Federal<br/>Passenger Company Annual Report

General Director’s Address

Dear Shareholders, Partners and Colleagues,

JSC FPC’s development strategy to 2030 defines the company’s fundamental development dynamic for growth and progression. The strategy’s approval by the Board of Directors in 2012 marked a milestone that signals our Company’s completion of a phase in its development as an independent economic entity and robust market player.

Two key principles constitute the basis for our business — commitment to strategic plans and customer focus. Steps taken by the company last year fully reflect these principles.

In 2013, the RZD-Bonus loyalty programme was developed to a new high-quality level. The joint co-branding project with the bank VTB24 has uncovered the prospect of our business’s integration with the financial services sector. The scheme’s scope was also extended to the high-speed train services sector. Almost half-a-million are currently registered in the scheme.

Foe the first time in March last year within the ‘1520’ space, a profitability management scheme was launched, seemingly allowing the resolution of conflicting objectives: increasing the company’s revenue and providing passengers with the opportunity to purchase tickets at attractive prices.

As partners, we select respective industry leaders. Such partnerships also gives our company the drive to be a leader.

The steady growth of e-ticket sales and the rise in online registration signals that we care about customer convenience even before the process of boarding the train. The company was able to post both international and domestic train route information in the Merits and Prifis database, which is widely used by Europe’s professional tourism and operator community to make offers and promotions to their customers — all potential passengers on Russian trains.

Priorities for the company include: reducing train travel time, enhancing the quality and expanding the range of additional service, while maintaining rigorously high safety standards.

The combination of high speed, state-of-the-art marketing initiatives and new technology is helping our company to compete successfully with air transport services, even under the current conditions of increasing state support for the airline industry. Transferring a number of trains to day-based operations, while simultaneously increasing their travelling speed, has enhanced the popularity and passenger numbers of these routes. This work is ongoing.

Upgrading the company’s rolling stock is playing a vital role in ensuring the company’s competitiveness and attracting passengers. IN 2013, the company acquired 395 new passenger rail carriages that meet all modern comfort and safety requirements. 82 RIC-type rail carriages were purchased to serve on the international passenger service routes.

Transportation services for passengers’ vehicles have undergone rapid development: the geographic scope of this service has been expanded and the number of car transportation carriages has been increased. We are now offering our passengers a vehicle transportation service on train routes from Moscow to St. Petersburg, Petrozavodsk and Helsinki. When booking a comprehensive ‘train-ferry’ car package, the service then extends geographically to cover Estonia, Sweden and Germany. Next year a further four routes will be opened.

The running of the new-generation high-speed Lastochka (Swallow) trains is now underway; experience of operating these trains has enabled us to develop beneficial strategies with regard to international passenger train services for both consumers and JSC FPC alike.

One of last year’s landmark events was the launch of the regular Moscow — Adler passenger service route using double-decker rail carriages — in full compliance with the Olympic train schedule. Double-decker trains have become popular with customers due to their advantages, which include a special tariff — the cost of a sleeper carriage fare is 30% lower against that of single-storey trains operating on this route.

The company’s achievements are the result of teamwork from over a 70,000 strong staff. Selfless staff efforts in response to the emergency in the Far East and the general competency of train crews on the North-Caucasian railway are an indicator of the high skill-level and professionalism of the company’s staff.

Our staff are the company’s most valued assets. We are introducing the competence approach to personnel, thereby ensuring intercommunication during the various processes of staff recruitment, appraisal, training, development and incentives. It is in our interests to recruit and retain the best people.

In the new year we plan to develop and improve the most highly sought-after services, making them as accessible as possible to passengers by using new technology. We shall continue to work on renewing our rolling stock — new RIC-type rail carriages and comfortable trains manufactured by the Spanish company Patentes Talgo S.L. are being commissioned on a number of international train routes; rail carriages used on domestic rail routes will also be updated and replaced. To reduce the cost of borrowing, we plan to gain long-term credit ratings from international rating agencies and to enter the public capital markets. The main objective of all the company’s projects is to satisfy passenger requirements by providing quality services throughout the entire journey. We are trying to anticipate and then carry through the potential requirements and needs of our customers.

I would like to hope that the words ‘Federal Passenger Company’ will become synonymous with comfort and travel convenience, both in Russia and abroad in the very near future.

Mikhail Pavlovich Akulov