Address from the Chairman of the Board of Directors

Dear Colleagues!

In 2014, JSC Federal Passenger Company celebrated five years of operation as an independent business entity, as part of Russian Railways Holding.

Since the start of operation, JSC FPC has fulfilled a socially significant role as Russia’s long-distance passenger carrier, connecting cities, regions, and countries. The Company not only provides public access to transport and travel, but also contributes to the further development of sustainable economic ties.

Last year, complex macro-economic and geopolitical factors impacted on business performance of all participants of rail passenger carrier market, resulting in reduced passenger numbers. In reaction to the changing market conditions, the Company adopted various measures to cut costs and curb losses, setting up an Anti-crisis Initiative, which featured projects to enhance operations in the Company’s key business areas. These tangible anti-crisis measures enabled the Company to reduce costs by 1.8% compared with the 2013 level.

A well thought-out marketing strategy remains an important tool in attracting passengers to the Company. Throughout the year, various marketing campaigns and promotions were run by JSC FPC for selected domestic train compartment carriages and the number of trains being used under the Dynamic Pricing scheme was increased. As a result, revenue from sleeper and compartment rail journeys on domestic routes was maintained at the 2013 level.

It should be noted that in 2014, JSC FPC succeeded in increasing revenue from other types of business activity, which included the repair and maintenance of customers’ rolling stock, the provision of extra services on trains and the leasing of rolling stock.

The Company is constantly striving to improve the quality and expand the range of services it provides. Every year, a large proportion of the Company’s investment initiative is aimed at renewing rolling stock. In 2014, RUB 24.5 billion was allocated for investment, 86.1% of which was used to fund the acquisition of new rolling stock. Last year, JSC FPC renewed the rolling stock of a number of JSC FPC trains running on domestic routes, as well as international trains. The new RIC carriages have already been highly rated by passengers departing from Moscow to Helsinki, Prague, Budapest, and Warsaw. In January 2015, Moscow-Paris and Moscow-Nice routes were the first to benefit from the use of the RIC trains. Last year, a project for the purchase of passenger rolling stock from the Spanish manufacturers Patentes Talgo S.L. was in full swing; these carriages are planned for use on Moscow-Berlin and Moscow-Nizhny Novgorod routes.

The progress JSC FPC has made in its first five years will undoubtedly lay the foundations for the Company’s further development, subject to present-day requirements. This will allow the Company to remain modern and dynamic, with due consideration for the best interests of every passenger.

Valeriy I. Reshetnikov