Federal<br/>Passenger Company Annual Report

Borrowing Policy

In its activities, FCP follows the borrowing policy approved by the Board of Directors on June 22, 2011.

The borrowing policy puts JSC FPC’s debt financing transactions under parent company’s control and outlines a procedure for assessment of the financial stability and creditworthiness of JSC FPC.

In 2013, the Company did not exceed any of the limits established by the borrowing policy.

JSC FPC borrowed from Russian lenders in order to support its operating activities and finance long-term investment projects.

In addition, in September 2013, when financial market conditions were favourable, the Company reached an agreement with its lenders on a reduction of the interest rates under all the loan contracts it had, which allowed it to save RUB 34 million in the reporting year.

In 2013, the Company borrowed a total of RUB 6.0 billion at fixed interest rates for a period of up to 5 years. As of December 31, 2013, the Company’s loan portfolio was RUB 11.4 billion.

The borrowing costs included in other expenses and investment asset costs totalled RUB 665.0 million and RUB 186.4 million respectively in 2013, compared to RUB 361.4 million and RUB 151.9 million in 2012.

In 2013, the Board of Directors approved a new version of the borrowing policy of JSC FPC to allow public debt transactions; hence, the Company will be able to borrow money from open financial markets through issuance of debt securities.

JSC FPC adopted the following covenants applicable to its borrowings

Covenants Limit Value in 2013
Debt structure (short-term debt to total debt ratio) 0.2 or less 0.18
Debt coverage (net debt to EBITDA ratio) 1.5 or less − 0.17
Interest coverage (EBITDA to interest ratio) 5 or more 26.25
Capital structure (total debt to equity ratio) 0.5 or less 0.07

Repayment schedule, RUB millionIn order to reduce its borrowing costs, JSC FPC refinanced its debt under one of its loan contracts ahead of the schedule (without any early repayment charges) on better terms.

Changes in JSC FPC’s loan portfolio, RUB million, by duration