operations and aqualification as construction engineer.

Human Resources Director of PJSC NCSP

Mikhail Stepanko was appointed HR Director in 2011, prior to which he was a crisis managerof assets at investment group A1 from 2009 to December 2011. In 2006 he was invited to workin Kazakhstan and was director of human resources/executive director at Kazakhstan’sSamruk State Holding Company for Management of State Assets from its founding in 2006until its reorganization in 2009. He served on the boards and HR and remunerationcommittees of national companies KazMunayGas, KEGOC, Kazakhstan Temir Zholy andKazakhstan Engineering. From 2001 to 2006 he worked at the oil, gas, mining and metalscompanies of the Renova Group as deputy general director for development, as well as vicepresident for HR and social policy at Sual Holding. From 1996 to 2001 he worked at theCentral Asia and Caucasus Division of Coca-Cola, holding various positions, including regionalsales & marketing director and regional HR director (Kazakhstan, Kyrgyzstan, Uzbekistan,Turkmenistan, Tajikistan).

Mr. Stepanko graduated with honors from the Aktyubinsk State Medical Institute in 1993,and in 1993-1994 did post-graduate work at the Experimental and Clinical OncologyDepartment of the Academy of Sciences. In 1994-1996 he completed an MPA at theKazakhstan Institute of Economics, Management and Forecasting with a major in economicsin public administration. In 2005 he earned an MBA from the Higher School of Economics inMoscow.

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Management of NCPG Group companies

Andrei Tereshchenko General Director, LLC PTP

Sultan Batov General Director, LLC BSC

Alexander Ovodovsky General Director, PJSC NCSPFleet

Alexander Brezhnev General Director, OJSC NSRZ

Nikolai Darma General Director, OJSC IPP

Igor Andreev General Director, PJSC NGT

Albert Likholet General Director, OJSCNovoroslesexport

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3.2. Corporate Governance

NCSP Group corporate governance systemNCSP Group’s corporate governance system complies with Russian law, and meets Russian and internationalstandards of best practice and business ethics, while taking into account the interests of all stakeholders. TheCompany complies with the requirements of the UK Listing Authority/Financial Services Authority (UKLA/FSA) forissuers of Global Depositary Receipts (GDRs).

The General Shareholder Meeting, Board of Directors, Chief Executive Officer and Management Board form the basisof NCSP Group’s corporate governance system.

NCSP Group corporate structure

PJSC NCSP corporate governance structurePJSC NCSP subsidiaries are governed by the election of representatives of PJSC NCSP and its shareholders to theboards of directors of these companies. The main document specifying corporate governance mechanismsat PJSC NCSP is the company’s Charter. Amendments to the Charter fall within the authority of the GeneralShareholder Meeting, with the exception of amendments pertaining to the creation of branches, and the openingand liquidation of offices, which fall under the authority of the Board of Directors.

The Russian Federation (RF) has had a special right to participation in the management of PJSC NCSP througha “golden share” since April 2011. This right is exercised by the ability to appoint one representative of thegovernment to both the Board of Directors and the Audit Commission. The RF representative on the Boardof Directors has the right to veto decisions by the General Shareholder Meeting concerning amendments to theCharter or the approval of a new version of the Charter, the reorganization of the Company, liquidation, changesto charter capital, and execution of major transactions and related-party transactions.

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The Company adopted a Corporate Governance Code in 2007 that takes into account the recommendations of theOrganization for Economic Cooperation and Development and the Russian financial markets regulator. The Codeis based on the Federal Law On Joint-stock Companies and the PJSC NCSP Charter. The Code does not applyto PJSC NCSP subsidiaries, which voluntarily comply with the Corporate Governance Code approved by the RussianFederal Financial Markets Service on April 5, 2002. The subsidiaries disclose this information in their annual reports.

The Internal Control Service (until June 14, 2012), Internal Audit Department (since June 14, 2012), as well as theInternal Audit Commission are responsible for internal control and auditing at NCSP Group and PJSC NCSP.

PJSC NCSP’s Charter, Corporate Governance Code, internal documents regulating management and control bodies,as well as information on the Company’s information policy, are available on the NCSP Group website:

http://www.nmtp.info/holding/investors/info_disclosure/uch_documents/.

Improvements to the corporate governance system in 2012

NCSP Group carried out a number of measures to improve corporate governance in 2012. The followingorganizational changes were made:

A new Regulation on Procurement of Goods and Services for PJSC NCSP was approved and is posted on thecompany’s website:http://www.nmtp.info/content/holding/downloads/2012/Zaycev/PZNCSP2.docxThe operations department was reorganized to reduce overlap among management personnel, increaseefficiency and improve customer service, resulting in record efficiency of cargo handlingThe Internal Control Service was reorganized into Internal Audit Department.

General Shareholder MeetingThe General Shareholder Meeting is PJSC NCSP’s highest management body. The Annual General Meetingis mandatory, and other general meetings of shareholders are extraordinary.

The following issues fall under the authority of the General Shareholder Meeting: amendments to the Charteror approval of a new Charter (other than cases specified in the Federal Law On Joint-stock Companies);restructuring (liquidation) of the Company; election and dismissal of members of the Board of Directors, ChiefExecutive Officer and members of the Audit Commission; confirmation of the auditor; and approval of annualreports, the annual financial statement and other issues. The General Shareholder Meeting is legitimate (hasa quorum) if it has the participation of shareholders who together hold more than half of the votes of outstandingvoting shares in PJSC NCSP.

The right to vote at the General Shareholder Meeting on issues submitted to a vote is held by shareholders whohold common shares in the company. Detailed information about the General Shareholder Meeting is containedin the Regulation on the General Shareholder Meeting of PJSC NCSP approved by the Board of Directors, whichis available on the company’s website:http://www.nmtp.info/content/holding/downloads/2007/09/14/Polojeniye_ob_OSA.pdf.

Three General Shareholder Meetings were held in 2012:

The following decisions were made at the Extraordinary General Meeting of PJSC NSCP shareholders heldon March 5, 2012:

Early dismissal of members of the Company’s Board of DirectorsElection of members of the Company’s Board of Directors

The following decisions were made at the Annual General Meeting of PJSC NSCP shareholders held on June 15, 2012:

Approval of the Company’s annual reportApproval of the Company’s annual financial statements, including the profit and loss statementApproval of the distribution of the Company’s profit for 2011Approval of the amount and form of payment of dividends for 2011Election of members of the Company’s Board of Directors (supervisory board)Election of members of the Company’s Audit CommissionConfirmation of the Company’s auditorPayment of remuneration to nongovernment members of the Board of Directors and Audit CommissionApproval of a new version of the Company’s Charter

The following decisions were made at the Extraordinary General Meeting of PJSC NSCP shareholders held on July 9,2012:

Early dismissal of PJSC NCSP’s Chief Executive OfficerElection of a new Chief Executive Officer of PJSC NCSP

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Board of DirectorsThe Board of Directors, as the key element in the corporate governance system, is responsible for the successfuldevelopment of PJSC NCSP. The Board of Directors acts in the interests of PJSC NCSP shareholders and thecompany as a whole.

The Board of Directors oversees the general management of PJSC NCSP’s business with the exception of issues thatfederal legislation and the PJSC NCSP Charter reserve for the purview of the General Shareholder Meeting.

The Board of Directors is responsible for determining PJSC NCSP’s strategic priorities, and for executing controlover financial and business activities and the performance of the Company’s executive bodies. Board directors areelected by the General Shareholder Meeting for a term until the next annual general meeting, and canbe reelected an unlimited number of times. Regular meetings of the Board of Directors are held at least once everysix weeks. PJSC NCSP shareholders strive to appoint board directors who are highly qualified professionals, with thenecessary knowledge, skills and experience. Independent directors are elected to the Board of Directorsto increase the objectivity and soundness of decision-making and to maintain balance. Candidates for the Boardof Directors can be nominated by shareholders with at least 2% of shares, or by the Board of Directors.

Major changes were made to the composition of the PJSC NCSP Board of Directors in 2012, giving new shareholderscommensurate representation in this key management body. The new Board of Directors electedat an extraordinary general meeting on June 15, 2012, included Summa Group representatives Ziyavudin Magomedovand Alexander Vinokurov; PJSC NCSP representative Marat Shaydaev; Federal State Property Management Agencyrepresentative Yevgeny Gavrilin; OJSC Transneft representatives Mikhail Barkov and Maxim Grishanin; andgovernment representative Viktor Olersky. This new Board of Directors enabled the Company to successfully meetthe challenges of further modernizing and increasing the efficiency of its operations. The Board of Directors hadseven members as of the end of 2012.

Members of PJSC NCSP Board of Directors in 2012

June 30, 2011 to March 5, 2012 March 5, 2012 to June 15, 2012 June 15, 2012 to Dec 31, 2012

Mikhail Arustamov *

Vitaly Kisenko *

Pavel Potapov *

Yury Soloviev *

Boris Tikhonenko *

Ziyavudin Magomedov * * *

Viktor Olersky * * *

Mikhail Barkov * *

Alexander Vinokurov * *

Yevgeny Gavrilin * *

Maxim Grishanin * *

Marat Shaydaev * *

Board of Directors (as of December 31, 2012)

Ziyavudin MagomedovMr. Magomedov has been Chairman of the Board of Directors of Summa Group (formerly Summa Capital) since 2007.He is a trustee of the nonprofit Russian Olympic Support Foundation, Chairman of the Board of Trustees of theRussian Tennis Federation, and a member of the boards of trustees of the Bolshoi Theater and Gerasimov Instituteof Cinematography. He has been awarded the Order of Friendship.

In 2004-2005, he served on the Board of Directors of OJSC Trans Oil and then on the Board of Directors of OJSC FirstMining Company. In 2002-2004 he was Chairman of the Board of Founders of the Dialog Program Support Foundation.

Born in 1968, Mr. Magomedov graduated from Moscow State University with a degree in international economics,and holds a PhD in economics.

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Viktor OlerskyMr. Olersky has been Deputy Minister of Transport of Russia since 2009.

He was Chairman of the Board at Northwest River Shipping from 2003 to 2009, and Chairman of the Board at VolgaRiver Shipping from 2001 to 2003. He was director of Infotek Baltika from 1994 to 2009.

Born in 1965, Mr. Olersky graduated from the S.O. Makarov Higher Marine Engineering Academy and holds a PhDin engineering and a Medal for Distinguished Service in Maritime Activities.

Maxim GrishaninMr. Grishanin is vice president of OJSC Transneft.

He was director of corporate financing at OJSC Sukhoi Aviation Holding Company in 2010, and senior vice presidentfor economics and finance at CJSC Sukhoi Civil Aircraft Company from 2006 to 2010. From 2002 to 2006, he headedthe project finance department at OJSC Financial Leasing Company, and earlier he held various positions in the fieldof finance and economics.

Born in 1959, Mr. Grishanin graduated from the University of Kiel in Germany in 1995 with a degree as an economist.

Mikhail BarkovMr. Barkov is vice president of OJSC Transneft.

He worked for many years in various positions at foreign economic organizations, and headed the legal departmentsat a number of ministries and Russia’s trade mission in the United States.

Born in 1951, Mr. Barkov graduated from Moscow State University and the Order of International FriendshipAcademy of Foreign Trade.

Alexander VinokurovMr. Vinokurov is President of Summa Group.

As manager of the Russian office of private equity firm TPG, he led projects to invest in LLC Lenta in 2009 and 2011,and in VTB Bank as anchor investor under the Russian government’s privatization program in February 2011. He alsoled the acquisition of commercial real estate assets from LLC Coalco in May 2011, and the company Ontex S.A.in July 2010.

Born in 1982, Mr. Vinokurov graduated from Cambridge University and holds a Bachelors and Masters degree.

Yevgeny GavrilinMr. Gavrilin is Deputy Head of Russia’s Federal State Property Management Agency.Mr. Gavrilin, who was born in 1959, graduated from Moscow State University and the Russian Presidential Academyof Civil Service. He holds a PhD in economics.

Marat ShaydaevMr. Shaydaev is First Deputy CEO of PJSC NCSP.

He was vice president and director of PJSC NCSP’s Moscow office in 2011.

Born in 1968, Mr. Shaydaev graduated from the Soviet Defense Ministry’s M ilitary Krasnokazarmenny Institute in 1990,and the Russian Presidential Academy of Civil Service in 2007.

Share ownership

Members of PJSC NCSP’s Board of Directors do not hold shares in the company.

Report on Board of Directors meetings in 2012

The Board of Directors held 17 meetings by absentee voting in 2012 at which it considered 169 issues.

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Participation by members of the Board of Directors in meetings in 2012

Number of meetings in whichmember participated

Total number of meetings in which member has been eligibleto participate since election

Mikhail Arustamov 15 16

Vitaly Kisenko 15 16

Ziyavudin Magomedov 30 30

Viktor Olersky 37 40

Pavel Potapov 5 13

Yury Solviev 16 16

Boris Tikhonenko 16 16

Mikhail Barkov 12 14

Alexander Vinokurov 14 14

Yevgeny Gavrilin 12 14

Maxim Grishanin 13 14

Marat Shaydaev 14 14

Board CommitteesTo ensure that the rights and interests of shareholders are observed, and to enhance the effectivenessof PJSC NCSP’s Board of Directors, both standing committees for the term of the Board of Directors and temporarycommittees to tackle specific issues can be created. The Board of Directors approves the regulationson committees and amends them if needed. The Board of Directors currently has two standing committees: theAudit Committee and the Human Resources and Remuneration Committee. Committee meetings are convenedas needed.

Audit Committee HR and Remuneration Committee

Analyzes financial statements, conducts external and internalaudits and presents relevant recommendations to the Boardof DirectorsMonitors:

Works closely with the external auditor, Audit Commission andInternal Control Service

Determines criteria for selection of candidatesfor the Board of Directors, Management Board

and CEOMakes recommendations on specific candidatesDevelops the terms of contracts with the CEO

and members of the Management BoardEvaluates the performance of the CEO and

members of the Management BoardDevelops corporate policy on remuneration for

company management

Committee Members in 2012

January 1, 2012 to April 10, 2012 April 10, 2012 to December 31, 2012

Audit Committee

Vitaly Kisenko, Chairman Alexander Vinokurov

Ziyavudin Magomedov Maxim Grishanin, Chairman

Mikhail Arustamov Ziyavudin Magomedov

HR and Remuneration Committee

Mikhail Arustamov Mikhail Barkov

Ziyavudin Magomedov Maxim Grishanin

Boris Tikhonenko, Chairman Marat Shaydaev, Chairman (April 4-Aug 6, 2012) Ziyavudin Magomedov, Chairman (Aug 6-Dec31, 2012)

quality and completeness of financial statements1.qualifications and independence of external auditor2.activities of the Internal Control Service3.

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The Audit Committee held two meetings in 2012, and the HR and Remuneration Committee held four meetings.At the meetings, the committees made decisions on issues including the following:

Audit Committee HR and Remuneration Committee

Approval of the PJSC NCSP Audit Committee’s schedule for 2012Review of the PJSC NCSP Internal Control Service’s (ICS) report for 2011Approval of the PJSC NCSP ICS’ schedule for 2012Appointment of the PJSC NCSP Audit Committee secretaryReview of the PJSC NCSP auditor’s report for 2011; developmentof recommendations on determining and evaluating candidates forindependent auditor, appointment or reappointment of the auditorReview of the Audit Commission’s report on an audit of the Company’sfinancial and operating results for 2011; development of recommendationson this reportReorganization of the PJSC NCSP ICS; approval of the draft Regulationon the Internal Audit Department of the PJSC NCSP office in MoscowApproval of the draft Regulation on the Financial Control Departmentof PJSC NCSP

Approval of the PJSC NCSP HR andRemuneration Committee schedule for

the first half of 2012Appointment of the PJSC NCSP HR and

Remuneration Committee secretaryApproval of candidates for the positions

of deputy CEO for Legal, technicaldirector, and chief financial officer

Chief Executive OfficerThe Chief Executive Officer is the individual executive body of PJSC NCSP, and by virtue of his/her position is thechairman of the collegial executive body, the Management Board. The CEO is elected by the General ShareholderMeeting for a term of five years and reports to the Board of Directors and the General Shareholder Meeting.Detailed information about the responsibilities of the CEO is contained in the Regulation on the Chief ExecutiveOfficer of PJSC NCSP, which is available on the company’s website:

http://www.nmtp.info/content/holding/downloads/2007/09/14/Polojeniye_o_GD.pdf.

PJSC NCSP’s CEO as of December 31, 2012, was Rado Antolovic. On March 19, 2013, the Board of Directors decidedto appoint PJSC NCSP Chief Operating Officer Yury Matvienko as Acting CEO of PJSC NCSP.

Management BoardThe Management Board is the collegial executive body of PJSC NCSP. Members are approved by the Boardof Directors. The Management Board carries out the day-to-day management of PJSC NCSP’s business accordingto the Charter, the Regulation on the Management Board and decisions of the General Shareholder Meeting andBoard of Directors. The Management Board acts in the interests of NCSP Group and reports to the GeneralShareholder Meeting and the Board of Directors of PJSC NCSP. Members of the Management Board are appointedand dismissed by the Board of Directors, which determines the number of members of the Management Board whenelecting the Management Board.

Meetings of the Management Board are held according to a schedule and as needed, but at least once a month.Detailed information about the responsibilities of the Management Board is contained in the Regulation on theManagement Board, which is available on the company’s website:

http://www.nmtp.info/content/holding/downloads/2007/09/14/Polojeniye_o_Pravleniyi.pdf

Management Board of PJSC NCSP as of December 31, 2012

Rado Antolovic, Chief Executive Officer, PJSC NCSPMarat Shaydaev, First Deputy CEO, PJSC NCSPYury Matvienko, Chief Operating Officer, PJSC NCSP

On 19 March, 2013, the Board of Directors PJSC NCSP determined the composition of PJSC NCSP’s ManagementBoard in the amount of five members and elected the following members of the Executive Board:

Yuriy Matvienko, Acting CEO;Marat Shaydaev, First Deputy CEO;Igor Terentyev, Executive Director;Denis Afanasof, Deputy CEO for Legal and Corporate;German Kachan, Deputy CEO for Economics and Finance

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Compensation of key management personnelFor the year ended 31 December 2012 and 31 December 2011, the remuneration of the directors and other membersof key management was 20,767 (including termination benefits in the amount of 1,079) and 11,622 (includingtermination benefits in the amount of 512), respectively, which represented short-term employee benefits andsocial security contributions.

The remuneration of directors and key executives is determined by the Board of Directors with regard to theperformance of individuals and market trends.

Internal Control and AuditInternal control is a key element of NCSP Group’s corporate governance system. It is intended to ensure promptidentification and analysis of risks arising in the course of the Group’s activities; implementation of the Group’sfinancial and business plans; compliance with legislation and the company’s internal procedures; and the accuracyand reliability of all types of reporting. The main structural units of the internal control system are the InternalControl Service (until June 14, 2012), and the Internal Audit Department (from June 14, 2012), and the AuditCommission of PJSC NCSP. The management bodies and certain divisions of the Group are also involved in theinternal control process according to the responsibilities assigned to them by founding and internal documents. Theeffectiveness of the internal control system is evaluated by the Audit Committee of the PJSC NCSP Boardof Directors.

Audit CommissionThe Audit Commission monitors the financial and business activities of PJSC NCSP, its divisions, services, branchesand representative offices. It reports to the General Shareholder Meeting of PJSC NCSP, and its five members areelected by the General Shareholder Meeting for a term until the next annual general meeting. The authority of theAudit Commission is defined by the Federal Law On Joint-Stock Companies, the PJSC NCSP Charter, and theRegulation on the Audit Commission of PJSC NCSP. The Audit Commission is responsible for auditing the financial andbusiness activities and documentation of the company; analyzing the company’s financial condition; and verifyingthe competence of decisions made by the company’s management bodies, among other things. The AuditCommission conducts one mandatory audit of financial and business activities for the year, as well as unscheduledaudits. Based on the results of these audits, the Audit Commission prepares a report stating its conclusionson compliance with or breaches of legislation, regulations, the charter and internal documents, as well as itsevaluation of the accuracy of data in reports and other financial documents. At each stage in the preparationof financial statements — first according to Russian standards and then according to international standards — theAudit Commission and other internal control bodies check the quality of accounting, recommending changesif needed. Detailed information about the responsibilities of the Audit Commission is contained in the Regulationon the Audit Commission, which is available on the company’s website:http://www.nmtp.info/content/holding/downloads/2007/09/14/Polojeniye_o_RC.pdf.

Audit Commission Members as of December 31, 2012

Ekaterina Vlasova, Head of the representative office of Baronetta Investments LimitedTatyana Nesmeyanova, Head of Finance and Economics at LLC Transneft ServiceMargarita Russkikh, General Director of LLC Transneft Finance, Director of Festina Alliance LTD (B.V.I.)Veronika Makeyeva, Deputy Director of Property Management and Regional Planning at the Russian TransportMinistryArtur Shamkut, Director of Internal Audit at the Moscow office of Baronetta Investments Limited

Internal Audit DepartmentThe Board of Directors decided on June 14, 2012 (Protocol No. 18-SD NCSP) to reorganize the Internal ControlService into the Internal Audit Department (IAD).

Key goals of the IAD, are to:

Identify and analyze risks to company’s operations in a timely manner;ensure integrity and accuracy of company’s financial and management accounts;implement company’s financial and operational plans;preserve company’s assets and ensure efficient use of company’s resources;support the development of optimal organizational structure ;ensure compliance with applicable laws and regulations, and company’s internal by-laws.

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The main objectives of the IAD, according to the Regulation approved by the Board of Directors, are to:

Create a system of follow-up control over financial and business activities at NCSP Group companies, divisionsand officesConduct studies, comprehensive audits, issue-specific and special inspections, evaluations and internalinvestigations according to the schedule for the current year approved by the Audit CommitteeVerify NCSP Group companies’ compliance with legislation in the area of economic relations (control overcompliance with legislation, regulations and internal procedures)Verify the legality of financial and business operations conducted by NCSP Group companies (control over theconformity of internal documents and draft decisions of management bodies to NCSP Group’s financial andbusiness interests)Monitor protection of assets (control over the principles of store accounting and holding of tangible assets,control over compliance with NCSP Group companies’ standards for expenditure of funds and tangible assets)Conduct random inspections of budget execution by NCSP Group companiesVerify cost estimates for the investment expenditures of NCSP Group companies (expert review of the costof engineering and design, construction and installation work, equipment and materials, and other expenditures)Identify untapped potential for increasing the economic efficiency of NCSP Group companiesReport to corporate bodies and management of NCSP Group companies on the results of control activities andthe condition of systems and processesDevelop remedial measures, draft corporate decisions based on control activitiesControl over other issues specified by the Board of Directors and Audit Committee

The IAD with a staff of 9 people became part of PJSC NCSP’s organizational structure on June 15, 2012 by orderof the Company’s Chief Executive Officer dated June 21, 2012 (No. 803).The IAD operated in the second half of 2012 based on an approved schedule for field audits and documentinspections, and in accordance with the responsibilities specified in the Regulation on the IAD of the PJSC NCSPOffice in Moscow. IAD staff conducted ten random audits of Group assets, including six field audits, in July-December 2012.

IFRS Risk ManagementIn preparing consolidated financial statements to International Financial Reporting Standards, NCSP Group currentlyuses an approach based on transformation of financial statements prepared to Russian Accounting Standards (RAS)into statements to IFRS. However, there are also elements of parallel accounting, such as for noncurrent assets.

At the stage of preparation for transformation, bookkeeping in RAS is checked for completeness and method. Then,based on an assessment of the differences between IFRS and RAS requirements, adjusting entries are made anda control balance sheet is compiled with a breakdown of the key modules of the financial statement. All substantiveaspects are analyzed for agreement of reporting forms and each note.

Every quarter, prior to the approval of statements, the financial department and Internal Control Service compareIFRS data with management reporting. All discrepancies are analyzed. Comparing consolidated planning data withactual data and describing the reasons for discrepancies also increases the reliability of information presentedin statements.

The financial department also analyzes major differences between accounts for the current period and the twoprevious periods, and prepares detailed explanations for all discrepancies, both for consolidated statements andindividual IFRS transformations of subsidiaries. To control working capital, a comparison is made of the accounts forcash flow prepared on the basis of management reporting data and accounts prepared by indirect method to IFRS.

Completeness of information disclosure is verified using a checklist of information that must be disclosed accordingto IFRS requirements. The checklist summarizes the compliance of recognitions, valuations, representations anddisclosure of information with requirements set out in IFRS. If there are mandatory disclosure items for whichrequirements have not been met, explanations are made (for example, the amount is deemed insignificant) or thenecessary corrections are made to the Group’s consolidated IFRS statements. In addition, educational seminars areheld with consultants from the Big Four accountancy firms to clarify the application of new and amended standards.

Implementing these key procedures gives NCSP Group management confidence that the prepared consolidatedstatements are accurate and fully reflect the actual business performance of the Group as a whole.

The prepared statements are approved by PJSC NCSP’s Chief Executive Officer. The reliability of data andcompleteness of the consolidated financial statements are also confirmed by an independent auditor.

External AuditTo ensure maximum objectivity and assurance of financial results, PJSC NCSP invites an independent qualifiedauditor to verify and confirm annual accounts for financial statements.

Auditors can be nominated by shareholders with at least 2% of shares and by the Board of Directors. The candidatefor auditor is confirmed by the General Shareholder Meeting. PJSC NCSP shareholders voted at the annual generalmeeting to confirm ZAO Deloitte & Touche CIS as the independent auditor of the company’s accounts for 2012. Thisfirm has been PJSC NCSP’s independent auditor since 2007 for statements prepared to IFRS.

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Risk ManagementThe management of NCSP Group pursues a focused policy to minimize the impact of external factors on theCompany’s business, enhancing its operational and technical potential, expanding its presence on the stevedoringservices market and strengthening relationships with counterparties and suppliers of related services.

One of the key principles of NCSP Group’s risk management system is the distribution of responsibilities in the areaof risk management and internal control between the Board of Directors, Audit Committee, Audit Commission, ChiefExecutive Officer and the Group’s executive management bodies.

Strategic risks

Exports of resource commodities from Russia, including crude oil and refined oil products, nonferrous and ferrousmetal products, grain and other agricultural commodities constitute the bulk of the Group’s cargo traffic. Changesin global commodity markets or to foreign trade regulation in Russia could have a significant impact on the volumeof Russian exports and the Group’s business.

Construction of new cargo transfer facilities and greater competition among seaports in regions where the Groupoperates could have a considerable impact on the future performance of the Group’s business.

The expansion of the Group’s business requires substantial capital expenditure that the Group might not carry out,or might be constrained in its ability to carry out, due to obligations assumed under loan and other financialagreements.

Expanding and maintaining the Group’s operations might depend on the construction of new docks, dredging andother hydraulic engineering work that is beyond the control of the Group as it falls under the authority of portadministrations and other government agencies.

The growth of the Group’s cargo turnover depends on the condition and development of railway lines, roads andpipeline infrastructure leading to ports.

The Group’s competitive advantages and prospects for growth depend on the competence and experience of keymanagers and their ability to recruit, retain and motivate skilled employees.

Changes in the international and national regulatory regime for shipping in the straits could have a substantialimpact on the Group’s performance and prospects for growth.

Operating risks

The following factors could affect the Group’s business and performance in the medium and short term:

concentration of substantial cargo volume within the context of cooperation with a limited number of shippinglines or exporters/importers;disruptions or delays to the operation of Russian railways, roads and pipeline infrastructure;adverse weather conditions (including storms), which may limit the ability to carry out loading and unloadingoperations at ports;changes to the tariff policy of companies in the transport sector and/or the introduction of new regulationsin this area, particularly changes in the tariffs and regulations for Russian Railways (RZD);changes in the situation on the global shipping market;increases in the cost of energy resources;seasonal fluctuations in demand or restrictions on exports of certain types of cargo handled by the Group;changes in leasing rates for offshore infrastructure and land leased from the Russian Federation;emergency situations and accidents, including manmade and natural incidents, as well as environmental pollutionresulting in obligations to make reparation for damages;disruptions in the operation of information support systems, including technological systems, as wellas recordkeeping and document flow systems at Group companies.

Country risks

Russia has seen positive changes in all areas of public and economic life in recent years, including economic growthand political stability. Nonetheless, Russia is still a country with a developing and changing political, economic andfinancial system. There are still risks of adverse economic developments such as negative changes in currency rates,among others, that could have a negative impact on the Group’s business.

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Financial risks

Interest rate risks

A considerable share of the Group’s debt portfolio consists of loans with a floating interest rate, changes in whichdirectly affect the Company’s financial results. The interest rate is sensitive to changes in a number of factorsoutside of the Group’s control, including domestic and international economic conditions, the policies of centralbanks and so on. An increase in the interest rate will lead to an increase in expenditures on external financing.As part of its efforts to manage interest rate risk, the Company monitors current and forward market rates and theinterest position on assets and liabilities, and works to manage the interest rate.

Currency risks

NCSP Group’s main currency risk is related to fluctuations in the Russian ruble’s exchange rate against the USdollar. Since the Company’s rates are primarily set in US dollars, a strengthening of the ruble’s exchange rateagainst the dollar could reduce revenue, profit and margins. Most of the Group’s debt is denominated in US dollarswhich is matched by a major portion of revenue received in US dollars. This creates a «natural hedge» againstcurrency risk by the fact that revenue is received and payments on debt service are made in the same currency.Changes in foreign currency exchange rates against the ruble could lead to changes in balance sheet items thatreflect debt on loans and credits denominated in foreign currency. Weaker foreign currency exchange rates againstthe ruble will increase positive exchange rate differences on revaluation of loans and increase profit tax liability.Conversely, stronger foreign currency exchange rates against the ruble will reduce positive exchange ratedifferences on revaluation of loans and reduce profit tax liability.

Inflationary risks

Inflationary processes that result in higher prices for supplies and raw materials could affect the growth of thebalance sheet total, as well as have a significant impact on the Company’s net profit, because the Group’s abilityto set rates for cargo transfer services is constrained by government regulation, while expenditures, which areprimarily denominated in rubles, change according to the inflation rate. Changes in the consumer price index havea certain impact on the Company’s profitability, and consequently on its financial position and ability to meetobligations, but this influence is not a factor of direct dependence.

In the event of a rapid acceleration of inflation, the Group plans to focus on accelerating turnover of currentassets, particularly by reducing inventories, as well as review existing contractual relations with customersto reduce receivables.

Credit risk

Credit risk lies in the possibility that a buyer might not meet obligations to the Group on time, which would resultin financial losses. Before beginning to work with new clients the Group uses its own system to assess thecreditworthiness of the potential client. The Group does not have restrictions on credit limits for clients.To minimize credit risks, the Group works with its clients on prepayment terms and only departs from this policyin exceptional cases warranted by business considerations.

Liquidity risk

Liquidity risk lies in the possibility of the Group not being able to meet its obligations when they fall due. The Groupcarefully manages and controls liquidity. The Group has processes in place for detailed budget preparation andforecasting of cash flow, ensuring that the Group has the necessary funds to meet its payment obligations. TheCompany compiles a cash flow forecast on a monthly basis.

Legal risks

General legal risks

Since the Russian legal system is still rapidly evolving, resulting in contradictions between local, regional and federallaws, rules and regulations, as well as industry standards that apply to the Company’s business, there is a risk in theuncertainty of the legal status of legal and business decisions made by the Company.

Shareholder risk

The Group’s controlling shareholders (beneficiaries) might pursue a policy that does not fully serve the interestsof minority shareholders, including the holders of GDRs representing PJSC NCSP shares.The Group might carry other shareholder risks as part of involvement in joint ventures and strategic partnerships.

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Risks related to changes in currency regulation

Currency regulation is currently based on Federal Law No. 173-FZ of December 10, 2003 On Currency Regulation andCurrency Control, with the exception of certain provisions with a different effective date. The Law is largelya framework and sets general rules within which the Russian government and Central Bank are authorizedto introduce various measures of current regulation. As a result, there could be some uncertainty regarding theCompany’s currency operations. Changes in currency regulation could have a negative impact on the fulfillmentof obligations on contracts previously signed with Russian and foreign counterparties and providers of capital thatrequire payment in foreign currency, and could require additional expenditures to bring the Group’s activitiesin line with the new requirements, including the signing of additional agreements to the relevant contracts.

Risks related to changes in tax legislation

Domestic market:

Russia currently has a Tax Code and a number of laws regulating various taxes and fees set at the federal, regionaland local levels. Applicable taxes include value-added tax, profit tax, advertising tax, property tax, excise duties,the social security contributions, and other taxes and fees.Regulations in the area of taxes and fees often contain unclear formulations and gaps in regulation. Furthermore,various government agencies and their officials often give contradictory interpretations of given tax regulations,resulting in certain inconsistencies and ambiguities. NCSP Group fully complies with current tax legislation, but thisdoes not eliminate potential risk of disagreements with regulatory agencies on issues subject to ambiguousinterpretation. In general, the tax risks related to the Group’s business are typical for most businesses operatingin the Russian Federation and can be considered as country risks.

Foreign market:

NCSP Group considers risks related to changes in tax legislation on the external market to be minimal, althoughwhen raising financing on foreign markets the Company is exposed to the risk of changes in the tax legislationof foreign countries. However, Russia now has an extensive list of double taxation treaties, which makes it possibleto minimize the negative impact of changes in foreign legislation. In any case, the Group takes all necessarymeasures to act in full compliance with new legislation.

Risks related to changes in requirements for licensing of core activities or licensing of rights to use assetswith limited transferability (including natural resources)

Given the specifics of its business, NCSP Group is subject to many environmental regulations and standards at boththe federal and regional levels. The introduction of new or changes to existing regulations could have a negativeimpact on the operations of Group companies.The Group sees the possibility of such risks arising as low, since Russian legislation is tending toward reducing thescope of activities that require licensing. The Group currently fully meets the requirements of Russian legislationin this area. Nonetheless, the Group does not rule out the possibility that regulation might be tightened in variousareas, or the possibility of legal claims from the government and third parties that could result in additional coststo bring the Group’s activities in line with new requirements, address infractions and make reparation of damages.

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3.3. Shareholder Capital & Debt Securities

Shares and GDRsPJSC NCSP’s charter capital is 192,598,154 rubles, divided into 19,259,815,400 shares with par value of 0.01 rubles.PJSC NCSP carried out an IPO on the London Stock Exchange and Russia’s RTS (Moscow Exchange as of December2011) in November 2007, placing 19.38% of its equity in the form of common shares and Global Depositary Receipts(GDRs).

At the beginning of 2012, PJSC NCSP converted 2.68% of treasury shares into GDRs. These shares were purchasedfrom investors under a mandatory offer as part of the deal to acquire LLC Primorsk Trade Port. The conversionof the shares was carried out on the basis of a decision made by the PJSC NCSP Board of Directors on February 17,2012.

PJSC NCSP’s largest shareholders as at December 31, 2012 were Novoport Holding Ltd. with 50.1% and the FederalState Property Management Agency (Rosimuschestvo) with 20%. The other 29.9% of shares are held by minorityshareholders, including companies that are part of OJSC Russian Railways (RZD), and the free float, including sharesheld nominally by JP Morgan Bank as the administrator of the company’s GDR program. As at the end of 2012,3,549,137,890 PJSC NCSP shares, amounting to 18.4% of outstanding shares, were traded on the London StockExchange in the form of GDRs.

PJSC NCSP shareholder structure as of December 31, 2012

5.3%

20.0%

24.6%

50.1%

Companies related to RZD State Free float Novoport Holding Ltd.

PJSC NCSP common shares

Type Common registered shares

State registration number 1-01-30251-E

ISIN code RU0009084446

Exchange/Listing Moscow Exchange/B

Ticker NMTP

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PJSC NCSP Global Depositary Receipts (GDRs)

Issue limit 25% of share capital

Shares to GDR ratio 75

Type Regulation S Rule 144 A

Exchange London Stock Exchange OTC Board

Ticker NCSP NVSKL

CUSIP 67011U208 67011U109

ISIN US67011U2087 US67011U1097

SEDOL B283BT30 B284CR8

Common code 32 417 710 32 418 384

EurobondsNCSP Group on May 17, 2012 completely redeemed an issue of five-year LPN (Loan Participation Notes) totaling $300million that was placed on May 17, 2007 through Novorossiysk Port Capital S.A., a special purpose vehicle registeredin Luxembourg. The LPN had a 7% coupon that was paid semi-annually.

Novorossiysk Port Capital S.A. Eurobonds

Type of securities Loan Participation Notes

Issue size $300 million

Coupon rate 7%

Coupon period Semiannual (May 17 and Nov 17)

Placement date May 17, 2007

Redemption date May 17, 2012

ISIN XS 03000986337

Ruble bondsPJSC NCSP’s Board of Directors on March 4, 2012 approved a ruble bond program consisting of five seriesof exchange traded bonds. Bond series BO-01, BO-02, BO-03, BO-04 and BO-05 amount to respectively 5 billionrubles, 4 billion rubles, 4 billion rubles, 3 billion rubles and 2 billion rubles. The coordinator of the program is VTBCapital. The Group completed the registration of the program on April 3, 2012 and the bonds were included in thelisting of securities admitted to trading on the Moscow Exchange. On the date publication of this report only seriesBO-02 bonds were placed and traded on the market.

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PJSC NCSP ruble bonds

Issue BO-01 BO-02 BO-03 BO-04 BO-05

Issue size 5 bln rubles 4 blnrubles

4 bln rubles 3 bln rubles 2 bln rubles

Couponrate

1st coupon ahead ofplacement or in bidding,remainder according to

issue documents

Coupons1-6 – 9%

annually

1st coupon ahead ofplacement or in

bidding, remainderaccording to issue

documents

1st coupon ahead ofplacement or in

bidding, remainderaccording to issue

documents

1st coupon ahead ofplacement or in

bidding, remainderaccording to issue

documents

Couponperiod

Semi-annual Semi-annual

Semi-annual Semi-annual Semi-annual

Couponaccrualstart date

2013 02.05.12 2013 2013 2013

Maturitydate

2016 29.04.15 2016 2016 2016

Issue status Planned Inc irculation

Planned Planned Planned

Stateregistrationnumber

4B02-01-30251-E 4B02-02-30251-E

4B02-03-30251-E 4B02-04-30251-E 4B02-05-30251-E

Dividend policyThe procedure for determining the amount of dividends paid to PJSC NCSP shareholders and their paymentis governed by the Regulation on Dividend Policy approved by the Board of Directors in 2007, which is availableon the Group’s website.

The dividend policy aims to meet the interests of all shareholders, while taking into account the need to increasethe company’s liquidity, capitalization and investment appeal.

The decision on the amount of dividends to be paid is made at the General Shareholder Meeting. PJSC NCSP’s Boardof Directors annually makes a recommendation on the amount of dividends that should be paid. When reviewingproposals for the distribution of net profit and deciding on the share of profit to be set aside for dividends, theBoard of Directors considers a number of factors, including:

The actual amount of PJSC NCSP net profitThe need to support PJSC NCSP’s strategic development priorities, including implementation of investmentprogramsThe need to fund PJSC NCSP’s reserve fundPJSC NCSP’s profitability, including return on assets and return on equityPJSC NCSP’s solvency and financial strength indicators, including current liquidity ratiosAvailability of working capital and debt ratio

Dividend history

Year for which dividends declared Total amount of declared dividends, ‘000 USD

2011* 14,138

2010 14,651

2009 79,241

2008 16,095

2007 14,818

56

58

62

62

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4. Social Responsibility

As one of the largest employers and taxpayers in the region, NCSP Group plays a significant role in thesocioeconomic development of the city of Novorossiysk and the Krasnodar Region as a whole. The Group hasundertaken numerous social and environmental programs and projects in the region. NCSP Group operates on theprinciples of sustainable development, embracing international best practices in corporate responsibility. NCSPGroup seeks to organize the operations of its companies according to international standards in quality (ISO9001:2000), environmental protection (ISO 14001:2000), and occupational health and safety (OHSAS 18001:1999).

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4.1. Human resources policy

General principles of employee relationsNCSP Group’s balanced human resources policy, aimed at recruiting highly qualified professionals, developing theskills of employees, providing decent wages and fostering a strong corporate culture, has been a key factor in itssuccessful development.

The employee incentive system at NCSP Group is based on competitive pay packages linked to employeeperformance. Considering the specifics of the Group’s business, special attention is paid to occupational health andsafety.

The Group had an average of 6,914 employees in 2012.

Since 2007, labour relations at Group companies have been governed by collective agreements that guaranteeemployees favourable and safe working conditions, social benefits and guarantees, opportunities for training, anda number of additional types of material incentives. The collective agreements provide for additional compensationfor work in difficult or hazardous conditions, as well as for multi-skilling and increased workloads.

In March 2013 PJSC NCSP management and employees signed a new collective agreement effective starting 1 May2013 and valid till 2016. The agreement established a new mechanism of annual wages indexation by 5% across allwage rates and tariffs. It also introduces new piece rates for handling of a range of cargoes and expands the rangeof employees eligible for additional benefits.

The collective agreement regulates issues concerning pay and benefits for employees, discipline and occupationalhealth and safety. The agreement also guarantees the rights of unions, and defines the obligations of the employerand union organizations in implementing the collective agreement.

The new version of the collective agreement was developed through dialog with a representative body thatincluded representatives of unions operating at PJSC NCSP.

NCSP Group Staff Category, 2012*

3.5%7.5%

26.0%

63.0%

6914

Office workers Managers Specialists Labobers

*Average staff number.

58

Average monthly salary at NSCP Group*, $

2011

2012

1 358.01 358.0

1 595.01 595.0

* Per employee, including insurance benefits and taxes.

NCSP Group average staff number, 2012

2011

2012

7 3317 331

6 9146 914

TrainingImproving the professional skills of NCSP Group workers, as well as specialists and management personnel is apriorityintegral part of the Group’s human resources policy.

The human resources departments of Group companies have a common approach in their programs for trainingoperational staff. All Group employees undergo training, instruction, professional development, evaluation and re-evaluation, and certification in 48 trades and engineering fields. This not only enables the Group to effectivelyrespond to its companies’ changing needs for skilled workers, but also to meet the requirements of the FederalEnvironmental, Technological and Atomic Oversight Service and provide services to outside companies and generateadditional revenue. The training center provided $18,000 in services to outside organizations in 2012.

In 2012, 4,389 employees participated in various education programs offering retraining, professional developmentand other training, including in occupational health and safety. NCSP Group spent more than $386,000 on employeetraining programs in 2012.

Table: Employee training in 2012, including in occupational health and safety

Company Spending on employees,‘000 USD

Employees trained,total

Operationalstaff Specialists Office

staff Managers

NCSP 58 2 912 1 301 1 280 99 232

IPP 12 67 28 11 — 28

NCSP Fleet 93 690 313 281 — 96

BSC 11 85 77 4 0 4

NLE 56 225 90 95 — 40

NSRZ 19 119 49 22 — 48

NGT 38 31 — 24 — 7

PTP 99 260 34 178 21 27

Grouptotal

386 4 389 1 892 1 895 120 482

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BenefitsNCSP Group has made it a priority to pursue a policy of corporate social responsibility toward its employees and hasintroduced a system of benefit packages at its companies. Collective agreements give employees the rightto additional incentives such as additional paid personal days for women with children under the age of 18,severance packages for retiring employees, bonuses for certain anniversaries and years of service and otherbenefits. Employees also receive additional lump-sum bonuses upon the birth of children and monthly childcareallowances for children up to 18 months of age. Support is also provided for multichild families, families with disabledchildren and pensioners.

NCSP Group supports its employees during difficult times such as the death of a loved one, illness, fire, theft,natural disasters, and other circumstances. In order to promote the health of employees, the collective agreementprovides reimbursement of expenses for regular medical examinations (for professions requiring periodic checkupsand in the hiring process), and provides annual compensation equivalent to the average monthly salary to covervacations taken for health and treatment purposes. NCSP Group spent $5.8 million on additional social benefits forits employees in 2012, 49% more than in the previous year.

In addition to benefits for its current employees, NCSP Group provides support for former employees who are nowretired. The Group has a Port Veterans Council that deals with issues concerning provision of quarterly materialassistance, as well as social security for veterans and their social and domestic issues. Employees who have workedfor the Company for at least 20 years with a faultless record are awarded the title of Novorossiysk Commercial SeaPort Veteran Employee, which entitles them to a cash bonus and a number of other benefits.

The Group spent $563,000 on additional social welfare benefits for retirees in 2012.

Social partnership with unionsNCSP Group works closely with the Krasnodar Union of Port Workers (PRMP, founded in February 2001). The Groupand PRMP, within the context of a social partnership, have developed a special social security program forPJSC NCSP employees who are members of the union.

The following social programs are being implemented within the context of union activities:Women and Children program. Benefits upon birth of children, benefits for multi-child families, monthly benefitsfor women on maternity leave with children up to three years old, etc.;Anniversaries and Holidays program. Benefits for participants of local conflicts for February 23, benefits forunion members, etc.;Best on the Job program. A competition is held among port employees to select the best in each department;Health program. Partial reimbursement for medical expenses;Cultural Events program. Expenses for organization of New Year celebrations for children, tickets for variousevents;Sports program. Partial reimbursement of expenses for attending sports leagues, renting fitness rooms, holdingvarious sports competitions;Solidarity Foundation program. Benefits for parents with disabled children, sanatorium-spa treatments foremployees, summer camps for children with intensive English language programs, group vacations for unionmembers, excursions, etc. The program also provides third-party liability insurance for union members. All unionmembers are insured for accidents occurring in the workplace or on the way to and from work.

Occupational health and safetyStevedoring operations by their nature can pose certain risks to the health and safety of employees, so NCSP Grouptakes occupational health and safety very seriously. The Group has introduced the Occupational SafetyManagement System (OSMS) to ensure safe working conditions at its companies. The system regulates the processof monitoring, certification and reporting for each division, and establishes a special occupational safety day.

As part of its work in the area of occupational health and safety, the Group is working actively to certify itsemployees, and 1,770 employees were certified in 2012.

Although the Group has not yet managed to eliminate workplace accidents completely, their number was minimizedto only 29 incidents in 2012.

All Group companies have carried out various measures in the area of industrial safety in 2012, including evaluationsof industrial safety, technical certifications, audits, monitoring, reviews, and inspections of equipment andinstallations at hazardous facilities. The companies have also prepared plans to undertake similar activitiesat subsidiaries in 2013.

Additionally, companies held training exercises for potential emergency situations, including drills on the Plan forContainment and Management of Emergency Situations and the Plan for Prevention and Management of Oil and OilProduct Spills.

A number of documents related to industrial safety underwent industrial safety reviews and were registered withRussia’s Federal Environmental, Technological and Atomic Oversight Service (Rostekhnadzor).

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Risk and liability insuranceNCSP Group carries insurance for a broad range of risks and liabilities, including property insurance, losses dueto interruption of operations, civil liability insurance for hazardous enterprises, optional health insurance and groupaccident insurance.

NCSP Fleet and Baltic Stevedoring Company anniversaries:something to be proud ofIn the 20 years since it was founded, PJSC NCSP Fleet has become the largest towing and tugboat company in thecountry. The company now has 695 employees, many of whom have been working in the port fleet for over 30 yearsand have a wealth of experience, both in routine operations and emergency situations such as fighting the fireon the Bulgarian tanker Khan Asparuh in October 2001 and coming to the aid of the bunkering ship Prometheus.These successful operations prevented environmental disasters and saved the lives of many crew members. PJSCNCSP Fleet workers have been repeatedly commended by the Russian Transport M inistry and the regional governorfor their valiant efforts. To mark the PJSC NCSP Fleet’s anniversary, the company presented awardsto 12 employees.

LLC Baltic Stevedoring Company celebrated its tenth anniversary in 2012. Since its inception, LLC BSC hasconsistently pursued its goals and achieved excellent results, assuredly securing its position as one of the fastestgrowing companies in the Kaliningrad Region and one of the leading companies in Russia’s container shippingmarket. Thanks to its hard work year in year out, day in day out, LLC BSC is making a considerable contributionto the growth and prosperity of the NCSP Group.

In the relatively short period since it was founded, LLC BSC has mastered the latest technologies, formed a close-knit team of professionals, and withstood the difficult times of the crisis to grow further and improve itsperformance.

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4.2. Procurement Policy

NCSP Group works with many contractors who perform various types of work and provide various services in thecourse of the Group’s operations and as it implements investment projects. The Group works with these companieson the basis of mutually beneficial cooperation.

The Group has developed a system to standardize its approach to the organization of projects, selectionof contractors, and the preparation and signing of contracts with them.

The Group holds tenders for construction, engineering, planning and surveying, and supply contracts for materialsand equipment.

The tenders define the methods and procedures for selecting a contractor depending on the nature of the workor services and the size of the contract.

For contracts exceeding 3 million rubles, the Tender Committee is joined in the tender proceedings by expertsappointed by the Board of Directors, together with specialists from the Internal Control Service and the EconomicsDepartment, who together review the financial standing of the bidding companies. External organizations may alsobe contracted to provide independent technical oversight.

4.3. Environment

NCSP Group is committed to protecting the environment and minimizing the environmental impact of its operations.To meet its obligations in environmental stewardship, the Group strives to adhere to ISO 14001:2004 principles andstandards. The Group takes a range of measures to maintain the ecological balance in the waters of NovorossiyskPort and the environs of the city of Novorossiysk, and to reduce the negative impact of its operations. The Grouphas an environmental management system, and has set up an operations monitoring department that includesan environmental service. Specialized laboratories at Group companies regularly monitor emissions and the releaseof pollutants, and conduct seasonal studies of levels of air, water and noise pollution. NCSP Group’s operations arespecifically associated with the possibility of emergencies. Thus the Group annually carries out tactical emergencyresponse exercises. Managers and specialists of the Group’s companies are regularly trained and certifiedin environmental safety management.

Material environmental disputesDepartment of the Federal Service for Supervision of Natural Resources in the North-West Federal District(Department) during the period from 18.07.2012 till 07.08.2012 carried an audit of LLC PTP compliance with therequirements of environmental protection legislation regarding the protection of atmospheric air.

The audit findings claimed that LLC PTP was conduction operations inconsistent with the expert conclusion of theState Environmental Expertise. Specifically oil berths number 3 and 4 are not equipped there with oil vapors captureunits for aspiration and disposal of oil vapors during loading of oil tankers.

According to the results of an administrative investigation the Department issued an administrative liability orderdated 21.11.2012, and imposed a fine on LLC PTP in the amount of $ 100 000. LLC PTP was also issueda representation dated 27.11.2012 requiring the latter to eliminate the causes and conditions that constitutedan administrative violation.

LLC PTP applied to the Arbitration Court of St. Petersburg and Leningrad region with the claim to invalidate andannul the Department’s order dated 21.11.2012 and the representation dated 27.11.2012 on elimination of thecauses and conditions that constituted an administrative violation.

The ruling of the Arbitration Court of St. Petersburg and Leningrad region dated 05.03.2013 cancelled theDepartment’s order dated 21.11.2012 and invalidated the representation dated 27.11.2012 on elimination of thecauses and conditions that constituted an administrative violation.

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Environmental protection measures in 2012

PJSC NCSP

Sorption agent charge replaced at treatment facilitiesMaintenance done to rotary air pumps and sewage pumps at treatment facilitiesRegular laboratory control of waste waters executedRegular sewage cleaningRegular cleaning and replacement of filters in dust and gas removal cyclonesPublic hearings regarding a part of Sheskharis oil terminal reconstruction project held, awaiting stateenvironmental expertise conclusionBiodiversity monitoring of Tsemes Bay conductedTechnical report on cataloguing of pollution and emission sources and project for emission allowancesproduced; permit for air emissions obtained

OJSC NLE

Industrial environmental monitoring of air quality, and lab monitoring of harmful contaminants in all runoffwaterQuarterly cleanup of Black Sea waters under contract with NCSP FleetConstant preparedness for cleanup of spills of oil products into the sea under a contract with stateemergency response enterprise FGUP BASUTreatment facilities launched in 2012 in areas 5 and 7, construction started on treatment facilities in area 2(scheduled for completion in 2013)Major repairs done on boiler equipment

PJSC NGT

Activated carbon charge acquired and charge replaced in filters of runoff treatment facilitiesMaintenance and current repairs on water utility networks and treatment facilitiesLab monitoring of storm water treatment facilities and disposal of storm water into sewer according to labmonitoring schedule, and lab monitoring of harmful emissionsLab monitoring of sanitary buffer zone according to approved schedule for lab tests in buffer zoneAcquisition of HAKO-Jonas 1900D vacuum sweeper for terminal cleanup

OJSC IPP

Environmental monitoring of air quality, operation of treatment facilities, the Tsemes River and ground waterProcessing of hazardous wasteMaintenance of oil separators, treatment facilities and storm drainageMaintenance of automobile fleet, production equipment, diesel fuel pumps, and equipment for heating anddraining fuel oil to prevent leaks from transhipment equipment

OJSC NSRZ

Epidemiological testing of drinking, technical, and waste waters, as well as sea water was carried out.Installed new technical water intake metering unit.Sewerage system was cleaned.Repairs on hydrotechnical installations were carried out.Repairs on the industrial site sewer system were carried out.Carried out staff training in environmental safety.Developed measures to reduce harmful air emissions content during adverse weather conditions.Conducted monitoring and validation of data on water and air emissions accounting, and on accumulation andtemporary storage of waste.Hazardous waste disposals were carried out.Monitored of the condition waste accumulation and storage sites; of the technical condition of biologicalsewage treatment plants; of water treatment quality and of pollutants content in waste waters.Monitored emission of air pollutants at the company’s industrial site and in the buffer zone.Monitored dust removal equipment effectiveness.

LLC BSC

Processing of hazardous wasteMonitoring of waste dumps, technical condition of treatment facilities, quality of treatment and pollutionlevels in storm water runoff, as well as the condition of storm water drainageMaintenance of required safe sanitation conditions at waste dumpsTechnical maintenance and servicing of treatment facilities and storm drainage

LLC PTP

Support and improvement of environmental management system that provides reliable and precise dataon environmental protectionEmergency response personnel held 358 training exercises and four comprehensive drills on cleaningup accidental oil spills with the participation of regulatory bodies

CJSC SFPEnergy performance certificate developed for consumption of fuel and energy resourcesEvaluation conducted of workplaces in administration and on ships

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4.4. Charity & Sponsorship

NCSP Group believes social responsibility is essential to the development of its business. The Group worksto promote the social and economic development of the region, foster a favorable business climate and support thesocial welfare of its employees, as well as the residents of regions where it operates.

NCSP Group’s charity work and sponsorship programs focus on the younger generation and efforts to improvepeople’s living standards, including aid to disadvantaged groups, municipal, educational and healthcare institutionsand community organizations.

PJSC NCSP spent more than $2.7 million on charitable programs in 2012.

PJSC NCSP has also traditionally provided support to the annual Morskoi Uzel internationally televised festival foryoung performers. In 2012 PJSC NCSP has also increased support of social projects by Novorossiysk CityAdministration under mutual agreement on social and economic development of Novorossiysk. PJSC NCSP hasprovided individual charity donations to families that suffered from the flooding in the cities of Krymsk andGelendzhik in amount of some $273 thousand, and donated some $160 thousand to various organizations to financethe disaster remedy actions after the flooding.

PJSC NCSP has traditionally been involved in exhibitions, forums and conferences in the area of marine transportand provides sponsorship support for them. Such events include:

The TransRussia international exhibition and conference on freight traffic, transport and logisticsThe Sochi International Investment ForumThe Transport Russia international transportation forum and exhibitionThe YugTrans international transportation forum

Novorossiysk-Krymsk: Direct AidThe flloding in the city of Krymsk on JUly 6-7 2012 has turned a real tragedy for Krasnodar region, that took manylives. Hundreds of families lost everything, including the roofs over their heads. Emergency Ministry workers,firefighters and soldiers sifted through the wreckage and pumped water out of courtyards and basements.Novorossiysk, where the memory of the terrible flood of 2002 is still fresh, was among the first to respond.

Volunteers, at their own peril, rushed to help the victims as soon as they heard about the disaster in Krymsk.People hired trucks, purchased and collected humanitarian goods and sent aid in any way they could to thedevastated city and surrounding villages.

A group of off-road enthusiasts drove to Krymsk in their own vehicles to help emergency workers and localresidents. NCSP employees also joined the team of volunteers. Workers at NCSP companies, on their own initiative,began collecting money to help the victims and quickly collected more than 150,000 rubles. Everyone contributed,from directors to entry-level employees. The money was used to buy medicine, personal hygiene products andchildren’s goods, and several trucks of humanitarian aid from NCSP employees were sent to Krymsk on July 9th and10th.

NCSP management decided to provide assistance to the families of those who perished, as well as to the cityof Novorossiysk. NCSP Group gave every family that lost someone in the flood 50,000 rubles and donated 5 millionrubles to the Novorossiysk city administration to help finance the flood cleanup effort.

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4.4. Charity & Sponsorship

NCSP Group believes social responsibility is essential to the development of its business. The Group worksto promote the social and economic development of the region, foster a favorable business climate and support thesocial welfare of its employees, as well as the residents of regions where it operates.

NCSP Group’s charity work and sponsorship programs focus on the younger generation and efforts to improvepeople’s living standards, including aid to disadvantaged groups, municipal, educational and healthcare institutionsand community organizations.

PJSC NCSP spent more than $2.7 million on charitable programs in 2012.

PJSC NCSP has also traditionally provided support to the annual Morskoi Uzel internationally televised festival foryoung performers. In 2012 PJSC NCSP has also increased support of social projects by Novorossiysk CityAdministration under mutual agreement on social and economic development of Novorossiysk. PJSC NCSP hasprovided individual charity donations to families that suffered from the flooding in the cities of Krymsk andGelendzhik in amount of some $273 thousand, and donated some $160 thousand to various organizations to financethe disaster remedy actions after the flooding.

PJSC NCSP has traditionally been involved in exhibitions, forums and conferences in the area of marine transportand provides sponsorship support for them. Such events include:

The TransRussia international exhibition and conference on freight traffic, transport and logisticsThe Sochi International Investment ForumThe Transport Russia international transportation forum and exhibitionThe YugTrans international transportation forum

Novorossiysk-Krymsk: Direct AidThe flloding in the city of Krymsk on JUly 6-7 2012 has turned a real tragedy for Krasnodar region, that took manylives. Hundreds of families lost everything, including the roofs over their heads. Emergency Ministry workers,firefighters and soldiers sifted through the wreckage and pumped water out of courtyards and basements.Novorossiysk, where the memory of the terrible flood of 2002 is still fresh, was among the first to respond.

Volunteers, at their own peril, rushed to help the victims as soon as they heard about the disaster in Krymsk.People hired trucks, purchased and collected humanitarian goods and sent aid in any way they could to thedevastated city and surrounding villages.

A group of off-road enthusiasts drove to Krymsk in their own vehicles to help emergency workers and localresidents. NCSP employees also joined the team of volunteers. Workers at NCSP companies, on their own initiative,began collecting money to help the victims and quickly collected more than 150,000 rubles. Everyone contributed,from directors to entry-level employees. The money was used to buy medicine, personal hygiene products andchildren’s goods, and several trucks of humanitarian aid from NCSP employees were sent to Krymsk on July 9th and10th.

NCSP management decided to provide assistance to the families of those who perished, as well as to the cityof Novorossiysk. NCSP Group gave every family that lost someone in the flood 50,000 rubles and donated 5 millionrubles to the Novorossiysk city administration to help finance the flood cleanup effort.

Table: Charitable activity*

Company Activity ‘000 USD ‘000 USD,total

PJSC NCSP

Krasnodar Regional Charity Foundation Albatros 257.4

2,340.8

Krasondar Regional Charity Foundation for creative education support «Port WorkersClub»

381.1

Charitable donations to Novorossiysk pubic administration 823.1

Charitable Donations to Transportation Police Office 67.3

Sea Knot arts festival 164.6

Other charity 647.3

OJSC IPP

Financial aid to pensioners and veterans 11.5

21.4

Donations to city administration 2.8

Sports organizations and youth sports schools (including sailing, volleyball and others) 2.4

Aid to healthcare institutions, for medical treatment and shelters 2.8

Contributions to children’s centres, kindergartens and educational institutions 1.4

Russian Orthodox Church, churches 0.2

Aid to military unit, Navy veterans 0.3

PJSC NCSPFleet

Aid to Veterans Council 18.2

76.9Organization of celebrations for Marine Fleet Workers Day 32.9

Sports organizations and youth sports schools (including sailing and others) 25.8

CJSC SFP

Aid to municipal Centre for Afterschool Education and the Sailing Sports Federationof Leningrad Region

118.9

140.9Russian Orthodox Church, Church of St. Nicholas the Wonderworker 10.5

State Educational Institution Orphanage No. 53 8.2

Other (Primorsk city administration) 3.2

LLC PTP

Aid to veterans 9.4

134.8

Aid to disadvantaged groups 27.7

Children and sport (aid to educational institutions) 68.9

Religion and culture (aid to Russian Orthodox Church) 24.8

Other 4.0

OJSC NSRZ

Donation to Novorossiysk mayoral candidate Vladimir Sinyagovsky, nominated by localchapter of United Russia Party

7.2

10.5

Aid to Novorossiysk hospital FGBUZ YuMTs FMBA Rossii 1.0

New Year gifts to Novorossiysk Border Control Unit 0.8

Interior paint for Chernomorets Football Club 0.2

New Year gifts for Akhtyrsky Orphanage 0.7

New Year gifts for Novorossiysk hospital FGBUZ YuMTs FMBA Rossii 0.6

PJSC NGTMedical treatment for relative of employee suffering from rare disease 3.3

32.9Celebration of Marine and River Fleet Workers Day 29.6

* Data not IFRS indicators, or cited according to management reporting

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5.1. Statement Of Management’s ResponsibilitiesFor The Preparation And Approval Of The Consolidated FinancialStatements For The Year Ended 31 December 2012

Management is responsible for the preparation of consolidated financial statements that present fairlythe consolidated financial position of Public Joint Stock Company Novorossiysk Commercial Sea Port and itssubsidiaries (the “Group”) as at 31 December 2012, and the consolidated results of its operations, cash flowsand changes in equity for the year then ended, in compliance with International Financial Reporting Standards(“IFRS”).

In preparing the consolidated financial statements, management is responsible for:

properly selecting and applying accounting policies;presenting information, including accounting policies, in a manner that provides relevant, reliable, comparableand understandable information;providing additional disclosures when compliance with the specific requirements in IFRSs are insufficientto enable users to understand the impact of particular transactions, other events and conditionson the Group’s consolidated financial position and financial performance;and making an assessment of the Group’s ability to continue as a going concern.

Management is also responsible for:

designing, implementing and maintaining an effective and sound system of internal controls, throughoutthe Group;maintaining adequate accounting records that are sufficient to show and explain the Group’s transactionsand disclose with reasonable accuracy at any time the consolidated financial position of the Group, and whichenable them to ensure that the consolidated financial statements of the Group comply with IFRS;maintaining statutory accounting records in compliance with statutory legislation and accounting standards;taking such steps as are reasonably available to them to safeguard the assets of the Group;and preventing and detecting fraud and other irregularities.

The consolidated financial statements of the Group for the year ended 31 December 2012 were approvedby management on 16 April 2013:

Y.V.Matvienko G.I. Kachan

Acting Chief Executive Officer Chief Financial Officer

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5.2. Independent Auditor’s Report

To the Shareholders and the Board of Directors of Public Joint Stock Company Novorossiysk Commercial Sea Port:

We have audited the accompanying consolidated financial statements of Public Joint Stock Company NovorossiyskCommercial Sea Port and its subsidiaries (the “Group”), which comprise the consolidated statement of financialposition as at 31 December 2012, and the consolidated statements of comprehensive income, changes in equityand cash flows for the year then ended, and notes comprising a summary of significant accounting policiesand other explanatory information.

Management’s responsibility for the consolidated financialstatementsManagement is responsible for the preparation and fair presentation of the accompanying consolidated financialstatements in accordance with International Financial Reporting Standards (“IFRS”) and for such internal controlas management determines is necessary to enable the preparation of consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on the fair presentation of these consolidated financial statements basedon our audit. We conducted our audit in accordance with Russian Federal Auditing Standards and InternationalStandards on Auditing. Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance whether the consolidated financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the consolidated financial statements. The procedures selected depend on the auditor’s judgment, includingthe assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraudor error. In making those risk assessments, the auditor considers internal control relevant to the Group’spreparation and fair presentation of the consolidated financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies usedand the reasonableness of accounting estimates made by management, as well as evaluating the overall presentationof the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to express an opinion on the fairpresentation of these consolidated financial statements.

OpinionIn our opinion, the accompanying consolidated financial statements present fairly, in all material respects,the consolidated financial position of the Group as at 31 December 2012, and its consolidated financial performanceand its cash flows for the year then ended in accordance with International Financial Reporting Standards.

16 April 2013 Moscow, Russian Federation

Sedov A.V., Partner (certificate no 01-000487 dated 13 December 2012)

ZAO Deloitte & Touche CIS

The Entity: OJSC “NCSP”

Certificate of state registration № 3207, issuedby the Administration of Novorossiysk by 11.12.1992.

Certificate of registration in the Unified State Register№ 1022302380638 of 23.08.2002, issued by NovorossiyskInspectorate of the Russian Ministry of Taxation.

Address: 353901, Russian Federation, Krasnodar region,Novorossiysk, Portovaya st., 14

Independent Auditor: ZAO “Deloitte & Touche CIS”

Certificate of state registration № 018.482, issuedby the Moscow Registration Chamber on 30.10.1992.

Certificate of registration in the Unified State Register№ 1027700425444 of 13.11.2002, issued by Moscow InterdistrictInspectorate of the Russian Ministry of Taxation № 39.

Certificate of membership in “NP“Audit Chamber of Russia”(auditors’ SRO) of 20.05.2009 № 3026, ORNZ 10201017407.

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5.3. Consolidated Financial Statements For The Year Ended31 December 2012

FOR THE YEAR ENDED 31 DECEMBER 2012(in thousands of US Dollars, except earnings per share)

Consolidated statement of comprehensive income5.3.1.

Notes Year ended 31 December 2012 Year ended 31 December 2011

REVENUE 6 1,033,680 1,049,539

COST OF SERVICES 7 (435,676) (495,440)

GROSS PROFIT 598,004 554,099

Selling, gener al and administr ative ex penses 8 (87,528) (78,168)

Loss on disposal of pr oper ty, plant and equipment 12 (2,288) (692)

Impair ment of goodw ill 13 (89,456) —

OPERATING PROFIT 418,732 475,239

Inter est income 12,009 4,434

Finance costs 9 (144,263) (144,619)

Shar e of loss in joint ventur e, net 16 (778) (4,746)

For eign ex change gain/(loss), net 130,200 (167,940)

Other (loss)/income, net (20) 2,152

PROFIT BEFORE INCOME TAX EXPENSE 415,880 164,520

Income tax ex pense 10 (99,920) (34,207)

PROFIT FOR THE YEAR 315,960 130,313

Effect of tr anslation to pr esentation cur r ency 64,023 (54,508)

Actuar ial loss on defined benefit plans 24 (1,624) —

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 378,359 75,805

Pr ofit for the year attr ibutable to:

Equity shar eholder s of the par ent company 310,771 127,100

Non-contr olling inter ests 5,189 3,213

315,960 130,313

Total compr ehensive income attr ibutable to:

Equity shar eholder s of the par ent company 371,407 74,144

Non-contr olling inter ests 6,952 1,661

378,359 75,805

Weighted aver age number of or dinar y shar es outstanding 18,743,128,904 19,087,586,568

BASIC AND DILUTED EARNINGS PER SHARE (US Dollar s) 0.0166 0.0067

Y.V.Matv ienko G.I. Kachan

Acting Chief Ex ecutive Officer Chief Financial Officer

Consolidated statement of financial position

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AS AT 31 DECEMBER 2012(in thousands of US Dollars)

Notes 31 December 2012 31 December 2011

ASSETS

NON-CURRENT ASSETS:

Property, plant and equipment 12 2,068,857 1,967,938

Goodwill 13 1,489,007 1,491,070

Mooring rights 14 7,864 7,980

Investments in securities and other financial assets 15 11,159 34,842

Investment in joint venture 16 8,916 9,425

Spare parts 5,467 5,007

Deferred tax assets 10 1,075 7,318

Other intangible assets 2,691 1,593

Other non-current assets 9,958 13,971

3,604,994 3,539,144

CURRENT ASSETS:

Inventories 17 8,195 11,258

Advances to suppliers 8,093 2,991

Trade and other receivables, net 18 43,037 47,796

VAT recoverable and other taxes receivable 23,965 41,132

Income tax receivable 272 41,209

Investments in securities and other financial assets 15 50,131 21,833

Cash and cash equivalents 19 242,579 127,522

376,272 293,741

TOTAL ASSETS 3,981,266 3,832,885

Consolidated statement of financial position5.3.2.

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Notes 31 December 2012 31 December 2011

EQUITY AND LIABILITIES

EQUITY:

Share capital 20 10,471 10,471

Treasury shares (281) (281)

Foreign currency translation reserve (41,413) (103,641)

Retained earnings 1,327,102 1,032,044

Equity attributable to shareholders of the parent company 1,295,879 938,593

Non-controlling interests 32,445 25,582

TOTAL EQUITY 1,328,324 964,175

NON-CURRENT LIABILITIES:

Long-term debt 21 2,171,762 2,113,843

Obligations under finance leases 22 6,089 —

Cross currency and interest rate swap 23 4,602 —

Defined benefit obligation 24 9,551 7,286

Deferred tax liabilities 10 292,082 266,907

Other non-current liabilities 949 2,864

2,485,035 2,390,900

CURRENT LIABILITIES:

Current portion of long-term debt 21 90,200 392,413

Current portion of obligations under finance leases 22 2,711 —

Trade and other payables 26 12,380 18,251

Advances received from customers 26,392 47,442

Taxes payable 6,113 4,292

Income tax payable 11,183 4,034

Accrued expenses 27 18,928 11,378

167,907 477,810

TOTAL EQUITY AND LIABILITIES 3,981,266 3,832,885

Consolidated statement of changes in equity

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FOR THE YEAR ENDED 31 DECEMBER 2012(in thousands of US Dollars)

Consolidated statement of changes in equity5.3.3.

Attributable to shareholders of the parent company

Notes Sharecapital

Treasuryshares

Sharepremium

Foreign currencytranslation

reserve

Retainedearnings Total

Non-controlling

interestsTotal

At 1 January 2011 10,471 — 9,255 (50,685) 996,330 965,371 23,927 989,298

Pr ofit for the year — — — — 127,100 127,100 3,213 130,313

Other compr ehensiveincome

— — — (52,956) — (52,956) (1,552) (54,508)

Total comprehensiveincome for the year

— — — (52,956) 127,100 74,144 1,661 75,805

Buy-back of shar es 20 — (281) (9,255) — (76,741) (86,277) — (86,277)

Dividends 11 — — — — (14,645) (14,645) (6) (14,651)

A t 31 December 2011 10,471 (281) — (103,641) 1,032,044 938,593 25,582 964,175

At 1 January 2012 10,471 (281) — (103,641) 1,032,044 938,593 25,582 964,175

Pr ofit for the year — — — — 310,771 310,771 5,189 315,960

Other compr ehensiveincome

— — — 62,228 (1,592) 60,636 1,763 62,399

Total comprehensiveincome for the year

— — — 62,228 309,179 371,407 6,952 378,359

Dividends 11 — — — — (14,121) (14,121) (89) (14,210)

A t 31 December 2012 10,471 (281) — (41,413) 1,327,102 1,295,879 32,445 1,328,324

Consolidated statement of cash flows

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FOR THE YEAR ENDED 31 DECEMBER 2012(in thousands of US Dollars)

Notes Year ended31 December 2012

Year ended31 December 2011

Cash flows from operating activities

Cash from operations 29 599,556 554,586

Income tax paid (33,898) (90,329)

Interest paid (138,710) (143,895)

Net cash generated by operating activities 426,948 320,362

Cash flows from investing activities

Proceeds from disposal of property, plant and equipment 5,360 1,064

Purchases of property, plant and equipment (55,784) (95,081)

Proceeds from investments in securities and otherfinancial assets

111,710 198,106

Purchases of investments in securities and other financialassets

(119,726) (182,153)

Acquisition of subsidiaries, net of cash acquired — (2,100,577)

Interest received 8,402 6,861

Purchases of other intangible assets (1,987) (1,026)

Net cash used in investing activities (52,025) (2,172,806)

Cash flows from financ ing activities

Repayments of loans and borrowings (388,726) (115,449)

Proceeds from loans and borrowings 21 136,207 1,938,300

Dividends paid 11 (14,183) (14,797)

Advances paid under lease contracts 22 (6,330) —

Payment for buy-back of shares 20 — (86,151)

Payment for shares buy-back costs 20 — (126)

Net cash (used in)/generated by financ ing activities (273,032) 1,721,777

Net increase/(decrease) in cash and cash equivalents 101,891 (130,667)

Cash and cash equivalents at the beginning of the year 19 127,522 265,017

Effect of translation into presentation currency on cashand cash equivalents

13,166 (6,828)

Cash and cash equivalents at the end of the year 19 242,579 127,522

Consolidated statement of cash flows5.3.4.

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5.3.5. Notes to the consolidated financial statements

OrganisationPublic Joint Stock Company (“PJSC”) Novorossiysk Commercial Sea Port (“NCSP”) was founded in 1845.NCSP was transformed from a state-owned enterprise to a PJSC in December 1992. NCSP’s principalactivities include stevedoring, additional port services, and sea vessel services. NCSP and its subsidiaries(the “Group”) primarily operate in the Russian Federation. The principal activities and significant entitiesof the Group as at 31 December 2012 were as follows:

Ownership % held*

Significant subsidiaries Nature of business Countryof incorporation 31 December 2012 31 December 2011

LLC Primorsk Trade Port Stevedoringand additional portservices

RussianFederation

100.00% 100.00%

PJSC Novorossiysk GrainTerminal

Stevedoringand additional portservices

RussianFederation

100.00% 100.00%

OJSC Novoroslesexport Stevedoringand additional portservices

RussianFederation

91.38% 91.38%

OJSC IPP Stevedoringand additional portservices

RussianFederation

99.98% 99.98%

OJSC NovorossiyskShipyard

Stevedoring and marinevessels repair services

RussianFederation

65.18% 65.18%

LLC Baltic StevedoreCompany

Stevedoringand additional portservices

RussianFederation

100.00% 100.00%

PJSC Fleet NovorossiyskCommercial Sea Port

Tug and towing servicesand bunkering

RussianFederation

95.19% 95.19%

CJSC SoyuzFlot Port Tug and towing services RussianFederation

99.99% 99.99%

* The ownership is calculated based onthe total number ofshares owned bythe Group asofthe reportingdates including preferred shares.

The main subsidiaries of the Group are located in the eastern sector of the Black Sea in Tsemesskaya Bayas well as in the Leningrad and Kaliningrad District.

NCSP is the largest stevedore of the Group and the holding company. It holds the primary cargo-loadingdistrict, the Sheskharis oil terminal, the technical support base and the passenger terminalin Novorossiysk. NCSP has eight significant subsidiaries, the primary activities of which are as follows:

LLC Primorsk Trade Port (“PTP”)PTP is involved in the transshipment of oil and oil products in the port of Primorsk, Leningrad District.The Group acquired 100% of the shares in PTP on 21 January 2011, in order to materially increasethe scale of its operations and become a market leader in port management in Russia’s two key regions,the North-Western and Southern basins.

PJSC Novorossiysk Grain Terminal (“Grain Terminal”)Grain Terminal manages grain storage and a shipment terminal in the western partof the Tsemesskaya Bay.

General Information1.

75

OJSC Novoroslesexport (“Novoroslesexport”)Novoroslesexport provides stevedoring and storage services for the export of timber, containerisedcargo, ferrous and nonferrous metals.

OJSC IPP (“IPP”)IPP is a liquid-cargo processing enterprise, and also provides bunkering services.

OJSC Novorossiysk Shipyard (“Shipyard”)Shipyard is the largest ship-repair enterprise in the South of Russia that has a major universal port at itsdisposal. The cargo specialization of Shipyard is the transshipment of ferrous metals and cement. It alsohandles loose goods in soft containers and big bags, construction cargo, oversize cargo, food andperishable cargo, and roll-on roll-off cargo at its own ferry berth.

LLC Baltic Stevedore Company (“BSC”)BSC is a stevedoring company operating the container, car-ferry, cargo and passenger terminal of theBaltiysk port in the Kaliningrad District.

PJSC Fleet Novorossiysk Commercial Sea Port (“Fleet”)Fleet is a maritime tug and towing company. It provides most of the tug and towing, mooring andbunkering services for ships and other maritime vessels at and around the Novorossiysky Port (the“Port”). In addition, it carries out emergency services such as transferring vessels to shelter zones duringemergencies, cleaning and containment services for oil or other liquid spills in and around the Port andhazardous material response and waste management services pursuant to its agreement on water usewith Kubanskoye Basin Department of the Krasnodar District under the Russian Ministry of NaturalResources.

CJSC SoyuzFlot Port (“SFP”)SFP is a subsidiary of PTP. According to a decision of the shareholders’ meeting on 25 April 2012, thecompany’s name was changed from CJSC Sovfracht-Primorsk to the Joint Stock Company “SoyuzFlot Port”.SFP is the operator of towing, pilotage and tug and towing services in the Port of Primorsk in theLeningrad District.

Golden shareAccording to decree No.1343-r dated 12 August 2010, which was issued by the Government of the RussianFederation, the Government has the right to obtain a golden share in companies. This golden shareprovides the holder with special rights in comparison with other shareholders, and allows the state toblock decisions made by shareholders to amend the charter, as well as decisions relating to liquidation,corporate restructuring and significant transactions. During 2010, the Government enacted this right tohold a golden share in the Group so that it may exercise significant influence over the Group without theactual need to acquire significant ownership.

Going concern assumptionThe accompanying consolidated financial statements of the Group have been prepared assuming that theGroup will continue as a going concern, which presumes that the Group will, for the foreseeable future,be able to realise its assets and discharge its liabilities in the normal course of business.

The consolidated financial statements of the Group have been prepared in accordance with InternationalFinancial Reporting Standards (“IFRS”).In preparing these consolidated financial statements, management complied with existing standards andinterpretations that are effective or available for early adoption at the Group’s IFRS annual reportingdate.

Adoption of new and revised International Financial

Basis For Presentation2.

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Reporting StandardsThe accounting policies adopted are consistent with those of the previous year, except for the followingnew and amended IFRS effective as of 1 January 2012 and the early adoption of IAS 19 “EmployeeBenefits” (as revised in June 2011):

IFRS 1 (Revised 2008) “First-time Adoption of International Financial Reporting Standards”.Amendments to severe hyperinflation. Effective 1 July 2011;IFRS 1 (Revised 2008) “First-time Adoption of International Financial Reporting Standards”.Amendments to removal of fixed dates of first-time adopters. Effective 1 July 2011;IFRS 7 “Financial Instruments: Disclosures”. Amendments to transfers of financial assets. Effective 1July 2011;IAS 12 “Income Taxes”. Amendments to IAS 12 “Income Taxes” — Deferred Tax: Recovery of UnderlyingAssets. Effective 1 January 2012.

The adoption of the amendments to IFRS 1 (Revised 2008) “First-time Adoption of International FinancialReporting Standards”, IFRS 7 “Financial Instruments: Disclosures” and IAS 12 “Income Taxes” did not haveany impact on the financial position or performance of the Group.

IAS 19 “Employee Benefits” (as revised in June 2011)

In the current year, the Group has applied IAS 19 (as revised in June 2011) “Employee Benefits” and therelated consequential amendments in advance of their effective dates. The amendments to IAS 19 changethe accounting for defned beneft schemes and termination benefts. For the Group, given that theplans are unfunded, the most signifcant change relates to the accounting for changes in defned beneftobligations. The amendments require the recognition of changes in defned beneft obligations when theyoccur in other comprehensive income such gains and losses and excluded permanently from profit andloss. Historically, the Group’s policy involved the recognition of actuarial gains and losses, immediately, inprofit or loss. The transitional provisions in IAS 19 (as revised in June 2011) require application of therevised policy retrospectively. The Group has not retrospectively restated financial information as of andfor the year ended 31 December 2011 for the adoption of IAS 19 (as revised in June 2011), given that theimpact is both qualitatively and quantitatively immaterial.

Furthermore, the interest cost and expected return on scheme assets used in the previous version of IAS19 are replaced with a ‘net-interest’ amount under IAS 19 (as revised in June 2011), which is calculatedby applying a discount rate to the net de�ned benefit liability or asset. IAS 19 (as revised in June 2011)also introduces more extensive disclosures in the presentation of the de�ned beneft cost.

The Group maintains an unfunded defined benefit plan, as such, the primary impact of the application ofIAS 19 (as revised in June 2011) impact of the immediate recognition of actuarial gains and losses in othercomprehensive income (Note 24).

Standards and Interpretations issued but not yet effectiveAt the date of approval of the Group’s consolidated financial statements, the following new and revisedStandards and Interpretations have been issued, but are not effective for the current year:

Effective for periods annualperiods beginning on or after

IFRS 7 “Financial Instruments: Disclosures” amendments enhancing disclosuresabout offsetting financial assets and financial liabilities

1 January 2013

IFRS 9 “Financial Instruments” — New requirements for classifying and measuringfinancial assets revised requirements for the classification and measurement of financial liabilities

1 January 2015

IFRS 10 “Consolidated Financial Statements” — New standard published in May2011

1 January 2013

IFRS 11 “Joint Arrangements” — New standard published in May 2011 1 January 2013

IFRS 12 “Disclosure of Interests in Other Entities” — New standard published inMay 2011

1 January 2013

IFRS 13 “Fair Value Measurement” — New standard published in May 2011 1 January 2013

IAS 1 “Presentation of financial statements” — amendment to revise thepresentation of other comprehensive income

1 January 2013

IAS 27 “Separate Financial Statements”— New standard published in May 2011 1 January 2013

IAS 28 “Investments in Associates” — New standard published in May 2011 1 January 2013

IAS 32 “Financial Instruments: Presentation” — amendments to applicationguidance on the offsetting of financial assets and financial liabilities

1 January 2014

Adoption of new and revised International Financial

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IAS 32 “Financial Instruments: Presentation” — amendments to applicationguidance on the offsetting of financial assets and financial liabilities

1 January 2014

Management is currently evaluating the impact of adoption of IFRS 9 “Financial Instruments”, IFRS 10“Consolidated Financial Statements”, IFRS 12 “Disclosure of Interests in Other Entities”, IFRS 13 “FairValue Measurement” and amendment to IFRS 7 “Financial instruments: Disclosures”. For other standardsand interpretations management anticipates that their adoption in future periods will not have materialeffect on the financial statements of the Group in future periods.

Functional and presentation currencyThe functional currency of NCSP and principally all of its subsidiaries is the Russian Rouble (“RUR”). Theconsolidated financial statements are presented in US Dollars as management considers the USD to be amore relevant presentational currency for international users of the consolidated financial statements ofthe Group.

Exchange ratesThe Group used the following exchange rates in the preparation of the consolidated financialstatements:

2012 2011

Year-end rates

RUR/ 1 USD 30.3727 32.1961

RUR/ 1 EUR 40.2286 41.6714

Average for the year

RUR / 1 USD 31.0930 29.3874

RUR / 1 EUR 39.9524 40.8848

Basis of consolidationThe consolidated financial statements incorporate the financial statements of NCSP and its subsidiaries,from the date that control effectively commenced until the date that control effectively ceased. Controlis achieved where the Group has the power to govern the financial and operating policies of an entity soas to obtain benefits from its activities.

The financial statements of subsidiaries are prepared for the same reporting period as those of NCSP;where necessary, adjustments are made to the financial statements of subsidiaries to bring theaccounting policies in line with those of the Group.

All intra-group balances, transactions, and any unrealised profits or losses arising from intra-grouptransactions, are eliminated upon consolidation.

Business combinationsAcquisitions of subsidiaries and businesses are accounted for using the acquisition method. Theconsideration for each acquisition is measured at the aggregate of the fair values (at the date ofexchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group inexchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss asincurred.

When the consideration transferred by the Group includes any assets or liabilities resulting from acontingent consideration arrangement, they are measured at the acquisition-date fair value and includedwith the consideration transferred. Subsequent changes in the fair value of the contingent considerationare adjusted against the cost of the acquisition when they qualify as measurement period adjustments,with corresponding adjustments against goodwill. The measurement period is the period from the date ofacquisition to the date the Group obtains complete information about facts and circumstances thatexisted as of the acquisition date – and is subject to a maximum of one year, and measurement periodadjustments are adjustments arising from additional information obtained during the measurement period,about facts and circumstances that existed at the acquisition date. Contingent consideration classified as

Significant Accounting Policies3.

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equity is not measured at subsequent reporting dates and its subsequent settlement is accounted forwithin equity. Contingent consideration classified as an asset or liability is measured at subsequentreporting dates in accordance with the relevant IFRSs.

When a business combination is achieved in stages, the Group’s previously held equity interest in theacquiree is measured to fair value at the acquisition date (i.e. the date when the Group obtains control)and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from the interests inthe acquiree prior to the acquisition date that have previously been recognised in other comprehensiveincome are reclassified to profit or loss where such treatment would be appropriate if that interest weredisposed of.

At the acquisition date, the acquiree’s identifiable assets and liabilities, meeting the recognition criteriaof IFRS 3 (2008) “Business Combinations”, are generally recognised at their fair value except that:

Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements arerecognised and measured in accordance with IAS 12 “Income Taxes” and IAS 19 “Employee Benefits”,respectively;Liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in accordance with IFRS 2 “Share-based Payment”; andAssets (or disposal groups) that are classified as held for sale in accordance with IFRS 5“ Non-currentAssets Held for Sale and Discontinued Operations” (“IFRS 5”) are recognised and measured at fairvalue less costs to sell.

If the initial accounting for a business combination is incomplete by the end of the reporting period inwhich the combination occurs, the Group reports provisional amounts for the items for which theaccounting is incomplete. Those provisional amounts are adjusted during the measurement period, oradditional assets or liabilities are recognised, to reflect new information obtained about facts andcircumstances that existed as of the acquisition date that, if known, would have affected the amountsrecognised as of that date.

Goodwill is measured as the excess of the sum of consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interestin the acquiree (if any) over the net of the acquisition-date amount of identifiable assets acquired andthe liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiableassets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount ofany non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interestin the acquiree (if any), the excess is recognised immediately in profit or loss as bargain purchase gain.

Non-controlling interest,identified separately from the Group’s equity, may be initially measured either:(i) at fair value; or (ii) at the non-controlling interests’ proportionate share of the fair value of theacquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Subsequent to acquisition, the non-controlling interest carrying amount is the amountat initial recognition, plus the non-controlling interests’ share of changes in equity. Total comprehensiveincome is attributed to non-controlling interests even if this results in the non-controlling interestshaving a deficit balance.

Business combinations with third parties taking place prior to 1 January 2010 were accounted for inaccordance with IFRS 3 (2004) “Business Combinations”.

Investments in associates and joint venturesAn associate is an entity over which the Group has significant influence and that is neither a subsidiarynor an interest in a joint venture. Significant influence is the power to participate in the financial andoperating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a contractual arrangement whereby two or more parties undertake an economicactivity that is subject to joint control.

The results and assets and liabilities of associates and joint ventures are incorporated in these financialstatements using the equity method of accounting, except when the investment is classified as held forsale, in which case it is accounted for in accordance with IFRS 5 “Non-current Assets and Held for Saleand Discontinued Operations”. Under the equity method, investments in associates and joint venturesare carried in the consolidated statement of financial position at cost as adjusted for post-acquisitionchanges in the Group’s share of the net assets of the associate or joint venture, less any impairment inthe value of individual investments. Losses of an associate or joint venture in excess of the Group’sinterest in that associate or joint venture (which includes any long-term interests that, insubstance,forms part of the Group’s net investment in the associate or joint venture) are recognisedonly to the extent that the Group has incurred legal or constructive obligations or made payments onbehalf of the associate or joint venture.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiableassets, liabilities and contingent liabilities of the associate or joint venture recognised at the date ofacquisition is recognised as goodwill. The goodwill is included within the carrying amount of theinvestment and is assessed for impairment as part of the investment. Any excess of the Group’s share of

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the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost ofacquisition, after reassessment, is recognised immediately in profit or loss.

The requirements of IAS 39 “Financial Instruments: Recognition and Measurement” (“IAS 39”) are appliedto determine whether it is necessary to recognise any impairment loss with respect to the Group’sinvestment in an associate. When necessary, the entire carrying amount of the investment (includinggoodwill) is tested for impairment in accordance with IAS 36 “Impairment of Assets” (“IAS 36”) as a singleasset by comparing its recoverable amount (higher of value in use or fair value less costs to sell) with itscarrying amount. Any impairment loss recognised forms part of the carrying amount of the investment.Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that therecoverable amount of the investment subsequently increases.

Where a Group entity transacts with an associate or joint venture of the Group, profit and lossesresulting from transactions with associates or joint ventures are eliminated to the extent of the Group’sinterest in these associates.

GoodwillGoodwill arising on an acquisition of a business, as described in “Business combinations” above, is carriedat cost as established at the acquisition date less accumulated impairment loss, if any.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating unitsexpected to benefit from the synergy of the combination. Cash-generating units to which goodwill hasbeen allocated are tested for impairment annually, or more frequently when there is an indication thatthe unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carryingamount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwillallocated to the unit and then to the other assets of the unit pro-rata on the basis of the carryingamount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in asubsequent period.

On disposal of a subsidiary the attributable amount of goodwill is included in the determination of theprofit or loss on disposal.

The Group’s policy for goodwill arising on the acquisition of an associate is described under “Investmentsin associates and joint ventures” above.

Foreign currenciesIn preparing the financial statements of the individual entities forming part of the Group, transactions incurrencies other than the functional currency of each entity (foreign currencies) are recorded at theexchange rates prevailing on the dates of the transactions. At each reporting date, monetary assets andliabilities denominated in foreign currencies are translated at the exchange rates prevailing at the end ofeach reporting period presented. Non monetary items carried at fair value that are denominated inforeign currencies are translated at the rates prevailing at the date the fair value was determined. Non-monetary items carried at historical cost are translated at the exchange rate prevailing on the date ofthe transaction. Exchange differences are recognised in profit or loss in the period in which they arise asa separate component, except for:

Exchange differences on foreign currency borrowings relating to assets under construction forfuture productive use, which are included in the cost of those assets when they are regarded as anadjustment to interest costs on those foreign currency borrowings;Exchange differences on transactions entered into to hedge certain foreign currency risks; andExchange differences on monetary items receivable from or payable to a foreign operation for whichsettlement is neither planned nor likely to occur (therefore forming part of the net investment in theforeign operation), which are recognised initially in other comprehensive income and reclassifiedfrom equity to profit or loss on disposal or partial disposal of the net investment.

For the purpose of presenting consolidated financial statements for the Group, the assets and liabilitiesof entities in the Group with functional currencies other than the USD are translated in USD at exchangerates prevailing at the end of each reporting period presented. Income and expense items are translatedat the average exchange rates for the period, unless exchange rates fluctuate significantly during theperiod, in which case, the exchange rates at the date of transactions are used. Exchange differencesarising on these translations, if any, are recognised in other comprehensive income and accumulated inequity (attributed to non-controlling interests as appropriate).

Revenue recognitionRevenue is recognised when it is probable that the economic benefits associated with the transactionwill flow to the Group, delivery has occurred, services have been rendered or construction works arefully completed, the amount of the revenue can be measured reliably, persuasive evidence of anarrangement exists and the collectability of the revenue is reasonably assured.

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The Group’s revenue is derived as follows:

Revenue from cargo-transhipment, fleet and additional port services is recognised when the services areaccepted by the customers (typically after the loading or unloading of cargo, as defined by the salesterms). Revenue from other services is recognised when the services are provided to the customers.

Prices for cargo transhipment and storage services are subject to Government regulations. The Groupcan provide discounts to its customers only within the limits set by the statutory legislation. Prices foradditional port services, fleet services, ship repair and other services are set by the Group.

Dividend income from investments is recognised when the Group’s right to receive payment has beenestablished.

Interest income is accrued on a time basis, by reference to ;the principal outstanding and the effectiveinterest rate applicable, which is the rate that exactly discounts estimated future cash receipts throughthe expected life of the financial asset to that asset’s net carrying amount.

LeasingLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risksand rewards of ownership to the lessee. All other leases are classified as operating leases.

Operating lease.Operating lease payments are recognised as an expense on a straight-line basis over the lease term,except where another systematic basis is more representative of the time pattern in which economicbenefits from the leased asset are consumed. Contingent rentals arising under operating leases arerecognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to;enter into operating leases, such incentives arerecognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rentalexpense on a straight-line basis, except where another systematic basis is more representative of thetime pattern inwhich economic benefits from the leased asset are consumed.

Finance leaseFinance leases that transfer substantially all the risks and benefits incidental toownership ofthe leaseditem to the Group, are capitalised atthe commencement ofthe lease atthe fair value ofthe leasedpropertyor, iflower, atthe present value ofthe minimum lease payments. Lease payments are apportionedbetween finance charges and reduction ofthe lease liability soastoachieve aconstant rate ofinterestonthe remaining balance ofthe liability. Finance charges are recognised infinance costs intheconsolidated statement ofcomprehensive income.

Aleased asset isdepreciated over the useful life ofthe asset. However, ifthere isnoreasonable certaintythat the Group will obtain ownership bythe end ofthe lease term, the asset isdepreciated over theshorter ofthe estimated useful life ofthe asset and the lease term.

Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets,which are assets that necessarily take a substantial period of time to get ready for their intended use orsale, are added to the cost of those assets, until such time as the assets are substantially ready for theirintended use or sale. Depreciation of these assets is recorded on the same basis as for other propertyassets, and commences when the assets are put into operation.

Transaction costs associated with the issuance of a debt instrument are recorded as a reduction of theliability, and are amortised to interest expense over the term of the related borrowing. In any period inwhich the borrowing is redeemed, the related unamortized costs are expensed.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Stevedoring services (liquid, dry bulk cargo, general cargo and containers transhipment) includingloading and unloading of oil, oil products, grain, mineral fertilizes, chemicals, containers, timber,timber products, metal products (slabs, tubing, rolled metal and others), sugar, and other cargo, fuelbunkering;

1.

Additional port services provided to customers at their requests (e.g. forwarding, storage, customdocumentation, repacking, ship repair services for all types of vessels and maintenance in docks,etc.);

2.

Fleet services including tugging, towing and other related services; and3.Other services mainly including the rental and resale of energy and utilities to external customers.4.

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Employee benefits

Defined contribution planThe Group’s Russian subsidiaries are legally obliged to make defined contributions to the RussianFederation State Pension Fund. The Group’s contributions to the Russian Federation State Pension Fundrelating to defined contribution plans are charged to the consolidated statement of comprehensiveincome in the period to which they relate.

In the Russian Federation, all state social contributions, including contributions to the Russian FederationState Pension Fund, are collected through taxes of 0% to 30%, directly calculated based on the annualgross remuneration of each employee. The rate of contribution to the Russian Federation State PensionFund varies from 0% to 22%. When the annual gross remuneration of an employee exceeds 512 thousandRUR (USD 16.5), the 10% tax rate is applied.

Contributions to the defined contribution retirement benefit plan are recognised as an expense asemployees render service.

Defined benefit plansFor defined benefit plans, the cost of providing benefits is determined using the projected unit creditmethod, with actuarial valuations performed at the end of each reporting period presented. Actuarialassumptions are an entity’s best estimates of the variables that will determine the ultimate cost ofproviding post-employment benefits. Actuarial assumptions include the financial assumptions dealing withitems such as taxes paid by the plan in respect of services-related contributions to the balance sheetdate, or in respect of remuneration granted in connection with the services. Remeasurement comprisingactuarial gains and losses are recognised immediately in the balance sheet with a charge or credit to thestatement of comprehensive income in the period in which they occur. Remeasurement recorded in thestatement of comprehensive income is not recycled. Past service cost is recognised in prot or loss inthe period of scheme amendment.

The retirement benefit obligation recognised in the consolidated statement of financial positionrepresents the present value of the defined benefit obligation.

Income taxIncome tax expense represents the sum of the tax currently payable and deferred tax.

Current taxThe tax currently payable is based on taxable profit for the year. Taxable profit differs from profit asreported in the consolidated statement of comprehensive income because it excludes items of income orexpense that are taxable or deductible in other years and it further excludes items that are nevertaxable or deductible. The Group’s liability for current tax is calculated using tax rates enacted orsubstantively enacted at the end of each reporting period presented.

Deferred taxDeferred tax is recognised on differences between the carrying amounts of assets and liabilities in theconsolidated financial statements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised forall taxable temporary differences and deferred tax assets are recognised to the extent that it is probablethat taxable profits will be available against which deductible temporary differences can be utilised. Suchassets and liabilities are not recognised if the temporary differences arise from goodwill or from initialrecognition (other than in a business combination) of other assets and liabilities in a transaction thataffects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments insubsidiaries and associates, except where the Group is able to control the reversal of the temporarydifference and it is probable that the temporary difference will not reverse in the foreseeable future.Deferred tax assets arising from deductible temporary differences associated with such investments andinterests are only recognised to the extent that it is probable that there will be sufficient taxable profitsagainst which to utilise the benefits of the temporary differences and they are expected to reverse inthe foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period presentedand reduced to the extent that it is no longer probable that sufficient taxable profits will be available toallow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is

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settled or the asset is realized based on the tax laws and rates that have been enacted or substantivelyenacted at the end of each reporting period presented.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off currentassets against current tax liabilities and when they relate to income taxes levied by the same taxationauthority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred taxes are recognised as an expense or income in the consolidated statement ofcomprehensive income, except when they relate to items credited or debited directly to equity, inwhich case the tax is also recognised directly in equity, or they arise from the initial accounting for abusiness combination. In case of a business combination, the tax effect is taken into account incalculating goodwill or determining the excess of the acquirer’s interest in the net fair value of theacquirer’s identifiable assets, liabilities and contingent liabilities over the cost.

Property, plant and equipmentThe Group adopted IFRS effective 1 January 2005. As part of the adoption, the Group elected to utiliseexemptions available for first-time adopters under IFRS 1, choosing to record property, plant andequipment at fair value (deemed cost). Valuations were performed by management with the assistance ofindependent appraisers as at 1 January 2005 and approved by the Group management. After that date,property, plant and equipment are stated at deemed cost less any subsequent accumulated depreciationand subsequent accumulated impairment losses.

Property, plant and equipment acquired through acquisitions of subsidiaries are recorded at fair value onthe date of the acquisition, as determined by management with the assistance of an independentappraiser.

Additions to property, plant and equipment are recorded at cost. Cost includes expenditure that isdirectly attributable to the acquisition of the items. Subsequent costs, including overhaul expenses, areincluded in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it isprobable that future economic benefits associated with the item will flow to the Group and the cost ofthe item can be measured reliably.

Capitalised cost includes major expenditures for improvements and replacements that extend the usefullives of the assets or increase their revenue generating capacity. Repairs and maintenance expendituresthat do not meet the foregoing criteria for capitalisation are charged to statement of comprehensiveincome as incurred.

Depreciation is charged so as to write off the cost or deemed cost of assets, other than land andproperty under construction, over their estimated useful lives, using the straight-line method.Theestimated useful lives, residual values and depreciation method are reviewed at each year end, with theeffect of any changes in estimate accounted for on a prospective basis.

Number of years

Buildings and constructions 3-75

Machinery and equipment 2-40

Marine vessels 4-25

Motor transport 3-15

Other 2-30

Properties in the course of construction for production, rental or administrative purposes are carried atcost, less any recognised impairment loss. Cost includes, for qualifying assets, borrowing costs capitalisedin accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis asother property assets, commences when the assets are put into operation.

Construction in progress comprise costs directly related to the construction of property, plant andequipment including an appropriate allocation of directly attributable variable overheads that areincurred in construction as well as costs of purchase of other assets that require installation orpreparation for their use. Depreciation of these assets, on the same basis as for other property assets,commences when the assets are put into operation. Construction in progress is reviewed regularly todetermine whether its carrying value is fairly stated and whether appropriate provision for impairment ismade.

Assets held under finance leases are depreciated over their expected useful lives on the same basis asowned assets or, where shorter, the term of the relevant lease.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference betweenthe sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

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Mooring rights and other intangible assetsIntangible assets acquired separately are reported at cost less accumulated amortisation and impairmentlosses. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimateduseful life and amortisation method are reviewed at the end of each annual reporting period, with theeffect of any changes in estimate being accounted for on a prospective basis. Amortisation of mooringrights and other intangible assets is charged to profit or loss.

Mooring rights and other intangible assets acquired in a business combination are identified andrecognised separately from goodwill where they satisfy the definition of an intangible asset and their fairvalues can be measured reliably. The cost of such intangible assets is the fair value at the acquisitiondate.

Subsequent to initial recognition, mooring rights and other intangible assets acquired in a businesscombination are reported at cost less accumulated amortisation and impairment losses, on the same basisas intangible assets acquired separately.

Useful lives of mooring rights and other intangible assets are as follows:

Number of years

Mooring rights 20

Marine vessels rights 10

Other intangible assets 3-5

Impairment of tangible and intangible assets excludinggoodwillAt the end of each reporting period, the Group reviews the carrying amounts of its tangible andintangible assets to determine whether there is any indication that those assets have suffered animpairment loss. If any such indication exists, the recoverable amount of the asset is estimated in orderto determine the extent of the impairment loss (if any). Where it is not possible to estimate therecoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,the estimated future cash flows are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carryingamount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Animpairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit)is increased to the revised estimate of its recoverable amount, but so that the increased carrying amountdoes not exceed the carrying amount that would have been determined had no impairment loss beenrecognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss isrecognised immediately in profit or loss.

Spare partsMajor spare parts and stand-by equipment qualify as non-current assets when an entity expects to usethem during more than one year. Such spare parts are stated at the lower of cost and net realisablevalue. Cost comprises direct materials and, where applicable, direct labour costs and those overheadsthat have been incurred in bringing the spare parts to their present location and condition. Spare partsare recognised in profit or loss as consumed.

InventoriesInventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and,where applicable, direct labour costs and those overheads that have been incurred in bringing theinventories to their present location and condition. Cost is calculated using the weighted averagemethod. Net realisable value represents the estimated selling price less all estimated costs of completionand costs to be incurred in marketing, selling and distribution.

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Financial assetsFinancial assets are recognised and derecognised on a trade date where the purchase or sale of anfinancial assets is under a contract whose terms require delivery of the financial assets within thetimeframe established by the market concerned, and are initially measured at fair value, plus transactioncosts, except for those financial assets classified as at fair value through profit or loss, which are initiallymeasured at fair value.

The Group’s financial assets consist of cash and cash equivalents, loans and receivables.

The classification depends on the nature and purpose of the financial asset and is determined at thetime of initial recognition.

Effective interest methodThe effective interest method is a method of calculating the amortised cost of a financial asset or liabilityand of allocating interest income or expense, respectively, over the relevant period. The effectiveinterest rate is the rate that exactly discounts estimated future cash receipts or payments, asapplicable, through the expected life of the financial asset or liability, or, where appropriate, a shorterperiod.

Loans and receivablesTrade receivables, loans, and other receivables that have fixed or determinable payments that are notquoted in an active market are classified as loans and receivables. Loans and receivables are measured atamortised cost using the effective interest method less any impairment. Interest income is recognised byapplying the effective interest rate, except for short-term receivables when the recognition of interestwould be immaterial.

Cash and cash equivalentsCash and cash equivalents comprise cash balances, cash deposits and highly liquid investments withoriginal maturities of three months or less, those are readily convertible to known amounts of cash andare subject to an insignificant risk of changes in value.

Impairment of financial assetsFinancial assets are assessed for indicators of impairment at the end of each reporting period presented.Financial assets are impaired where there is objective evidence that, as a result of one or more eventsthat occurred after initial recognition, the estimated future cash flows have been impacted. The amountof the impairment is the difference between the asset’s carrying amount and the present value ofestimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial assets is reduced by the impairment loss directly for all financialassets with the exception of trade receivables where the carrying amount is reduced through the use ofan allowance account. When a trade receivable is uncollectible, it is written off against the allowanceaccount. Subsequent recoveries of amounts previously written off are credited against the allowanceaccount. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of available-for-sale (“AFS”) equity instruments, if, in a subsequent period, theamount of the impairment loss decreases and the decrease can be related objectively to an eventoccurring after the impairment was recognised, the previously recognised impairment loss is reversedthrough profit or loss to the extent that the carrying amount of the investment at the date theimpairment is reversed does not exceed what the amortised cost would have been had the impairmentnot been recognised.

In respect of AFS equity securities, impairment losses previously recognised in profit or loss are notreversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognisedin other comprehensive income and accumulated under the heading of investments revaluation reserve.In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if anincrease in the fair value of the investment can be objectively related to an event occurring after therecognition of the impairment loss.

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Derecognition of financial assetsThe Group derecognises a financial asset only when the contractual rights to the cash flows from theasset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership ofthe asset to another entity. If the Group neither transfers nor retains substantially all the risks andrewards of ownership and continues to control the transferred asset, the Group recognises its retainedinterest in the asset and an associated liability for amounts it may have to pay. If the Group retainssubstantially all the risks and rewards of ownership of a transferred financial asset, the Group continuesto recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments issued by theGroup

Classification as debt or equityDebt and equity instruments are classified as either financial liabilities or as equity in accordance withthe substance of the contractual arrangement.

Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the asset of an entitydeducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceedsreceived,net of direct issue costs.

Financial liabilitiesThe Group’s financial liabilities can be classified into financial liabilities at fair value through profit andloss (“FVTPL”) and other financial liabilities.

Financial liabilities as at FVTPLFinancial liabilities are classified as at FVTPL where the financial liability is either held for trading or it isdesignated as at FVTPL.

A financial liability is classified as held for trading if:

It has been incurred principally for the purpose of repurchasing in the near future; orIt is a part of an identified portfolio of financial instruments that the Group manages together and hasa recent actual pattern of short-term profit-taking; orIt is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL uponinitial recognition if:

Such designation eliminates or significantly reduces a measurement or recognition inconsistency thatwould otherwise arise; orThe financial liability forms part of a group of financial assets or financial liabilities or both, which ismanaged and its performance is evaluated on a fair value basis, in accordance with the Group’sdocumented risk management or investment strategy, and information about the grouping is providedinternally on that basis; orIt forms part of a contract containing one or more embedded derivatives, and IAS 39 permits theentire combined contract (asset orliability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit orloss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financialliability. Fair value is determined in the manner described in Note 32.

Other financial liabilitiesOther financial liabilities, including loans and borrowings, are initially measured at fair value, net oftransaction costs. Other financial liabilities are subsequently measured at amortised cost using theeffective interest method, with interest expense recognised on an effective yield basis.

Derecognition of financial liabilitiesThe Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,cancelled or they expire.

86

Derivative financial instrumentsDerivatives are initially recognised at fair value at the date a derivative contract is entered into and aresubsequently remeasured to their fair value at the end of each reporting period presented. The resultinggain or loss is recognised in profit or loss immediately unless the derivative is designated and effective asa hedging instrument, in which event the timing of the recognition in profit or loss depends on thenature of the hedge relationship.

The Group uses derivative instruments, including cross-currency and interest rate swap, to manageexchange rate exposures. A derivative with a positive fair value is recognised as a nancial asset whereasa derivative with a negative fair value is recognised as a nancial liability. A derivative is presented as anon-current asset or a non-current liability if the remaining maturity of the instrument is more than 12months and it is not expected to be realised or settled within 12 months. Other derivatives arepresented as current assets or current liabilities.

The fair value measurement of the Group’s cross currency and interest rate swap is performed asdescribed in Note 23.

TThe Group does not use derivative financial instruments for trading or speculative purposes.

ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of apast event, and it is probable that the Group will be required to settle that obligation, and a reliableestimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle thepresent obligation at the end of each reporting period presented, taking into account the risks anduncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated tosettle the present obligation, its carrying amount is the present value of those cash flows.

Dividends declaredDividends paid to shareholders are determined by the board of directors and declared and approved atthe annual shareholders’ meeting.

Dividends and related taxation thereon are recognised as a liability in the period in which they have beendeclared and legally payable

Accumulated profits distributable by the Group’s entities are based on the amounts available fordistribution in accordance with the applicable legislation of the jurisdictions where each entity operatesand as reflected in the statutory financial statements of the individual entities of the Group based oncalendar reporting years (years ended 31 December). These amounts may differ significantly from theamounts calculated on the basis of IFRSs.

In the process of applying the Group’s accounting policies, management is required to make judgements,estimates and assumptions about the carrying amounts of assets and liabilities that are not readilyapparent from other sources. The estimates and associated assumptions are based on historicalexperience and other factors that are considered to be relevant. Actual results may differ from theseestimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised if the revision affects only thatperiod or in the period of the revision and future periods of the revision affects both current and futureperiods.

Key sources of estimation uncertaintyThe following are the key assumptions concerning the future, and other key sources of estimationuncertainty at the end of each reporting period presented that have a significant risk of causing amaterial adjustment to the carrying amounts of assets and liabilities within the next financial year.

Critical Accounting Judgements And Key Sources Of EstimationUncertainty

4.

87

Allowance for trade and other receivables and advances tosuppliersThe Group creates allowances for doubtful receivables to account for estimated losses resulting from theinability of customers to make required payments. When evaluating the adequacy of the allowance fordoubtful receivables, management bases its estimates on the current overall economic conditions, theageing of accounts receivable balances, historical write-off experience, customer creditworthiness andchanges in payment terms. Changes in the economy, industry or specific customer conditions mayrequire adjustments to the estimated allowance for doubtful receivables.

Useful lives of fixed assetsThe useful economic lives of the Group’s assets are determined bymanagement at the time the asset isacquired and regularly reviewed for appropriateness. The Group defines useful lives of its assets in termsof the assets’ expected utility to the Group. This judgment is based on the experience of the Group withsimilar assets. In determining the useful life of an asset, the Group also follows technical and/orcommercial obsolescence arising on changes or improvements from a change in the market.

Impairment of goodwillDetermining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity toestimate the future cash flows expected to arise from the cash-generating unit and a suitable discountrate in order to calculate present value.

Key estimates used in the Group’s annual impairment testing are presented in Note 13.

Impairment of assets (excluding goodwill)The Group periodically evaluates the recoverability of the carrying amount of its assets. Whenever eventsor changes in circumstances indicate that the carrying amounts of those assets may not be recoverable,the Group estimates the recoverable amount of the asset. This requires the Group to make judgmentsregarding long-term forecasts of future revenues and costs related to the assets subject to review. Inturn, these forecasts are uncertain in that they require assumptions about demand for products andfuture market conditions. Significant and unanticipated changes to these assumptions and estimatesincluded within the impairment reviews could result in significantly different results than those recordedin the consolidated financial statements.

TaxationThe Group is subject to income tax and other taxes. Significant judgement is required in determining theprovision for income tax and other taxes due to the complexity of the tax legislation of the RussianFederation where the Group’s operations are principally located. There are many transactions andcalculations for which the ultimate tax determination is uncertain. The Group recognises liabilities foranticipated tax audit issues based on estimates of the whether additional taxes will be due. Where thefinal tax outcome of these matters is different from the amounts that were initially recorded, suchdifferences will impact the amount of tax and tax provisions in the period in which such determination ismade.

In addition, the Group records deferred tax assets at the end of each reporting period presented basedon the amount that management believes will be utilised in future periods. This determination is based onestimates of future profitability. A change in these estimates could result in the write off of deferred taxassets in future periods for assets that are currently recorded on the consolidated statement of financialposition. In estimating levels of future profitability, the Group has considered historical results ofoperations in recent years and would, if necessary, consider the implementation of prudent and feasibletax planning strategies to generate future profitability. If future profitability is less than the amount thathas been assumed in determining the deferred tax asset, then an adjustment to derecognise thedeferred tax asset will be required, with the corresponding charge against income. On the other hand, iffuture profitability exceeds the level that has been assumed in calculating the deferred tax asset, thefurther recognition and utilisation of the deferred tax assets may be appropriate, with the correspondingcredit recognised to income.

Current and deferred tax assets and liabilities are usually measured using the tax rates (and tax laws) thathave been enacted. However, in some jurisdictions, announcements of tax rates (and tax laws) by thegovernment have the substantive effect of actual enactment, which may follow the announcement by aperiod of several months. In these circumstances, tax assets and liabilities are measured using theannounced tax rate (and tax laws).

88

Allowance for obsolete and slow-moving inventoryThe Group creates an allowance for obsolete and slow-moving raw materials. Estimates of net realisablevalue of inventories are based on the most reliable evidence available at the time the estimates are made.These estimates take into consideration fluctuations of prices or costs directly relating to eventsoccurring subsequent to the end of each reporting period represented to the extent that such eventsconfirm conditions existing at the end of the reporting period. Changes in the supply and demand for theproducts or any subsequent changes to prices or costs may require adjustments to the estimatedallowance for obsolete and slow-moving raw materials.

ReclassificationsAt 31 December 2012, management reassessed the classification of property, plant and equipment in linewith the asset classes disclosed in Note 12. Property, plant and equipment are classified based on thenature of the activities carried out and services produced as a result of this activity.

Corresponding figures for the year ended 31 December 2011 have been retrospectively adjusted forreclassifications identified as at 31 December 2012. Certain assets have been reclassified in order toaccurately reflect the nature of the assets based on the activity carried and services produced.

The Group’s entities operate in different geographical regions. Financial results, projections or plans forthe segment are made for each region separately. In this regard, it was decided to change thereportable segments according to the geographical area of activities.

The reclassifications did not have any impact on equity or profit for the periods presented.

The Group’s operations are managed by type of services: stevedoring services and additional portservices; fleet services; and other services mainly comprising rent, resale of energy and utilities toexternal customers (which individually do not constitute separate reportable segments). Substantially allGroup operations are located within the Russian Federation. All segments have different segmentmanagers responsible for each segment’s operations. The chief operating decision maker (the ExecutiveBoard) is responsible for allocating resources to and assessing the performance of each segment of thebusiness.

As decisions regarding allocating resources and further assessment of the performance are madeseparately for each region, therefore the reportable segments are further split between the threeregions where the Group operates: Novorossiysk, Primorsk, Baltiysk.

Segment results are evaluated based on segment profit as disclosed in the management accounts, whichare determined under Russian statutory accounting standards. Adjustments to reconcile segment profitto profit before income tax include the following: unallocated operating income and expenses,differences between Russian statutory accounting standards and IFRS, interest income, finance costs,share of loss in joint venture, foreign exchange gain/(loss), and other (loss)/income, net

Segment Information5.

89

Segment revenue and segment resultsSales transactions between segments are made at prices which are defined in price list. Price listcontains both services, tariffs which are regulated by the state and other services for which prices areset by the Group. Prices for non-regulated services are close to market prices.

The segment revenue and results for the years ended 31 December 2012 and 2011 are as follows:

During the year ended 31 December 2012 revenue from BIG PORT SERVICE DMCC of 142,668 representsmore than 10% of revenue included in the stevedoring and additional services segment (2011: revenuefrom PORATH SERVICES LIM ITED of 169,484 represented more than 10% of revenue of that segment).Management of the Group believes that it adequately manages the corresponding possible credit risk.

Total reportable segment profit reconciles to the Group consolidated profit before tax through thefollowing adjustments and eliminations:

Segment revenue Inter-segments sales Segment profit

Year ended Year ended Year ended

31 December2012

31 December2011

31 December2012

31 December2011

31 December2012

31 December2011

Stevedor ing and additional ser vices 917,829 941,009 6,813 8,786 455,446 426,753

Novor ossiysk 693,431 724,791 6,766 8,786 333,159 312,856

Pr imor sk 209,225 203,354 47 — 116,649 110,185

Baltiysk 15,173 12,864 — — 5,638 3,712

Fleet ser vices 100,882 92,902 5,182 5,092 50,003 42,876

Novor ossiysk 54,610 47,597 2,615 2,371 19,271 13,015

Pr imor sk 46,272 45,305 2,567 2,721 30,732 29,861

Other ser vices 14,969 15,628 14,854 14,609 17,573 17,323

Total reportable seg ments 1,033,680 1,049,539 26,849 28,487 523,022 486,952

Adjustments and eliminations (seefollow ing table)

(107,142) (322,432)

Profit before income tax expense 415,880 164,520

Year ended 31 December 2012 Year ended 31 December 2011

Total seg ment profit 523,022 486,952

Unallocated amounts:

Loss on disposal of pr oper ty, plant and equipment (2,288) (692)

Impair ment of goodw ill (89,456) —

Defined benefit obligation ex pense (161) (820)

Differ ences between Russian statutor y accounts and IFRS:

Bank commission 415 10,307

Depr eciation and amor tisation (21,192) (20,720)

Repair s and maintenance 5,966 1,822

Pr ofessional ser vices (270) (139)

Change in allowance for doubtful r eceivables — (240)

Inter company pur chases of pr oper ty, plant and equipment — (2,858)

Other 2,696 1,627

Operating profit 418,732 475,239

Inter est income 12,009 4,434

Finance costs (144,263) (144,619)

Shar e of loss in joint ventur e, net (778) (4,746)

For eign ex change gain/(loss), net 130,200 (167,940)

Other (loss)/income, net (20) 2,152

Profit before income tax 415,880 164,520

90

Other segment information

Capital expenditures consist of additions of property, plant and equipment, which include constructionin progress and the related advances paid as of the end of the year (Note 12).

Depreciation and amortisation charge Capital expenditures

Year ended Year ended

31 December 2012 31 December 2011 31 December 2012 31 December 2011

Stevedor ing and additional ser vices 63,370 57,939 67,904 94,400

Novor ossiysk 49,129 48,330 56,710 75,282

Pr imor sk 11,895 7,627 9,914 9,249

Baltiysk 2,346 1,982 1,280 9,869

Fleet ser vices 6,870 6,888 1,553 1,995

Novor ossiysk 4,269 4,164 1,222 1,960

Pr imor sk 2,601 2,724 331 35

Other ser vices 5,534 6,215 769 410

Total reportable seg ments 75,774 71,042 70,226 96,805

Adjustments and eliminations 6,096 6,587 3,870 2,545

Consolidated 81,870 77,629 74,096 99,350

Revenue6.

Year ended 31 December 2012 Year ended 31 December 2011

Stevedor ing ser vices 827,915 857,451

Fleet ser vices 100,882 92,902

Additional por t ser vices 89,914 83,558

Other 14,969 15,628

Total 1,033,680 1,049,539

Cost Of Services7.

Year ended 31 December 2012 Year ended 31 December 2011

Fuel for r esale and own consumption 143,032 214,649

Depr eciation and amor tisation 77,883 73,503

Salar ies 72,271 66,704

Rent 66,034 66,487

Repair s and maintenance 25,030 21,062

Tax es dir ectly attr ibutable to salar ies 18,648 19,005

Subcontr actor s 11,722 13,695

Mater ials 10,196 7,787

Ener gy and utilities 7,374 8,653

Defined benefit obligation ex pense 793 1,443

Insur ance 786 503

Other 1,907 1,949

Total 435,676 495,440

Selling, General And Administrative Expenses

91

Year ended 31 December 2012 Year ended 31 December 2011

Salaries 41,903 33,274

Taxes other than income tax 8,636 9,499

Taxes directly attributable to salaries 6,426 4,871

Professional services 6,293 4,859

Security services 4,401 4,737

Depreciation and amortisation 3,987 4,126

Charitable donations 3,567 3,196

Repairs and maintenance 1,694 1,356

Travel and representation expenses 1,673 1,982

Materials 1,356 1,053

Rent 1,316 1,232

Bank charges 1,155 2,066

Change in allowance for doubtful receivables (68) 1,289

Other 5,189 4,628

Total 87,528 78,168

Year ended 31 December2012

Year ended 31 December2011

Interest on loans and borrowings 139,768 144,619

Loss on сross-currency and interest rate swap (Note23)

4,495 —

Total 144,263 144,619

Year ended 31 December 2012 Year ended 31 December 2011

Current income tax expense 84,453 54,755

Deferred tax loss/(benefit) 15,467 (20,548)

Total 99,920 34,207

The corporate income tax rate in the Russian Federation is 20% of taxable profits calculated based on thestand alone accounts of each entity.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

Income tax expense calculated by applying the Russian Federation statutory income tax rate to profitbefore income tax differs from income tax expense recognised in the consolidated statement ofcomprehensive income as a consequence of the following factors:

Selling, General And Administrative Expenses8.

Finance Costs9.

Income Tax10.

92

Year ended 31 December2012

Year ended 31 December2011

Profit before income tax expense 415,880 164,520

Tax at the Russian Federation statutory rate of20%

83,176 32,904

Impairment of goodwill 17,891 —

Different tax rates of subsidiaries (5,370) (550)

Revaluation of cross-currency and interest rateswap

791 —

Other non-deductible expenses 3,432 1,853

Total 99,920 34,207

In November 2011, PTP signed an investment agreement with the authorities of the Leningrad region. As aresult of this investment agreement, commencing 1 January 2012 PTP was permitted to apply a reducedincome tax rate of 15.5% until 2015. This change did not impact on deferred tax liabilities as at 31December 2011 because the deferred tax liabilities recognised by PTP were expected to be releasedafter the period end of the tax rate reduction period.

The movement in the Group’s deferred taxation position was as follows:

31 December 2012 31 December 2011

Net balance at the beginning of the year 259,589 29,781

Loss/(benefit) recognised during the year 15,467 (20,548)

Deferred tax liability assumed on acquisition of subsidiaries — 269,450

Effect of translation into presentation currency 15,951 (19,094)

Net balance at the end of the year 291,007 259,589

Deferred taxation is attributable to the temporary differences that exist between the carrying amountsof assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

The tax effects of temporary differences that give rise to deferred taxation are as follows:

93

31 December 2012 31 December 2011

Deferred tax assets

Accrued expenses 5,492 1,572

Investment valuation 2,376 2,037

Allowance for obsolete and slow-moving inventories 385 213

Vacation accruals 134 10

Tax loss carry forward — 16,750

Allowance for doubtful receivables — 4

Total 8,387 20,586

Deferred tax liabilities

Property, plant and equipment 295,227 276,630

Long-term debt 2,594 1,949

Mooring rights 1,573 1,596

Total 299,394 280,175

Net deferred tax liability 291,007 259,589

Certain deferred tax assets and liabilities have been offset in accordance with the Group’s accountingpolicy. The following is the analysis of the deferred tax balances (after offset) as they are recorded inthe consolidated statement of financial position:

31 December 2012 31 December 2011

Deferred tax assets 1,075 7,318

Deferred tax liabilities 292,082 266,907

Net deferred tax liability 291,007 259,589

Dividends declared in 2012 and 2011 were 14,121 and 14,645, respectively. Dividends per share for 2012and 2011 were US cents 0.075 and 0.078, respectively. The total dividends paid during 2012 and 2011 were14,183 and 14,797, respectively.

Dividends11.

Property, Plant And Equipment

Year ended 31 December2012

Year ended 31 December2011

Profit before income tax expense 415,880 164,520

Tax at the Russian Federation statutory rate of20%

83,176 32,904

Impairment of goodwill 17,891 —

Different tax rates of subsidiaries (5,370) (550)

Revaluation of cross-currency and interest rateswap

791 —

Other non-deductible expenses 3,432 1,853

Total 99,920 34,207

In November 2011, PTP signed an investment agreement with the authorities of the Leningrad region. As aresult of this investment agreement, commencing 1 January 2012 PTP was permitted to apply a reducedincome tax rate of 15.5% until 2015. This change did not impact on deferred tax liabilities as at 31December 2011 because the deferred tax liabilities recognised by PTP were expected to be releasedafter the period end of the tax rate reduction period.

The movement in the Group’s deferred taxation position was as follows:

31 December 2012 31 December 2011

Net balance at the beginning of the year 259,589 29,781

Loss/(benefit) recognised during the year 15,467 (20,548)

Deferred tax liability assumed on acquisition of subsidiaries — 269,450

Effect of translation into presentation currency 15,951 (19,094)

Net balance at the end of the year 291,007 259,589

Deferred taxation is attributable to the temporary differences that exist between the carrying amountsof assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

The tax effects of temporary differences that give rise to deferred taxation are as follows:

94

1 Comparative information as at 1 January 2011 and as at 31 December 2011 and for the year then endedhas been adjusted for certain reclassifications between categories.

As at 31 December 2012 the total amount of advances paid for property, plant and equipment recorded inconstruction in progress equals to 25,273 (31 December 2011: 14,883).

During the year ended 31 December 2012 no interest expense was capitalised. The total amount ofcapitalised interest expense for the year ended 31 December 2011 amounted to 1,003.

The carrying value of property, plant and equipment held under finance leases at 31 December 2012 was10,812. Additions to the group machinery and equipment during the year include 10,687 of property,plant and equipment under finance leases. Leased assets are pledged as security for the related financeliabilities.

Property, Plant And Equipment12.

Land Buildings andconstructions

Machinery andequipment

Marinevessels

Motortransport Other Construction

in progress Total

Cost

As at 1 January 2011(1) 18,991 356,136 297,511 88,712 24,387 8,225 77,003 870,965

Additions 150 27,530 29,345 2,340 2,117 1,269 36,599 99,350

Acquisitions thr ough businesscombinations (Note 25)

1,274,775 120,658 21,481 55,116 1,400 209 48,277 1,521,916

Tr ansfer — 42,400 40,663 — 87 95 (83,245) —

Disposals — (1,993) (3,196) (92) (1,013) (206) (1,358) (7,858)

Effect of tr anslation intopr esentation cur r ency

(91,357) (33,493) (23,237) (8,384) (1,505) (556) (3,345) (161,877)

As at 31 December 2011 1,202,559 511,238 362,567 137,692 25,473 9,036 73,931 2,322,496

Accumulated depreciation

As at 1 January 2011(1) — (94,312) (167,575) (26,783) (12,126) (6,330) — (307,126)

Depr eciation ex pense — (26,890) (35,334) (9,186) (3,628) (1,269) — (76,307)

Disposals — 1,871 3,063 8 963 197 — 6,102

Effect of tr anslation intopr esentation cur r ency

— 7,219 11,763 2,479 880 432 — 22,773

As at 31 December 2011 — (112,112) (188,083) (33,482) (13,911) (6,970) — (354,558)

Carrying value

As at 1 January 2011(1) 18,991 261,824 129,936 61,929 12,261 1,895 77,003 563,839

As at 31 December 2011 1,202,559 399,126 174,484 104,210 11,562 2,066 73,931 1,967,938

Land Buildings andconstructions

Machinery andequipment

Marinevessels

Motortransport Other Construction

in progress Total

Cost

As at 1 January 2012 1,202,559 511,238 362,567 137,692 25,473 9,036 73,931 2,322,496

Additions — 7,849 27,835 10,542 2,179 1,546 21,933 71,884

Tr ansfer — 14,734 3,525 — — 17 (18,276) —

Disposals — (3,976) (14,013) (10) (2,225) (391) (6,274) (26,889)

Effect of tr anslation intopr esentation cur r ency

72,195 31,133 22,178 7,637 1,528 570 4,376 139,617

As at 31 December 2012 1,274,754 560,978 402,092 155,861 26,955 10,778 75,690 2,507,108

Accumulateddepreciation

As at 1 January 2012 — (112,112) (188,083) (33,482) (13,911) (6,970) — (354,558)

Depr eciation ex pense — (28,624) (38,286) (8,833) (3,131) (1,406) — (80,280)

Disposals — 3,837 13,261 5 1,757 381 — 19,241

Effect of tr anslation intopr esentation cur r ency

— (7,318) (11,885) (2,140) (868) (443) — (22,654)

As at 31 December 2012 — (144,217) (224,993) (44,450) (16,153) (8,438) — (438,251)

Carrying value

As at 1 January 2012 1,202,559 399,126 174,484 104,210 11,562 2,066 73,931 1,967,938

As at 31 December 2012 1,274,754 416,761 177,099 111,411 10,802 2,340 75,690 2,068,857

95

During the period, the Group acquired property, plant and equipment with an aggregate cost of 71,884 ofwhich 10,687 was acquired by means of finance leases. Cash payments of 57,897 were made to purchaseproperty, plant and equipment, including cash payments of 2,113 paid under finance lease contracts.

Before recognition of impairment losses, the carrying amount of goodwill was allocated to cash-generating units as follows:

Carrying amount

31 December 2012 31 December 2011

Stevedoring and additional services segment:

PTP 808,309 762,531

Grain Terminal 156,338 147,484

Novoroslesexport 126,166 119,021

IPP 27,194 25,654

Shipyard 12,312 11,614

BSC 2,814 2,655

Fleet services segment:

SFP 379,314 357,832

Fleet 71,240 67,205

Total 1,583,687 1,493,996

During the six months ended 30 June 2012, the Group learned of the postponement of the railwayconstruction to port Primorsk. The delay, as a result of the factors outside of the Group’s control, led toa shift in the anticipated start date of the transshipment of oil and oil-products from 2013 to 2015. As aresult of this delay, management reduced the expected oil and oil-product transshipment forecastsapplied in the Group’s business plan. The reduction in the forecasts indicated that an impairment lossmay have occurred and as such, management performed an impairment analysis with respect to goodwillas of 30 June 2012. No impairment was recognised as of 30 June 2012.

Management performed an additional impairment analysis as at 31 December 2012, in accordance with theGroup accounting policy. The analysis was performed based on updated projections of oil and oilproducts transshipment volumes. As a result of the Group’s annual impairment test, goodwill associatedwith PTP was determined to be impaired. For the purpose of testing the PTP cash-generating unit forimpairment, management of the Group used a certified independent appraiser to assist in estimating the

Goodwill13.

31 December 2012 31 December 2011

Cost 1,583,687 1,493,996

Accumulated impair ment loss (94,680) (2,926)

Carrying amount 1,489,007 1,491,070

31 December 2012 31 December 2011

Cost

Balance at the beginning of the year 1,493,996 394,710

Acquir ed thr ough business combinations — 1,205,806

Effect of tr anslation into pr esentation cur r ency 89,691 (106,520)

Balance at the end of the year 1,583,687 1,493,996

Accumulated impairment loss

Balance at the beginning of the year (2,926) (3,092)

Impair ment losses r ecognised dur ing the year (89,456) —

Effect of tr anslation into pr esentation cur r ency (2,298) 166

Balance at the end of the year (94,680) (2,926)

96

recoverable amount of the Group’s cash-generating unit. Based on the value in use calculations, theGroup recorded an impairment loss attributable to the PTP cash-generating unit in amount of 89,456 as at31 December 2012, attributable to the stevedoring and additional services (Primorsk) segment.

With the exception of the PTP cash generating unit, the estimated recoverable amount of each of theGroup’s cash generating units exceeded its carrying value. For all such cash generating units,management believes that no reasonably possible change in any of the key assumptions would cause thecarrying value of a cash generating unit to exceed its recoverable amount.

Management prepared a sensitivity analysis and determined that a change of 5% in the oil and oilproducts transshipment volumes applied in the impairment testing of the PTP cash-generating unit would,in isolation, lead to an (increase)/decrease to the aggregate impairment loss recognised in the yearended 31 December 2012 of 156,199.

The recoverable amount of each cash-generating unit was determined based on a value in usecalculation, which uses cash flow projections based on actual operating results, business plans approvedby management and a discount rate which reflects the time value of money and the risks associated withthe cash generating unit.

The most significant estimates and assumptions used by management in the value in use calculations as at31 December 2012 were as follows:

Cash flow projections were based on the business plans of Company for the years 2013-2018, approvedby management. Such business plans consider significant industrial and macroeconomic trends;Cash flow projections were prepared in RUR and considered long-term price trends for sales pricesand material costs, specific to each cash generating unit and geographic region;Cash flow projections were prepared based on RUR/USD currency rates projections from theEconomist Intelligence Unit for each respective year;Cash flow projections beyond 2018 were extrapolated using a steady 2.3% per annum growth rate.This rate does not exceed the average long term growth rate for the relevant markets; andDiscount rates were applied for each cash-generating unit based on the Group’s weighted averagecost of capital.

The Group’s cash-generating units operate within a consistent industry within the same geographicregions. As such, within the development of the Group’s business plan, management applies consistentassumptions across each cash-generating unit.

The inflation rates used in the preparation of the cash flow projections are as follows:

Year Inflation expectation, %

2013 6.5

2014 6.6

2015 5.7

2016 5.1

2017 5.0

2018 5.0

Thereafter 3.0

Discount rates for each cash-generating unit were estimated in nominal terms using the weighted averagecost of capital basis. These rates are as follows:

Year Discount rates, %

2013 9.66

2014 9.66

2015 9.66

2016 9.35

2017 9.35

2018 9.35

Thereafter 9.35

Management believes that the values assigned to the key assumptions and estimates represent the mostprobable assessment of future trends.

97

31 December 2012 31 December 2011

Cost 11,736 11,072

Accumulated amortisation (3,872) (3,092)

Carrying value 7,864 7,980

31 December 2012 31 December 2011

Cost

Balance at the beginning of year 11,072 11,696

Effect of translation into presentation currency 664 (624)

Balance at the end of the year 11,736 11,072

Accumulated amortisation

Balance at the beginning of year (3,092) (2,672)

Charge for the year (582) (616)

Effect of translation into presentation currency (198) 196

Balance at the end of the year (3,872) (3,092)

Mooring rights represent the long-term lease rights of hydro technical infrastructure (e.g. berths, piersand marine vessels) held with the state.

31 December 2012 31 December 2011

Current

Deposits 512 18,976

Loans issued 49,619 2,857

Total current 50,131 21,833

Non-current

Loans issued and other financial assets 11,159 34,842

Total non-current 11,159 34,842

Short-term deposits placed in LLC “Vneshprombank” (“Vneshprombank”) consist of short-term depositsdenominated in RUR with an interest rate of 6% per annum and short-term deposits denominated in USDwith an interest rate of 2.75% per annum. Short-term deposits placed in CJSC “Raiffeisenbank”(“Raiffeisenbank”) consist of short-term deposits denominated in RUR with an interest rate of 7.20% perannum.

Current loans issued in RUR include short-term loans given to employees of the Group and to otherrelated parties with interest rates varying from 7% to 8% per annum. Current loans issued in USD includeshort-term loans given to other related parties with interest rates varying from 5% to 7% per annum,including loans to LLC Novorossiysk Fuel Oil Terminal (“NFT”), a joint venture created in 2009 (Note 16).

Prior to 31 December 2012, the Group and NFT agreed that NFT would repay during first quarter of 2013,loans issued in the amount of USD 45 million with interest rate of 7% and original maturity of 2015-2019years. Such loans are, consequently, presented as current in the consolidated statement of financialposition.

Non-current loans issued and other financial assets consist of non-current loans given to employees of

Mooring Rights14.

Investments In Securities And Other Financial Assets15.

98

31 December 2012 31 December 2011

Cost 11,736 11,072

Accumulated amortisation (3,872) (3,092)

Carrying value 7,864 7,980

31 December 2012 31 December 2011

Cost

Balance at the beginning of year 11,072 11,696

Effect of translation into presentation currency 664 (624)

Balance at the end of the year 11,736 11,072

Accumulated amortisation

Balance at the beginning of year (3,092) (2,672)

Charge for the year (582) (616)

Effect of translation into presentation currency (198) 196

Balance at the end of the year (3,872) (3,092)

Mooring rights represent the long-term lease rights of hydro technical infrastructure (e.g. berths, piersand marine vessels) held with the state.

31 December 2012 31 December 2011

Current

Deposits 512 18,976

Loans issued 49,619 2,857

Total current 50,131 21,833

Non-current

Loans issued and other financial assets 11,159 34,842

Total non-current 11,159 34,842

Short-term deposits placed in LLC “Vneshprombank” (“Vneshprombank”) consist of short-term depositsdenominated in RUR with an interest rate of 6% per annum and short-term deposits denominated in USDwith an interest rate of 2.75% per annum. Short-term deposits placed in CJSC “Raiffeisenbank”(“Raiffeisenbank”) consist of short-term deposits denominated in RUR with an interest rate of 7.20% perannum.

Current loans issued in RUR include short-term loans given to employees of the Group and to otherrelated parties with interest rates varying from 7% to 8% per annum. Current loans issued in USD includeshort-term loans given to other related parties with interest rates varying from 5% to 7% per annum,including loans to LLC Novorossiysk Fuel Oil Terminal (“NFT”), a joint venture created in 2009 (Note 16).

Prior to 31 December 2012, the Group and NFT agreed that NFT would repay during first quarter of 2013,loans issued in the amount of USD 45 million with interest rate of 7% and original maturity of 2015-2019years. Such loans are, consequently, presented as current in the consolidated statement of financialposition.

Non-current loans issued and other financial assets consist of non-current loans given to employees of

Mooring Rights14.

Investments In Securities And Other Financial Assets15.

the Group denominated in RUR with an interest rate of 5% per annum and long-term loan issued in USD toNFT in the amount of 11,150 maturing in March 2020 with an interest rate of 7% per annum.

NFT is a fuel oil terminal with expected transshipment capacity of four million tons per year.In August2012 NFT began generating revenue as a result of commencement of fuel oil transshipments. During theperiod from commencement of operations to 31 December 2012 the joint venture operations generatedrevenue of 19,399, however, for the year ended 31 December 2012 the operations incurred a loss of1,556.

The Group owns 50% of NFT and its share in losses of the joint venture for the years ended 31 December2012 and 2011 amounted to (778) and (4,746), respectively. Loss recognised in 2011 is the result offluctuations in the USD exchange rate resulting in significant foreign exchange loss related to thefinancial debt of NFT.

Ownership % held

Joint venture 31 December 2012 31 December 2011

NFT 50.00% 50.00%

Summarised financial information of NFT is represented below:

31 December 2012 31 December 2011

Current assets 27,578 14,993

Non-current assets 164,428 145,291

Total assets 192,006 160,284

Current liabilities (15,425) (38,754)

Non-current liabilities (156,094) (100,700)

Total liabilities (171,519) (139,454)

Net assets 20,487 20,830

Group’s share of joint venture net assets 10,243 10,415

Elimination of unrealised profit (1,327) (990)

Carrying value of investment 8,916 9,425

Loans issued by the Group to NFT in the total amount of 56,150 are disclosed in Note 15.

Investment In Joint Venture16.

99

31 December 2012 31 December 2011

Materials and low value items 6,372 8,045

Fuel 1,939 1,850

Goods for resale 1,789 2,195

Less: allowance for obsolete and slow-moving inventories (1,905) (832)

Total 8,195 11,258

31 December 2012 31 December 2011

Trade receivables (RUR) 20,741 25,598

Trade receivables (USD) 19,309 19,222

Trade receivables (EUR) 622 58

Other receivables and prepayments 4,640 5,628

Interest receivable 1,017 1,069

Less: allowance for doubtful trade and other receivables (3,292) (3,779)

Total 43,037 47,796

The average credit period for the Group’s customers is seven days. During this period no interest ischarged on the outstanding balances. Thereafter, interest is charged according to the contractsdetermined on a customer specific basis, determined based on size, volume and history of operationswith the Group at between 0.3 % and 15 % per month on the outstanding balance.

Before accepting any new customer, the Group uses an internal credit system to assess the potentialcustomer’s credit quality. Of the trade receivables balance at the end of the year, the Group’s 8 largestcustomers (2011:9) in total represent 61% (2011: 67%) of the outstanding balance.

Included in the Group’s receivable balance are debtors with carrying value of 3,717 (2011: 3,675) whichare past due at the respective reporting date but not impaired and which the Group still considersrecoverable.

A maturity analysis of trade and other receivables is as follows:

31 December 2012 31 December 2011

Not past due and not impaired 39,320 44,121

Past due but not impaired

less than 45days 2,106 2,214

45-90 days 699 473

90-180 days 19 683

180-365 days 580 305

Over 1 year 313 —

3,717 3,675

Past due and impaired 3,292 3,779

Total 46,329 51,575

The Group does not hold any collateral over these outstanding balances

Inventories17.

Trade And Other Receivables, Net18.

100

The movement in the allowance for doubtful trade and other receivables is as follows:

31 December2012

31 December2011

As at beginning of the year 3,779 2,841

Impairment (reversal)/losses recognised in the statement of comprehensiveincome

(68) 1,289

Amounts written-off as uncollectable (626) —

Amounts recovered during the year (3) (96)

Effect of translation into presentation currency 210 (255)

As at end of the year 3,292 3,779

Past due trade receivables and other receivables were provided for based on estimated irrecoverableamounts. These were determined by reference to past experience, and are regularly reassessed basedon the facts and circumstances existing as at each reporting date.

31 December 2012 31 December 2011

Bank deposits in RUR 124,181 24,132

Bank deposits in USD 110,981 74,320

Bank deposits in EUR — 2

Current accounts in RUR 4,278 25,013

Current accounts in USD 3,093 4,018

Current accounts in EUR 12 13

Cash in hand 34 24

Total 242,579 127,522

Bank deposits as at 31 December 2012 mainly represent deposits with Vneshprombank, OJSC “Alfa-Bank”(Alfa-Bank), OJSC “Promsvyazbank” (Promsvyazbank) and Sberbank of Russia (Sberbank) with an originalmaturity of three months or less.

Bank deposits with an original maturity of three months or less, placed in Vneshprombank, arerepresented by deposits denominated in RUR with interest rates varying from 6% to 10% per annum anddeposits denominated in USD with interest rates from 2.75% to 5.60% per annum. Deposits denominated inRUR are placed in Alfa-Bank with an interest rate 7.50%. Promsvyazbank charges interest on depositsdenominated in RUR with an original maturity of three months an interest rate 8% per annum. Depositsdenominated in RUR, placed in Sberbank, are represented by deposits with interest rates from 4.64% to7.75% per annum.

The share capital of the Group consists of 19,259,815,400 ordinary shares authorised, issued, and fullypaid with a par value of 0.054 US cents per share. Authorised share capital at par is 10,471. Each ordinaryshare has equal voting rights.

During the period from 24 February to 1 March 2011, NCSP repurchased 516,686,496 of its own shares forRUR 4.9 per share for a total of RUR 2,531,763 thousand (USD 86,151 thousand).The direct costsassociated with the buy-back of shares were 126. The obligatory purchase was performed in accordancewith the Federal Law on Joint Stock Companies, under approval by the Board of Directors on 4 February2011. The Group’s repurchased shares are held as treasury shares in equity as at 31 December 2011 and2012.

The number of shares outstanding is 18,743,128,904 as of 31 December 2012 and 31 December 2011.

Cash And Cash Equivalents19.

Share Capital20.

101

Interest rate Maturity date 31 December2012

31 December2011

Unsecured borrowings

Loan Participation Notes (USD) 7% May 2012 — 302,241

Bonds (RUR) 9.0% April 2015 133,347 —

Unsecured bank loans (RUR)

Sberbank 8.5% November2014

177,314 250,908

Sberbank 8.5% November2014

6,594 9,331

Total unsecured borrowings 317,255 562,480

Secured bank loans (USD)

Sberbank LIBOR 3М +4.85%

January 2018 1,944,707 1,943,776

Total debt 2,261,962 2,506,256

Current portion of long-termborrowings

(90,200) (392,413)

Total non-current debt 2,171,762 2,113,843

SberbankIn November 2010, PTP entered into two loan agreements with Sberbank under a new credit line to beused for the acquisition of SFP in the amount of 348,752, and for financing and refinancing costsassociated with the construction of a bunkering complex in the amount of 12,970, each with an interestrate of 8.5% per annum. The principal amounts of the loans are payable in equal instalments at the end ofeach quarter beginning 31 March 2011 through the maturity date in November 2014. The interest foreach loan is calculated and payable on a monthly basis.

On 21 January 2011, NCSP received a loan in the amount of 1,950,000 from Sberbank pursuant to acontract dated 19 January 2011 relating to a new credit line to be used for the acquisition of PTP. Theloan was provided with the following terms:

The term of the facility is seven years;Floating interest of LIBOR 3M + 4.85% per annum is applied during the first three years of the loan;Fixed interest of 7.48% is applied during the last four years of the loan;A lump sum commission of 11,700 (or 0.6%) was paid for the receipt of the loan;No principal is due for the first 36 calendar months from the date of the loan agreement (“the graceperiod”), after which the principal amount of the loan is to be paid by equal quarterly instalments;The loan is secured by a pledge of 50.1% of the Company’s shares and a guarantee of PTP; andCertain financial covenants are imposed on the Group (e.g. restrictions as to the Group’s debt toequity ratio and net debt to earnings before interest, income taxes, depreciation and amortizationratio, and reduction of NCSP’s share price, etc).

The Group does not pledge any financial assets as collateral for the existing liabilities.

Loan Participation NotesOn 17 May 2007, the Group, through a newly formed special purpose entity, Novorossiysk Port CapitalS.A., issued 7% loan participation notes due in May 2012 (the “Loan Participation Notes”) in an aggregateprincipal amount of 300,000.

The principal amount and interest accrued of the Loan Participation Notes were repaid in full on 15 May2012.

Debt21.

102

Rouble bondsOn 2 May 2012 the Group issued a Russian rouble bond tranche BO-02 with a par value of 4 billion RUR(USD 136 million) with a maturity up to 29 April 2015. The coupon on the bond tranche is 9% per annum,payable every 182 days with the first coupon payment due on 31 October 2012.The Group used theproceeds of the bond tranche to repay the Loan Participation Notes.

As at 31 December 2012, the average effective borrowing rate relating to the Group’s debt was 5.79% perannum (31 December 2011: 5.73% per annum).

The Group borrowings as of 31 December 2012 are repayable as follows:

Principal amount Contractual interest liability Total

Due within three months 16,893 28,915 45,808

Due from three to six months 22,956 34,806 57,762

Due from six months to twelve months 45,090 37,434 82,524

84,939 101,155 186,094

Between 1 and 2 years 582,911 173,951 756,862

Between 2 and 5 years 1,467,394 183,889 1,651,283

Over 5 years 121,457 725 122,182

Total 2,256,701 459,720 2,716,421

For variable rate borrowings, the contractual interest liability for future periods was calculated based onthe effective borrowing rate relating to the Group’s variable rate borrowings as at 31 December 2012 of5.16%.

The financial obligations of the Group consist primarily of borrowings denominated in USD. Thefluctuation of the USD exchange rate leads to foreign exchange rate gains or losses which affect thefinancial performance of the Group. During the year ended 31 December 2012, the foreign exchange gainon financial obligations increased the Group’s profit before income tax by 133,585 and during the yearended 31 December 2011 decreased the Group’s profit before income tax by 171,356.

On 4 May 2012 in conjunction with the placement of the rouble bonds, the Group entered into cross-currency and interest rate swap agreement to mitigate foreign currency risk (Note 23).

103

The Group rents transshipment machinery and equipment under finance lease agreements, each with athree year term. The Group has the right to purchase the equipment after expiration of lease contractsat a purchase price close to zero. Interest rates for all obligations under the finance lease agreementswere fixed at the dates of the agreements at 8% per annum.

Minimum lease payments 31December 2012

Present value of lease payments 31December 2012

Less than one year 3,296 2,711

In the second and third year 6,591 6,089

Less: future financing costs (1,087) —

Present value of minimum leasepayments

8,800 8,800

31 December 2012

Obligations under finance leases 6,089

Current portion of obligations underfinance leases

2,711

8,800

The fair value of the Group’s lease obligations is approximately equal to their carrying amount due to theshort lease term of three years.

The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assetsdisclosed in Note 12.

On 4 May 2012, the Group entered into a cross currency interest rate swap agreement with CJSC “BankCredit Suisse (Moscow)” related to the bond tranche BO-02 (Note 21). This swap economically hedges therisk of currency fluctuations. The Group agreed to pay interest in USD at a rate of 3.85% per annumbased on a notional amount of USD 135 million, in exchange for interest paid in RUR at a rate of 9% perannum based on notional of RUR 4 billion (USD 136 million) over three years and to exchange USD 135million for RUR 4 billion at maturity of the bond tranche. Settlements of interest and principals are madein net amounts.

This swap agreement was recorded as a derivative financial instrument recognised at fair value throughprofit and loss with the changes in fair value recorded within finance costs.

The fair value measurement is based on the applicable forward curves as determined based on theforeign currency rate, interest rates and settlement dates of the swap contract. The discount rateswere based on a zero coupon yield curve. The Group determined that the impact of the credit risk onmeasurement of the fair value of swap was not significant. Changes in the fair value of the swap ariseprimarily due to the appreciation of USD forward rates against the RUR. As the fair value measurement isbased on the inputs derived from observable market data, the instrument is classified as Level 2 in the fairvalue hierarchy.

The most significant estimates and assumptions used in the fair value measurement are as follows:

Settlement dates (DD.MM.YYYY) Expected rate, RUR/ 1 USD Discount rate, %

01 May 2013 31.13 0.30

30 October 2013 31.95 0.30

30 April 2014 32.77 0.32

29 October 2014 33.59 0.35

29 April 2015 34.44 0.39

The table below details the Group’s sensitivity to depreciation and appreciation of currency exchangerates used in the fair value measurement (the Russian RUR against the US Dollar by 3 RUR at each

Finance Lease22.

Cross-Currency And Interest Rate Swap23.

The Group rents transshipment machinery and equipment under finance lease agreements, each with athree year term. The Group has the right to purchase the equipment after expiration of lease contractsat a purchase price close to zero. Interest rates for all obligations under the finance lease agreementswere fixed at the dates of the agreements at 8% per annum.

Minimum lease payments 31December 2012

Present value of lease payments 31December 2012

Less than one year 3,296 2,711

In the second and third year 6,591 6,089

Less: future financing costs (1,087) —

Present value of minimum leasepayments

8,800 8,800

31 December 2012

Obligations under finance leases 6,089

Current portion of obligations underfinance leases

2,711

8,800

The fair value of the Group’s lease obligations is approximately equal to their carrying amount due to theshort lease term of three years.

The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assetsdisclosed in Note 12.

On 4 May 2012, the Group entered into a cross currency interest rate swap agreement with CJSC “BankCredit Suisse (Moscow)” related to the bond tranche BO-02 (Note 21). This swap economically hedges therisk of currency fluctuations. The Group agreed to pay interest in USD at a rate of 3.85% per annumbased on a notional amount of USD 135 million, in exchange for interest paid in RUR at a rate of 9% perannum based on notional of RUR 4 billion (USD 136 million) over three years and to exchange USD 135million for RUR 4 billion at maturity of the bond tranche. Settlements of interest and principals are madein net amounts.

This swap agreement was recorded as a derivative financial instrument recognised at fair value throughprofit and loss with the changes in fair value recorded within finance costs.

The fair value measurement is based on the applicable forward curves as determined based on theforeign currency rate, interest rates and settlement dates of the swap contract. The discount rateswere based on a zero coupon yield curve. The Group determined that the impact of the credit risk onmeasurement of the fair value of swap was not significant. Changes in the fair value of the swap ariseprimarily due to the appreciation of USD forward rates against the RUR. As the fair value measurement isbased on the inputs derived from observable market data, the instrument is classified as Level 2 in the fairvalue hierarchy.

The most significant estimates and assumptions used in the fair value measurement are as follows:

Settlement dates (DD.MM.YYYY) Expected rate, RUR/ 1 USD Discount rate, %

01 May 2013 31.13 0.30

30 October 2013 31.95 0.30

30 April 2014 32.77 0.32

29 October 2014 33.59 0.35

29 April 2015 34.44 0.39

The table below details the Group’s sensitivity to depreciation and appreciation of currency exchangerates used in the fair value measurement (the Russian RUR against the US Dollar by 3 RUR at each

Finance Lease22.

Cross-Currency And Interest Rate Swap23.

settlement date). The movement applied is based on the forecasted range of reasonable fluctuations overthe next three years.

104

31 December 2012

Depreciation by 3 RUR Appreciation by 3 RUR

(Loss)/gain from сross-currency and interest rate swap (11,517) 13,741

The following table shows details of the contractual maturities of the cross currency and interest rateswap. The data is based on the undiscounted cash flows of the Group’s financial liabilities based on theearliest date at which settlement may be required. The table shows the contractual interest asset,representing cash flows of interest payments, and the principal obligations.

Principal amount Contractual interest asset Total

Due within three months — — —

Due from three to six months — 3,215 3,215

Due from six to twelve months — 3,144 3,144

Between 1 and 2 years — 6,074 6,074

Between 2 and 5 years (21,523) 2,928 (18,595)

Total (21,523) 15,361 (6,162)

Unfunded defined benefit plan

The Group has defined benefit plans for employees of NCSP and some of its subsidiaries (subsidiaries(Novoroslesexport, Shipyard and Fleet). Under the plans, upon attainment of a retirement age of 55 forwomen and 65 for men, the employees are entitled to one-time retirement benefits of 10% of theemployee’s final salary for every year of completed service. Also post-retirement benefits are provided tothese employees ranging from RUR 267 (USD 0.009 thousand) to RUR 633 (USD 0.02 thousand) per monthper employee, depending on each employee’s years of service and qualifications.

The most recent actuarial valuation of the defined benefit obligation was carried out as at 31 December2012. The present value of the defined benefit obligation, the related current service cost and the pastservice cost were all measured using the projected unit credit method.

The principal assumptions used for the purposes of the actuarial valuations were as follows:

Valuation at

31 December 2012 31 December 2011

Discount rate 7% 8%

Employees turnover per annum 5% 5%

Expected annual rate of salary increase 10% 10%

Expected annual rate of post retirement benefits increase 0% 0%

Average residual period of work 7 years 7 years

Amounts recognised in profit or loss in respect of these defined benefit plans are as follows:

Year ended 31 December 2012 Year ended 31 December 2011

Interest on obligation 594 628

Current service cost 199 275

Past service cost — 494

Actuarial losses recognised during the year — 46

Total 793 1,443

Employee Benefits24.

105

The defined benefit obligation charge for the year has been included in cost of services within profit orloss.

Effect of early adoption of IAS 19 "Employee Benefits" is reflected through the immediate recognition ofactuarial gains and losses within other comprehensive income as actuarial losses on defined benefit plansin amount of 1,624. The amount of actuarial losses recognized during the year ended 31 December 2012relates to changes in discount rate used as principal assumptions for actuarial valuation.

In 2012, the number of retired employees who received benefits was 2,646 (2011: 2,668)

The amount included in the statement of financial position arising from the entity’s obligation in respectof its defined benefit plans is as follows:

31 December 2012 31 December 2011

Present value of unfunded benefit obligation 9,551 7,286

Net liability arising from defined benefit obligation 9,551 7,286

Movements in the present value of the defined benefit obligations in the current period were as follows:

Year ended 31 December 2012 Year ended 31 December 2011

Opening defined benefit obligation 7,286 7,382

Inc luded in cost of service 793 949

Current service cost 199 275

Interest cost 594 628

Actuarial losses recognised during the year — 46

Benefits paid (632) (623)

Actuarial losses in other comprehensive income 1,624 —

Effect of translation to presentation currency 480 (422)

Closing defined benefit obligation 9,551 7,286

The history of experience adjustments for defined benefit plan are as follows:

31 December2012

31 December2011

31 December2010

31 December2009

31 December2008

Present value of defined benefitobligation

9,551 7,286 6,906 9,732 7,643

Experience adjustments on planliabilities

1,624 46 (3,727) 1,380 339

Defined contribution plansContributions to the Russian Federation State Pension Fund charged to profit or loss amounted to 20,205and 19,613 for the years ended 31 December 2012 and 2011, respectively, which related to employeeservices rendered during each year.

On 21 January 2011, NCSP acquired 100% of the shares in PTP, an operator of oil and oil producttranshipment at the port of Primorsk, Leningrad District, for a cash consideration of 2,153,000 fromOMIRICO LIM ITED. The Group also incurred acquisition costs of 4,077 which were recognised as anexpense in profit or loss in December 2010. By acquiring PTP, management believed the Group would beable to materially increase the scale of its operations and to become a market leader in port managementin Russia’s two key regions, the North-Western and Southern basins.

The following table summarises the estimated acquisition date fair values of the assets acquired andliabilities assumed as part of the purchase price allocation:

Business Combination25.

106

21 January 2011

Current assets

Cash and cash equivalents 52,423

Trade and other receivables 33,419

Other current assets 1,715

Non-current assets

Property, plant and equipment 1,521,916

Other non-current assets 1,980

Current liabilities

Trade and other payables 20,207

Current portion of long-term debt 93,232

Non-current liabilities

Deferred tax liabilities 269,450

Long-term debt 281,370

Net assets 947,194

Measurement period adjustments arising from additional information obtained during the measurementperiod, about facts and circumstances that existed at the acquisition date did not have a material impacton the purchase price allocation as presented above.

Goodwill arising on acquisition 21 January 2011

Consideration transferred 2,153,000

Less fair value of identifiable net assets acquired 947,194

Goodwill 1,205,806

Goodwill arose in the acquisition of PTP because the cost of the combination included amounts inrelation to the future market development, benefit of expected synergies and revenue growth. Thesebenefits are not recognised separately from goodwill because they do not meet the recognition criteriafor identifiable intangible assets.

The receivables acquired (which principally comprised trade receivables) in these transactions with a fairvalue of 33,419 had gross contractual amounts of 33,419. The best estimate at acquisition date of thecontractual cash flows not expected to be collected equals to nil.

31 December 2012 31 December 2011

Trade payables (RUR) 8,559 13,176

Trade payables (USD) 201 303

Trade payables (EUR) 375 125

Trade payables (GBP) 2 1

Trade payables (JPY) 44 —

Payables for property, plant and equipment 2,908 4,429

Other accounts payable 291 217

Total 12,380 18,251

The average credit period for trade payables relating to the purchase of inventories (e.g. fuel) andservices (e.g. utilities) is 15 days. No interest is charged on the outstanding balance for trade and other

Trade And Other Payables26.

107

payables during the credit period. Thereafter, interest may be charged from 0.3 % to 15 % per month onthe outstanding balance.

The maturity profile of trade and other payables is as follows:

31 December 2012 31 December 2011

Past due 376 4,695

Due within three months 10,091 13,196

Due from three to six months 16 47

Due from six months to twelve months 1,897 313

Total 12,380 18,251

31 December 2012 31 December 2011

Accrued salaries and wages 16,657 9,908

Accrued professional service expenses 1,244 713

Other accrued expenses 1,027 757

Total 18,928 11,378

Transactions between NCSP and its subsidiaries have been eliminated on consolidation and are notdisclosed in this note. Related party receivables and payables resulting from operating activities aresettled in the normal course of business. Details of transactions with related parties are disclosed below.

Given that the Federal Agency of the Russian Federation owns a 20% interest in NCSP, significant balancesand transactions with state-controlled entities are considered to be transactions with related parties.During 2012 and 2011, the Group transacted with Sberbank, Russian Agricultural Bank, VTB, Rosneft,Russian Railways and other state-controlled entities (apart from Transneft).

Transactions with state-controlled entities:

Year ended 31 December 2012 Year ended 31 December 2011

Sales

Sales of goods and services 107,404 113,671

Interest income 4,000 2,357

Purchases

Services and materials received 22,018 76,098

Finance costs 123,581 121,832

Accrued Expenses27.

Related Party Transactions28.

108

Balances with state-controlled entities:

31 December 2012 31 December 2011

Cash and cash equivalents

Cash and cash equivalents 18,896 50,034

Deposits — 4,840

Receivables

Long-term receivables 2,264 —

Trade and other receivables 3,319 7,929

Advances to suppliers 1,025 437

Payables

Trade and other payables 310 1,045

Advances received from customers 3,606 2,080

Debt

Long-term debt 2,040,395 2,113,843

Current portion of long-term debt 88,219 90,172

During 2011, ultimate control and ownership of the Group changed. In conjunction with the Group’sacquisition of PTP, Kadina Limited Company, the prior ultimate parent of the Group, sold 100% of theshares in Novoport Holding Ltd. (which owned 50.1% of the Group) to OMIRICO LIM ITED, the prior ownerof PTP, and now ultimate parent of the Group. OMIRICO LIM ITED is registered under the legislation of theRepublic of Cyprus, and is jointly controlled by OJSC Transneft and Z. Magomedov.

The owner of 100% of the OJSC Transneft ordinary shares is the Russian Federation represented by theFederal Agency for the Management of Federal Property. The OJSC Transneft preferential shares areowned by various legal entities and private individuals and are traded on the secondary stock market.

Other related parties include parties jointly controlling the ultimate parent and their subsidiaries andaffiliates as well as NFT.

Transactions with NFT:

Year ended 31 December 2012 Year ended 31 December 2011

Sales and income

Sales of goods and services 3,600 109

Interest income 2,499 1,085

Purchases

Capital expenditures — 11

Balances with NFT:

31 December 2012 31 December 2011

Receivables

Trade and other receivables — 6

Long-term loans and interest receivable 18,179 35,655

Short-term loans and interest receivable 45,000 —

Payables to related parties

Advances received from customers 972 3

109

Transactions with other related parties:

Year ended 31 December 2012 Year ended 31 December 2011

Sales

Sales of goods and services 91,683 84,816

Interest income 264 206

Purchases

Services and materials received 39,583 56,747

Capital expenditures — 8

Balances with other related parties:

31 December 2012 31 December 2011

Receivables

Trade and other receivables 1,455 2,917

Advances to suppliers 671 62

Short-term loans and interest receivable 4,571 3,353

Long-term loans and interest receivable — 2,530

Payables

Trade and other payables 3,563 2,154

Advances received from customers 10,699 14,700

Compensation of key management personnelFor the year ended 31 December 2012 and 31 December 2011, the remuneration of the directors andother members of key management was 20,767 (including termination benefits in the amount of 1,079) and11,622 (including termination benefits in the amount of 512), respectively, which represented short-termemployee benefits and social security contributions.

The remuneration of directors and key executives is determined by the Board of Directors with regard tothe performance of individuals and market trends.

Cash Flows From Operating Activities

110

Year ended 31 December2012

Year ended 31 December2011

Profit for the year 315,960 130,313

Adjustments for:

Depreciation and amortisation 81,870 77,629

Finance costs 144,263 144,619

Loss on disposal of property, plant and equipment 2,288 692

Foreign exchange (gain)/loss, net (130,200) 167,940

Income tax expense 99,920 34,207

Change in retirement benefit obligation 161 820

Interest income (12,009) (4,434)

Impairment of goodwill 89,456 —

Change in allowance for doubtful receivables (68) 1,289

Change in allowance for spare parts and slow-movinginventories

794 193

Share of loss in joint venture, net 778 4,746

Other adjustments (188) 269

593,025 558,283

Working capital changes:

Decrease/(increase) in inventories 2,696 (3,507)

Decrease/(increase) in receivables 23,967 (41,341)

(Decrease)/increase in liabilities (20,132) 41,151

Cash flows generated from operating activities 599,556 554,586

Legal proceedingsThe Group is involved in various claims and legal proceedings arising in the ordinary course of business.These claims relate to, but are not limited to, its business practices and tax matters. The Group believesthat resolution of such matters will not have a material adverse effect on its financial performance andliquidity based on information currently available.

In December 2012 СJSC "Transneft-Service" has cancelled oil product transshipment agreement with PTP.As of 31 December 2012 the amount of advances received in accordance with the agreement was 9,048.Management expects that cash outflow due to any resulting claim of CJSC "Transneft-Service" will notexceed 9,048. As of 31 December 2012 no additonal provision was recorded in the consolidated financialstatements in respect of this claim.

Taxation contingencies in the Russian FederationRussian tax authorities have a period of up to three years to re-open tax declarations for furtherinspection. Changes in the tax system that may be applied retrospectively by authorities could affect theGroup’s previously submitted and assessed tax declarations.

While management believes that it has adequately provided for tax liabilities based on its interpretation ofcurrent and prior legislation, the risk remains that the tax authorities in the Russian Federation couldtake differing positions with regard to interpretative issues. In connection with this fact, the Group has apotentially significant risk of additional taxation, fines and penalties.

Pricing of transactions between each of the Group’s subsidiaries in the course of its activities might be

Cash Flows From Operating Activities29.

Commitments And Contingencies30.

111

Year ended 31 December2012

Year ended 31 December2011

Profit for the year 315,960 130,313

Adjustments for:

Depreciation and amortisation 81,870 77,629

Finance costs 144,263 144,619

Loss on disposal of property, plant and equipment 2,288 692

Foreign exchange (gain)/loss, net (130,200) 167,940

Income tax expense 99,920 34,207

Change in retirement benefit obligation 161 820

Interest income (12,009) (4,434)

Impairment of goodwill 89,456 —

Change in allowance for doubtful receivables (68) 1,289

Change in allowance for spare parts and slow-movinginventories

794 193

Share of loss in joint venture, net 778 4,746

Other adjustments (188) 269

593,025 558,283

Working capital changes:

Decrease/(increase) in inventories 2,696 (3,507)

Decrease/(increase) in receivables 23,967 (41,341)

(Decrease)/increase in liabilities (20,132) 41,151

Cash flows generated from operating activities 599,556 554,586

Legal proceedingsThe Group is involved in various claims and legal proceedings arising in the ordinary course of business.These claims relate to, but are not limited to, its business practices and tax matters. The Group believesthat resolution of such matters will not have a material adverse effect on its financial performance andliquidity based on information currently available.

In December 2012 СJSC "Transneft-Service" has cancelled oil product transshipment agreement with PTP.As of 31 December 2012 the amount of advances received in accordance with the agreement was 9,048.Management expects that cash outflow due to any resulting claim of CJSC "Transneft-Service" will notexceed 9,048. As of 31 December 2012 no additonal provision was recorded in the consolidated financialstatements in respect of this claim.

Taxation contingencies in the Russian FederationRussian tax authorities have a period of up to three years to re-open tax declarations for furtherinspection. Changes in the tax system that may be applied retrospectively by authorities could affect theGroup’s previously submitted and assessed tax declarations.

While management believes that it has adequately provided for tax liabilities based on its interpretation ofcurrent and prior legislation, the risk remains that the tax authorities in the Russian Federation couldtake differing positions with regard to interpretative issues. In connection with this fact, the Group has apotentially significant risk of additional taxation, fines and penalties.

Pricing of transactions between each of the Group’s subsidiaries in the course of its activities might be

Cash Flows From Operating Activities29.

Commitments And Contingencies30.

subject to transfer pricing rules. Russian transfer pricing legislation was amended starting from 1 January2012 to introduce additional reporting and documentation requirements. The new legislation allows thetax authorities to impose additional tax liabilities in respect of certain transactions, including but notlimited to transactions with related parties, if they consider transaction to be priced not at arm's length.As the practice of implementation of the new transfer pricing rules has not yet developed and wording ofsome clauses of the rules is unclear, the impact of challenge of the Group's transfer pricing positions bythe tax authorities cannot be reliably estimated. The Group’s management believes that taxes payableare calculated in compliance with the applicable tax regulations relating to transfer pricing. Howeverthere is a risk that the tax authorities may take a different view and impose additional tax liabilities. As of31 December 2012, no provision was recorded in the consolidated financial statements in respect of suchpossible future claims.

Operating environmentEmerging markets such as the Russian Federation are subject to different risks than more developedmarkets, including economic, political and social, and legal and legislative risks. As has happened in thepast, actual or perceived financial problems or an increase in the perceived risks associated withinvesting in emerging economies could adversely affect the investment climate in the Russian Federationand the Russian Federation’s economy in general.

Laws and regulations affecting businesses in the Russian Federation continue to change rapidly. Tax,currency and customs legislation within the Russian Federation are subject to varying interpretations,and other legal and fiscal impediments contribute to the challenges faced by entities currently operatingin the Russian Federation. The future economic direction of the Russian Federation is heavily influencedby the economic, fiscal and monetary policies adopted by the government, together with developmentsin the legal, regulatory, and political environment.

The global financial system continues to exhibit signs of deep stress and many economies around theworld are experiencing lesser growth than in prior years or no growth. Additionally there is increaseduncertainty about the creditworthiness of some sovereign states in the Eurozone and financialinstitutions with exposure to the sovereign debt of such states. These conditions could slow or disruptthe Russian Federation’s economy, and adversely affect the Group’s access to capital and cost of capitalfor the Group and, more generally, its business operations.

The Russian Federation produces and exports large volumes of oil and gas, therefore the economy isparticularly sensitive to the price of oil and gas on the world market.

Environmental mattersThe Group is subject to extensive federal and local environmental controls and regulations. Managementbelieves that the Group’s operations are in compliance with all current existing environmental legislationin the Russian Federation. However, environmental laws and regulations continue to evolve. The Group isunable to predict the timing or extent to which those laws and regulations may change, or the costthereby.

InsuranceThe Group’s entities do not have full coverage for property damage, business interruption and third partyliabilities. Until the Group obtains comprehensive insurance coverage exceeding the book value ofproperty, plant and equipment, there is a risk that the loss or destruction of certain assets could have amaterial adverse effect on Group’s operations and financial position.

Operating lease arrangementsOperating lease arrangements relate to the lease of land, mooring installation, vessels and equipmentfrom the Russian State and related parties. These arrangements have lease terms of between three and49 years. All operating lease contracts contain market review clauses in the event that the lesseeexercises its option to renew. The lessee does not have an option to purchase the land and mooringinstallations at the expiry of the lease period.

Future minimum lease payments under non-cancellable operating leases with initial terms in excess of oneyear are as follows:

112

31 December 2012

Within 1 year 73,466

Between 1 and 2 years 70,833

Between 2 and 3 years 70,019

Between 3 and 4 years 69,781

Between 4 and 5 years 63,805

Thereafter 1,085,235

Total 1,433,139

At 31 December 2012, the Group had the following commitments for acquisition of property, plant andequipment and construction works at:

31 December 2012 31 December 2011

NCSP 38,369 8,062

Novoroslesexport 12,877 1,992

IPP 11,479 8,366

Grain Terminal 720 —

PTP 604 49

BSC 264 —

Shipyard 52 211

Fleet 7 —

Total 64,372 18,680

Capital commitments of NCSP and Novoroslesexport at 31 December 2012 include obligations underfinance lease contracts for transshipment machinery and equipment in the amount of 23,476 and 9,080,respectively.

The fair value of financial assets and liabilities is determined as follows:

The fair value of financial assets and financial liabilities with standard terms and conditions and tradedon active liquid markets are determined with reference to quoted market prices; andThe fair value of other financial assets and financial liabilities (excluding derivatives) are determined inaccordance with generally accepted pricing models based on discounted cash flow analyses usingprices from observable current market transactions.

As at 31 December 2012 and 2011, management believes that the carrying values of significant financialassets (Notes 15, 18 and 19) and financial liabilities recorded at amortised cost in the consolidatedfinancial statements approximated their fair value due to their short-term nature, except for the long-term loans and borrowings, and long-term investments.

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance ofthe inputs used in making the measurements. The fair value hierarchy includes the following levels:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset orliability, either directly or indirectly.Level 3 — Inputs for the asset or liability that are not based on observable market data (unobservableinputs).

Capital Commitments31.

Fair Value Of Financial Instruments (Excluding Derivatives)32.

Year ended 31 December2012

Year ended 31 December2011

Profit for the year 315,960 130,313

Adjustments for:

Depreciation and amortisation 81,870 77,629

Finance costs 144,263 144,619

Loss on disposal of property, plant and equipment 2,288 692

Foreign exchange (gain)/loss, net (130,200) 167,940

Income tax expense 99,920 34,207

Change in retirement benefit obligation 161 820

Interest income (12,009) (4,434)

Impairment of goodwill 89,456 —

Change in allowance for doubtful receivables (68) 1,289

Change in allowance for spare parts and slow-movinginventories

794 193

Share of loss in joint venture, net 778 4,746

Other adjustments (188) 269

593,025 558,283

Working capital changes:

Decrease/(increase) in inventories 2,696 (3,507)

Decrease/(increase) in receivables 23,967 (41,341)

(Decrease)/increase in liabilities (20,132) 41,151

Cash flows generated from operating activities 599,556 554,586

Legal proceedingsThe Group is involved in various claims and legal proceedings arising in the ordinary course of business.These claims relate to, but are not limited to, its business practices and tax matters. The Group believesthat resolution of such matters will not have a material adverse effect on its financial performance andliquidity based on information currently available.

In December 2012 СJSC "Transneft-Service" has cancelled oil product transshipment agreement with PTP.As of 31 December 2012 the amount of advances received in accordance with the agreement was 9,048.Management expects that cash outflow due to any resulting claim of CJSC "Transneft-Service" will notexceed 9,048. As of 31 December 2012 no additonal provision was recorded in the consolidated financialstatements in respect of this claim.

Taxation contingencies in the Russian FederationRussian tax authorities have a period of up to three years to re-open tax declarations for furtherinspection. Changes in the tax system that may be applied retrospectively by authorities could affect theGroup’s previously submitted and assessed tax declarations.

While management believes that it has adequately provided for tax liabilities based on its interpretation ofcurrent and prior legislation, the risk remains that the tax authorities in the Russian Federation couldtake differing positions with regard to interpretative issues. In connection with this fact, the Group has apotentially significant risk of additional taxation, fines and penalties.

Pricing of transactions between each of the Group’s subsidiaries in the course of its activities might be

Cash Flows From Operating Activities29.

Commitments And Contingencies30.

113

The fair value compared to the carrying value of long-term financial liabilities as at 31 December 2012 and2011 is as follows:

31 December 2012 31 December 2011

Carrying value Fair value Carrying value Fair value

Loan Participation Notes (Level 1) — — 302,241 301,875

RUR bonds (Level 1) 133,348 133,146 — —

Fixed rate financial liabilities (Level 2) 183,908 175,489 260,239 248,168

LIBOR+ rate agreement with Sberbank (Level 2) 1,944,707 1,827,628 1,943,776 1,878,506

Capital risk managementThe Group manages its capital to ensure that entities of the Group will be able to continue as a goingconcern while maximising the return to the equity holder through the optimisation of the debt andequity balance and meet debt to equity ratio covenant of the loan agreement with Sberbank (Note 21).Management of the Group reviews the capital structure on a regular basis. Based on the results of thisreview, the Group takes steps to balance its overall capital structure through the payment of dividendsas well as the issuance of new debt or the redemption of existing debt.

Major categories of financial instrumentsThe Group’s principle financial liabilities comprise loans and borrowings, trade and other payables. Themain purpose of these financial instruments is to raise finance for the Group’s operations. The Group hasvarious financial assets such as trade and other receivables, investments in securities and cash and cashequivalents.

31 December 2012 31 December 2011

Financial assets

Cash and cash equivalents 242,579 127,522

Investments and receivables carried at amortised cost

Deposits 512 18,976

Trade and other receivables including long-term 52,416 61,768

Loans issued 60,778 37,699

Total financ ial assets 356,285 245,965

Financial liabilities carried at amortised cost

Borrowings (2,261,962) (2,506,256)

Trade and other payables (9,683) (14,093)

Payables for property, plant and equipment (3,646) (7,022)

Finance lease (8,800) —

(2,284,091) (2,527,371)

Financ ial liabilities at FVTPL

Cross currency and interest rate swap (4,602) —

(4,602) —

Total financ ial liabilities (2,288,693) (2,527,371)

The main risks arising from the Group’s financial instruments are foreign currency, interest rate, creditand liquidity risks.

Risk Management33.

114

Foreign currency riskForeign currency risk is the risk that the financial results of the Group will be adversely impacted bychanges in exchange rates to which the Group is exposed. The Group undertakes certain transactionsdenominated in foreign currencies. During 2012 the Group entered into a cross-currency and interestrate swap agreement to mitigate foreign currency risk (Note 23). In addition, management mitigates suchrisk by obtaining loans and borrowings in the same currency as the Group’s major operating inflows.

The carrying amount of the Group’s US Dollar denominated monetary assets and liabilities as at thereporting date are as follows:

31 December 2012 31 December 2011

Assets

Cash and cash equivalents 114,074 78,338

Investments and receivables carried at amortised cost 76,389 72,769

Total assets 190,463 151,107

Liabilities

Borrowings (1,944,707) (2,246,017)

Trade payables (201) (303)

Total liabilities (1,944,908) (2,246,320)

Total net liability position (1,754,445) (2,095,213)

The table below details the sensitivity of the Group’s financial instruments to a 10% depreciation of theRUR against the US Dollar if all other variables are held constant. The analysis was applied to monetaryitems at the year end dates denominated in USD. 10% is the sensitivity rate used when reporting foreigncurrency risk internally to key management personnel and represents management’s assessment of thereasonably possible change in foreign exchange rates. A 10% appreciation of the RUR against the US Dollarwould have an opposite impact as seen below:

31 December 2012 31 December 2011

Loss (175,445) (209,521)

The carrying amount of the Group’s EURO denominated monetary assets and liabilities as at the reportingdate are as follows:

31 December 2012 31 December 2011

Assets

Cash and cash equivalents 12 15

Investments and receivables carried at amortised cost 622 58

Total assets 634 73

Liabilities

Finance lease (8,800) —

Trade payables (375) (125)

Total liabilities (9,175) (125)

Total net liability position (8,541) (52)

The table below details the Group’s sensitivity to a 10% depreciation of the RUR against the EURO if allother variables are held constant. The analysis was applied to monetary items at the year end datesdenominated in the EURO. A 10% appreciation of the RUR against the EURO would have opposite impactas seen below:

31 December 2012 31 December 2011

Loss (854) (5)

115

Interest rate riskThe Group is exposed to interest rate risk because entities in the Group borrow funds at both xed andoating interest rates. The risk is managed by the Group by maintaining an appropriate mix between xedand oating rate borrowings.

The Group maintains only one loan subject to a variable interest rate. On 21 January 2011,NCSP receiveda loan in the amount of 1,950,000 from Sberbank pursuant to a contract dated 19 January 2011 relating toa new credit line to be used for the acquisition of PTP. Floating interest rate of LIBOR 3M + 4.85% perannum is applied during the first 3 years of the loan, fixed interest rate of 7.48% is applied from 19January 2014. The change in LIBOR rate by 1% would lead to an increase in interest expense on 19,500.

Credit riskCredit risk is the risk that a customer may default or not meet its obligations to the Group on a timelybasis, leading to financial losses for the Group.

The summary below shows the revenue and outstanding balances of the top five counterparties as at therespective balance sheet dates and for the year then ended:

Customer location Revenue for 2012 31 December 2012

BIG PORT SERVICE DMCC United Arab Emirates 142,668 15,460

ROSNEFT Russia 82,211 2,213

TRANSNEFT-SERVICE Russia 67,423 329

NLMK Russia 40,494 458

ROSMORAGENT Russia 36,678 522

Total 369,474 18,982

Customer location Revenue for 2011 31 December 2011

PORATH SERVICES LIMITED Marshall Islands 169,484 —

ROSNEFT Russia 90,422 5,895

TRANSNEFT-SERVICE Russia 72,346 21

Palmpoint International Inc. Panama 51,630 268

LUKOIL Russia 40,506 1,943

Total 424,388 8,127

The carrying amount of financial assets recorded in the financial statements, which is net of impairmentlosses, represents the Group’s maximum exposure to credit risk as no collateral or other creditenhancements are held.

Liquidity riskLiquidity risk is the risk that the Group will not be able to settle all liabilities as they become due. TheGroup’s liquidity position is carefully monitored and managed. The Group has in place a detailedbudgeting and cash forecasting process to help ensure that it has adequate cash available to meet itspayment obligations.

Maturity analyses of financial liabilities are presented in Notes 21 and 26.

116

In January 2013 the Group pledged 30% of its stake in NFT and provided a guarantee in the amount of55,000 as collateral for a credit line obtained by NFT from Raiffeisenbank

In January 2013 NFT repaid to the Group the principal balance on loans that existed prior to year end2012 (Note 15) in the amount of 45,000. Accrued interest on these loans was refinanced to mature on 31March 2020.

On 19 March 2013 the NCSP Board of Directors made the following decisions:

To appoint Grishanin M.S. (First Vice-President of OJSC Transneft) the Chairman of the Board ofDirectors NCSP;To suspend authority of the Chief Executive Officer Rado Antolovich;To appoint Matvienko Y.V. acting Chief Executive Officer, former Executive Director of NCSP; andTo establish the Executive Board in the quantity of five members.

In April 2013, the Group and the government agency Rosmorport signed an investment agreement forengineering works to upgrade certain facilities in Novorossiysk port. The Group committed to finance theengineering works in the amount of 62,556.

On 15 April 2013 the NCSP Board of Directors recommended to the annual shareholders’ meeting toapprove dividends in the amount of 14,978 (RUR 454,916 thousand).

Events After The Balance Sheet Date34.

117

Notes

118

Contacts

PJSC Novorossiysk Commercial Sea Port2, Mira Street, Novorossiysk, 353901, RussiaTel.: +7 (8617) 60-46-30Fax: +7 (8617) 60-23-23

Media RelationsТел.: +7 (8617) 60-43-93Факс: +7 (8617) 60-44-00E-mail:PR@ncsp.com

Investor Relations+7 (495) 662-37-95E-mail:IR@ncsp.com

Shareholder Services+7 8617 604 952

RegistrarNikoil Registrar+7 495 926 81 738 Ivana Franko Street, Moscow, 121108, Russia

GDR ProrgammeJP Morgan AG+7 495 967 7113

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