Federal<br/>Passenger Company Annual Report

Results of implementing the company’s strategic objectives in 2013 and plans for next year

In 2013, there were slight deviations from the scheduled benchmark figures.

Performance over and above the average annual net assets growth was due to additional contributions from the parent company JSC RZD into JSC FPC authorised capital, of RUB 5 billion.

In 2013, the company exceeded the target value for average revenue growth. Revenue growth for other business areas reached 11.41% for 2013. Revenue growth with regard to transport services reached 6.65% for 2013.

Reduced investment resulted in cut-backs on the scheme for acquiring new second-class sleeper carriages, used for passenger transport services in the regulated sector. This is fully consistent with the decision to shift the focus of the company’s business model towards an increased profitable business-segment share, while reducing train services in the subsidised regulated segment.

The EBITDA margin did not reach the target values, due to under compensation for lost income, as a result of the state tariffs regulation for passenger second-class sleeper and standard-class services.

JSC FPC Benchmark Development Results

Description Target values Actual values Actual deviation from target value 2013
2013 2015 2030 2013
Average annual net assets growth, %Average annual net assets growth for 2011-2013, 2011-2015, 2016-2030.
2.3 1.8 7.3 6.0 +3.7 p. p.
Average annual revenue growth,%Average annual revenue growth for 2011-2013, 2011-2015, 2016-2030.
5.6 6.3 5.4 6.1 +0.5 p. p.
Cumulative investment, RUB billionTotal investment figures for 2012-2013 at nominal prices for 2012-2015 and for 2016-2030 at 2012 prices.
52.9 105.7 688.9 50.1 —2.80
EBITDA margin, % 12.4 14.2 19.2 11.6 —0.8 p. p.

However, the EBITDA margin has remained at a sufficiently high level to indicate management efficiency.

The following are the main factors intended to stimulate revenue growth from train services in 2014: stable tariffs (tariffs in the deregulated segment for 2014 will remain the same and readjustment in the regulated segment will amount to 4.2%, i.e. lower than the rate of inflation), the launch of new RIC-type and Talgo rolling stock on some of the most popular routes and the staging of the Winter Olympic and Paralympic Games in Sochi.