Luka Koper

Annual Report • Feb 25, 2019

LUKA KOPER GROUP

INFORMATION ON THE PERFORMANCE OF LUKA KOPER GROUP AND LUKA KOPER, D. D., FOR JANUARY – DECEMBER 2018

TABLE OF CONTENT

Introductory note	2
Performance highlights of Luka Koper Group in 2018	3
Financial indicators	11

Introductory note

Compliant with the Market and Financial Instrument Act, Ljubljana Stock Exchange Rules as well as Guidelines and Disclosure for Listed Companies, Luka Koper, d. d., Vojkovo nabrežje 38, 6501 Koper discloses this Information on the performance of Luka Koper Group and Luka Koper, d. d., for January – December 2018.

The Annual Repport 2018 will be published in accordance with the financial calendar on April 26, 2019.

Performance highlights of Luka Koper Group in 2018

Comparison of achieved results of Luka Koper Group 2018 and 2017

24 MILLION TONNES MARITIME THROUGHPUT 2018/2017 +3 % 988 THOUSAND TEUS

CONTAINERS 2018/2017 +8 % 754 THOUSAND VEHICLES

CARS 2018/2017 +2 %

In 2018, the maritime throughput achieved 24 million tonnes, which is 3 percent ahead on 2017 and represents a record annual throughput in the port's history. In March 2018, a record monthly maritime throughput of 2.3 million tonnes of goods was achieved.

The growth of throughput with respect to the previous year Luka Koper Group achieved in almost all product groups, except in liquid cargoes. In the product group of general cargoes Luka Koper Group concluded the business year 2018 with 11-percent increase of the maritime throughput in comparison with 2017. Due to the reopening of the African market, the Group achieved the throughput growth in the throughput of iron and steel products and in the throughput of timber. Good results and a record throughput in 2018, Luka Koper group achieved both in the product group of containers and cars. In the product group of dry bulk and bulk cargoes, Luka Koper Group achieved 1 percent higher throughput in comparison with 2017. The maritime throughput of liquid cargoes in 2018 declined by 1 percent in comparison to the one achieved in 2017 and is attributable to a lower throughput of petroleum products. In 2018, the Cruise terminal recorded 101.415 passengers, which is 41 percent ahead on 2017.

Maritime throughput in tonnes per cargo types 2018 and 2017

CARGO TYPES (in tonnes)	1 – 12 2018	1 – 12 2017	Index 2018/2017
Generaln cargoes	1.526.026	1.377.702	111
Containers	9.520.007	9.071.440	105
Cars	1.156.265	1.123.779	103
Liquid cargoes	3.855.247	3.876.535	99
Dry bulk and bulk cargoes	7.991.074	7.917.542	101
TOTAL	24.048.618	23.366.998	103

Thropughput of containers (number of containers in TEU) and cars (in UNITS) in 2018 and 2017

CARGO TYPES	1 – 12 2018	1 – 12 2017	Index 2018/2017
Containers – number	582.397	540.245	108
Containers – TEU	988.499	911.532	108
Cars– UNITS	754.409	741.253	102

EUR 226 MILLION

NET REVENUE FROM SALE 2018/2017 +7 %

In 2017, higher by 7 percent resp. by EUR 15 million.

EUR 70 MILLION

OPERATING PROFIT (EBIT) 2018/2017 +90 %

In 2018, the operating profit (EBIT) of Luka Koper Group amounted to EUR 70 million, which is 90 percent resp. EUR 33 million increase in comparison with 2017. Without taking into consideration a single event relating to the received compensation in the amount of EUR 9.6 million accounted for among other revenue and provisions for legal liabilities formed in 2017 in the amount of EUR 15.7 million and accounted for among other expense, the operating profit (EBIT) of Luka Koper Group in 2018 in comparison with 2017 increased in real terms by 15 percent resp. by EUR 8 million.

EUR 99 MILLION

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTISATION (EBITDA) 2018/2017 +52 %

Earnings before interest, taxes, depreciation and amortisation (EBITDA) of Luka Koper Group in 2018 amounted to EUR 99 million, which is 52 percent resp. EUR 34 million increase in comparison with 2017. Without taking into consideration a single event related to the received compensation in the amount of EUR 9.6 million and the provisions for legal liabilities in the amount of EUR 15.7 million, formed in 2017, Earnings before interest, tax and amortisation (EBITDA) in 2018, increased in real terms 11 percent resp. by EUR 9 million in comparison with 2017.

43,8 %

EBITDA MARGIN 2018/2017 +42 %

EBITDA margin of Luka Koper Group in 2018 amounted to 43.8 percent, which is 42 percent resp. 13 percentage point increase over 2017. Without taking into consideration a single event related to the received compensation for the damage in the amount of EUR 9.6 million and provisions for legal liabilities in the amount of EUR 15.7 million formed in 201 , the EBITDA margin in 2018 with respect to 2017 in real terms increased by 4 percent resp. by 1.4 percentage point.

EUR 60 MILLION NET OPERATING PROFIT 2018/2017 +71 %

Net operating profit of Luka Koper Group in 2018 amounted to EUR 60 million, which is 71 percent resp. EUR 25 million ahead on 2017. Without taking into consideration the received odškodnine in the amount of EUR 9.6 million, the net profit in 2018 would amount to EUR 51.9 million, which would be 48 percent resp. EUR 17 million increase on the generated net profit in 2017. In 2017, the net profit was decreased by the provisions for liabilities from legal obligations, formed in 2017 in the amount of EUR 15.7 million, and without taking into consideration the latter, the net profit of the Group in 2018 in comparison with 2017 increased in real terms by 9 percent resp. by EUR 4 million.

EUR 16 MILLION

INVESTMENTS 2018/2017 - 56 %

In 2018, Luka Koper Group allocated EUR 16 million for investments.

The major investments were the following:

• Five new electric RTG cranes were ordered.
• Purchase of two new terminal trailers Terberg for the needs of the general cargoes.
• Reconstruction of the existing diesel RTG cranes with aim to reduce the noise emissions.
• Finalisation of the construction of the track 61 due to the increase of safety of the railway transport and traffic decongestion.
• Arrangement of the premises for the needs of the Car and RO-RO terminal.
• Purchase of 33-tonnes forklift for the needs of the general cargoes.
• Purchase of two grabs for the gantry crane.
• Start of the renovation of the administrative building at the Terminal of bulk cargoes.
• Purchase of the replacing equipment for the fire-protection system.
• The construction of a new entrance is underway with the merger of the internal and external truck terminal
• Stabilization of the handling areas alongside the warehouses for the needs of the general cargoes.

1.242 NUMBER OF EMPLOYEES 2018/2017 +12%

In 2018, Luka Koper Group 2018 realised 214 new employments. The number of employees recorded a year-on increase of 12 percent equal to 134 employees and reached a number of 1.242 employees.

16,1 %

RETURN ON EQUITY (ROE) 2018/2017 +57 %

The return on equity (ROE) in 2018 amounting to 16.1 percent, was by 57 percent resp. by 5.8 percentage point ahead on 2017. Without taking into consideration a single event relating

to the received compensation in the amount of EUR 9.6 million and provisions for legal liabilities formed in 2017 in the amount of EUR 15.7 million, the return on equity (ROE) in 2018 increased in real terms by 1 percent resp. by 0.2 percentage point in comparison with 2017.

0,1 NET FINANCIAL DEBT/EBITDA 2018/2017 -91 %

A low net financial debt/EBITDA ratio, shows a high financial stability of Luka Koper, d.d. and Luka Koper Group and the readiness to start a more intensive investment cycle planned for the coming years.

Besides exceeding physical and financial indicators, 2018 was a significant year for Luka Koper Group also due to the shifts in strategic areas

In 2018 Luka Koper, d.d. obtained the building permit for the extension of the operational quay of the Container terminal at the Pier I, for the construction of additional tracks in the rear areas of the Basin III resp. for the needs of the Car terminal and the building permit for the construction of a new RO-RO berth in the Basin III, which also became final. Luka Koper, d.d. started the construction of the Sermin entrance to the port, which will operate primarily as entry point for the Pier II, and thereby, the internal logistics will be improved and the access roads to the town will be relieved from the truck traffic. Simoultaneously with this process, Luka Koper, d.d. signed a Letter of Intent with the Municipality of Koper for the conclusion of an agreement on the implementation of the mitigating measures for the reduction of the environmental impacts of the port's activity and further port's development.

In June 2018, the Government of the Republic of Slovenia amended the Decree on the management and administration of the freight port of Koper, including the expansion of the concession area on land and at sea by 704.436 m2.

At its regular session on March 26, 2018, Luka Koper, d.d. Supervisory Board discussed the course of the company's business restructuring and took note about the proposal of the port service providers drawn up by the management board. By the publication of an extensive vacancy notice for 307 posts started the action plan of the implementation of the port service providers strategy, and in November the company published the public procurement for the selection of recruitment agencies for the provision of workers for the implementation of the port's activity.

On July 21, 2018 entered into force the Act regulating the construction, operation and management of the second of the Divača-Koper raiway line. This act will be an additional financial burden for the company, but in the long term it will enable a sustainable development of Luka Koper and the throughput increase through the Port of Koper.

In 2018, Luka Koper, d. d., started and in January 2019 completed the refinancing procedure of a part of received long-term loans, under which two contracts for a long-term, 10-years loans, in the total amount of EUR 43.7 million were concluded with Banka Intesa Sanpaolo, d. d., and SID, d. d., whereof a half of the amount with each of the aforementioned banks. By refinancing a part of loans, the maturity of the company's sources of financing is prolonged. Meanwhile, sources of financing with a variable interest rate were swapped into sources of financing with fixed interest rate and the costs of financing are reduced.

Implementation of Luka Koper Group plans

Net revenue from sale of Luka Koper Group in 2018 amounted to EUR 226.3 million, which is one percent resp. EUR 2.6 million decline from the planned net revenue from sale.

Net revenue from sale of Luka Koper Group from the market activity in 2018 exceeded the planned net revenue from sale by one percent resp. by EUR 1.9 million, the revenue from the performance of the public utility of a regular maintenance of the port's infrastructure, intended for the public transport, lagged behind the plan by 51 percent resp. by EUR 4.5 million, with a consequent impact on the total revenue of the Group in 2018, which was by one percent resp. by EUR 2.6 million down in comparison to the planned net revenue from sale.

The received compensation for the damaged quayside crane, which collapsed due to the hit of a ship beacuse of a strong wind in June 2017, was accounted for within other revenue in the revised business plan for 2018, which was approved at the end of August 2018. In 2018, it was realised in the same amount of EUR 9.6 million.

In 2018, the operating profit (EBIT) of Luka Koper Group amounted to EUR 69.7 million, which is 5 percent resp. EUR 3. million ahead on the planned. Earnings before interest and taxes (EBITDA) of Luka Koper Group in 2018 amounted to EUR 99.1 million, which is 4 percent resp. EUR 3.6 million ahead on the planned.

EBITDA margin of Luka Koper Group in 2018 amounted to 43.6 percent, which is 44 percent resp. 13.4 percentage point ahead on the planned.

EBITDA margin of Luka Koper Group from the market activity in 2018 amounted to 44.6 percent, which is 3 percent resp. 1.3 percentage point increase in comparison with the planned.

Net profit of Luka Koper Group in 2018 amounted to EUR 59.8 million, which is 7 percent resp. EUR 4 million ahead on the planned.

In 2018, Return on Equity (ROE) in 2018 amounted to 16.1 percent, which is 7 percent resp. by 1 percentage point ahead on the planned.

Comparison of achieved results of Luka Koper, d. d., in 2018 and 2017

Net revenue from sale of Luka Koper, d. d., in 2018 amounted to EUR 223 million, which is 8 percent resp. EUR 16.1 million ahead on 2017. Net revenue from sale of Luka Koper, d. d., from the market activity in 2018 exceeded the last year's figures by 8 percent resp. by EUR 15.4 million, the revenue from the performance of the public utility service of regular maintenance of the port's infrastructure, intended for the public transport exceeded the last year revenue by 22 percent resp.by EUR 793.5 thousand, which consequently resulted that the total revenue of, Luka Koper, d. d., in 2018, was 8 percent resp. EUR 16.1 million higher than the revenue generated in the previous year.

In 2018, the operating profit (EBIT) of Luka Koper, d. d., amounted to EUR 68.7 million, which is 96 percent resp. EUR 33.7 million ahead on 2017. Without taking into consideration a single event of a received compensation for damage in the amount of EUR 9.6 million and the provisions for legal liabilities formed in 2017 in the amount of EUR 15.7 million, the operating profit (EBIT) of Luka Koper, d. d., in 2018 increased in real terms by 17 percent resp. by EUR 8.5 million in comparison with 2017.

In 2018, net profit of Luka Koper, d. d., amounted to EUR 58.6 million, which is 77 percent resp. EUR 25.4 million ahead on 2017. Without taking into consideration a single event of received compensation for damage in the amount of EUR 9.6 million, the net profit in 2018 would amount to EUR 50.7 million, which would be 53 percent resp. EUR 17.5 million ahead on the achieved in 2017. In 2017, the net profit was decreased by the provisions for legal liabilities formed in the amount of EUR 15.7 million, without taking into consideration this, the net profit of Luka Koper, d. d., in 2018, increased in real terms by 11 percent resp. by EUR 4.9 million in comparison with 2017.

Implementation of plans of Luka Koper, d. d.

Net revenue from sale of Luka Koper, d. d., in 2018 amounted to EUR 223 million, which is by 1 percent resp. EUR 1.5 million down on the planned net revenue from sale. Net revenue

from sale of Luka Koper, d. d., from the market activity in 2018 exceeded the planned by 1 percent resp. by EUR 3 million, the revenue from the performance of the public utility service of regular maintenance of the port's infrastructure, intended for the transport, lagged behind the plan by 51 percent resp. by EUR 4.5 million, whith a consequent impact on the total revenue of Luka Koper, d. d., in 2018 which was 1 percent resp. by EUR 1.5 million lower than planned net revenue from sale.

The operating profit (EBIT) of Luka Koper, d. d., in 2018 amounted to EUR 68.7 million, which is 5 percent resp. EUR 3.4 million ahead on the planned.

In 2018, net profit of Luka Koper, d. d., amounted to EUR 58.6 million, which is 7 percent resp. EUR 3.7 million ahead on the planned.

Financial indicators

Key performance indicators of LukaKoper, d. d., and Luka KoperGroup in 2018, in comparison to 2017

(in EUR)	Luka Koper, d. d.			Luka Koper Group
Income statement	1 – 12 2018	1 – 12 2017	IND 2018/ 2017	1 – 12 2018	1 – 12 2017	IND 2018/ 2017
Net revenue from sales	222.980.390	206.835.533	108	226.305.538	211.438.377	107
Earnings before interest and taxes (EBIT)	68.744.504	35.032.311	196	69.707.503	36.639.872	190
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	97.289.912	62.570.820	155	99.074.678	65.087.648	152
Profit or loss from financing activities	2.055.290	1.385.636	148	624.297	-377.307	-165
Profit before tax	70.799.794	36.417.947	194	71.997.092	37.952.498	190
Net profit or loss	58.588.995	33.143.408	177	59.761.810	34.982.789	171
Added value 1	153.696.710	115.524.196	133	162.462.413	124.516.296	130

Statement of financial position	31. 12. 2018	31. 12. 2017	IND 2018/ 2017	31. 12. 2018	31. 12. 2017	IND 2018/ 2017
Assets	552.787.725	518.952.908	107	571.505.208	536.478.688	107
Non-current assets	433.894.686	447.568.391	97	445.662.035	459.505.654	97
Current assets	118.893.039	71.384.517	167	125.843.173	76.973.034	163
Equity	362.640.484	320.652.651	113	393.875.930	350.437.387	112
Non-current liabilities with provisions and long-term accruals	137.848.415	156.033.161	88	124.316.097	142.700.743	87
Short-term liabilities	52.298.826	42.267.096	124	53.313.181	43.340.558	123
Financial liabilities	107.273.741	133.114.842	81	91.273.741	117.114.842	78

¹ Added value =operating revenue + capitalised own products and services + other revenue – costof goods, material, sercvices – other operating expenses without operating expenses from revaluation.

(in EUR)	Luka Koper, d. d.			Luka Koper Group
Investments	1 – 12 2018	1 – 12 2017	IND 2018/ 2017	1 – 12 2018	1 – 12 2017	IND 2018/ 2017
Investments in property, plant and equipment, investment property and intangible assets	15.867.036	36.661.385	43	16.442.606	37.342.062	44

Ratios (in %)	1 – 12 2018	1 – 12 2017	IND 2018/ 2017	1 – 12 2018	1 – 12 2017	IND 2018/ 2017
Return on sales (ROS)2	30,8%	16,9%	182	30,8%	17,3%	178
Return on equity (ROE)	17,1%	10,6%	162	16,1%	10,3%	157
Return on assets (ROA)	10,9%	6,7%	164	10,8%	6,8%	158
EBITDA margin 3	43,6%	30,3%	144	43,8%	30,8%	142
EBITDA margin related to the market activity4	44,5%	30,8%	145	44,6%	31,3%	143
Financial liabilities/equity	29,6%	41,5%	71	23,2%	33,4%	69
Net financial debt EBITDA5	0,3	1,7	21	0,1	1,3	9

Maritime throughput (in tons)	1 – 12 2018	1 – 12 2017	IND 2018/ 2017	1 – 12 2018	1 – 12 2017	IND 2018/ 2017
Maritime throughput	24.048.618	23.366.998	103	24.048.618	23.366.998	103

Number of employees	31. 12. 2018	31. 12. 2017	IND 2018/ 2017	31. 12. 2018	31. 12. 2017	IND 2018/ 2017
Number of employees	1.089	926	118	1.242	1.108	112

² Return on sales (ROS) = operating profit (EBIT) / net revenue from the sale

³ EBITDA margin = Operating Earning Before Amortisation (EBITDA) / net revenue from the sale

⁴ EBITDA margin from the market activity = Operating Earning before amortisation (EBITDA) / net revenue from the market activity

⁵ Net financial indebtedness/EBITDA = (financial liabilities – cash and cash equivalents)/EBITDA

Key performance indicators of Luka Koper, d. d., and Luka KoperGroup in 2018 in comparison to the plan for 2018

		Luka Koper, d. d.	Luka Koper Group
Income statements	1 - 12 2018	PLAN 1 – 12 2018	IND PLAN 2018/	1 - 12 2018	PLAN 1 – 12 2018	IND 2018/ PLAN 2018
Net sales	222.980.390	224.431.963	99	226.305.538	228.894.117	99
Earnings before interestt, taxes (EBIT)	68.744.504	65.389.038	105	69.707.503	66.232.590	105
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	97.289.912	93.787.334	104	99.074.678	95.447.200	104
Profit or loss from financing activities	2.055.290	1.748.758	118	624.297	593.146	105
Profit before tax	70.799.794	67.137.796	105	71.997.092	68.272.889	105
Net profit or loss	58.588.995	54.889.584	107	59.761.810	55.798.178	107
Added value 6	153.696.710	148.421.235	104	162.462.413	156.430.945	104

Statement of financial position	31. 12. 2018	PLAN 31. 12. 2018	IND 2018/ NAČRT 2018	31. 12. 2018	PLAN 31. 12. 2018	IND 2018/ PLAN 2018
Assets	552.787.725	559.587.395	99	571.505.208	576.791.071	99
Non-current assets	433.894.686	445.685.979	97	445.662.035	457.233.085	97
Current assets	118.893.039	113.901.416	104	125.843.173	119.557.986	105
Equity	362.640.484	359.044.293	101	393.875.930	389.929.283	101
Non-current liabilities with provisions and long-term accruals	137.848.415	140.364.820	98	124.316.097	126.881.232	98
Short-term liabilities	52.298.826	60.178.282	87	53.313.181	59.980.557	89
Financial liabilities	107.273.741	116.847.995	92	91.273.741	100.848.101	91

⁶ Added value = operating revenue + capitalised own products and services + other revenue – costs of goods, material, services – other operating expenses without operating expenses from revaluation.

(in EUR)	Luka Koper, d. d.			Luka Koper Group
Innvestments	1 - 12 2018	PLAN 1 – 12 2018	IND 2018/ PLAN 2018	1 - 12 2018	PLAN 1 – 12 2018	IND 2018/ PLAN 2018
Investments in property, plant and equipment, investment property and intangible assets	15.867.036	25.371.150	63	16.442.606	25.612.575	64

Ratios (in %)	1 - 12 2018	PLAN 1 – 12 2018	IND 2018/ PLAN 2018	1 - 12 2018	PLAN 1 – 12 2018	IND 2018/ PLAN 2018
Return on sales (ROS)7	30,8%	29,1%	106	30,8%	28,9%	106
Return on equity (ROE)	17,1%	16,2%	106	16,1%	15,1%	107
Return on assets (ROA)	10,9%	10,2%	107	10,8%	10,0%	108
EBITDA margin8	43,6%	41,8%	104	43,8%	41,7%	105
EBITDA margin from the market activityi 9	44,5%	43,5%	102	44,6%	43,4%	103
Financial liabilities/equity	29,6%	32,5%	91	23,2%	25,9%	90
Net financial debt /EBITDA10	0,3	0,6	61	0,1	0,3	35

Maritime throughput (in tonnes)	1 - 12 2018	PLAN 1 – 12 2018	IND 2018/ PLAN 2018	1 - 12 2018	PLAN 1 – 12 2018	IND 2018/ PLAN 2018
Maritime throughput	24.048.618	23.181.410	104	24.048.618	23.181.410	104

Number of employes	31. 12. 2018	PLAN 31. 12. 2018	IND 2018/ NAČRT 2018	31. 12. 2018	PLAN 31. 12. 2018	IND 2018/ PLAN 2018
Number of employees	1.089	1.147	95	1.242	1.311	95

⁷ Return on sales (ROS) = operating profit (EBIT) / net revenue from the sale

⁸ EBITDA margin = Operating Earning Before Amortisation (EBITDA) / net revenue from the sale

⁹ EBITDA margin from the market activity = Operating Earning before amortisation (EBITDA) / net revenue from sale from market activity

¹⁰ Net financial indebtedness/EBITDA = (financial liabilities – cash and cash equivalents)/EBITDA

Members of the Management Board:

Dimitrij Zadel President of the Management Board

Metod Podkrižnik Member of the Management Board

Irma Gubanec, M.Sc. Member of the Management Board

Vojko Rotar Member of the Manageent Board – Labour Director

Koper, February 14, 2019