Annual report 2020

Responsibility in Every Action RUSSIAN RAILWAYS Content ANNUAL REPORT — 2020

About the Company 2 Performance Corporate overview 36 governance 122 Company profile 4 Challenge of the Year 10 Market overview 38 Corporate governance system 124 2020 performance highlights 16 Analysis of operating results 41 General Meeting of Shareholders 126 Key performance indicators 18 Traffic safety 68 Board of Directors 127 Business model 20 Investment activities 70 Corporate Secretary 135 Innovation driven development 80 Management Board 136 Strategic report 22 Analysis of financial results 84 Members of the Management Board 138 Securities 95 Audit and control 140 Letter from the Chairman of the Anti-corruption 144 Board of Directors 24 Risk management 146 Letter from the CEO and Sustainable Chairman of the Management Board 26 development 102 Strategy 28 Sustainable development Annexes 158 management 104 Social policy 105 HR management 108 Health and safety 113 Environmental protection 115 Energy efficiency and conservation 119 Charity 121

The Russian Railways annual report for 2020 (the version approved by the Government of the Russian Federation per the Order No. 1786-r dated June 30, 2021) Confidence 85,600 in every project km of railways

Russian Railways is the largest railway carrier in the Russian Federation, an owner and developer of common-use railway infrastructure. The company ensures transportation of vital goods to the most remote parts of the country and provides the most affordable means of transport to millions of people. 44,100 km For more details see p. 58 of electrified lines ABOUT THE COMPANY THE ABOUT ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 4 | 5 Company profile

The Russian Federation Russian Railways is the leader of Russia’s ESG-market. The Russian Russian Railways provides is the founder and sole Company was the first in Russia No. 1 in the world shareholder of Russian and the CIS to issue “green” Eurobonds. Russian Railways Railways today: a full range of services, Railways. The Long-Term is committed to achieving the by freight and passenger transportation density Development Programme of UN Sustainable Development per km of main line network including: Goals and actively contributes to Russian Railways until 2025 the implementation of the Paris aims to meet the strategic Agreement on climate change freight transportation, locomotive traction and response. The Company is No. 1 infrastructure; national goals by expanding in the world by energy efficiency in the world of freight services and other No. 2 long-haul and suburban passenger transportation; the transport infrastructure performance indicators:1 and enhancing economic by freight turnover rolling stock repairs; links among Russian regions. logistics;

engineering; In 2020, Russian No. 3 in the world Railways ranked railway R&D. fourth in the annual by operational length of railway lines ESG ranking compiled by the RAEX-Europe rating agency. The No. 4 in the world

Company earned by passenger turnover high scores in the Environmental Responsibility and Social Responsibility Russian 47.2 % categories. Railways’ infrastructure of total freight turnover accounts for: 25 %

of total passenger turnover

1 According to the International Energy Agency. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 6 | 7

Responsibility in The Company’s contribution to the achievement of the every action UN Sustainable Development Goals (SDGs)

In 2020, Russian Railways:

handled 1.2 bn t of cargo; ensured scheduled departure of 99.64% of passenger trains and 93.11% of freight trains; carried 872 m passengers to their destinations; Protecting the health of its employees is one of the top priorities Russian Railways has zero tolerance for any types of developed a user-friendly mobile app for passengers of the Company’s social policy. Health resort treatment, discrimination, including gender discrimination, in recruitment, protected the health of passengers and and new services for shippers; recreation and rest are available at corporate health resorts, staff development and promotions. The Company consistently employees with effective COVID-19 prevention holiday hotels, recreational centres and camps. The Company expands the list of railway jobs available to women. In 2021, the means, in particular, by implementing remote reduced the number of railway accidents by 17%; consistently promotes healthy lifestyle and creates opportunities first women started work as assistants to engine drivers. services and setting up over 115,000 remote for sports activities. workplaces; attracted “green” and “social” financing, issued the first social Eurobonds and first perpetual bonds in Russian Railways took extensive measures to protect the health supported shippers affected by economic Russia; of its employees and customers during the pandemic. Several of slowdown; the Group’s healthcare facilities were converted for treatment of approved an action plan to protect Lake Baikal and COVID-19 patients. successfully treated nearly 9,000 COVID-19 assumed additional responsibility for the protection patients at Russian Railways Group’s hospitals. of the unique environment in the Central Zone of The Company spent a total of ca. RUB 7 bn on Lake Baikal Protected Areas; anti-COVID measures in 2020; Russian Railways is implementing a Clear Water investment allocated ca. RUB 5.5 bn for charity. project to upgrade water supply systems and bring the quality of helped company employees save their jobs water supplied to consumers in line with standards set by Russian and income during the country-wide lockdown sanitation and environmental laws. initiated to prevent the spread of coronavirus;

launched 20 new suburban routes and 12 new The Company’s professional training framework relies on long-haul routes; 15 education centres. Our Corporate University trains specialists with higher education and secondary vocational education in trained women as assistant engine drivers for the cooperation with industry-based higher education institutions. first time in Russia; The Company also provides specialised educational programmes for school and university students. commissioned new high-comfort passenger rolling stock (>1,000 railcars);

provided assistance and escort services to 165,000 passengers with reduced mobility at more than 1,500 railway stations and stops; ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 8 | 9

The Company’s contribution to the achievement of the UN Sustainable Development Goals (SDGs) (continuation)

Russian Railways’ Collective Bargaining Agreement for The Company and its subsidiaries are the main providers of GHG emissions reduction is an integral element of Russian Zero tolerance of corruption in any form or manifestation thereof 2020–2022 covers the majority of the Company’s employees. suburban passenger transportation in Russia. They are integrating Railways’ corporate strategy. Shifting to innovative types of and taking all necessary actions to ensure compliance with We run a number of corporate programmes supporting certain suburban transport into urban transport systems and actively rolling stock is essential in this context. The Company also pays international and Russian anti-corruption laws are indispensable categories of personnel, including young, retired and soon-to-be- developing multi-modal routes and transport interchange hubs to great attention to climate change risks. for the Company’s sustainable development. Based on the results retired employees. enhance the mobility of urban population. of the Anti-Corruption Rating of Russian Business 2020, the Company’s operations were found to be fully compliant with the Efficient measures taken by the Company during the COVID-19 ISO 37001:2016 international anti-corruption standard and the pandemic helped to prevent the loss of jobs and a shift to shorter provisions of the Russian Anti-Corruption Charter for Business. working hours. Russian Railways was assigned the top A1 rating as a company with the highest level of anti-corruption efforts and a minimum level of corruption risks associated with a minimum threat to investors, creditors, business partners, and other stakeholders.

Russian Railways is a major natural resource user operating in Company divisions use waste processing, recovery and recycling 77 regions of Russia. The Company makes consistent efforts to technologies to reduce the negative environmental impact of minimise its environmental footprint. In November 2020, Russian railway industry-specific waste. The Company recognises its Railways approved an action plan to protect Lake Baikal and environmental and social responsibility and fulfils a self-assumed assumed additional responsibility for the protection of the unique Russian Railways’ investment programme is focused obligation to ensure selective collection of certain types of solid environment in the Central Zone of Lake Baikal Protected Areas. on developing and upgrading the railway infrastructure municipal waste (paper, glass, plastic, metal, etc.) in its office and promoting high-speed and ultra high-speed railway buildings and at railway stations. transportation. In 2020, Russian Railways signed the Declaration on Sustainable Mobility of the International Union of Railways (UIC). The Company The Company is implementing projects to create a digital twin of makes an active contribution to the development of sustainable the Russian railway network, develop transportation management “green” transport and the implementation of the Paris Agreement systems based on artificial intelligence, introduce innovative on climate change response. Russian Railways is both the leader rolling stock, etc., in line with its Digital Transformation Strategy and the pioneer of Russia’s sustainable finance market. and the Group’s Comprehensive Innovative Development Programme. The Group promotes partnerships with scientific institutions, manufacturing enterprises, and small and medium- size businesses based on the principle of “open innovation”. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 10 | 11 Challenge of the Year

Russian Railways’ response to COVID-19

In March 2020, Russian During the pandemic, Russian Railways saw its priority tasks in protecting the Railways established health of its employees and customers, 2020 results: a dedicated task center facilitating the treatment of infected patients, enhancing communication with to prevent the bringing-in customers, introducing new customer- and spread of the novel friendly services, and further improving 9,148 >20,000 85 service standards. The Company coronavirus infection and successfully addressed all of the year’s maintain stable operation challenges. COVID-19 patients employees volunteer admitted to RZD-Medicine of RZD-Medicine receiving response teams created of the railway transport in hospitals hardship allowances response to the general RZD-Medicine hospitals taking part in the fight epidemiological situation against COVID-19 and escalation of the With the outbreak of the pandemic, COVID-19 pandemic. The pandemic was a severe several of the Company’s healthcare >1 91.9 2,500 and objective test of our facilities were converted for treatment of Its prompt actions, management system. All COVID-19 patients.1 We also seconded m COVID-19 tests RUB m volunteers including epidemiological, our staff, from rank and file medical professionals from Russian made by RZD-Medicine allocated to compensations to taking care of veterans workers to heads of regional Railways’ network of regional clinics to laboratories bring wages to an average level organisational, medical, railways, took the lead in staff those hospitals. during the lockdown HR, technological and uncertain situations, supported each other, and demonstrated information response, helped their best professional and to prevent an explosive human qualities during the pandemic. сa. spread of the infection, 7 115,000 protect our employees RUB bn employees and customers, and ensure Oleg Belozerov, spent by Russian Railways to moved to working uninterrupted transport CEO and Chairman of the finance anti-COVID efforts from home Management Board operation.

1 In accordance with Order No. 844-r of the Russian Government dated 2 April 2020. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 12 | 13

Passenger protection Support of shippers

One of the key challenges faced by Russian Railways with the Russian Railways has been providing maximum support to onset of the pandemic was to ensure the safety of long-haul carriers from the very onset of the pandemic. The Company and suburban train passengers. offered a broad range of preferences and discounts to shippers.

Key steps taken Key steps taken In the context of growing negative macroeconomic Employee protection changes, the aggravation of the epidemiological Refunded tickets, including non-refundable ones, to Launched a legally binding electronic document situation, and the resulting risk of a decrease in With the outbreak of the pandemic, Russian Railways faced all passengers who cancelled their trips during the management service. More than 21,000 business traffic volumes and earnings, at the end of Q1 2020, three priority tasks: lockdown. partners used the service and generated over 3.8 m the Management Board members and the heads • preserving employee health; electronic documents. of departments, business units and branches of • maintaing uninterrupted business operations; In March–September 2020, passengers Russian Railways resolved to waive their quarterly • preventing mass lay-offs and escalation of social and Provided customers with free container storage bonuses for Q1 2020 and donate the total amount psychological tension among the staff. were refunded RUB 16.9 bn for over services for up to 30 days at 6 container terminals thereof to the All-Russian Public Movement of for the accumulation of container trains from Medical Volunteers. 7.1 million tickets. March 2020 to 31 March 2021.

Key steps taken Provided passengers with remote options to cancel Offered a 5% discount for cargo handling their tickets, obtain refunds for long-haul tickets and storage services ordered via the Freight Established a dedicated task center to prevent the and prolong their Business Travel Passes for long- Transportation electronic trading platform in bringing-in and spread of the coronavirus infection. distance travel. March–August 2020.

Introduced security measures to control access to Introduced mandatory contactless temperature Launched a Hot Summer loyalty programme work, such as temperature checks, providing and checks before gaining access to railway stations and covering a broad range of cargoes and applicable monitoring the use of personal protective equipment, boarding trains. Allocated premises with necessary to domestic, export and transit shipments. The and social distancing. thermometry, disinfection and personal protection loyalty programme helped the Company to resume equipment for temporary placement of passengers cooperation with 34 former clients and to attract Cancelled all mass events (conferences, forums, with symptoms of contagious diseases at railway 93 new partners. sports competitions) and operational meetings. stations. Provided box railcars for mixed consignments at Shifted to online meetings, conferences, and Put social distancing markings at all facilities. reduced prices to Federal Freight Company during employee training. Developed schemes for dividing passenger flows the period of high alert regime. Transportation costs within the premises of railway stations. for shippers were reduced to the price of cargo Paid wage compensations to employees forced to shipment in an all-purpose car. stay at home due to lockdowns to ensure they get Organised regular disinfection of premises (up average wage levels. to 8 times per day) and surfaces (every 2 hours). Offered a preferential 90% discount to clients for Organised inspections of ventilation systems, the storage of crushed aggregate at 71 freight Delivered on all of its obligations under the introduced waiting area ventilation schedules, yards of the Kaliningrad, Moscow, Northern, Gorky, Collective Bargaining Agreement. checked the availability of sterilisation lamps, filters, Privolzhsk, and West-Siberian Railways from and air sanitisers. May 2020 to the end of March 2021. The service was Launched a coronavirus vaccination campaign in late mainly used by companies engaged in road repairs 2020. Organised more than 140 vaccination points Introduced the preferential use of online services and construction. at RZD-Medicine clinics, as well as field vaccination and cashless (contactless) payments in servicing teams. Launched a sustained information campaign passengers and visitors. to promote the importance of vaccination. As of the report date, 93,400 employees were vaccinated. Reduced cancellation fees for the return of unused tickets by 100 times (to RUB 2.1).

Implemented a quick customer response service to ensure that customers receive same-day responses.

Users of the RZD Passengers mobile app can get assistance on any issue in a real-time chat. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 14 | 15

The year 2020 clearly demonstrated a much greater income as compared to another important industry, rolling stock how fragile the “sustainable” economy passenger transportation. As a result, manufacturing, and proceed with R&D was, both globally and in Russia. The a significant decrease in passenger and other investment projects. The expansion of the COVID-19 pandemic transportation was not so critical for Group also preserved all of its key and the escalation of measures to curb the Russian Railways Group. However, environmental initiatives. its spread disrupted the existing global in late 2019, freight volumes handled cooperation chains and restricted the by its railway network began declining Thus, Russian Railways demonstrated flow of goods. Life virtually stopped after several years of steady growth high professionalism and a coordinated all around the planet. Closed national due to a number of domestic and approach to managing its operations borders and travel restrictions led external market factors. In 2020, the in the challenging 2020 conditions. to a logical decline in the transport negative growth trend prevailed and The recovery of the transportation mobility of people and had a negative even worsened under the impact of the market is strongly dependent on effect on the operations of passenger COVID-19 pandemic and the slowdown the evolution of the COVID-19 carriers. During lockdowns, passenger of the global economy. pandemic. However, the industry is transportation dropped by up to unlikely to compensate all of the last 70%. The decrease in passenger The greatest decrease was observed for year’s losses in 2021. A number of transportation in Russia was on a par commodity cargoes (oil and petroleum negative effects have just begun to with European countries. products, coal) and non-ferrous metals. emerge and Russian Railways will have At the same time, the volume of shipped to make additional efforts in order to It should be noted that Russian grain grew 28.7%, while construction attain its strategic goals. Railways and foreign transport cargoes went up 6.1%. The pandemic operators did their best to assist the also boosted the development of rail governments in fighting against the container transportation because The year 2020 changed our way of infection, even by sacrificing their own quarantine restrictions reduced the life, and full-scale and long-term work economic interests. Thus, in Russia, the supply of road transportation services, from home became the new reality for number of passenger trains remained mainly for transit shipments. At the millions of people and thousands of unchanged to ensure social distancing. same time, cargoes transported in businesses. Accepting these changes Air disinfection systems installed in rail containers were delivered without and putting them to good use will be Serving the People the trains proved very efficient and delays. Today, the railway industry a key challenge in the next decade. became a must-have item of passenger must do its best to demonstrate the The recovery and future growth of the transport equipment. In general, convenience of rail transportation to Russian economy will strongly depend and the Country: the whole transportation process new customers in Russia and abroad on how fast the transportation industry Russian Railways and the Pandemic was redesigned to comply with all and win their loyalty. can adapt to the changes. mandatory requirements to passenger health protection. For example, the Russian Railways consistently applied majority of services became contactless new technologies and an andjusted to minimise human contact. pricing policy to support its clients and retain the freight volumes. At the Russian Railways also extended onset of the pandemic, the Company In 2020, amid the COVID-uncertainty, of working hours, and improve labour improve the transportation process support to passenger carriers. offered discounts of up to 42.5% for the Russian Railways succeeded in productivity. and introduce state-of-the-art Thus, in 2020, it deferred more than transportation of socially significant preserving the important instrument, technologies. RUB 23 bn of payments due from goods in box railcars. Later, this practice i.e. the carriage process. Russian Railways’ management Federal Passenger Company (FPC) was rolled out so that the total amount capitalised on their ability to maintain In 2020, it launched a number of and suburban carriers. There were of discounts was equivalent to financial When both freight and passenger high performance under heavy external quantum communications projects. times during 2020 when the amount assistance of RUB 21.4 bn. In addition, transportation volumes are falling, pressure and implemented remote Within three years, these technologies of deferred payments rose above the spread of the pandemic triggered a carrier is obliged to optimise its costs. working solutions across its railway will provide users of railway RUB 30 bn. an active development of digital Infrastructure maintenance is a costly network in the shortest possible time. services with access to advanced services and contactless interfaces process, and its main cost items software products facilitating Despite a decrease in passenger for freight transportation. The Freight do not correlate with the negative Despite a strong negative impact of the interaction between the customer, transportation, the Company saw the Transportation electronic trading growth in freight and passenger objective external factors, Russian the infrastructure, and the carrier. development of the passenger network platform was expanded to cover more transportation. Railways managed to implement as its top priority and managed to than 70% of legally binding procedures. infrastructure projects at its Eastern launch 20 new suburban routes and Russian Railways’ professional team Operating Domain and the Moscow even a retro train connecting Moscow In spite of the declining revenue, the managed to organise the transportation Transport Hub. and Pereslavl-Zalessky. Company managed to finance its process with minimum losses and investments in the acquisition of new Yuri Saakyan, maximum efficiency. This approach Having realised that the 2020 market Pavel Ivankin, Russian railways use a unique system railcars and retained the majority PhD in Physics and Mathematics, helped the Company to retain its highly conditions would be short-lived, Russian President of the Institute for of running both freight and passenger of orders for new locomotives. This General Director of the Institute for qualified staff, avoid the shortening Railways did not cease its efforts to Railway Transport Studies trains, with freight traffic generating helped to prevent the collapse of Natural Monopolies Research (IPEM) ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 16 | 17 2020 performance highlights

Macroeconomic consequences of the spread of the coronavirus Indicator Unit of measurement 2019 2020 +/− % infection in 2020 affected freight traffic volumes. However, Freight handling mt 1,278.1 1,243.6 −34.6 −2.7 their negative impact on long-haul and suburban passenger Total freight turnover, including1 bn tkm 3,305.0 3,221.0 −84.0 −2.5 transportation was even stronger. At the same time, performance net of empty runs of third-party railcars2 bn tkm 2,601.9 2,544.8 −57.1 −2.2 enhancement measures helped to maintain positive growth of empty third-party railcars3 bn tkm 703.0 676.2 −26.9 −3.8 qualitative rolling stock operation parameters, such as the schedule Passenger turnover bn pkm 133.4 78.1 −55.2 −41.4 speed and the average daily performance of a freight train long-haul bn pkm 99.1 53.5 −45.6 −46.0 locomotive. suburban bn pkm 34.3 24.7 −9.6 −28.1 Passengers transported m people 1,197.8 872.0 −325.9 −27.2 long-haul m people 116.5 67.4 −49.1 −42.1 suburban m people 1,081.3 804.5 −276.8 −25.6 Average schedule speed of freight train km/h 41.2 41.6 0.4 +1.0 Average daily performance of freight locomotive thousand gross tkm 1,610.0 1,677.0 +67.0 +4.2 Average gross weight of freight train t 4,090.0 4,084.0 −6.0 −0.1 Average loaded freight car delivery speed km/day 394.6 439.4 +44.8 +11.4 Transportation of container freight, net of empty containers thousand TEU 3,379.9 3,980.0 +600.1 +17.8 Transportation of container freight, including empty containers thousand TEU 5,001.9 5,799,4 +797.5 +15.9 Transit, net of empty railcars mt 23.9 23.1 −0.8 −3.3

1 Hereinafter referred to as “total freight turnover” 2 Hereinafter referred to as “loaded freight turnover” 3 Hereinafter referred to as “empty freight turnover” ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 18 | 19 Key performance indicators

The Regulation on Key Performance Indicators of Russian The KPI Regulation provides the basis for as Russian Railways’ EBITDA Margin, KPI targets are set in line with the Russian setting Russian Railways’ key performance the Russian Railways Group’s ROIC Railways’ financial plan and can be revised Railways (“KPI Regulation”) was approved by the Company’s indicators and includes an updated list of for Unregulated Types of Activities, in accordance with any adjustments to the Board of Directors on 18 December 2019 (Minutes No. 11), Group-wide KPIs to be applied starting the Russian Railways Group’s EBITDA, financial plan, budgets and/or investment 1 January 2020. Reduction of Operating Costs (Expenses), programmes approved by governance 1 as prescribed by relevant directives of the Russian Government Traffic Safety across the Russian Railways bodies of the Russian Railways Group and/ and the Guidelines for KPI Application.2 The list of Group-wide KPIs includes Group and Virtual Performance of Russian or Russian Railways throughout the year. both core and recommended items, such Railways’ Infrastructure.

Russian Railways’ key performance indicators – progress in 2020 Russian Railways’ KPI targets for 2021

Indicator Unit of Actual for Target for Actual for % of the Change No. Area Key performance Target for measurement 2019 20203 2020 target y-o-y, % indicator 2021

Russian Railways Group’s EBITDA4 RUB bn 576.9 414.0 420.7 101.6 % 72.9 % 1 Industry-wide KPIs focused on Investment amount, RUB bn 731.6 achieving national goals Reduction of operating costs 2 Passengers transported, m1 8.6 (expenses) % 2.8 ≥2.0 2.2 +0.2 pp – 3 Financial KPIs Revenue from core operations (revenue from transportation services + other Russian Railways’ EBITDA margin % 22.6 22.0 22.2 +0.2 pp –0.4 pp operations) under RAS, RUB bn 1,929.9 Russian Railways Group’s ROIC for 4 Russian Railways Group’s ROIC for unregulated types of activities (under IFRS), % 5.5 unregulated types of activities % 17.3 5.7 5.8 +0.1 pp –11.5 pp 5 Operating costs (transportation) growth in comparable prices, % 97.8 Traffic safety across the Russian accidents per 6 Net debt / EBITDA of Russian Railways 3.8 Railways Group million train kilometres 0.86 0.64 0.544 – – 7 Special KPIs Adherence to passenger train schedules, % 98.37 8 Traffic safety (across the Russian Railways Group), accidents per million train 0.496 Virtual performance of Russian kilometres Railways’ infrastructure bn virtual tkm 3,442.2 3,266.2 3,301.2 101.1 % 95.9 % 9 Virtual performance of Russian Railways’ infrastructure, bn virtual tkm 3,610.6 10 Average loaded freight car delivery speed, km/day 441.0

1 Directive No. 9054p-P13 of 2 October 2019. 2 Approved by Decree No. 1388-r of the Government of the Russian Federation dated 27 June 2019 3 The Group-wide KPI targets for 2020 were approved by the Company’s Board of Directors on 18 December 2019 (Minutes No. 11), as adjusted by the Board of Directors on 29 December 2020 (Minutes No. 5). 4 Under IFRS. 1 Carried by Russian Railways. ANNUAL REPORT — 2020 RUSSIAN RAILWAYS ABOUT THE COMPANY 20 | 21

GOVERNMENT Regulation of joint Tariff Antimonopoly Drafting of the Transport Approval of the Russian Railways stock companies regulation regulation Industry Development Group’s Long-Term Development Business model Strategy Programme until 2025

REVENUE FINANCIAL VALUE BUSINESS LINES SERVICES PRICES GENERATION FLOWS5 CREATION

RZD EBITDA 85,600 km 7,108 of tracks locomotives No. 1 FFC 1,243.6 420.7 RUB bn mt 2,279.2 RUB bn • The Russian Railways of freight handled Group is Russia’s largest employer thousand Regulated 145.2 Proceeds from • The Company is the leader FREIGHT FREIGHT freight railcars tariffs long-term in passenger and freight 3,221.0 transportation in Russia bn tkm borrowings TRANSPORTATION Freight 1 • of freight turnover transportation • Russian Railways is No. 1 267.6 RUB bn in the world by freight and • III and IV class Freight transportation, passenger transportation infrastructure density per km of main line long-haul network thousand pairs RZD 18 1,312 398 passenger 1,531.0 RUB bn passenger locomotives of express and 872 Perpetual • Russia’s first-ever issuer of railcars high-speed trains m transportation bonds issue perpetual bonds in energy Federal Passenger transported efficiency globally Company passengers (classified as (long-haul routes) equity)

Suburban passenger 313 RUB bn PASSENGER PASSENGER 78.1 companies bn tkm TRANSPORTATION of passenger turnover No. 2 Repayment GEFCO m of long-term • The Company is No. 2

4.2 (Europe’s Top 5 logistics operator) cars transported borrowings in the world by freight Market-based turnover RZD Logistics pricing 162.7 RUB bn (the largest multimodal logistics operator in the CIS and the Baltics) • Use of tariff SERVICES LOGISTICS LOGISTICS 242.4 thousand corridor in freight Dividend No. 3 UTLC ERA TEU transported transportation payouts containers • The Company is No. 3 Income of railcar Passenger transportation in the world by operational • 2.7 RUB bn operators length of rail lines 155.7 RUB bn • I and II class 5,480.8 Investment RRC-1 km unregulated (railcar repair company) financing of tracks repaired passenger Logistics services 2 transportation No. 4 RRC-2 723 RUB bn (railcar repair company) km 354.3 RUB bn • The Company is No. 4 of417 tracks constructed in the world by passenger OTHER Company TransTeleCom turnover (telecommunications) Charity BUSINESSES Other businesses expenses • The Company ranks fourth 291.4 in RAEX-Europe’s ESG km RZDstroy ranking (infrastructure construction) of tracks electrified 238.2 RUB bn 5.5 RUB bn

The revenue data are reported as per the IFRS statements for 2020.

1 Including freight luggage transportation and empty runs of third-party railcars. 4 The Group’s contribution to Russia’s 2 PERSONAL GOVERNMENT Sold in Q2 2020. 3 GDP through taxes, fees and dividends Including the funds provided by the Russian National Wealth Fund (preferred shares) and contributions in the form of real estate owned by the Charter capital contributions3 Subsidies Federal Government. 4 Headcount of the Russian Railways Group. 5 The financing items of Russian Railways Group are stated on an amalgamated basis. For more details see the IFRS statements for 2020 at 831.6 323.5 RUB bn https://eng.rzd.ru/en/9637/page/103290?id=11909#main-header. thousand people 93.5 RUB bn 60.1 RUB bn (0.3 % of GDP) Leadership in every way

The Long-Term Development Programme of Russian Railways until 2025 aims to meet strategic national development goals by expanding infrastructure and enhancing economic links among Russian regions.

For more details see p. 30

717

RUB bn REPORT STRATEGIC Russian Railways’ investment programme in 2020 ANNUAL REPORT − 2020 RUSSIAN RAILWAYS STRATEGIC REPORT 24 | 25 Letter from the Chairman of the Board of Directors

Dear Colleagues, Partners, Customers commuter and long-distance services, Given the scale and geography of Russian and Investors, while preventing any serious reduction Railways’ activities, social responsibility in freight transportation. Meanwhile, we must be a top priority. Particular emphasis 2020 will go down in history as an observed a remarkably positive trend is placed on strict adherence to our exceptionally challenging year for both among several product groups, including obligations towards our employees the Russian and global economy. transportation of grain and container in terms of collective bargaining and Despite the unprecedented external freight. constructive cooperation with regional conditions, Russian Railways passed authorities on social issues. its durability test with flying colours. In 2021, Russian Railways and its Taking into account the Company’s subsidiaries face the challenge I am confident that all of the tasks contribution to Russia’s overall GDP, of responding to recovering demand facing Russian Railways as set by its this durability was not just a major factor for both freight and passenger stakeholder – the Russian Federation in the resilience of the transport industry, transportation, increasing the quality (represented by the Russian Government), but in that of the Russian economy of our customer services, and further as well as by Russian Railways’ Board as a whole. developing and improving our of Directors will be completed. I wish transportation products. the Russian Railways’ team, and all of Despite global transport restrictions, our partners and customers, a fruitful Russian Railways was able to leverage Our key tasks are to provide uninterrupted cooperation. the main competitive advantages of rail commuter and long-distance services transport: stability, reliability, technology to passengers, and to maintain and further and sustainability. develop our rail networks in the interests of Russian citizens. Russian Railways’ investment programme reached a total of RUB 717 bn in 2020, Implementing Russian Railways’ exceeding the previous record of ambitious investment programme 2019 by RUB 43 bn. One of the key is particularly important in terms of factors in supporting the Company’s meeting the long-term demands of investment activities was the decision the Russian economy and the further to issue perpetual bonds supported potential for growth in the rail by the Government of the Russian transportation sector. In accordance Federation, which provided Russian with decisions made by the Russian Railways with additional investment Government and Russian Railways’ resources, while maintaining a sustainable Вoard of Directors, the total size of this debt ratio. The total value of perpetual programme will exceed RUB 730 bn bonds offered last year stood at in 2021, while over RUB 134 bn will be RUB 313 bn, with the green bonds dedicated to developing the Eastern accounting for RUB 100 bn out of this Operating Domain. Ensuring we amount. adhere to the schedule for increasing the throughput and carrying capacity of I would like to thank the entire Russian the Baikal-Amur and the Trans-Siberian Railways’ team for their tireless work. main lines is vital to the national interest. In these unprecedented times, all of The first stage towards modernising these our railway employees have shown lines should be completed in the coming professionalism, organisation and year, with the second stage beginning efficiency, which has allowed us to in the same year. provide uninterrupted and high-quality services. Despite the challenging The effective use of available resources epidemiological situation, the Company and reaching established production was able to resolve all of the problems targets are serious challenges and major Andrey Belousov we encountered in providing both priorities for the Company. Chairman of the Board of Directors ANNUAL REPORT − 2020 RUSSIAN RAILWAYS STRATEGIC REPORT 26 | 27 Letter from the CEO and Chairman of the Management Board

Dear Partners and Colleagues, our procedures switching to mostly the largest annual volumes in the contactless interaction with passengers. last five years, worth approximately In 2020, Russian Railways faced The Company also carried on with RUB 310 bn. unprecedented challenges due to efforts to modernise its rolling stock and the pandemic-related restrictions introduce new products and services. Environmental efforts have been in Russia and across the world. Today, among our priorities in recent years. we can state with confidence that In the reporting year, we boosted Pursuant to the Russian President’s the Company succeeded in achieving significantly our tourism offering. Our instructions, Russian Railways deployed all of its objectives last year. We ensured rail tours have become more accessible benchmark environmental protection a high level of transportation safety and are now available to the widest processes in the Central Zone of and reliability, keeping the pace of range of travellers. Enormously popular Lake Baikal Protected Areas to be innovative development and pressing in Russia are our retro train tours, rolled out across the construction and on with upgrading our infrastructure, capitalising on the historical heritage renovation projects of the entire railway management systems, equipment and of Russian Railways. network. Our consistent environmental technologies. We took prompt and policies have had an important role in effective action to provide medical The Company strictly complies with strengthening the Company’s financial support and protect the life and the Russian President and Government market positions. health of the Company’s employees orders by ensuring stable commuter and our customers. Russian Railways transportation. In 2020, we launched In the reporting year, we carried on with demonstrated high levels of resilience 20 new commuter lines, with modern our innovative development efforts. and solid financial performance in 2020. trains hitting the rails in 21 regions. Thanks to the Russian Railways’ Digital Transformation Strategy we were Despite the 2.7% decrease in handling Russian Railways reconfirmed its able to make seamless remote work volumes y-o-y, we averted the most commitment to being a responsible arrangements for tens of thousands of our pessimistic scenarios, with the Q4 results employer, ranking among the most employees. We continue working hard coming close to the 2019 indicators. attractive companies in Russia. on such breakthrough technologies as In 2020, we relied as much as possible The Company fulfilled all of its social autonomous trains, alternative energy on digital interfaces to communicate obligations enshrined in the Collective sources, and quantum communications. with our partners. This helped attract Bargaining Agreement. over 300 new clients, primarily small Dear Partners and Colleagues, and medium-sized businesses. While tackling our ongoing business, we also laid the groundwork The Company’s successful performance In the reporting year Russian in the reporting year for the Company’s in 2020 is based on everyday Railways transported an all-time continued sustainable growth. Russian diligent work, dedication, and high high of 5,800,000 containers, which Railways strengthened its positions professionalism of our team. Facing a translates into a growth rate of 16% in safety, sustainability, speed and tough environment, Russian Railways has for the segment, and 34.4% for transit lines. reliability of freight transportation proved its strength, gained invaluable We exceeded almost all historical freight among international railway companies. experience, and is moving confidently transportation indicators in the Eastern In Russia, we lead the industry in towards new accomplishments. This direction meeting all the targets under developing and deploying financial experience will help us to continue the Comprehensive Plan for the Carrying innovations. delivering the goals set for the Company Capacities of the Eastern Operating by Russia’s leadership. Domain amounting to 144 mt. Russian 2020 was a year of major investment Railways transported 126 mt of coal and and construction projects. Russian ore from the main mineral deposits of Railways invested an all-time high Siberia and the Russian Far East. of RUB 717 bn in various initiatives. We implemented a large-scale upgrade Last year was extremely difficult for our programme for the rolling stock and passenger services. In order to protect work trains. Despite all restrictions, Oleg Belozerov the health of our customers we revised our construction services delivered CEO, Chairman of the Management Board ANNUAL REPORT − 2020 RUSSIAN RAILWAYS STRATEGIC REPORT 28 | 29 Strategy

Mission

The mission of the Russian Railways Group is to develop Strategic goals until 2030: Railway transportation and Strategic goals until 2030: • maintain leadership in Europe’s rail infrastructure • create conditions for four-fold growth an efficient transportation business that will be competitive freight transportation and enhance the in the volumes of transit and container on the Russian and international markets and focus on appeal of rail transport to customers; In addition to the railway infrastructure, transportation; • become one of Europe’s Top 5 this focus area covers traffic management, • ensure promotion of the Group’s effectively meeting the Group’s objectives as a national companies in terms of logistics operating and traction maintenance initiatives in international freight and passenger carrier and owner of the public railway volumes; units. The Company’s strategic priorities organisations; • improve customer satisfaction by in developing infrastructure are defined • create conditions for expansion of infrastructure. enhancing the quality of services by its natural monopoly status and the Russian Raiways Group’s foreign while also maintaining competitive include cost cutting, unlocking of the projects portfolio. transportation prices; potential to create new transportation • provide high-quality services for the and logistics products, upgrade of the Social policy global supply chains of major Russian existing network, and construction of and international customers and additional profitable main tracks to meet Russian Railways’ employees are the Development Strategy until 2030 expand the transportation and logistics the growing transportation needs. The Company’s key asset instrumental in business in Eurasia. need to maintain service availability to the achieving its long-term growth objectives general public, comply with government and securing a strong competitive edge. The Russian Railways Group’s 2030 Development Strategy Accomplishment of the Group’s mission Passenger transportation regulations on natural monopolies and Development in this focus area builds will rely on the achievement of the 2030 provide equal opportunities to consumers on the unbiased assessment of added 1 (“Russian Railways’ Strategy”) sets out the Group’s goals strategic goals in five focus areas: The strategic priorities for development distinguishes this focus area from the value created through employee support and objectives, defines its key priorities and describes long- • transportation and logistics services; in this focus area are to streamline the others. initiatives and efficient management of • passenger transportation; route network and train schedules, resources to provide market services. This term development projects. • railway transportation and increase speeds, use cutting-edge Strategic goals until 2030: focus area also covers social and public infrastructure; rolling stock, improve the product • maintain global leadership in policies of the Group stretching beyond • international operations; offering, digitalise customer services and efficiency, safety and quality of the workforce matters. • social policy. business processes, and enhance the infrastructure services; quality of traditional on-train and other • ensure consistent asset upgrade Strategic goals until 2030: In 2020, the Strategy was implemented related services. Another key objective through cutting-edge technologies and • make it to the Top 5 of Russia’s most in line with Russian Railways’ Long-Term is to expand the operating domain solutions relying on the efficient fixed attractive employers; Development Programme until 2025. of high-speed and ultra high-speed assets life cycle cost management and • engage the top talent by offering transportation between the country’s reliability, prescribed state of those. competitive salaries, better working largest metropolitan areas leveraging conditions and best-in-class social Strategic priorities and goals efficient state-of-the-art solutions. International operations benefits. across focus areas Strategic goals until 2030: The strategic priorities in this focus area Transportation and logistics services • maintain the existing share in Russia’s are to unlock the transit potential of overall passenger turnover; Russia, to consolidate and enhance the The strategic priorities for development • develop high-speed and ultra high- Group’s presence in the international in this focus area are to build a diversified speed transportation. railway engineering, infrastructure product portfolio shifting the focus from construction and railway management, transportation services to comprehensive and to promote and protect the Group’s door-to-door solutions, consistent interests in international organisations. expansion of the offering to include 2PL, 3PL and 4PL services, and creation of global logistics chains.

1 Approved by the Company’s Board of Directors (Minutes No. 19 dated 23 December 2013). ANNUAL REPORT − 2020 RUSSIAN RAILWAYS STRATEGIC REPORT 30 | 31

Russian Railways’ Long-Term Development Programme until 2025

Russian Railways’ Long-Term Development Programme until 2025 (the “Programme”) has been approved by the Russian Government1 and Russian Railways’ Board of Directors.2

1 Order No. 466-r dated 19 March 2019. 2 Minutes No. 14 dated 8 April 2019. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS STRATEGIC REPORT 32 | 33

It was developed in line with the Russian The design and deployment of large Programme implementation Achievement of selected KPI targets as part of the President’s Decree No. 204 On National infrastructure projects are closely aligned in 2020 Long-Term Development Programme (LTDP) in 2020 Goals and Strategic Objectives of the with Russia’s Spatial Development Russian Federation through 2024 dated Strategy, helping to create the The pandemic-related macroeconomic KPI (unit of measurement) LTDP 2020 Target 7 May 2018 (in terms of Russia’s goal transportation backbone for the national challenges in 2020 affected fulfilment target1 performance achievement to enter the Top 5 of the world’s largest economy. To this end, the Company will of certain Programme KPIs, including economies). The Programme also aims to need to focus extensively on and stay Russian Railways’ revenue, EBITDA, Freight handling, mt 1,338.8 1,243.6 −7.1 % contribute to achieving the goals set forth one step ahead in upgrading, expanding EBITDA margin, passenger turnover, Total freight turnover, bn tkm 3,458.4 3,221.0 −6.9 % in the Comprehensive Plan for Upgrading and improving railway infrastructure, labour productivity growth, ROIC, virtual and Expanding Core Infrastructure until enhancing the quality of rail freight performance, handling, adherence to Loaded freight turnover, bn tkm 2,727.7 2,544.8 −6.7 % 2024, the action plan to expedite capital transportation and its efficiency for freight train schedules, length of railway Passenger turnover, bn pkm 129.9 78.1 −39.9 % investment growth and increase its share shippers, bringing passenger experience tracks with exceeded limits of throughput Passengers transported, m people 1,199.6 872.0 −27.3 % to 25% of the GDP, the Transport Strategy to a whole new level, expanding and in tonnes or useful life. of the Russian Federation until 2030, fine-tuning the range of passenger Investment programme, RUB bn 823.6 717.3 −12.9 % Russia’s Railway Transport Development services, and ensuring greater safety It should also be noted that the Length of public railway lines with limited throughput, Strategy until 2030, Russia’s Innovative of transportation. The Russian industry Programme KPIs were set in 2018 prior to thousand km 8.5 6.3 −25.8 % Development Strategy until 2020 and will have the infrastructure capabilities the deterioration of the economic situation Length of railway tracks with exceeded limits of throughput in the Russian Railways Group’s 2030 to boost output, meeting the demand for starting in Q4 2019. tonnes or useful life, thousand km 23.7 23.9 +0.8 % Development Strategy. The Company’s transportation services from shippers and Development Strategy and Long-Term passengers and ensuring the growth of Still, some KPIs were exceeded, including Container transit volumes, thousand TEU 750.0 830.92 +10.8 % Development Programme are aligned the national economy. procurement from small and medium- Average daily performance of a freight train locomotive, through a list of Group-wide key sized businesses (+45.5 pp over the thousand tkm gross 2,177.0 2,216.0 +1.8 % performance indicators (KPIs). The Programme’s key performance target), the volume of transit container Average loaded freight car delivery speed, km/day 402.0 439.4 +9.3 % indicators reflect the main targets transportation (10.8% over the target), In order to achieve the goals set by included in the Programme with due which reflects Russian Railways’ efforts Adherence to freight train schedules, % 74.67 74.26 −0.41 pp the Russian President the Programme account of the Russian Government’s to expand container transportation, and Adherence to passenger train schedules, % 98.36 98.8 +0.44 pp provides for: directives and a part of the incentive the average daily performance of a freight Integrated KPI for innovation efficiency 1.0 1.433 +43.0 % • an increase in the carrying capacity system for the Company’s executive train locomotive (+ 1.8% over the target), of the Baikal-Amur and Trans-Siberian management. The KPIs are subject to helped by measures to improve the Procurement from small and medium-sized businesses 18.04 63.5 +45.5 pp main lines to 180 mt by 2024; change if the key goals and assumptions locomotive fleet utilisation. Russian Railways’ revenue, RUB bn 1,974.5 1,813.1 −8.2 % • an increase in the carrying capacity of (including the industry regulations) the approaches to the ports of the Azov underlying the Programme are reviewed. Russian Railways’ EBITDA (under RAS), RUB bn 476.4 402.3 −15.6 % and Black Seas; Russian Railways’ net profit, RUB bn 48.6 0.3 −99.4 % • a throughput increase to ensure a EBITDA margin (under RAS), % 24.1 22.2 −1.9 pp four-fold growth of transit container transportation; Labour productivity growth at Russian Railways • a reduction of container travel times (average annual growth in 2019–2025), % 105.0 97.9 −7.1 pp (in particular, to 7 days for containers transported from Russia’s Far East to its western border).

1 Under the base case scenario of Russian Railways’ Long-Term Development Programme until 2025. 2 Including the return of empty containers from Europe to China as per new logistics schemes. 3 In accordance with the Regulation on the Procedure for monitoring and assessment of development, updating and implementation of Innovation Development Programmes (IDPs) of joint-stock companies with government ownership, the Quality of Development (Updating) of Innovative Development Programme / Implementation of Innovative Development Programme indicator included in the Integrated KPI for innovation efficiency is assessed by the Interdepartmental Commission on Technology Development under the Government Commission for Economic Modernisation and Innovative Development based on the IDPs implementation report by federal executive authorities and independent experts (approximately in the second half of the year following the reporting year). 4 In accordance with Russian Government Resolution No. 1352 dated 11 December 2014, the standard indicator is set at 20%. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS STRATEGIC REPORT 34 | 35

Development prospects in 2021

The Company’s development prospects 3. Strengthen the Company’s market 6. Achieve the 2021 targets of the • meet the Company’s needs in shaping a stable and favourable up in-house engineering and technical were assessed taking into account the position in passenger transportation Company’s Digital Transformation computing capacities and data working environment. consulting capabilities and acquiring following key objectives for 2021: by providing customers with high- Strategy until 2025 to the extent storage systems; an interest in an engineering company, 1. Achieve targets and implement quality product offerings, further determined by end customers and • create at least 8,000 thin client 8. Enhance traffic safety, improve the as well as promoting Russian initiatives in line with the 2030 national digitalising customer services and subject to funds allocated. Proceed workstations; traffic safety management system and Railways’ export-oriented portfolio in goals.1 Achieve targets under the business processes and introducing with the action plan for Russian • deploy at least 150 software robots foster a traffic safety culture. its focus markets. Comprehensive Plan for Upgrading the world’s best practices for the Railways’ transition to the preferred automating routines across Russian and Expanding Core Infrastructure development of multimodal transport. use of domestic software across key Railways. 9. Make efforts to minimise Russian 11. Achieve the 2021 targets under the until 2024.2 Implement five federal system classes. Develop Russian Railways’ environmental footprint. roadmap for the development of projects involving Russian Railways, 4. Ensure the suburban transport Railways’ IT infrastructure, including 7. Develop Russian Railways’ human quantum communications across including: availability in cooperation with efforts to: capital through a set of measures 10. Continue to implement overseas three focus areas: infrastructure, • Development of Railway Russian regions and improve service • achieve at least 99.9% availability promoting continuous training, projects (with at least 5 projects to be technologies and ecosystem. Infrastructure in the Eastern quality in the passenger transportation of Russian Railways’ information employee engagement and run in 2021) and diversify the project Operating Domain; segment. services; occupational health, as well as portfolio, including by both building • Development of Railway Infrastructure Serving Ports of the 5. Ensure that the Company achieves its Azov and Black Seas; targets and improves its operational • Development of Railway performance, including by: Infrastructure Serving Ports of the • enhancing operating procedures; North-Western Basin; • harnessing unmanned • Development of Railway technologies, innovations and Infrastructure of the Central tools, combining the efforts of Transport Hub; business and science to support • Development of High-Speed key priority areas in technological Transportation. advancement and upgrade; • providing for infrastructure 2. Strengthen the Company’s market debottlenecking, optimising position in freight transportation the use of traction resources by improving service quality, (including by signing locomotive expanding the product offering and life cycle contracts) and improving developing freight transportation station operations (including by quality standards based on streamlining train schedules and availability, timeliness and reliability reducing downtime of transit of transportation services. Develop railcars); digital competencies and harness • developing an end-to-end digital technology to improve the framework and enhancing efficiency of transport and logistics automation systems to manage services rendered by the Russian transportation; Railways Group and ensure that at • promptly mitigating various least 90% of customer services and adverse effects and timely business processes are performed adjusting budget parameters without human input. based on consistently monitored changes in the macroeconomic and market environments, as well as implementing measures to improve operational efficiency and optimise costs at all management levels of Russian Railways.

1 In accordance with the Russian President’s Decree No. 474 On National Goals of the Russian Federation through 2030 dated 21 July 2020. 2 Approved by the Russian Government’s Order No. 2101-r dated 30 September 2018. Reliability in any situation

Russian Railways holds leading positions in terms of sustainability, speed and reliability of freight transportation, and ensures passengers’ comfort and safety in any season, at any time of day and in any weather

For more details see pp. 41, 50

+9.3 % increase in the average loaded freight car delivery speed compared to the Long-Term Development Programme

20 new suburban routes

and 12 OVERVIEW PERFORMANCE new long-haul routes ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 38 | 39 Market overview households were unable to spend abroad conservative fiscal policy, and probable Passenger transportation because of the closed borders in favour of price corrections in global commodity market domestic consumption. markets. In 2020, Russia’s passenger However, a milder decline of the Russian turnover decreased by 45.2 % y-o-y Russian economy in 2020 economy in 2020 as compared to the Freight transportation market to 312.7 bn pkm.1 Passenger turnover by global economy means that recovery will transport mode is outlined below: be less pronounced as well. According According to the Russian Federal State • 78.6 bn pkm in railway transport; 2020 saw Russian The nation’s GDP dropped by 3.0% after Despite the economic fallout from the to the base case scenario of the Russian Statistics Service, in 2020, freight turnover • 80.4 bn pkm in road transport; a 2.0% growth in 2019. In Q2 2020, the pandemic and low oil prices, the Russian Ministry of Economic Development of in Russia decreased by 4.9% y-o-y • 153.5 bn pkm in air transport. macroeconomic Russian economy reached its lowest economy contracted less than many September 2020, the Russian GDP growth to 5,397.2 bn tkm. In particular, 2020 saw performance follow global point, with recession amounting to 7.8% developed economies in 2020, which in 2021 will total 3.3%, with the April 2021 freight turnover of the pipeline transport 2020 saw a decrease in passenger year-on-year. In Q3, the downturn was is primarily the result of its structure. forecast revising the growth rate down decrease by 8%, air transport by 3.7%, turnover across all transport modes. trends as it was negatively less pronounced, standing at 3.5%, A number of large businesses that are to 2.9%. According to the IMF outlook, inland waterways by 8.6%, and road Despite a 41.2% y-o-y drop in railway affected by the COVID-19 and Q4 saw a contraction of 1.8%. the backbone of the economy were not the Russian GDP will add 3.8% in 2020, transport by 1.3%, with sea transport being passenger turnover, its share in total In 2020, industrial production, which affected by the lockdown due to the compared to the expected global GDP the only exception and delivering an passenger turnover went up 1.7 pp pandemic and weaker is of critical importance to the rail nature of their operations. In Russia, the growth of 6.0%. increase of 16.2% in freight turnover. to 25.1%. freight transportation sector, decreased number of SMEs and businesses in the consumer and investment by 2.6% after expanding by 3.4% in 2019. services sector that suffered greatly from At the same time, the Russian economy Loaded freight turnover in the railway The share of the road transport (bus demand. The contraction in extractive industries the crisis and lockdown is far lower than is exposed to relatively high risks segment dropped by 2.2%. Railway service) segment in total public transport in 2020 totalled 6.9%, whereas the in developed countries. The government’s in 2021, including uncertainty about transport expanded to account passenger turnover is 25.7% (up 5.8 pp processing sector saw an insignificant refusal to reintroduce restrictions in further epidemiological developments for 47.2% of the country’s total freight vs 2019). Air transport accounts for 49.1 % upside (by 0.6%). Q4 2020 also spurred further recovery of in the country and globally, geopolitical turnover (up 1.3 pp vs 2019), or 87% of total public transport passenger the national economy. tensions and probability of new (down 0.1 pp vs 2019) with the pipeline turnover (down 7.5 pp vs 2019). Factors that had an additional negative sanctions, implications of a return to the transport excluded. impact on the Russian economy Drivers that supported the Russian in 2020 include low global prices for economy in 2020 include the anti-crisis oil and some other goods that Russia programme by the Russian Government, Freight turnover by transport mode in 2020 exports. Exports of many cargoes increased government spending, accounting for a major share of export relatively expansionary monetary policy Transport mode 2020 Share in total rail freight transportation also dropped in pursued by the Bank of Russia, and freight turnover, % volume terms. redistribution of significant funds that bn tkm Y-o-y 2019 2020 change, %

Change in Russian macroeconomic indicators, % y-o-y All transport modes 5,397.2 −4.9 100.0 100.0 Railway2 2,545.3 −2.2 45.9 47.2 GDP −3.0 2.0 Including the infrastructure of Russian Railways and 2,544.8 −2.2 45.9 47.2 Capital investments −1.4 Yakutia Railways3 2.1 Industrial output −2.6 Road 271.8 −1.3 4.9 5.0 3.4 Agricultural output 1.5 Including commercial road transport 149.9 −1.3 2.7 2.8 4.3 Sea4 42.5 +16.2 0.6 0.8 Retail sales volume −3.2 1.9 Inland waterways 60.2 −8.6 1.16 1.12 Export −21.0 −5.4 Air (transport aviation) 7.1 −3.7 0.13 0.13 Import −5.8 2.3 Pipeline 2,470.2 −8.0 47.3 45.8 Consumer inflation (y-o-y) 4.9 3.0 For reference: Producer prices (y-o-y) 3.6 −4.3 Share of railway transport excluding pipelines 87.1 87.0 Real disposable incomes −3.5 1.0 Share of Russian Railways excluding pipelines 87.1 87.0 Real paid salary 2.5 4.8

2020 1 Excluding intra-urban transport. 2 2019 Loaded freight turnover. 3 Freight turnover according to Russian Railways excluding empty runs of own railcars. 4 For reference: freight transportation by sea and inland waterways includes shipments made under freight transportation contracts by the company’s own and/or leased (chartered) vessels (including vessels leased to foreign companies (charterers) under time charter arrangements) flying the flag of the Russian Federation with the relevant shipping documents in place. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 40 | 41 Analysis of In 2020, the COVID-19 pandemic and Position of Russian Railways Passenger transportation partly cancelled regular and charter in the railway industry flights caused passenger turnover in air Russian Railways provides rail 1 operating results transport to go down by 52.5% y-o-y. infrastructure for passenger transportation In 2020, passenger turnover of Russian Freight transportation and is the only Russian company that airlines on international air routes carries out ultra high-speed passenger Transportation and logistics decreased by 74.2%. Domestic routes Russian Railways is the only carrier in transportation by rail. Russian Railways’ saw a considerably smaller decrease rail freight transportation that operates subsidiaries and affiliates provide of 22.3%. The domestic flights’ share its fully owned infrastructure. Since 2011, conventional long-haul and suburban Russian Railways operates Key initiatives in • developing freight transportation of total passenger turnover of Russian the Russian Railways Group’s railcar fleet railway transportation services. Further quality standards based on railway infrastructure, transportation and logistics airlines rose by 26.6 pp amid reduced intended for commercial use has been information on their business is available under the Long-Term availability, timeliness and reliability passenger turnover on international owned by the Company’s subsidiaries in respective sections of this report. owns rolling stock (through of transportation services, cargo routes. As a result, railway transport in and affiliates. Further information on Development Programme safety, choice of logistics, terminal and the deregulated segment remains under their business is available in respective its subsidiaries and warehousing services, and delivery competitive pressure of air transport on sections of this report. affiliates) and provides The Programme’s key initiatives in the speed; domestic routes. realm of transportation and logistics • developing the RZD Express service for both basic transportation services focus on: small and medium-sized cargo batches; and 3PL/4PL services. • building long-term relations with • introducing RoLa services; Passenger turnover by transport mode in 2020 customers, including by linking • conducting a dedicated analysis and, The Company is applying guaranteed freight volumes to if economically feasible, initiating Transport mode 2020 Share in total infrastructure, organisational and gradual abolition of tariff regulation passenger turnover, % advanced logistics technical initiatives designed to fully in certain sufficiently competitive bn pkm Y-o-y change, % 2019 2020 technologies, implementing meet the customers’ transportation transportation market segments an automated customer needs; (including container (RoLa) shipping, Public transport total 312.7 −45.2 100.0 100.0 • improving customer feedback and transportation of light petroleum ensuring high client loyalty, including products, fish, fish products, etc.); Railway 78.6 −41.2 23.4 25.1 relationship management by putting in place an automated • enhancing coordination within Including Russian Railways’ infrastructure 78.1 −41.4 23.4 25.0 system and a uniform freight customer relationship management the Group in order to improve the Road (bus service) 80.4 −29.1 19.9 25.7 transportation service system in the freight transportation performance of transportation and segment in Russian Railways and logistics subsidiaries and business Inland waterways 0.2 −59.5 0.1 0.07 catalogue, and expanding across its subsidiaries and affiliates; units; Sea 0.03 −39.5 0.009 0.01 its geography, while also • creating an automated tool to maintain • launching electronic workflow as a tool a uniform freight transportation to facilitate communication between Air 153.5 −52.5 56.6 49.1 continuing to develop and service catalogue giving customers all participants of the transportation introduce new services for access to the entire range of freight process (including the federal transportation services, offerings and executive authorities and international shippers. specifications; multimodal freight transportation • strengthening logistics capabilities players). to satisfy the customer demand for comprehensive services, including use of global transportation chains and outsourcing logistics for industrial facilities; • enhancing accuracy of freight shipment schedules by improving the system of shipments with fixed departure and arrival times and reducing delivery time; • fine-tuning transportation products and services to meet the shippers’ needs and developing new products and services;

1 According to the Federal Air Transport Agency (Rosaviatsiya). ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 42 | 43

In August 2020, Russian Railways launched the Grain Express service, having made and dispatched on time a total of 27 pick-up trains to the port of Novorossiysk from the project start to the end of the year.

Handling volumes increased sizeably for grain (up 28.7% vs 2019), containerised cargoes (up 16.5%) and construction cargoes (up 6.1%). The pandemic forced us to change the way we interact with our customers and to increasingly rely on digital technology to render In December 2020, the Company started testing scheduled shipments along the Bely Rast–Podsolnechnaya transportation and logistics services. Digitalisation strengthened route as part of the Smart Logistics project, which is capable of competing with transportation by road at a our ties with partners, resulting in greater resource efficiency, lower haul distance of no more than 120 km. transportation and logistics costs and stronger business sustainability. The better our interaction with transport market players is, the stronger In December 2020, Russian Railways arranged for a pilot multimodal express shipment as part of the Cargo our Company is positioned! Lowcoster project. It took two days to deliver a food consignment from a Kaliningard-based manufacturer to Moscow. The Cargo Lowcoster seeks to take over freight volumes from road transport by creating alternative logistics opportunities for companies based in the Kaliningrad Region and supporting small and medium-sized Alexey Shilo businesses. Deputy CEO, Head of the Centre for Corporate Transport Services

Highlights of freight transportation using Russian Railways’ infrastructure

Key achievements in 2020 Item Unit of 2016 2017 2018 2019 2020 Change measurement y-o-y, % Russian Railways launched an automated on-demand freight service portfolio builder enabling customers to select freight transportation services they need in online environment. Handling volumes mt 1,222.3 1,261.3 1,289.6 1,278.1 1,243.6 −2.7 The electronic workflow coverage reached 86.1%. daily average thousand t 3,339.5 3,455.7 3,533.2 3,501.7 3,397.7 −3.0 Total freight turnover bn tkm 2,997.8 3,176.7 3,304.8 3,305.0 3,221.0 −2.5 The Freight Transportation electronic trading platform saw the number of participants grow by 25% to over 6,000 users and that of service providers by 42.6% to 97 businesses. loaded turnover bn tkm 2,342.6 2,491.9 2,596.9 2,601.9 2,544.8 −2.2 empty turnover bn tkm 655.2 684.8 708.0 703.0 676.2 −3.8 Russian Railways hit an all-time high with some 5.8 m TEU containers transported in 2020, up 15.9 y-o-y. Share of shipments delivered within required (contractual) In 2020, the Company implemented a project providing for double-decker train operation using the public period % 96.1 96.7 97.1 98.4 99.2 0.8 pp railway infrastructure to accommodate the declared freight volumes from the key terminals of the Moscow Railway and those of the October Railway based in the Moscow agglomeration.

Russian Railways rolled out multimodal container services along the China–Europe–China axis using the port of Kaliningrad (giving rise to two multimodal container transit routes via ports).

The Company started using new container formats, such as open top, flexitank and tank containers.

In July 2020, the first regular container train from the Chinese city of Shenyang (Liaoning province) arrived at the Bely Rast terminal and logistics centre as part of a pilot project. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 44 | 45

Freight transportation In total, 2020 saw 1,243.6 mt of freight In terms of tariff classes, low-margin Daily average handling volumes evolution, thousand t using Russian Railways’ handled by Russian Railways (0.8% cargoes dominated the freight shipment above the target but down 2.7% vs 2019). structure, gaining 0.3 pp since 2019. The 3,653 infrastructure 3,650 Handling volumes declined for crude oil shares of mid- and high-margin cargoes 3,572 3,570 3,533 3,543 and petroleum products (down 10% vs grew by 0.2 pp and decreased by 0.5 pp, 3,550 3,515 3,514 3,483 Handling 2019), ferrous metals (down 10.0%) and respectively. The most expensive cargoes 3,532 3,451 3,429 3,507 hard coal (down 5.0%), but increased for (Class III) were the most sensitive to 3,450 3,400 3,486 3,490 3,452 3,384 In 2020, all the key industries in Russia grain (up 28.7%), containerised cargoes changing market conditions with a drop 3,428 3,442 and abroad were facing unprecedented (up 16.5%), construction cargoes (up 6.1%), of 7.7%, while Class II and Class I freights 3,350 3,361 3,346 adverse challenges due to the COVID-19 chemical and mineral fertilisers (up 3.7%). only fell by 2.1% and 2.2%, respectively. 3,250 pandemic. 3,233 3,242 3,236 The reporting year saw lower handling However, it has to be noted that the 3,150 Peaking in Q2 2020, it resulted in weaker volumes across the board. Domestic and Company reported a loss of RUB 45.7 bn January February March April May June July August September October November December demand both across key commodity export handling volumes decreased by from coal shipments in 2020, mainly 2020 2019 markets and in terms of volumes shippers 3.8% and 0.9%, respectively, while the driven by coal volumes transported from were willing to transport by rail. When the share of domestic transportation in the the Kuzbass region to the Far Eastern pandemic-related restrictions kicked in, handling breakdown dropped marginally Railway. Dynamics of loading volumes, mt Domestic handling by cargo type many businesses were forced to promptly by 0.7 pp to 60.9% and that of export in 2020, % adapt their operations, with construction transportation went up by 0.7 pp to Losses largely stem from downward 2020 1,243.6 −2.7 16.3 activities being suspended for several 38.1%. The shares of import and transit adjustments (applicable to haul distances 20.3 weeks in parts of Russia. transportation remained virtually flat. exceeding 3,300 and 3,500 km) and 2019 1,278.1 −0.9 2.7 higher unit costs of transportation along 2018 1,289.6 2.2 3.2 3.5 757.9 In 2H 2020, freight transportation Shipments of hard coal, crude oil and the Baikal–Amur Mainline on routes to mt 4.3 performance improved on the back of petroleum products, construction ports of the Vanino–Sovetskaya Gavan 2017 1,261.3 3.2 17.1 5.0 economic recovery after the lockdown materials and ores made up the largest hub. 2016 1,222.3 0.6 was eased up partially. However, critically part of handling volumes, with their 12.1 15.5 important was Russian Railways’ timely aggregate share amounting to 65.4%. Handling response with a set of measures aimed Handling volume growth, % y-o-y Hard coal at supporting shippers and making Construction cargoes organisational, logistical and economic Crude oil and petroleum products Iron and manganese ore adjustments to the transportation Handling volumes evolution in 2020, mt Ferrous metals management process. Industrial commodities Chemical and mineral fertilisers 2020 1,243.6 Cement Handling by transportation type Other −2.6 Timber Other Item 2019 2020 Change in Crude oil and petroleum products −23.2 volume, % mt share, % mt share, % Hard coal −18.7 Export handling by cargo type in Handling 1,278.1 100.0 1,243.6 100.0 −2.7 Ferrous metals −7.3 2020, % Domestic 788.2 61.7 757.9 60.9 −3.8 Timber −1.3 15.0 Export, including 478.3 37.4 473.9 38.1 −0.9 Industrial commodities −1.3 4.2 via ports 316.9 24.8 331.7 26.7 4.7 Cement −1.2 5.8 473.9 42.1 mt via border crossings 161.4 12.6 142.2 11.4 −11.9 Iron and manganese ore −0.5 6.0 Import and transit 11.6 0.9 11.8 0.9 1.7 Ferrous scrap metals −0.4 7.7

Chemical and mineral fertilisers +2.2 19.2

Containerised cargoes +5.9 Hard coal Grain +6.2 Crude oil and petroleum products Chemical and mineral fertilisers Construction cargoes +7.6 Ferrous metals Iron and manganese ore 2019 1,278.1 Timber Other ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 46 | 47

Handling by cargo class in 2020 Transportation and Container traffic through Russian Railways’ network in 2020 logistics services Item Low-margin cargoes Mid-margin cargoes High-margin cargoes Direction Transportation volumes, Change y-o-y, % (Class I) (Class II) (Class III) Operating in a highly competitive and thousand TEU volatile market, Russian Railways seeks Handling (change y-o-y), mt 751.4 (−2.2 %) 371.3 (−2.1 %) 120.8 (−7.7 %) to provide comprehensive services Domestic 2,320.4 +11.6 across all transportation types and Share in total handling volumes 60.4 % (+0.3 pp) 29.9 % (+0.2 pp) 9.7 % (−0.5 pp) expand its customer offering. Advanced Export 1,453.0 +13.5 3PL/4PL logistics technologies lie at Import 1,225.5 +15.6 Freight turnover export volumes going to Russian ports In terms of cargo types, in 2020, the the centre of our business, ensuring our Transit 800.61 +37.6 and increased transit container shipments shares of other cargoes, chemical ability to serve the maximum number of In 2020, total freight turnover accounted driven by the return of empty containers fertilisers and ores grew by 1.2 pp, consumers. Total, including 5,799.4 +15.9 for 3,221 bn tkm (down 2.5% y-o-y), from Europe to China as per new logistics 0.5 pp and 0.1 pp, respectively, while loaded containers 3,980.0 +17.8 where loaded turnover declined by 2.2% schemes. those of ferrous metals and mineral and to 2,544.8 bn tkm and empty turnover construction cargoes added 0.3 pp each. Container and RoLa solutions dropped by 3.8% to 676.2 bn tkm. The domestic, export and transit The shares of crude oil and petroleum In 2020, the range of cargoes transported Performance highlights of major loaded turnover contracted by 4.8% (to products and coal, two major contributors, Russian Railways hit an all-time high with in containers exceeded 3,400 items, transportation and logistics The decrease in freight turnover was 968.3 bn tkm), 0.5% (to 1,401.4 bn tkm) decreased by 1.2 pp each, compared to some 5.8 m TEU containers transported which was made possible in reliance on subsidiaries and affiliates lower compared to handling volumes and and 4.5% (to 63.2 bn tkm), respectively. 2019. in 2020, up 15.9% y-o-y, with transit traffic new container formats, such as open top, mainly attributable to the rising average However, import turnover rose by 1.6% to growing the fastest, primarily along the flexitank and liner bag containers. Federal Freight Company haul, which was prompted by higher 112 bn tkm. China–Europe–China axis. Russian Railways focuses on expanding Federal Freight Company (FFC) is a The loaded container traffic grew by RoLa routes. In 2020, it started testing network-wide operator of freight rolling Average haul, km 17.8% to 3.98 m TEU, with its share in total RoLa shipments between Kaliningrad and stock. The company is a subsidiary of transportation volumes rising to 68.6% St Petersburg, Moscow/Sosnogorsk and Russian Railways and the largest railway Item 2016 2017 2018 2019 2020 Change (up 1% vs 2019). In terms of cargo types, Vorkuta. freight operator in Russia. y-o-y, % transportation volumes increased for ferrous metals (up 46%), consumer and In 2020, FFC continued to be a leader of Loaded1 1,764 1,800 1,835 1,851 1,862 0.6 industrial goods (up 28%), chemicals and Developing transit transportation the freight rolling stock market in terms of soda (up 24%), food (up 33%). the share in freight turnover (10.3%) and Empty 1,199 1,236 1,274 1,269 1,256 −1.0 in 2020 the share in the Russian railcar fleet (11.1%). In 2020, transit container transportation In 2020, transit transportation (including As at the end of 2020, FFC operated Loaded freight turnover evolution through Russian Railways’ network empty railcars) stood at 27.86 mt, down a total of 132,800 cars. In 2020, FFC’s reached 800.6 thousand TEU. Container 2.4% y-o-y. Total income from transit revenue was RUB 69.9 bn (down 35% transit, including the return of empty transportation rose by 16.1% y-o-y to y-o-y, under RAS), sales revenue stood 2020 2,544.8 −2.2 containers from Europe to China under RUB 54.2 bn. at RUB 4.9 bn (down 82%) and net profit 2019 2,601.9 0.2 the new logistic arrangements, totalled amounted to RUB 3.6 bn (down 85%). 830.9 thousand TEU, up 34.4% y-o-y. The Compared to 2019, the transit traffic 2018 2,596.9 4.2 East–West transport corridor accounts for growth was mainly attributable to Loaded freight turnover, 2017 2,491.9 6.4 bn tkm the bulk of container transit, with 570.0 containerised cargoes (up 43.1% y-o-y Growth, % y-o-y thousand TEU transported in 2020 (up in absolute terms), which was driven by 2016 2,342.6 1.6 63.9% y-o-y). rising transportation volumes along the China–Europe–China axis. Container trains are a top pick for our Loaded freight turnover breakdown, % customers. Russian Railways now covers more than 1,200 container routes, both domestically and internationally. In 2020, 2020 38.0 55.1 4.4 2.5 the Company hit an all-time high with over 2019 39.1 54.1 4.2 2.5 31,500 container trains (including those in transit) passing through its network, 2018 39.5 54.1 3.9 2.5 Domestic with the share of full train shipments 2017 40.1 53.6 4.0 2.3 Export reaching 64.2% (up 4.0% y-o-y). In case of Import loaded containers, the share of full train 2016 41.7 52.8 3.6 2.0 Transit shipments stood at 74.2% (2.95 m TEU), up 5.4% y-o-y.

1 Including freight luggage. 1 Excluding the delivery of empty containers from Europe to China as per new logistics schemes. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 48 | 49

GEFCO RZD Logistics In 2020, RZD Logistics rendered accounted for 91% of all transit services • 3 terminal and warehouse operators, fivefold by the end of 2020, resulting transportation and logistics services for along the China–Europe–China axis. including the Moscow-based in 447 freight forwarding contracts a total of RUB 33.4 bn (down 8% y-o-y, In 2020, its revenue was RUB 49.3 bn and Central Directorate for Management signed and 123 new customers acquired. under RAS), while its net profit amounted net profit stood at RUB 4.3 bn. of the Terminal & Warehouse to RUB 211.6 m. Complex (Russian Railways’ The growth mainly results from concerted subsidiary). Improving the quality of UTLC ERA efforts by shareholders seeking to transportation services increase the service speed and minimise In 2020, the Company developed an technical delays throughout UTLC ERA’s enhanced FT ETP interface for interaction To attract customers and provide easier Based in France, GEFCO is a global RZD Logistics is the largest multimodal 1,520 mm gauge network. In 2020, the with service providers (rolling stock and access to its services and infrastructure, provider of 3PL/4PL logistics solutions and logistics operator in the CIS and the transit time between the borders of China port terminal operators) and launched Russian Railways opened sales services. With 350 operational sites all Baltics established as part of the and Europe amounted to 5–6 days, a cloud service, thus helping them save on offices across all its network in Russia. over the world and a footprint spanning development of the logistics business with the highest speed of 1,394 km/day in-house IT services. The Company is currently operating over 150 countries, the company is among of the Russian Railways Group and one achieved by the Altynkol–Baltiysk train in 69 regional and local sales offices. Europe’s Top 10 logistics operators. of Russia’s leading players in logistics July 2020. In the reporting period, sales offices Russian Railways holds a 75% stake in outsourcing for industrial facilities with a United Transport and Logistics Managing the terminal and attracted around 3,000 new railway GEFCO. comprehensive supply chain management Company – Eurasian Rail Alliance warehouse infrastructure customers. service offering. The company arranges (UTLC ERA) develops transit railway Improving the quality of The company’s revenue in 2020 freight transportation to more than 50 container services in Russia, Kazakhstan In 2020, the Central Directorate Russian Railways employs a multi- dropped by 20% y-o-y to EUR 3.805 bn. regular delivery destinations in Russia, and Belarus. UTLC ERA is a joint venture transportation services for Management of the channel monitoring system to collect Net profit for the same period totalled Europe and China and provides logistics of Russian Railways, Belarusian Railway Terminal & Warehouse Complex (Russian customer feedback. According to VCIOM, EUR 84.9 m, down 28% y-o-y. The services for foreign trade in Eurasia (the and Kazakhstan Temir Zholy, with each FT ETP progress in 2020 Railways’ subsidiary) embarked on the as at September 2020, Russian Railways’ company’s performance was impaired CIS, the Baltics, China, Japan, Vietnam, founder having an equal shareholding of CD Freight Forwarder project which aims consolidated customer satisfaction index by the shutdown of car and component India, and the European Union). It 33.33%. The Freight Transportation electronic to minimise customer involvement in in the freight transportation segment making plants, including those owned by services over 160 cities in Russia and trading platform (FT ETP) currently the cargo delivery process. The project remained moderately positive at 61.7% Group PSA, GEFCO’s key customer, as a the CIS, 46 locations in China and seven In 2020, its transportation volumes connects over 97 service providers kicked off in June 2020 when a team of (up 1.4 pp vs December 2019 through result of the COVID-19 outbreak and the destinations in Europe. The company increased by 64% y-o-y to 546.9 thousand (up 42.6% vs 2019), including: logistics experts was set up to develop February 2020). related restrictions imposed on its focus keeps expanding its network which now TEU, accounting for 5.5% of total trade • 82 rolling stock operators; and market new products and services. markets in Europe. exceeds 16,000 routes. between China and Europe. UTLC ERA • 8 stevedores; Total income from the project grew Activities of the Consumer Council on Operations of Russian Railways The Consumer Council on Operations of ussian Railways and its subsidiaries and affiliates is a working body of the Russian Government Commission on Transport in charge of public scrutiny. Russian Railways and the Consumer Council mainly interact through the Company’s representatives that attend meetings of the Council and its committees to consider Russian Railways’ key activities.

In 2020, the Consumer Council focused on: • regulatory framework improvements affecting railway operations and development; • tariff regulation for railway services; • financial projects and the investment programme of Russian Railways; • customer satisfaction surveys in freight and passenger transportation; • major investment projects of Russian Railways, including their process and price audits; • transport safety enhancement. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 50 | 51

Passenger transportation

The primary objective The Company’s priorities include Key initiatives for the suburban passenger continuous improvement of customer transportation development: of Russian Railways is experience, development of new • integrating suburban transport into to provide all Russian products and services, digitalisation, the urban transport environment of and creation of a comfortable transport metropolitan areas; regions with affordable environment affordable to all categories • ensuring long-term mutual obligations passenger transportation. of passengers. In 2020, Russian Railways of all participants of suburban transit put an emphasis on ensuring safety systems under the regional tariff and Along with suburban and protecting the life and health of our budgetary policies of the Russian transportation comprising passengers and employees involved in Federation; transportation operations. • adopting regulatory decisions aimed Many of the decisions made in 2020 in response to the novel multimodal routes, the at securing equal opportunities for coronavirus infection outbreak became an essential part of our the development of the suburban business and management processes enabling the Company to ensure Company is developing Key focus areas of the passenger transportation vs other a full and reliable passenger service. long-haul passenger Long-Term Development transport modes; • launching multimodal transportation services, including high- Programme (with the possibility of building an speed and ultra high- In line with the Long-Term Development integrated route network for several Dmitry Pegov transport modes) along with the Programme, the Company intends to Deputy CEO of Russian Railways speed transportation fully maintain the volume of socially comprehensive development of a between metropolitan significant transportation, including bus transportation services within the through implementing initiatives in Group; areas. Russian Railways Russia’s Far East. • defining economic incentives carries out long-haul and for upgrading rolling stock and Key initiatives for the long-haul passenger infrastructure facilities; Key achievements in 2020 suburban transportation in transportation development: • introducing suburban transportation 77 and 66 regions of Russia, • building an efficient route network and standards for accessibility, quality and In 2020, the Company transported 872 m people. train schedule; safety of passenger transportation; respectively. • developing high-speed rail • enhancing the Central Transport Hub; Moscow Central Diameters were named the best regional infrastructure project winning the 7th Formula for transportation through operation of • reducing the interval between Movement national award for accomplishments in transportation and transport infrastructure. Lastochka and Strizh trains as well as passenger trains on certain routes, trains with double-decker railcars; including the Moscow Central Circle. New rolling stock hit the rails on suburban routes in 21 regions. Sakhalin had its entire rolling stock upgraded. • providing customers with high quality product offerings; Key initiatives for the railway station We launched 20 new suburban routes. • digitalising customer services and development: business processes; • creation of multifunctional intermodal In 2020, we continued to renew our passenger rolling stock and procured 1,051 cars, with Russian Railways • offering innovative products in trains; and transport interchange hubs purchasing 371 cars, Federal Passenger Company buying 648 cars, including 175 double-deckers, and SPCs • improving the customer experience; integrated with the modern urban acquiring 32 cars, including 8 RA3 cars and 24 locomotive traction cars. • introducing the world’s best practices environment and infrastructure; for the development of multimodal • efficient use of railway station areas We developed a new open sleeping car concept to enhance the customer experience. transport. (including synergies and cooperation with bus stations). Russian Railways continued to expand its high-speed long-haul network by launching new Lastochka routes.

The Company renovated and repaired 184 facilities as part of its railway station development programme.

Russian Railways opened new Smart Hotels at 25 railway stations and innovative Priority Pass lounges at 6 stations.

The RZD Passengers mobile app has been downloaded over 5 m times and earned high scores from the Apple and Google stores (4.9 and 4.5, respectively). In December 2020, the mobile app became the best performing sales channel, occasionally accounting for 50% of all e-tickets sold for Russian Railways’ trains. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 52 | 53

Passenger transportation the passenger transportation collapsed long-haul and suburban transportation Suburban passenger turnover by category, bn pkm • infrastructure upgrade completed at in 2020 by more than 75% y-o-y (with suburban going down by 46.0% and 28.1%, Пассажирооборот в пригородном сообщении по категориям перевозок, млрд пасс.-км the Yaroslavsky route, with suburban and long-haul transportation plummeting respectively). train service launched on the fifth main In 2020, passenger transportation by 65% and 79.8%, respectively). In 2020 16.5 1.7 3.7 2.7 24,7 track at the Moscow–Mytishchi section, performance was affected by the October, the passenger transportation In 2020, the Company transported some 2019 21.7 2.7 5.7 4.2 34.3 the fourth main track at the Mytishchi– epidemiological situation in Russia, dropped by 36.2% y-o-y (with suburban 872 m people (down 27.2% y-o-y), with Pushkino section and the third main national border closures, cancellation and long-haul transportation declining long-haul and suburban transportation 2018 22,2 2.8 4.0 4.1 33.1 track at the Mytishchi–Podlipki- of all international flights and the by 24.4% and 41.1%, respectively). In total, contracting by 42.1% and 25.6%, 2017 21.8 2.9 3.0 4.1 31.9 Dachnye section; consequences of restrictions and 2020 saw the passenger transportation respectively. • a new railway bridge across the lockdowns. In April through early May, fall by 41.4% y-o-y to 78.1 bn pkm (with 2016 20.7 3.1 3.2 4.0 31.0 Moscow River put into operation at the Testovskaya–Fili section, which was Commercial Federal Regional Other built to enhance MCD 1 operations Russian Railways’ passenger transportation highlights and further develop the road network around Moscow-City. • new railway platforms featuring a 2016 2017 2018 2019 2020 Change Moscow Central Diameters y-o-y, % barrier-free environment, heated Moscow Central Circle Moscow Central Diameters (MCDs) is the pedestrian crossings, vending Passenger turnover, bn pkm 124.5 122.9 129.4 133.4 78.1 −41.4 largest project of the Central Transport machines, lifts and escalators; Moscow Central Circle (MCC) is an urban Hub seeking to develop high-capacity • enhanced customer experience passenger rail line partially integrated Long-haul transportation 93.5 91.0 96.3 99.1 53.5 −46.0 commuter rail lines connecting Moscow (climate control, free Wi-Fi, charging with the Moscow Metro in terms of fares Suburban transportation 31.0 31.9 33.1 34.3 24.7 −28.1 suburbs with the city centre. This is a joint ports for mobile devices, infotainment and transfers. This is a joint project by project by Russian Railways, the Ministry services, kids areas, etc.). Moscow Metro, Russian Railways and Passengers transported, m people 1,037.0 1,117.9 1,157.2 1,197.8 872.0 −27.2 of Transport of the Russian Federation, Moscow Ring Railway launched in 2016. Long-haul transportation 101.4 102.2 110.3 116.5 67.4 −42.1 and the governments of Moscow and the The launch of MCD 1 and MCD 2 made a Moscow Region, which aims to combine real difference for more than 4 m residents In October 2020, MCC welcomed its Suburban transportation 935.6 1,015.7 1,046.9 1,081.3 804.5 −25.6 suburban routes and the Moscow Metro. of the Moscow agglomeration in terms 500-millionth passenger. In 2020, MCC of new fares, cutting-edge trains, travel serviced 115.3 m passengers, with total Railway passenger turnover, bn pkm Suburban passenger The first two diameter routes from intervals and transfer opportunities. passenger transportation since its launch Пассажирооборот железнодорожного транспорта, млрд пасс.-км transportation Odintsovo to Lobnya and from Nakhabino amounting to 530.4 m people. The daily 2020 24.7 53.5 78.1 to Podolsk were launched in late 2019. The Russian Government launched a new average traffic stood at 314,900 people, Suburban transportation services are The next two diameter routes from federal project titled the Development rising to 464,700 people on weekdays. 2019 34.3 99.1 133.4 provided by 24 suburban passenger Zelenograd to Ramenskoye and from of Railway Infrastructure of the Central As of the report date, trains arrive every 2018 33.1 96.3 129.4 companies (SPCs), with Russian Railways, Aprelevka to Zheleznodorozhny are set to Transport Hub. The project aims to four minutes. In 2020, MCC launched an regional executive authorities, private be launched by late 2025. increase the passenger transportation R&D project to provide for a transition to a 2017 31.9 91.0 122.9 investors, Aeroexpress and Central SPC of the Central Transport Hub to 850 m three-minute interval service. 2016 31.0 93.5 124.5 among the co-founders. Russian Railways MCD hallmarks: passengers annually by 2030 (vs 578.7 m holds more than 50% in 19 SPCs. The • operating hours: from 5:30 am to passengers in 2020). Suburban transportation 2020/2021 schedule provides for 1:00 am without breaks; Long-haul transportation 3,963 pairs of suburban trains per day (up • travel intervals: 5–6 minutes during Under the project, 2020 saw: 2.3% y-o-y). peak hours; • 5 new transport stops launched at • integrated ticket offering for city and MCD 1, MCD 2, the Kiyevsky route and Passengers transported by rail, m people In 2020, most regions opted not to suburban routes; the October Railway and 9 transport Количество пассажиров, отправленных железнодорожным транспортом, млн человек increase rail fares. • free transfers between MCC and the stops renovated at MCD 1 and MCD 2; 2020 804.5 67.4 872.0 Moscow Metro during a 90-minute ride; • train service launched on the Reutovo– Progress on multimodal routes and • new comfortable Ivolga 2.0 trains; Balashikha junction and the second 2019 1,081.3 116.5 1 197.8 hubs in 2020 • new infrastructure: continuous welded main track at the Reutovo–Stroyka 2018 1,046.9 110.3 1 157.2 rails for a smooth ride; section of the Gorkovsky route; In line with international best practices, the 2017 1,015.7 102.2 1,117.9 most successful approach to the integration 2016 935.6 101.4 1,037.0 of urban passenger systems is the creation of transport interchange hubs that link Suburban transportation together different modes of transport, Long-haul transportation including railway, underground and land transit systems. Such hubs are designed to ensure seamless passenger experience and efficiency of the transportation systems both in terms of technology and economics. Multimodal suburban routes 1 Altai Suburb, Baikal SPC, Bashkortostan SPC, Volga–Vyatka SPC, Kuzbass Suburb, Moscow–Tver SPC, Sakhalin PC, Chernozemye SPC, North–West SPC, are currently provided by 14 SPCs.1 Samara SPC, Sodruzhestvo, Sverdlovsk Suburban Company, Kaliningrad SPC, Perm Suburban Company. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 54 | 55

Moskov central diameters trains amid the pandemic starting from St Petersburg–Valdai–Staraya Russa, of passengers, including people with March 2020. In 2020, Federal Passenger Moscow–Kostroma, Moscow–Patriot Park. reduced mobility. MCD 1 MCD 2 Company reported a loss of RUB 33.6 bn Odintsovo–Lobnya Nakhabino–Podolsk (vs net profit of RUB 8.5 bn in 2019). Rolling stock renewal Sosnogorsk now features Russia’s first D1 Lobnya (Belorussko–Savelovsky (Kursko–Rizhsky modular building as a passenger railway Diameter) Diameter) International transportation In 2020, the Company continued to renew station that was designed using Building its passenger rolling stock and procured Information Modelling (BIM) technology Length Length In 2020, besides the CIS and the Baltics, 1,051 cars: with digital representations of its Federal Passenger Company served • 371 cars purchased by Russian architectural, structural and engineering 52 km 80 km direct and transit routes to eleven Railways, including 196 Lastochka cars, specifications. The new building Nakhabino countries of Europe and Asia – Germany, 20 EP3D cars, 34 EP2D, 92 locomotive accommodates a homey waiting space France, Poland, Austria, the Czech traction cars, 29 RA3 railbus cars; with rest areas and ticket offices, as well as Travel time Travel time D2 Republic, Monaco, Italy, Finland, China, • 648 passenger cars bought by Federal retiring rooms for passengers with children. Mongolia, and North Korea. Passenger Company, including MOSCOW h min h 1 27 2 175 double-deckers; Accessibility for people with reduced In response to the COVID-19 outbreak, • 32 cars acquired by SPCs, including mobility Number of stations Number of stations the governments of Russia and foreign 8 RA3 cars and 24 locomotive traction countries imposed national emergency cars. Russian Railways focuses on making a D1 24 33 measures in February through growing number of stations and trains March 2020, with all international fully accessible. As at the end of 2020: Odintsovo (28 in 2024) (28 in 2024) passenger transportation by rail being Development of railway station • 103 railway stations were fully suspended in March.1 infrastructure accessible, which accounts for 8% of Number of transfers Number of transfers all railway stations, with other railway between the railway and between the railway In total, 2020 saw 1.2 m passengers In 2020, the Company renovated and stations partially accessible; the Moscow Metro and the Moscow Metro transported in the international segment, repaired 184 facilities, including railway • long-haul trains included administrative which accounted for only 19% of those stations in Ivanovo, Petrozavodsk, Ulan- locomotive traction cars specifically 8 11 transported in 2019. Ude, Chany, Tatarskaya, Sosnogorsk. designed for passengers with disabilities, with 88% of administrative D2 Podolsk (12 in 2024) (15 in 2024) High-speed passenger transportation Ivanovo boasts its unique railway station, cars accessible to such people; Russia’s seventh largest hub and most • up to 20% of suburban electric trains High-speed transportation services prominent constructivist landmark. The were adapted for people with reduced are provided by Federal Passenger project aimed to preserve its architectural mobility; Company and High-Speed Transportation design, while also turning it into a • 100% of high-speed and ultra high- During Transport Week 20201 Long-haul passenger Federal Passenger Company’s Directorate (a branch of Russian Railways). tech-savvy and comfortable transport speed passenger trains were fully Annual business event held by transportation performance Federal Passenger Company’s high- environment accessible to all categories accessible. Ministry of Transport of the Russian speed trains operate on Moscow to Nizhny Federation, which includes a series Long-haul transportation services are Federal Passenger Company is Russian Novgorod, Smolensk, Voronezh, Belgorod, of nationwide and international provided by seven carriers: Railways’ subsidiary, which provides St Petersburg, and other routes. Russian events focused on transport issues. • Federal Passenger Company; long-haul passenger and freight luggage Railways serves Moscow–St Petersburg, Moscow Central Diameters were • Grand Service Express TC; transportation services. In 2020, Federal Nizhny Novgorod–Moscow–St Petersburg, named • Tverskoy Express; Passenger Company’s passenger turnover St Petersburg–Bologoye, Moscow– • TransClassService; totalled 48.2 bn pkm, down 48.5% y-o-y Ivanovo routes. the best regional • Sakhalin Passenger Company; due to the COVID-19 restrictions. The • Kuzbass Suburb; company transported some 59 m people In 2020, high-speed and ultra high- infrastructure project • High-Speed Transportation Directorate (down 44.2% y-o-y), including 58.2 m speed passenger turnover totalled (branch of Russian Railways). passengers (down 44.2%) by trains made 5.01 bn pkm (down 36.2% y-o-y). The winning the 7th up by Federal Passenger Company and number of passengers transported In 2020, the combined share of long- 0.8 m people (down 82%) by those made declined to 11.08 m (down 35.3% y-o-y), Formula for Movement haul transportation services provided up in the CIS and the Baltics. including 6.6 m people served by Federal by Russian Railways’ subsidiaries and Passenger Company (down 35.8% y-o-y). national award for accomplishments affiliates and private carriers was as high In 2020, Federal Passenger Company’s High-Speed Transportation Directorate in transportation and transport as 94.3% (including 4.1% controlled by income from core operations amounted saw its passenger transportation fall by infrastructure. private ones), while that of High-Speed to RUB 130.9 bn (down 44.7% y-o-y), 28.6%. Transportation Directorate stood at 5.7%. including RUB 114.6 bn from passenger transportation (down 46.3%), mainly In the reporting year, Russian Railways Passenger trains achieved a 98.8% driven by lower passenger turnover due continued to expand its high-speed adherence to their schedules (up 0.79 pp to deteriorating mobility of people and long-haul network by launching y-o-y). snowballing cancellation of international new Lastochka routes: Rostov– Anapa, Rostov–Imeretinsky Kurort, 1 Annual business event held by Ministry of Transport of the Russian Federation, which includes a series of nationwide and international events focused on transport issues. 1 Russian Government’s Order No. 763-r dated 27 March 2020. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 56 | 57

Customer service In 2020, the Company put an emphasis The quality of passenger services RZD Bonus loyalty programme Russian Railways’ mobile app for The RZD Passengers mobile app is on developing contactless digital provided by Russian Railways is measured passengers one of the Company’s best IT products. The Company aims to offer its customers services and expanding ticket issuing by the customer satisfaction index RZD Bonus is Russian Railways’ loyalty By now, it has been downloaded over a new level of service quality in a timely channels. Integrated ticket offering for (CSI), which is based on opinion surveys programme that enables long-haul The RZD Passengers mobile app has all 5 m times and earned high scores from manner. Russian Railways Unified city and suburban routes is available conducted by both the Company’s own passengers to earn points by making a traveller would need and more: the Apple and Google stores (4.9 and Information Service Centre provides in St Petersburg, Rostov-on-Don, Ufa, resources in line with the approved trips and exchange them for tickets. The • long-haul and suburban train 4.5, respectively). In December 2020, information on the Company’s passenger Samara, Nizhny Novgorod and Moscow. methodology1 and by VCIOM, resulting in programme currently covers 6 m users. schedules; the mobile app became the best services. In 2020, the Centre handled an all-round assessment. • ticket sold for long-haul and suburban performing sales channel, occasionally 9.8 m queries (down 7% vs 2019). Given the growing demand for domestic In 2020, the Company revised its scope trains; accounting for 50% of all e-tickets sold for tourism in 2020, Russian Railways started Due to the pandemic, the Company with a view to including suburban • refund for tickets purchased via the Russian Railways’ trains. Benefits of the Centre: promoting new tourist routes combining conducted three surveys in 2020. transportation and other passenger website or mobile app; • single entry point across the entire a rail ride and an excursion, as well as In Q4 2020, Russian Railways’ services. • help information about railway stations; railway network; rail tours by hotel trains. The Russian consolidated customer satisfaction • actual train information; • uniform quality standards on par with Railways Group currently offers over index across eight focus areas rose to • Russian Railways’ help information and global benchmarks; 50 tourist routes, including the Ruskeala 83.2 points in long-haul transportation news. • key communication channels Mountain Park, a ride along the Trans- (vs the target of 81.3 points) and automated; Siberian Railway, weekend retro trains 81.3 points in suburban transportation • remote ticket refund option available to departing from Moscow, St Petersburg and (vs the target of 75.3 points). passengers aged 65 or older. Irkutsk, New Year trips to Veliky Ustyug and Kostroma, and many more.

1 The Integrated Methodology for Evaluating Passenger Satisfaction in Rail Transportation (approved by Russian Railways’ Order No. 227/r dated 7 February 2018). ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 58 | 59

Railway transportation and infrastructure

Key focus areas of the • using natural gas as a motor fuel, The railway transportation Long-Term Development gradually expanding the use of gas powered locomotives (gas turbine and infrastructure Programme locomotives, gas powered diesel segment covers core Key initiatives in rail transportation and locomotives used in shuntering infrastructure development include: operations), while also working to business units engaged • developing operating domain-centred improve design and increase efficiency It was in 2020 that we had a chance to assess our own circumstances in railway transportation transportation management principles at locomotive plants when developing and improve existing routines. In this challenging environment, we across the Russian Railways network; modern servicing stations and LNG did our best to make the most of available resources and ensure management, maintenance • creating dedicated infrastructure for refuelling mechanisms. uninterrupted use of our railway network. We managed to deliver and development of passenger and freight transportation; on the Comprehensive Plan for Upgrading and Expanding Core • boosting efficiency of low intensity Russian Railways’ goals for developing Infrastructure through the concerted efforts of all business units aimed infrastructure and railway lines; railway infrastructure until 2025: at infrastructure debottlenecking and improvements in transportation locomotive fleet. The • enhancing transportation efficiency • achieve an increase in the throughput technologies. through quality improvements in capacity of the Baikal–Amur and Trans- Company’s operating and utilisation of the rolling stock; Siberian Railways to 180 mt by 2024; financial performance • developing marshalling yards; • boost the throughput capacity of the • improving management of the freight rail infrastructure serving ports of the Anatoly Krasnoshchek is directly linked to their car fleet; Azov and Black Seas; First Deputy CEO of Russian Railways • bolstering utilisation efficiency of • reduce container travel times from the efficiency, effectiveness and mainline and shuntering locomotives Far East to Russia’s western border technical cooperation. and locomotive crews; to seven days and achieve a fourfold • upgrading railway tracks applying increase in the transit container traffic new technology and using elements by 2024; and structures of equally high quality • develop high-speed and ultra high- to reduce costs associated with the speed railway services between and Key achievements in 2020 infrastructure maintenance life cycle; within major cities and metropolitan • introducing automation equipment areas; The Company handled 1.2 bn t of cargo. with moving blocks within sections, • develop transportation services including a distributed computer- between regional administrative We exceeded the last year’s export volumes by more than 11 mt of coal (up 7.6% y-o-y). based interlocking system at stations centres and other cities of major with identification of main tracks, economic activity; Handling of containerised cargoes grew by 16.5% vs 2019. differentiated departure sections and • create multimodal freight automatic cab signalling; transportation and logistics hubs. Total freight turnover amounted to 3,221.0 bn tkm. • establishing extended guarantee sections ensuring safe passage of The loaded car delivery speed rose to 439.4 km/day, up 11.4% vs 2019. freight trains; • creating an operating domain-centred The share of shipments delivered within required period increased by 1 pp vs 2019, reaching 99.4%. model for operation of work trains and diagnostic machinery; In 2020, 46,300 trains (up 6.6% y-o-y) were dispatched as scheduled with fixed departure and arrival times. • removing energy-related restrictions; • preparing infrastructure facilities for A total of 2,400 trains (up 24.8% y-o-y) were dispatched as part of the Freight Express service. passage of heavy-duty and long trains; • streamlining planning for repairs and The Company dispatched 29,200 trains weighing over 7 kt (up 21% vs 2019). maintenance of infrastructure facilities and associated scheduling processes; In 2020, we renovated over 5,500 km of tracks and laid more than 2,000 sets of turnouts, which helped keep • improving train composition planning down the length of railway tracks with exceeded limits of throughput, reduce the length of permanent speed and train passage management limit sections and increase the train speed on 1,100 km of tracks. systems; Russian Railways ensured that 63% of track overhauls using new materials and 57% of full replacements and intermediate overhauls were carried out on traffic-free sections. In 2020, diagnostic machinery performance improved by 16% y-o-y, with the share of incident detections by mobile diagnostic tools quadrupling to 21% over the past five years. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 60 | 61

Russian Railways’ infrastructure highlights in 2020

Item 2020 performance % vs 2019

Average weight of freight train, t 4,084.0 −0.1 Schedule speed of freight train, km/h 41.6 +1.0 Average operating speed, km/h 46.6 +0.4 Average daily performance of freight locomotive, thousand tkm gross 1,677.0 +4.2 Average daily performance of freight train locomotive, thousand tkm gross 2,216.0 +3.6 Per unit electricity consumption for train traction, kWh/10,000 tkm gross 106.2 −1.2 Per unit fuel consumption for train traction, kg of reference fuel/10,000 tkm gross 55.5 +0.1

Improving the efficiency of Track overhaul and maintenance in 2020 • reduce equipment failures by 27% infrastructure helped: (247,700 in 2020 vs 338,300 in 2019); • increase the speed of passenger and • keep the length of railway tracks with freight trains on 1,115.6 and 1,119.3 km of exceeded limits of throughput or useful Repairs and upgrade of tracks, respectively; life flat vs 2019 at 23,900 km. infrastructure facilities • increase the average speed of passenger and freight trains by In 2020, the Company spent RUB 127.1 bn 0.2 km/h (to 93.6 km/h) and 0.1 km/h on all types of track repairs and renovated (to 73.5 km/h), respectively; 5,480.8 km of tracks, with the Eastern • improve track condition assessment Operating Domain accounting for over by 1 point y-o-y to 33 points; a quarter of all repairs.

Renovation of the Kozinsky viaduct

In 2020, Russian Railways completed the renovation of the Krasnoyarsk Railway's 326 m long Kozinsky viaduct. We had to replace the 50-year-old bridge at a height of 65 m on the most challenging pass of the Dzheb- Shchetinkino section in the Western Sayan mountain gorge. We relied on unique high-rise operations to replace bridge spans one by one, which involved laying a temporary track on each installed bridge span for heavy-duty machines to roll on to assist with further replacements. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 62 | 63

Streamlining the freight traffic Developing infrastructure to Developing heavy-duty traffic schedule support growing transit container volumes Heavy-duty traffic and higher weight The main function of the train schedule is standards of freight trains are key to to maximise the infrastructure efficiency In 2020, the Company updated its action optimising the transportation process in for the required throughput and carrying plans to enhance the throughput and terms of increasing the carrying capacity, capacity, ensure the target volume of carrying capacity of its infrastructure enhancing performance of locomotives freight traffic and increase the schedule to deliver a fourfold increase in transit and locomotive crews and reducing and mean speed. container traffic by 2025. energy consumption for train traction. Russian Railways continues to develop Russian Railways’ timetable provides The average speed of transit container heavy-duty traffic. Following pilot tests for over 900 special routes, including trains in 2020 stood at 1,074 km/day, in 2020 and thanks to new locomotive 595 container trains, 16 RoLa trains, or 7.6% above the target set in the purchases, the Company managed to 149 Freight Express trains, 53 coal trains, Comprehensive Plan for Upgrading and increase allowable weight limits on more 30 timber trains, 8 Cargo Lowcoster Expanding Core Infrastructure (998 km/ than 46 sections. The average train weight trains. day). Russian Railways hit an all-time across the network increased by 11 t vs high with some 5.8 m TEU containers the plan on the back of composition and transported in 2020, up 15.9 y-o-y. operation of heavy-duty and push-pull Improving performance at freight trains, including: operating domains • 161,900 runs by trains weighing over Higher traction stock 6 kt; To this end, the Company strives to efficiency • 42,400 runs by push-pull trains. streamline train composition planning coupled with schedule improvements. Traction stock in 2020 In 2020, the share of full train shipments rose by 1.5 pp (to 53.3% of all dispatched In 2020, Russian Railways spent loaded freight cars), which helped RUB 94.3 bn on traction stock purchases, reduce yard operations by 4,000 cars with all locomotives made in Russia. per day vs 2019. The Company procured 566 locomotives, including: • 328 mainline electric locomotives, Developing passenger including 294 freight and 34 passenger infrastructure locomotives; • 238 diesel locomotives, including In 2020, the Central Transport Hub met 154 shunting, 80 freight mainliners and its target for passenger transportation 4 passenger locomotives. with 548.9 m people transported annually. Russian Railways completed Train traction accounts for the bulk an all-time high RUB 99.3 bn worth of of Russian Railways’ fuel and energy A new railway bridge across the Akhtuba River works (101.4% of the plan) as part of the expenses, so energy saving initiatives Central Transport Hub development are high on the agenda. Over 4,000 In 2020, Russian Railways built a new railway bridge across the Akhtuba River in the Krasnoyarsky District of the project. The Company commissioned locomotives have been equipped with Astrakhan Region. The new bridge is a key to boosting the throughput capacity of the rail infrastructure serving passenger and transport infrastructure automatic train operation systems that ports of the Azov and Black Seas. Its launch helps eliminate the last single-track bottleneck between Baskunchak facilities for a total of RUB 54.2 bn, control their movement and minimise and Astrakhan thus enabling heavy-duty freight traffic. The bridge crossing will also increase the throughput exceeding the plan by half. energy consumption. In 2021, the project capacity of the North-South corridor en route to Moscow and Kazakhstan. will be rolled out across the entire railway In 2020, Russian Railways managed to network. With the new bridge opened, freight traffic is expected to reach 20 million tons with its throughput capacity set increase the train speed on the Centre– to rise to 153 train pairs per day. The bridge crossing is 2.35 km long and consists of 8 pillars and 7 spans. South axis, specifically on Moscow– In 2020, per unit electricity consumption The bridge was inaugurated on 19 February 2021, when the Privolzhsk Railway turns 150. Ryazhsk–Adler–Moscow (176 km) and for train traction amounted to Moscow–Yelets–Adler–Moscow (186 km) 106.2 kWh/10,000 tkm gross (down 1.2% It was constructed using state-of-the-art engineering solutions, with strain pole foundations laid to a depth of 18 routes, thus reducing travel times by y-o-y), while per unit fuel consumption for to 33 m and pile tops combined with reinforced concrete grillage. Bridge spans were assembled on site. Structural 10 minutes on each route. train traction stood at 55.5 kg of reference steel relies on crossbeams, as well as longitudinal and lateral ties supporting the lower boom. We also laid fuel/10,000 tkm gross (up 0.1% y-o-y). reinforced concrete panels for ballastless track. Russian Railways invested RUB 3 bn in the construction. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 64 | 65

Foreign projects and international cooperation

Russian Railways operates Key focus areas of the • comprehensive transport and logistics services (establishing joint operations, in Europe, Asia, Africa, Long-Term Development Programme acquiring stakes in national logistics and Latin America. Its key companies, etc.); Russian Railways continues developing its • expanding international passenger business lines abroad foreign business, among other things, by transportation routes and assessing the In a whole new environment, the Russian Railways Group keeps include transit freight expanding its footprint and promoting the possibility to establish joint operations feet firmly on the ground as a global business. Our services won Group’s export-oriented portfolio centred in the passenger segment (including for strong customer recognition for their high reliability, while transit transportation, international on: the purpose of entering the European transportation volumes entrusted with us grew by a third compared logistics, and overseas • railway design, construction (upgrade), market); to 2019. The most sophisticated infrastructure facilities we are electrification, and subsequent • transit freight transportation to key building in the Republic of Serbia received the highest praise from the infrastructure projects. operation; international destinations; country’s government. With over 100 initiatives being implemented in • consulting (development of concepts, • personnel training and education; cooperation with international industry organisations, we are geared to The key companies of strategies, railway development • development of IT services, cloud work towards even more ambitious projects. the Russian Railways programmes, feasibility studies, and applications, and digital strategies; business plans); • working out financial solutions for Group engaged in its • railway facility management; foreign projects. operations abroad are • supplies of railway machinery, Sergey Pavlov equipment and materials; RZD International, South First Deputy CEO of Russian Railways Caucasus Railway, UTLC ERA, GEFCO, and RZD Logistics.

Key achievements in 2020 In 2020, Russian Railways’ container transit totalled 830.9 thousand TEU,1 10.8% above the target of 750 thousand TEU.

We continued to implement infrastructure projects in the Republic of Serbia, with two existing contracts running as scheduled and to the full extent and another one being explored.

The Company continued to honour its commitments under railway management agreements in Mongolia and Armenia. In 2020, Ulaanbaatar Railways hit an all-time high in freight transportation (30 mt), including container transit along the China–Europe route via Russia.

Russian Railways promoted its initiatives through international organisations, including the OSJD, the UIC, and the Council for Rail Transport of the Commonwealth Member States.

Oleg Belozerov, CEO and Chairman of the Management Board of Russian Railways, signed the UIC Declaration on Sustainable Mobility. Russian Railways contributes to the SDG Rail Index on the UIC Sustainability Platform.

The Company developed and approved its export-oriented portfolio, while its Management Board adopted a marketing concept to promote it in foreign markets.

1 Including the delivery of empty containers from Europe to China as per new logistics schemes. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 66 | 67

Foreign operations and key Company assists the Eurasian Economic basic fares and guaranteed delivery times Following negotiations, the OSJD member are ongoing on the terms of the third international projects Union (EAEU) in developing the regulatory for transportation of Indian cargoes by countries agreed to preserve virtually contract. framework. We are finalising negotiations container trains. all international passenger and direct The long-term priorities of Russian on the draft roadmap for implementing a train routes running between them Work continued underway to create a new Railways’ business abroad are outlined concerted (coordinated) transport policy before the pandemic-related restrictions transport corridor, which includes broad in the Foreign Operations Strategy in 2021–2023, which provides for the use Cooperation with international were imposed. This will help resume gauge railway extension to Bratislava and approved by the Company’s Management of electronic navigation seals for goods in organisations international railway traffic in a fast-track Vienna. Board. The Strategy was aligned with the transit. and simplified procedure should the Long-Term Development Programme and Russian Railways’ membership in national governments decide to do so. The Company continued to honour its Russian Railways’ Action Plan to Deliver international organisations was a key commitments under railway management against the Russian President’s Address to Cooperation with countries in the to strengthening its image as a green A key project being implemented part of agreements in Mongolia and Armenia. In the Federal Assembly in 2018–2020. Asia-Pacific region company. The Company’s contribution to the UIC Asia–Pacific Regional Assembly, 2020, Ulaanbaatar Railways1 achieved the goals of sustainable development and INTERTRAN helps reduce the cargo strong performance in freight traffic, with In 2020, the Russian Railways Group In 2020, the Company continued its climate agenda includes participation in handling time in intermodal shipping transportation volumes amounting to managed to maintain high business cooperation with Chinese partners, mostly the task forces of the UN organisations from ports of Japan, China and South 30 mt (up 6.6% y-o-y) and freight turnover volumes and further expand its global China Railway, with a view to developing and the International Union of Korea through the port of Vladivostok by reaching 19 bn tkm (up 9.1% y-o-y). footprint. The Company exceeded all container transit, enhancing digitalisation, Railways (UIC). four days. The project was initiated by targets in terms of transit transportation expanding the range of cargoes Russian Railways in 2017. The technology Projects in Egypt, Vietnam, India and other by implementing initiatives aimed at transported, etc. On 15 July 2020, Oleg Belozerov, CEO makes intermodal shipping support countries were being reviewed, too. creating efficient transportation routes and Chairman of the Management Board fully electronic and can be used by all and customer-centric transit services. Given the Russian Government’s of Russian Railways, signed the UIC operators and freight forwarders. In 2020, The Russian Railways Group developed To this end, Russian Railways joins efforts resolution to subsidise transit routes, we Declaration on Sustainable Mobility, the Company continued to roll out the and approved its export-oriented portfolio with over 10 international organisations took consistent steps to engage foreign which proclaims railway companies’ INTERTRAN technology across all its to strengthen its positions in focus to improve the regulatory framework and customers and attract additional cargo commitment to reducing specific energy container handling stations. markets. The portfolio currently includes work out strategic development priorities. traffic to the Trans-Siberian Railway. consumption and CO2 emissions, over 150 products and services. The November saw the first full-length achieving carbon neutrality by 2050, and Company’s Management Board adopted In 2020, the Company met its targets in container train dispatched from Japan to reaching sustainable development goals. Overseas infrastructure a marketing concept to promote it. Russian terms of revenue from foreign operations1 Europe. In 2020, Russian Railways opened In doing so, the Company opted for an projects Railways was also working to create and EBITDA. a representative office in Japan to expand active contribution to the development a digital environment for international its presence in the region’s most promising of sustainable green transport and the Despite the pandemic challenges, the project management and develop an market. implementation of the Paris Agreement on Company honoured all its contractual incentive scheme for business efforts Cooperation with CIS and Baltic climate change response. obligations under the ongoing abroad. states within the 1,520 mm gauge infrastructure projects. network Development of international Russian Railways contributes to the transport corridors SDG Rail Index on the UIC Sustainability In the Republic of Serbia, key construction The Council for Rail Transport of the Platform, which aims to create a rating phases were completed on the two most Commonwealth Member States remains The Septilateral Working Group system for railway companies based on sophisticated infrastructure facilities the key international body ensuring (Germany, Poland, Belarus, Kazakhstan, their contribution to the achievement of on the Belgrade–Budapest route, with technological continuity and practical Mongolia, China, Russia) in charge of sustainable development goals. SDG Rail core viaduct structures erected in the interaction across the 1,520 mm gauge transit promotion focused on streamlining Index is likely to facilitate easier access Danube floodplain and the two bores network. In 2020, the Council held two business processes, increasing the service to green bonds and sustainable finance connected at Čortanovci-Tunnel. Under meetings in absentia. The 73rd meeting speed, developing end-to-end timetables instruments for railway undertakings. the second contract, the Company of the Council approved the draft for container trains, including those based started constructing a single dispatch Conceptual Framework for Strategic on automated solutions, and further During the pandemic, Russian Railways, centre for train traffic control in Serbia Development of the Railway Transport digitalising the transportation process. as well as more than 60 other UIC and designing the renovation of the through 2030, which was submitted to members and representatives of Valjevo–Vrbnica–Montenegro border the CIS Executive Committee. As part of our transportation and logistics 14 international organisations, were route. The Company opened a centre of initiatives to promote the International actively involved in the activities of the excellence in Belgrade to further promote As for Eurasian integration, we delivered North–South Transport Corridor, we are COVID-19 Task Force established by the Russian rail technologies in the region. on all commitments under the roadmap for working to launch a regular container UIC Headquarters. These efforts resulted The Serbian leaders inspected the interaction between Russian Railways and service from India to Russia. The in 8 recommended practices to combat construction site and highly appreciated the Eurasian Economic Commission. The authorised logistics operators agreed on the pandemic. Russian Railways’ efforts. Negotiations

1 In line with Russian Railways’ Action Plan to Deliver against the Russian President’s Address to the Federal Assembly in 2018–2020 (Russian Railways’ Order No. 635r dated 20 March 2020). 1 Russian Railways acts as trust manager in respect of a 50% stake of the Russian Federation in Ulaanbaatar Railways. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 68 | 69 Traffic safety

Transportation Safety project

Russian Railways’ The strategy seeks to develop a safety In 2020, the Company recorded 204 traffic Traffic safety target, accidents per million train kilometres In 2020, as part of its Transport Safety of management system throughout the life accidents across its railway network, Infrastructure Projects and Transportation Strategy for Guaranteed cycle of infrastructure facilities and rail down 18% y-o-y, with collisions at rail 2.0 Safety investment projects the Company vehicles and to create a methodological crossings 26% less severe. In 2020, the furnished 100 facilities with transport Transportation Safety and 1.42 framework for transportation safety Company achieved traffic safety targets 1.5 1.30 1.28 safety equipment to ensure compliance Reliability lays out the management by introducing digital set by Russian Railways’ Management 1.32 0.98 with transportation security laws. On platforms and improving the offering of Board final meeting for 2019, with a 15% 1.0 1.17 top of that, the Company purchased general principles that are 0.98 0.64 quality, highly reliable and safe services. improvement to the estimates (0.544 0.86 security screening equipment for railway 0.5 underpinned by safety cases per million train kilometres vs the 0.544 stations in St Petersburg to be engaged Traffic safety priorities include: target of 0.64). (−15 %) in providing transportation services management and culture. • improving the reliability and safety of 0.0 during the 2021 UEFA European Football 2016 2017 2018 2019 2020 equipment that is part of infrastructure In 2020, Russian Railways fully Championship, and the Syktyvkar and rolling stock; implemented the programmes to target actual railway station which will serve as a • reducing the likelihood of traffic ensure train traffic safety and bring its transportation hub during the 2022 Bandy accidents; infrastructure in line with operations and World Championship. • preventing or reducing fatalities and maintenance requirements. Investments in Safety violations across Russian Railways infrastructure injuries; boosting traffic safety totalled RUB 2.0 bn, In 2020, Russian Railways organised • reducing property damage and other down 44% y-o-y. security at 7,338 facilities and arranged losses; 6,000 for the protection of 400 facilities. Over 5,048 • preventing any adverse impact on the the year, the Company increased the 4,500 environment. 3,707 number of facilities protected by transport 3,120 2,877 security units by 32.7% y-o-y, engaging 3,000 2,401 The reporting year saw the number of (−17 %) 396 dedicated railway guard teams. 1,770 1,575 traffic accidents and incidents involving 1,348 1,500 797 the Company’s railway infrastructure fall 913 (−13 %) 17% against 2019 to 2,401, including a 13% decrease in accidents caused by Russian 0 2016 2017 2018 2019 2020 Railways (to 797). Russian Railways infrastructure Russian Railways Group ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 70 | 71 Investment activities Investment highlights in 2020

The expansion and upgrade The priority of the Russian Railways No. 204 dated 7 May 2018 that aim to As approved by the Russian Railways Investment projects included in the Comprehensive Plan investment programme in 2020 is make substantial positive changes to Board of Directors, the 2020 investment of railway transport fixed to achieve the targets set in the the rail infrastructure across the country. programme1 totalled RUB 704.1 bn, Enhancement of the throughput and carrying capacities to deliver assets is indispensable for Comprehensive Plan for Upgrading Russian Railways investment activities inlcuding: a four-fold increase in transit container traffic, including the Trans- and Expanding Core Infrastructure until provide RUB 6 tn worth of economic • RUB 583.1 bn of the Company’s own Siberian in Seven Days project the balanced economic 2024 and Russian President’s Decree benefits to Russia. funds; • RUB 121.0 bn of the government support. development of a nation, North-West ports and border crossings establishment of the The spending on the Russian Railways 2020 investment programme stood at domestic production base, Krasnoye Investment programme approaches RUB 717.3 bn (101.9% of the approved unlocking of the industrial plan). potential, and promotion The Company’s investment programme is for the Russian Federation. The above In 2020, Russian Railways continued of the country’s territorial designed to: assessments are performed in line with its work towards achieving the goals Ozinki • Iletsk Petropavlovsk ensure uninterrupted transportation the Methodology for Evaluating the established in the Transport Section of Kartaly integrity and security. The service; Social and Economic Impacts.1 In addition, the Comprehensive Plan for Upgrading Samur implementation of the • embrace the most promising projects in the Company uses the Procedure and Expanding Core Infrastructure until terms of both commercial and budget for Calculating the Russian Railways 2024 (the “Comprehensive Plan”) and Primorye Naushki Zabaikalsk investment programme is efficiency; Group’s Contribution to the GDP of the Russian President’s Decree No. 204 dated Territory ports and border crossings a key enabler to deliver • minimise federal government spending Russian Federation.2 The procedure 7 May 2018. on investment projects. requires, among other things, to take on the strategic goals and into account social and economic factors The project progress in 2020: • in 2020, the transit container traffic objectives of the Russian To evaluate project feasibility, Russian when conducting the assessments. The • in 2020, transit container shipping totalled 830.9 thousand 20-foot Railways applies a comprehensive balanced criteria for an investment project times on the Europe to Western China equivalent units (TEU) vs the targeted Railways Group. approach involving assessments to be considered feasible are a payback route were reduced to 2.0 days vs the 680 thousand TEU (increase by of investment efficiency for project period of up to 20 years and an IRR of at 2.2 days’ target (1.2 days faster than in 212.7 thousand TEU vs 2019). participants and measurements of budget least 10%. 2019); and social and economic efficiency • in 2020, transit container shipping In 2020, the Company completed times on the West to East route RUB 2.8 bn worth of works to develop improved to 7.8 days vs the 8.0 days’ design documents and estimates (143% vs target (1.1 days faster than in 2019); 2020 plan).

1 Full title: Methodology for Evaluating the Socio-Economic Impacts of Transport Infrastructure Construction (Upgrade) and Operation Projects Intended to Be Funded from the Federal Budget, Backed by the Government Guarantees of the Russian Federation and Eligible for Tax Relief. Approved by Resolution of the Russian Government No. 1512 dated 26 November 2019. 2 Approved by Russian Railways Order No. 1957r dated 6 September 2019. 1 Meeting on 29 December 2020 (Minutes No. 5). ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 72 | 73

Construction of a western bypass Development and renovation of the rail infrastructure Development of the Central Upgrade of rail infrastructure of the Baikal–Amur and Trans- at the Saratov Transport Hub with serving ports of the North-Western basin Transport Hub Siberian main lines to increase throughput and carrying the expansion of the Lipovsky– capacities (phase 1) Kurdyum section The project is aimed at increasing the Murmansk carrying capacity of the rail infrastructure

to Syzran in the North-Western operating domain to Lipovsky 145.6 mt in 2020 and to 177 mt in 2030. Kryukovo Lobnya Krasnoyarsk Tayshet Severobaikalsk Trofimovsky II Arkhangelsk Severomuysk to Atkarsk Nakhabino Sayanskaya In 2020, the Company completed Tynda Tatishchevo Kurdyum RUB 11.4 bn worth of works Zheleznodorozhnoye Gorely Saratov I-Passenger Novokuznetsk- 30 km block st. (118% vs 2020 plan). Vostochny Komsomolsk- Saratov II-Freight Odintsovo Irkutsk- Saratov III Sortirovochny Chita I Sortirovochny Ramenskoye St Petersburg Aprelevka Zabaikalsk Vologda Vanino Podolsk

Knyazevka Volga Pskov Bagaevka st. Tver Ivanovsky Moscow Sibirtsevo Neftyanaya St. Vladivostok Nakhodka- Anisovka Vostochnaya The project is aimed at strengthening the Electrification of the Ozherelye–Uzlovaya–Yelets section rail infrastructure to achieve the planned The project is aimed at developing and In 2020, the total carrying capacity of The project is aimed at developing the (adjustments required for passenger transportation) passenger transportation volumes at the upgrading the rail infrastructure to create an the main lines stood at 144.0 mt vs the rail infrastructure on the far approaches Central Transport Hub. additional 55 to 66.8 mt carrying capacity 144.0 mt target. to the ports of the Azov and Black Seas, The project is aimed at diverting on routes to sea ports and Far East border enabling an increase in freight carriage Moscow passenger trains from the Kazan and In 2020, the Company completed crossings in 2021 vs 2012. through the Saratov Transport Hub of at Paveletskoye routes of the Moskovskaya RUB 99.3 bn worth of works Upgrade of the Baikal-Amur and the least 49.2 mt vs 2015. Ozherelye Railway, and increasing the throughput (101% vs 2020 plan). In 2020, the Company completed Trans-Siberian main lines (phase 2) Ryazan capacity of the Uzlovaya–Yelets section to RUB 56.7 bn worth of works (87% vs 2020 In 2020, the total carrying capacity on the 65 train pairs by 2030. plan). The project is aimed at increasing the approaches to the Saratov Transport Hub Tula carrying capacity of the Baikal-Amur and of the Privolzhskaya Railway was 75.6 mt. In 2020, the Company completed In 2020, Russian Railways shipped the Trans-Siberian main lines to 180 mt by RUB 0.4 bn worth of works 125.8 mt of coal and ore from the main 2024. In 2020, the Company completed (100% vs 2020 plan). mineral deposits, which is above the RUB 0.4 bn worth of works to develop

Tambov upper end of the target set in the project In 2020, the Company completed design specifications and estimates (79% Lipetsk data sheet (124.9 mt). RUB 10.3 bn worth of works to develop vs 2020 plan). Yelets design specifications and estimates (127% vs 2020 plan).

Creation of the St Petersburg–Moscow Ultra Development and renovation of the rail infrastructure serving High-Speed Railway ports of the Azov and Black Seas The project is aimed at laying the The project is aimed at creating the foundation for the development of high- 125.1 mt carrying capacity of railway speed and ultra high-speed railway sections serving ports of the Azov and services between major cities.

Maxim Trubnaya Black Seas by 2024 (+50.1 mt vs 2015). Gorky In 2020, the Company completed Volgograd Verkhniy Baskunchak NOVGOROD TVER In 2020, the Company completed Saint Petersburg REGION REGION RUB 2.1 bn worth of works Volgodonsk Main St. Taganrog Kotelnikovo RUB 15.2 bn worth of works (101% vs 2020 HSR Moscow (100% vs 2020 plan). Okulovo HSR Oktyabrskaya Rostov-on-Don Obukhovo-2 Tver Vysokovo Kuberle plan). Vypolzovo HSR HSR HSR Azov Zharovskaya HSR Sea Salsk Aksarayskaya Sadva HSR Novaya Tver Astrakhan Gorki HSR Kryukovo HSR Logovezh HSR Grechanaya Tikhoretskaya HSR Kozyrki Veliky Novgorod HSR Poltavskaya Krymskaya LENINGRAD Veliky Novgorod MOSCOW REGION Black Caspian REGION Sea Sea ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 74 | 75

Other comprehensive rail infrastructure development projects

Development of the railway Reconstruction of the Development of the Development of the Infrastructure expansion and upgrade on the Severnaya and hub of the St Petersburg Morozovskaya–Volgodonskaya Perm Railway Hub and the Perm–Solikamsk Sverdlovskaya Railways to accommodate additional freight trains as part transport system railway section construction of a river crossing connection of the Northern Latitudinal Railway project

The project will facilitate a throughput Orekhovo Sokhranovka Solikamsk VOLGOGRAD Chashkino of 23.9 mt of freight, reducing the length Palniki Karskaya Chertkovo REGION Berezniki Bovanenkovo of transportation routes linking mineral Yayva Golovanovo Kaliynaya deposits in the northern parts of West Millerovo Levshino Siberia to the ports of the Baltic, White, Toksovo Sertolovo Kabelnaya Nyar Beloostrov Morozovskaya Barents and Kara Seas and thereby Likhaya Balmoshnaya Vorkuta Novy Yamburg Payuta Port contributing to the development of the Kurya Blochnaya Dobryanka Russian Arctic. Finland St. Melnichny Bronka Ruchey Perm Sortirovochnaya Yarino Moskovsky St. Obskaya Vitebsky St. Kuberle Perm I Perm Novy Oranienbaum Baltiysky St. Kalino Perm II Chusovskaya Salekhard Urengoy Korotchaevo In 2020, the Company completed Pavlovo-na-Neve Perm St Petersburg Krasnokamsk Levshino Pangody RUB 0.9 bn worth of project works Rostov Main St. ROSTOV YAMALONENETS Nadym Krasnoye Selo REGION Perm II AUTONOMOUS AREA (106% vs 2020 plan). Pavlovsk Azov Bataysk

Vladimirskaya Purpe Gatchina-Varshavskaya Tosno Salsk

The project is aimed at developing the In 2020, as part of the Comprehensive The investment project is aimed at The project is aimed at accommodating St Petersburg Railway Hub in light of Plan for Upgrading and Enhancing Core accommodating the freight volumes from the rising freight volumes of up to Upgrade of rail infrastructure on the the projected increase in freight and Infrastructure until 2024, the Company the Bereznikovsko-Solikamsky industrial 23.0 mt in 2021 and up to 31.9 mt by island of Sakhalin passenger transportation volumes by implemented the Reconstruction of hub by construction of a northern railway 2025 by providing the Solikamsk–Perm 2030. the Morozovskaya–Volgodonskaya bypass of Perm with a railway river Sortirovochnaya route for freight trains The project is aimed at ensuring Railway Section project to introduce an crossing over the Kama Reservoir. with a weight of 6 kt and a length of uninterrupted transport access to Sakhalin Nogliki In 2020, the Company completed automatic block signalling system at the 71 standard cars. and developing the railway transport on RUB 0.9 bn worth of works Morozovskaya–Tsimlyanskaya section of In 2020, spending on the investment the island. A stationary bridge crossing (97% vs 2020 plan). the North Caucasus Railway. project stood at RUB 0.6 bn In 2020, the Company completed will help develop the island’s port (98% vs 2020 plan). RUB 1.5 bn worth of works capacities. In 2020, the project moved from the (101% vs 2020 plan). investment phase to the operation phase. In 2020, the Company introduced a train service running on the 1,520 mm gauge network on Sakhalin Island. The gauge Development of the Tobolsk–Surgut–Korotchaevo railway section conversion made it possible to align the Sakhalin track gauge system with the The project is aimed at ensuring the by the approved design documents, Russian railway network. Korotchaevo 577 transportation of the expected volumes the throughput capacity of the section of hydrocarbons from the Yamalo-Nenets is now 66 train pairs per day. Actual spending on the investment and Khanty-Mansi autonomous areas by Ilyinsk project in 2020 amounted to RUB 5.2 bn Arsentievka gradually ramping up the throughput and In 2020, the Company completed (86% vs 2020 plan).

YAMALONENETS carrying capacity of the Tobolsk–Surgut RUB 0.8 bn worth of project works KHANTYMANSI AUTONOMOUS AREA AUTONOMOUS AREA railway section to 66 train pairs per day. (92% vs 2020 plan). Kholmsk

Korsakov Surgut 696 The construction of the second main track throughout the Tobolsk–Surgut section was completed. As required Nizhnevartovsk I

222 Tobolsk ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 76 | 77

Construction of the Asino Other rail infrastructure Conformance of Upgrading the fixed assets Novaya Yolovka Prokhorovka–Zhuravka– Tomsk Timonino Ilanskaya Mariinsk Bugach Krasnoyarsk development projects infrastructure to regulatory Anzherskaya Achinsk I Vostochny Biryusinsk This section of the investment programme Chertkovo–Bataysk line Taiga Reshoty Krasnoyarsk Uyar Zaozyornaya standards Shush includes Russian Railways projects aimed at: Barzas Dubinino Kr. Sopka Zykovo Kvartsit Tayshet Yurga I Divnogorsk Khairuzovka Sayanskaya Agul Irbeyskaya Construction of second tracks, The above investment projects involve • improving the infrastructure and Sharypovo Zhuravka Kemerovo Uzhur Topki extension of station tracks, and works to ensure conformance of the rail retrofitting freight yards and terminals; Zaytsevka Kiya-Shaltyr infrastructure to the regulatory standards • refurbishing the fuel storages and Proektnaya development of railway hubs and Guryevsk Belovo border crossing stations by introducing transport safety equipment warehouses; B. Irba Koshurnikova Sergeevka Artyshta II Bardino Kaspa and installing environmental protection • refurbishing and erecting buildings, Irba Mezhdurechensk Abakan Kuragino The project is aimed at increasing the systems at the Company’s facilities (water structures and critical infrastructure Tomusinskaya Karai Biskamzha Minusinsk Teba Mundybash Khabzas Tigey throughput and handling capacities of the purification and air cleaning equipment, facilities (heat and power, water supply Sokhranovka Teya Kamyshta Kondoma Sheregesh Birkchul key railway routes with a view to allowing waste disposal and neutralisation and sewage, lighting) used for process Tashtagol Kazanovskaya Askiz passage of freight trains with a unified equipment). and utility needs of the railway; Byisk Abaza mass of 6,300 t and length of 71 standard • renovating track maintenance Kuteynikovo cars. In 2020, the investment expenses equipment, diagnostic facilities and Throughput increase at the Comprehensive development amounted to RUB 10.4 bn (98% vs 2020 train cars intended for maintenance UKRAINE Vinogradovka Artyshta–Mezhdurechensk– of the Krasnoyarsk Railway’s In 2020, the Company completed plan). and support of reconstruction (upgrade) Tayshet section Mezhdurechensk–Tayshet section RUB 4.8 bn worth of works and overhaul works, and works to build (102% vs 2020 plan). new railway tracks, and upgrading the The project draws on the parameters When completed in 2021, the project will Digitalisation and lean fixed assets of maintenance sections Kolodezi of the first and second phases of the help handle all coal volumes expected to technologies and automation and telecontrol tools; project to upgrade the Baikal-Amur and be shipped from the Kuzbass region to the Development of marshalling yards • developing electricity supply facilities the Trans-Siberian main lines discussed Far East ports and sync the throughput This section of the investment programme of Russian Railways.

Bochenkovo at the meeting of the Strategic Planning and carrying capacities with the first The project is aimed at ensuring the includes projects aimed at: Committee of the Russian Railways Board phase of the project to upgrade Baikal- development of track infrastructure • developing and supporting the In 2020, the investment expenses of Directors on 31 July 2018. Amur and the Trans-Siberian main lines. and equipping the marshalling yards IT infrastructure that ensures amounted to RUB 250.1 bn The project is aimed at developing the with comprehensive mechanisation and uninterrupted industrial processes (106% vs 2020 plan). infrastructure at the Moscow–Rostov In 2020, the Company completed In 2020, spending on the project totalled automation systems. within the Company; passenger and freight main line section RUB 3.4 bn worth of works RUB 8.7 bn (100% vs 2020 plan). • upgrading and developing the (part of the North–South corridor) with (100% vs 2020 plan). In 2020, the Company completed primary transport telecommunication heavy passenger and commuter traffic. RUB 1.7 bn worth of works environment; (105% vs 2020 plan). • introducing modern digital radio In 2020, the Company completed Electrification of the Rtishchevo–Kochetovka section systems and upgrading the fixed RUB 0.4 bn worth of project works (adjustments required for freight services) assets; (82% vs 2020 plan). Digital marshalling units • creating digital twins and using The project is aimed at ensuring the innovative traffic control, traffic safety Ryazan passage of freight trains by way of The project is aimed at introducing and energy- and resource-saving diverting transit trains from the passenger- the technologies that will minimise technologies in rail transport. crowded Voronezh route – up to 51 train the involvement of staff in industrial pairs by 2030. processes, including, among other things, In 2020, the investment expenses through the deployment of: amounted to RUB 30.7 bn The Company completed RUB 0.6 bn (116% vs 2020 plan). worth of works to develop design • a comprehensive automation system to documents (100% vs 2020 plan). control the marshalling process; Kochetovka • an automatic cab signalling switching Michurinsk Tambov system; • systems intended to control and Lipetsk generate information about movements Rtishchevo of train cars and locomotives at the station in real-time mode.

In 2020, the Company completed RUB 1.3 bn worth of works (100% vs 2020 plan). ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 78 | 79

Passenger infrastructure Rolling stock renewal Other projects Moscow – St Petersburg ultra high-speed line: project overview and details upgrade The projects covered by this section This section contains projects to deliver This section of the investment programme are aimed at renewing the rolling stock improvements in the social sphere and includes Russian Railways projects aimed to ensure uninterrupted cargo and to support the establishment of Russian at implementing measures to enhance passenger transportation, train traffic Railways’ subsidiaries and affiliates. the accessibility of passenger services safety and achievement of the targets Ultra High-Speed Railway Lines in all regions of Russia by improving relating to passenger traffic and cargo In 2020, the investment expenses Federal Project the quality of service, developing new turnover, as defined by the Development amounted to RUB 34.0 bn products and services, introducing digital Strategy of the Russian Railway Transport (100% vs 2020 plan). 625 km RUB 1,390 bn services, and creating a comfortable until 2030. transport environment for all categories of passengers. In 2020, the investment expenses amounted to RUB 152.7 bn Moscow Logovezh Veliky St Petersburg In 2020, the investment expenses (99% vs 2020 plan). Kryukovo Tver (Torzhok) Novgorod Obukhovo amounted to RUB 8.4 bn 2024 2025 2027 2027 2027 2024 (102% vs 2020 plan).

42 km 180 km 445 km 12 km Rail tracks for Ultra High-Speed Line (ultra high-speed line: Rail tracks for Ultra high-speed lines passenger trains (up to 400 km/h) speeds of up to passenger trains (reaching speeds of 440 RUB bn 400 km/h) (reaching speeds of up to 200 km/h) up to 200 km/h)

The updates to the Russian High-Speed The length of the railway line (including Ultra High-Speed Line 1: Russian Russian Federal Russian and Ultra High-Speed Lines Programme the upgraded existing infrastructure Moscow–St Petersburg Railways Railways Concession Railways until 2036 continue into 2021. The sections on the approaches to Moscow Programme is scheduled for approval In 2020, the Company started engineering and St Petersburg) will be about 679 km. in 2021. It defines the procedure for surveys and developed area planning and The travel time between Moscow and implementing 15 high-speed and ultra design documents to build the Moscow– St Petersburg will be reduced by 1.7 times high-speed railway projects until 2036, St Petersburg ultra high-speed line.1 The (to 2 h 15 min – 2 h 19 min). creating a high-speed and ultra high- railway line will run through 6 constituent The ultra high-speed line will The project will create speed rail infrastructure framework, and entities of the Russian Federation: federal serve an area with nearly 679 km consolidating key centres of economic cities of Moscow and St Petersburg, and >250 thousand growth in Russia into a single network. Leningrad, Novgorod, Tver and Moscow length, including entrances to Moscow and St Petersburg regions. The ultra high-speed line will 30 new jobs, serve an area with nearly 30 million including residents. h min million people 2 15 35 thousand Travel time between the two jobs to build the line capitals (without stops). % 20 The project will help reduce RUB tn travel times between the 1.5 metropolitan areas by of Russia’s for 7 years of works population commissioned by the times 1.7 construction industry including metropolitan area entrances 23.3 m1 passengers per annum RUB 8,013 bn in 2030 (3rd full year of operation) throughout the entire railway line GDP growth (by 2050)

1 Pursuant to Russian President’s Instruction No. Pr 623 dated 10 April 2019. 1 GDP growth and passenger transportation data sourced from Infrastructure Economics Centre. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 80 | 81 Innovation driven development

The Russian Railways The Group’s Comprehensive Innovative The Group aims to lead the way in In 2020, innovation projects delivered the • improved information and transport • Following the results of tests carried Development Programme (the “CIDP”) unlocking innovation across the economy following outcomes: security and more effective out at the Severnaya, Kuybyshevskaya Group’s R&D activities lays the groundwork for implementing by fostering collaboration with the • an increase in profitability, quality of management of resources, risks and and Sverdlovskaya Railways, and innovation driven the Long-Term Development Programme. national scientific institutions, industrial service and passenger satisfaction reliability across the life cycle of Ledokol – specialised equipment for The programme currently in place is enterprises, small and medium-sized attributable to Lastochka electric railway infrastructure facilities and instant removal of ice from pedestrian development follow the the CIDP until 20251. It includes 11 groups businesses, and other stakeholders that trains, new rolling stock for freight rolling stock; surfaces (LLC Baraban Scientific priorities set forth in the of key projects and proposals for are a part of the national innovation traffic (innovative gondola cars), • optimised fuel and energy consumption and Technical Company) – proved streamlining innovation activities and system. To this end, it has placed innovative rolling stock for passenger and efficient transportation thanks to its efficiency. The initial demand for Company’s Long-Term establishes partnership mechanisms significant focus on taking forward the transport (double-decker cars) and new generation locomotives; the equipment across the network is underpinned by open innovation principles. open innovation principles. expanded use of double-decker trains; • reduced adverse impacts on the estimated at 111 units. Development Programme • improved passenger train service on the environment (decreased discharge of • Tests were completed for the until 2025, as well as the Key areas of the Group’s innovation driven Moscow Central Circle and throughout insufficiently treated waste water and integrated pneumatic hydro-pulse Group’s Research and development: the Moscow Central Diameters greenhouse gas emissions) enabled by cleaning technology used in heat • developing a customer-focused The Group’s contributing to the development of the innovative technologies. engineering equipment (R-Techno LLC) Development Strategy until transportation and logistics system in Moscow Transport Hub; to be included in the Russian Railways a unified transportation space; innovation driven • reduced operating costs, increased In 2020, Group invested a total of investment programme for 2021. 2025 and further until 2030 • establishing and implementing traffic safety, optimised expenses RUB 197.43 bn in innovation projects, • A downhole sensor for measuring (the “White Book”), in line dynamic transportation management activities achieved through the implementation including R&D. The funding planned for the content of petroleum products in systems using artificial intelligence; of innovation projects to introduce 2021 stands at RUB 170.03 bn. waste water (Gazenergoproekt Institute with the country’s strategic • implementing innovative systems AI-powered traffic control systems, LLC) successfully passed trials on the development goals and to automate and mechanise station All business units of Russian Railways develop an automated train traffic Moscow Railway. processes; are engaged, to a various extent, in prediction system based on simulation Key innovation driven global R&D trends. • setting requirements for the innovation. They plan and implement modelling, create and put in place development projects in 2020 In 2020, as part of the project to introduce construction and deployment of innovation projects aimed at boosting virtual coupling – a wireless inter automatic movement control on electric innovative rolling stock; economic and non-economic carriage link technology, and introduce Below are the innovation projects trains, acceptance tests were completed • developing and implementing performance, providing regular updates the technology of driving freight trains implemented as part of the CIDP in 2020: for the automatic control system on advanced equipment and technologies on the projects and their progress in the without assistant; • A unified processes model was Lastochka ES2G-113, an electric train for track maintenance infrastructure, context of the CIDP mid-term plan. There • enhanced traffic safety thanks to designed for the Northen Latitudinal equipped with a machine vision system railway automation and telematics, is an expert task force led by Deputy CEO, constant monitoring of rolling stock Railway. that runs on the Moscow Central Circle. electrification and power supply, Chief Engineer of Russian Railways, movement and the condition of • Technical requirements were On top of that, an ES2G-136 electric innovative information and that is responsible for selecting innovation infrastructure facilities, including by developed for long-distance double- train powered by machine vision was telecommunication technologies; projects and activities and overseeing using predictive analytics; decker electric trains. purchased for subsequent tests with • developing the traffic safety the implementation of the CIDP. • higher information security, new • As part of the project to increase ES2G-113. This step is expected to management system and risk technical diagnostic tools for the the speeds at the Moscow – Nizhny facilitate a transition to fully automatic management methods associated with The Company’s branches take part in infrastructure and rolling stock; Novgorod section, a new traffic operation. It is implemented in sync with the transportation safety and reliability; testing innovative solutions and fostering • a unified corporate hardware and management technology was the development of design documents for • developing and implementing interaction between the Group and software environment to enable introduced on 17 EP20 locomotives. a prototype of Lastochka electric train that equipment and technologies for participants of innovative ecosystems the transition to minimum manning Using a DMR-RUS channel to transmit will operate in a fully automatic mode, promoting high-speed and ultra high- across the constituent entities of the solutions for maintenance and critical information, it enables their which will continue into 2021. speed railway transport; Russian Federation, including those commercial acceptance of rolling stock operation at speeds of over 160 km/h. • promoting technologies for heavy-duty operating on regional innovation at marshalling yards, and introduction • The Company put into permanent use freight traffic management; platforms. of modern automation systems for an automated traffic management • improving energy efficiency of station processes; system on the Moscow Railway and operations; • increased train traffic safety and an unmanned locomotive system • implementing the best available transport safety, high operational for shunting operations on the technologies in environmental readiness to carry guaranteed Oktyabrskaya Railway (Luzhskaya protection; volumes of freight and passenger station). • promoting the quality control system. transportation;

1 Approved by the Company’s Board of Directors (Minutes No. 13 dated 26 February 2019). ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 82 | 83

Projects implemented as The digital transformation in Russian customers, Company’s employees) and port (Russia) – Kolyadichi station have taken part in the HR digital Quantum communications part of the Russian Railways’ Railways will be focused on the following external customers (mainly passengers (Belarus) route. document management pilot project. 8 digital platforms: and freight forwarders). The Strategy 2. Russian Railways launched a new 4. The Company completed the As defined by the Russian Government Digital Transformation • multimodal passenger transportation; provides for implementation of 55 projects website with all passenger information development of internal digital tools, in the Digital Economy of the Russian Strategy • multimodal freight transportation; based on the use of high-potential end-to- available on the home page – tickets, such as the Employee Service Portal Federation national programme, • transportation and logistics hubs; end technologies, including the Internet bonus programme, promos, contact with 10 new services becoming Russian Railways acts as the company The Company’s Digital Transformation • local infrastructure operator; of Things, “big data”, distributed ledgers details. The Company’s mobile available. At the present moment, responsible for the development of Strategy until 2025 (the “Strategy”) is • logistics operator in e-commerce; (blockchain), artificial intelligence, virtual services have been growing, with employees of Russian Railways the quantum communications sector. aligned with the Long-Term Development • transportation management; and augmented reality, advanced data 14.7 m long-distance tickets and 2 m have access to more than 40 digital Russian Railways together with the Programme in terms of timing, financial • business support processes; transmission solutions (such as quantum suburban tickets issued via the Russian services, and the number of users leading research centres and the expert metrics, activities and targets. The • traction stock. communications). Railways Passengers mobile app. exceeded 600 thousand. community prepared a roadmap that financial metrics of the Strategy are in 3. The Company launched 5. A career portal of Russian Railways was approved by the Praesidium of the turn aligned with the Company’s three- These platforms will be leveraged to In 2020, the Company implemented the document exchange through was launched. It is visited by more than Government Commission on Digital year investment programme. Apart from develop digital services and improve the following major digital transformation the interdepartmental electronic 100 thousand people monthly, including Development, Use of Information the integration of digital technology, the effective use of the existing digital assets projects: document management system both the Company’s employees and Technologies to Improve the Quality of digital transformation projects are geared such as data from information systems to 1. International intermodal container (MEDO) and established interaction external users interested in vacancies Life and the Conditions for Doing Business towards improving business processes, reduce the operating costs or generate service as part of the INTERTRAN with the Federal Tax Service switching with the Company. in August 2020. updating regulations and creating a additional income. Such services will be project using paperless technology on to the tax monitoring regime. 6. As part of the improvement of the digital culture within the Company. geared towards both internal users (end the Ningbo port (China) – Vladivostok 126 business units of the Company Foreign Projects automated system, The development of quantum the Company introduced services communications in Russia will contribute offering additional features with to creating an integrated secure regard to foreign projects of Russian infrastructure for the digital economy and Railways. the public administration system, which 7. The Company completed testing of is particularly important in the face of its long-distance travel documents modern information security threats. The issuance service for passengers with main users will include Russian Railways, disabilities that uses information as an operator of essential transport from the Federal Register of Disabled infrastructure, telecom operators, Persons. government bodies, financial institutions, 8. As part of the Digital Railway healthcare organisations, operators of Station project, execution control critical infrastructure, and organisations and planning modules were put operating intellectual property. into commercial operation at the Kinel station of the Kuybyshevskaya Russian Railways established a Steering Railway and the Chelyabinsk-Main Committee for the Implementation of the Station of the South Urals Railway. Quantum Communications Roadmap 9. The Company designed a new to serve as a coordinating body. It also interface for the Personal Account created the Quantum Communications of the Russian Railways freight Section as part of the Russian Railways transportation. Scientific and Technical Council that will 10. An automated service builder was act as an expert council bringing together launched to meet the needs of freight major science and industry leaders. transportation customers. 11. The Company deployed new software modules for the Intelligent Railway Transport Management System (the “IRTMS”) and developed the core functionality for the IRTMS project in the Eastern Operating Domain. 12. A blockchain-powered service for managing rail track life cycle was introduced. 13. The Company completed the first stage of works pertaining to the development of the life cycle management system for infrastructure facilities of Russian Railways based on Building Information Modelling (BIM) technology. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 84 | 85 Analysis of financial results

Outstanding debt at the end of 2020 An adverse macroeconomic environment The Company’s investment programme amounted to RUB 1,513.8 bn. In 2020, created by the pandemic-related reached an all-time high, with capex in Russian Railways raised long-term restrictions did not prevent us from excess of RUB 717 bn for the year. financing in the primary market for a total generating a net profit of RUB 0.3 bn Despite the pandemic’s major impact and related restrictions, the of RUB 452.9 bn, including RUB 313 bn thanks to cost optimisation and robust Company implemented its investment programme to the maximum as a part of the perpetual bond issue debt portfolio management to beat our to support Russia’s economy in 2020. This was driven by our strong supported by the Russian President – an own expectations of a RUB 3.3 bn loss. efforts to increase the internal efficiency, as well as corporate impressive result for a complex financial In 2020, Russian Railways’ EBITDA was governance improvements and the successful use of new financial instrument issued for the first time. RUB 402.3 bn – just 3.6% lower than in the instruments (including perpetual bonds). Typically, new instruments placed on previous year (up 3.1% vs the plan). the local market during a year bring in In these circumstances, we managed to deliver a positive financial RUB 20 bn or less. result, with losses in line with our expectations and the Group-wide KPI targets achieved in full. Russian Railways’ key financial and economic results under RAS, RUB bn

Item 2019 2020 Change vs plan Change y-o-y Vadim Mikhailov Plan Actual +/− % +/− % First Deputy CEO of Russian Railways Total income 1,848.1 1,776.5 1,813.1 36.6 102.1 −35.0 98.1 Income from transportation, infrastructure, In 2020, Russian Railways A major decline in economic activity Income from transportation reduced and locomotive traction services 1,641.9 1,597.8 1 615.3 17.5 101.1 −26.6 98.4 amid the pandemic-related restrictions by 1.6% y-o-y, but was up 1.1% compared Freight transportation 1,503.4 1,478.1 1 495.3 17.2 101.2 −8.1 99.5 acted promptly to translated into substantially lower to the plan. Freight operations showed Infrastructure services 110.6 95.3 96.5 1.2 101.2 −14.1 87.3 address the unfavourable demand for railway transportation. Freight a 0.5% decline (up 1.2% vs the plan), handling and turnover (including empty with the revenue rate growth at 2.1% amid Freight 4.0 4.8 5.0 0.2 105.2 1.0 125.8 situation that emerged in a runs of own railcars) were 2.7% and 2.5% changes in the freight transportation Long-haul 72.4 55.0 55.5 0.5 100.9 −16.9 76.6 lower, respectively, than in 2019. structure. Passenger operations challenging macroeconomic Suburban 34.2 35.5 36.0 0.4 101.2 1.8 105.3 deteriorated by 15.8%.Sales profit environment amid the In passenger services, performance decreased by 29.4% y-o-y to RUB 117.3 bn, Passenger transportation 27.9 24.4 23.5 −0.9 96.4 −4.4 84.2 spread of COVID-19 and was mainly affected by the critical but was up RUB 25.0 bn, or 27.0%, Long-haul 21.7 13.1 12.2 −0.9 93.4 −9.5 56.4 epidemiological situation. Passenger compared to the plan. Profit from other related restrictions, with turnover shrank by 41.4% to 78.1 bn pkm operations amounted to RUB 17.9 bn. Suburban 6.2 11.3 11.3 0.0 99.9 5.1 181.7 as the Company transported 872 million Income from other operations 206.2 178.7 197.8 19.1 110.7 −8.5 95.9 timely decision-making people (down 27.2% y-o-y). Dividends from subsidiaries and affiliates supporting its response. stood at a record RUB 39.7 bn, while During these challenging times, Russian sales of their shares amounted to Railways provided strong support RUB 46.2 bn and yielded a financial to ensure business continuity for its result of RUB 0.7 bn. subsidiaries, customers, and partners. We also paid all the necessary federal, regional and local taxes, levies and insurance fees. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 86 | 87

Item 2019 2020 Change vs plan Change y-o-y Analysis of income and expenses Plan Actual +/− % +/− %

Total expenses 1,681.8 1,684.2 1,695.8 11.6 100.7 13.9 100.8 Income from transportation Expenses in transportation, infrastructure Changes in income from transportation and locomotive traction services 1,498.5 1,519.2 1,515.9 −3.3 99.8 17.5 101.2 Freight transportation 1,350.1 1,366.2 1,364.7 −1.5 99.9 14.6 101.1 Item 2019 2020 Change Change vs plan 2020/2019 Infrastructure services 122.3 125.5 123.5 −2.0 98.4 1.1 100.9 target actual +/− % +/− % Freight 3.6 4.3 4.6 0.2 105.2 0.9 125.8

Long-haul 76.8 69.4 68.6 −0.8 98.9 −8.2 89.3 Income from transportation 1,641.9 1,597.8 1,615.3 17.5 1.1 −26.6 −1.6 Suburban 41.9 51.8 50.3 −1.5 97.2 8.4 120.1 Freight transportation 1,503.4 1,478.1 1,495.3 17.2 1.2 −8.1 −0.5 Passenger transportation 26.0 27.5 27.7 0.2 100.8 1.7 106.7 Passenger transportation 27.9 24.4 23.5 −0.9 −3.6 −4.4 −15.8 Long-haul 15.6 16.2 16.6 0.3 102.1 0.9 106.0 Long-haul 21.7 13.1 12.2 −0.9 −6.6 −9.5 −43.6 Suburban 10.4 11.3 11.2 −0.1 98.8 0.8 107.8 Suburban 6.2 11.3 11.3 0.0 −0.1 5.1 81.7 Expenses in other operations 183.4 164.9 179.8 14.9 109.0 −3.5 98.1 Infrastructure services 110.6 95.3 96.5 1.2 1.2 −14.1 −12.7 Total sales revenue 166.3 92.3 117.3 25.0 127.0 −49.0 70.6 Freight 4.0 4.8 5.0 0.2 5.2 1.0 25.8 Profit from transportation, infrastructure, Long-haul passenger 72.4 55.0 55.5 0.5 0.9 −16.9 −23.4 and locomotive traction services 143.4 78.6 99.4 20.8 126.5 −44.0 69.3 Suburban passenger 34.2 35.5 36.0 0.4 1.2 1.8 5.3 Profit from other operations 22.9 13.8 17.9 4.2 130.3 −4.9 78.5 Result from other income and expenses1, In 2020, income from transportation At the end of 2020, the revenue rate was Income from infrastructure services including: −68.0 −88.3 −112.9 −24.6 127.9 −44.9 166.0 totalled RUB 1,615.3 bn, down RUB 4.64 per 10 tkm, representing an Social expenses −22.5 −23.8 −24.0 −0.2 100.7 −1.4 106.4 RUB 26.6 bn y-o-y (up 1.1% vs the plan). increase of 2.1% compared to the previous In 2020, income from infrastructure Borrowing costs −73.2 −79.8 −78.4 1.3 98.3 −5.2 107.2 year. services for freight and passenger operations totalled RUB 96.5 bn, down Change in provisions and contingent Income from freight transportation RUB 14.1 bn, or 12.7%, y-o-y. Freight liabilities −11.3 11.4 −6.5 −17.9 −57.2 4.8 57.7 Income from long-haul passenger brought in RUB 5.0 bn, up RUB 1.0 bn, Profit before tax 98.2 4.0 4.4 0.3 108.2 −93.9 4.4 In 2020, income from freight transportation or 25.8%, on a larger volume of Corporate income tax and similar transportation totalled RUB 1,495.3 bn, infrastructure services, while passenger obligations −44.8 −7.3 −4.1 3.3 55.7 40.7 9.1 down RUB 8.1 bn y-o-y (up 1.2% vs the In 2020, income from long-haul passenger transportation showed a decrease of plan). The change from the previous year transportation totalled RUB 12.2 bn, down RUB 15.1 bn, or 14.2%. Net profit 53.5 −3.3 0.3 3.6 −8.6 −53.2 0.5 is attributable to the following: RUB 9.5 bn, or 43.6%, y-o-y as the number EBITDA 417.2 390.4 402.3 12.0 103.1 −14.8 96.4 • a 2.5% decline in freight turnover of long-haul passengers transported by (negative effect on income: Sapsan, Allegro, and Lastochka trains RUB 38.2 bn); shrank by 28.6% due to pandemic-related • a 3.5% indexation of freight tariffs restrictions. (positive effect on income: RUB 49.3 bn) • adverse trends in the freight transportation structure carried over Income from suburban passenger from 2020 (negative effect on income: transportation RUB 8.5 bn); • tariff incentives within price limits that In 2020, income from transportation were set in 2020 but did not exist services provided by Russian Railways in 2019 (negative effect on income: within the Moscow Central Circle RUB 10.7 bn, mainly attributable to amounted to RUB 11.3 bn, up RUB 5.1 bn, coal exports and revised base tariffs or 81.7%, due to the transition to following an order of the Federal a four-minute interval service from Antimonopoly Service on shipping 21 November 2019 and a corresponding producer gases to certain destinations). increase in transportation operations.

1 This item is explained on page 90. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 88 | 89

Transportation expenses The overall effect was a result of initiatives in the following categories:

Changes in transportation expenses, RUB bn 1. Higher asset management 3. Assessment and optimisation of 5. Other initiatives efficiency operating expenses Item 2019 2020 Change Change vs plan 2020/2019 RUB 11.8 bn target actual +/− % +/− % RUB 13.5 bn RUB 6.8 bn

The key effects in this category were Transportation expenses 1,498.5 1,519.2 1,515.9 −3.3 −0.2 +17.5 +1.2 The key effects were from: The key effect in this category was from regional property tax preferences Payroll expenses 453.5 470.6 465.4 −5.2 −1.1 +11.9 +2.6 • optimisation of the traction rolling from the Energy Savings and Energy and initiatives to streamline the stock through its better utilisation Efficiency Programme and our lean procurement and supply chain Social expenses 129.2 134.6 132.6 −2.0 −1.5 +3.3 +2.6 in freight, shunting, and service production initiatives, which seek to management system. Material expenses 544.4 507.5 514.3 +6.8 +1.3 −30.1 −5.5 operations streamline every process by reducing • lower infrastructural restrictions, or eliminating losses of all kinds while Materials 52.8 52.3 57.1 +4.8 +9.1 +4.3 +8.1 better track maintenance and repair also minimising costs. Fuel 113.1 104.6 101.6 −3.0 −2.9 −11.5 −10.2 practices • including for train traction 99.2 91.9 89.7 −2.2 −2.4 −9.5 −9.6 higher efficiency of property, plant and equipment maintenance and 4. Improvements in labour Electricity 175.6 170.9 173.7 +2.8 +1.6 −1.9 −1.1 repair management productivity including for train traction 156.7 152.4 155.0 +2.6 +1.7 −1.7 −1.1 • streamlined fixed assets with those inactive put on care and Other material expenses 203.0 179.7 182.0 +2.3 +1.3 −21.0 −10.3 maintenance, non-core asset RUB 9.8 bn Depreciation 240.1 262.7 262.4 −0.2 −0.1 +22.4 +9.3 optimisation

Other expenses 131.2 143.9 141.2 −2.7 −1.8 +10.0 +7.6 The key effects in this category were 2. Introduction of cutting-edge from new and improved equipment, Breakdown of transportation Cost optimisation Cost optimisation produced technologies and innovations digitalisation, workflow changes, expenses in 2020, RUB bn an effect of organisational measures, unmanned Russian Railways has been working to technologies in train service 141.2 streamline its business via a Programme RUB bn management, better workflows in (9 %) 0.8 to Improve Operational Efficiency and infrastructure management, multi- 465.4 RUB bn 262.4 1 42.7 (17 %) (31 %) Optimise Costs , as well as by other skilling, expanded roles, and flexible means. Our key objectives, initiatives and working arrangements. 1,515.9 performance targets in innovation are 132.6 In 2020, the Company’s initiatives to based on the Company’s strategic 182.0 (9 %) improve operational efficiency and development goals. Cutting-edge (12 %) 57.1 173.7 101.6 (4 %) optimise costs produced an effect of technologies and innovations are (11 %) (7 %) RUB 42.7 bn, including RUB 38.8 bn in introduced under the Comprehensive transportation and RUB 3.9 bn in other Innovative Development Programme Payroll expenses operations. This offset much of the price of the Russian Railways Group and Social expenses pressure on our expenses. We also the Digital Transformation Strategy of Materials Fuel managed to reduce costs by RUB 90 bn Russian Railways as approved by its Electricity compared to the initial plan approved by Board of Directors. Other material expenses the Board of Directors. Depreciation Other expenses

1 Drafted following a meeting held by Prime Minister Dmitry Medvedev on 2 December 2016 (Minutes No. DM-P9-71pr), this Programme seeks to help fulfil the Russian President’s Decree No. 204 On National Goals and Strategic Objectives of the Russian Federation through 2024 dated 7 May 2018. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 90 | 91

Income from other operations Government support of Russian Railways’ financial results based on its Russian Railways in 2020 In 2020, the Company’s income from consolidated IFRS financial statements other operations decreased by 4.1% y-o-y In 2020, Russian Railways received to RUB 197.8 bn, while profit reduced by RUB 129.96 bn from the government for 2020 21.5% to RUB 17.9 bn on lower demand budget and the National Wealth Fund, and due to pandemic-related restrictions. including RUB 84.18 bn from the federal The negative impact from the latter budget (of which RUB 35.6 bn was was partially offset by a wider range of allocated from the budget of Moscow services and their promotion. via inter-budget transfers), RUB 45.0 bn from the National Wealth Fund, and Other income and expenses RUB 0.79 bn from regional budgets and extra-budgetary funds. 2020 was a year of significant challenges which made us think outside In 2020, the financial result from other the box amid restrictions imposed to combat the COVID-19 spread. At income and expenses was a negative the same time, the Russian Railways Group provided a timely response RUB 112.9 bn compared to a negative Taxes and insurance fees to the situation to ensure stable transportation and the Group’s financial RUB 68.0 bn in the previous year. While resilience. In 2020, its income totalled RUB 2,279 bn, down 9.1% y-o-y, interest expenses and expenses under The total amount of taxes and insurance primarily due to a drop in the operating performance of the passenger the Company’s Collective Bargaining fees accrued in RAS accounting transportation segment, and EBITDA stood at RUB 421 bn. The Group Agreement were the biggest, it was statements for 2020 stood at financed its investment projects, inter alia, through perpetual bonds, thus negative exchange differences of RUB 294.8 bn, or 91.0% of the previous curbing the growth of its debt portfolio. RUB 37.1 bn caused by a weaker rouble year’s figure, including: that ultimately led to the deterioration • RUB 18.6 bn (54.1%) owed to the federal vs 2019, when the local currency budget; appreciated to bring about RUB 14.6 bn in • RUB 119.1 bn (88.1%) owed to regional Vadim Mikhailov positive exchange differences. and local budgets; First Deputy CEO of Russian Railways • RUB 157.1 bn (107.7%) owed to extra- Adjusted for these differences, the total budgetary funds. effect vs the previous year was a positive RUB 6.8 bn thanks to an RUB 11 bn, or 1.4 times, increase in dividends from subsidiaries and affiliates. The consolidated IFRS financial y-o-y to RUB 2,251.6 bn, which translated Thanks to the measures taken, the statements of Russian Railways include into sales profit after subsidies and Russian Railways Group reduced its net the operating results of 189 subsidiaries EBITDA at RUB 87.7 bn and RUB 420.7 bn, debt to RUB 1,610 bn from RUB 1,739 bn as at 31 December 2020. respectively. The Russian Railways Group as at the end of 1H 2020. The increase incurred a net loss of RUB 52.9 bn in 2020. compared to 2019 (RUB 1,436 bn as at In 2020, the Group’s income fell by 9.1% 31 December 2019) is mainly due to the y-o-y to RUB 2,279.2 bn, with income from In the reporting year, Russian Railways growth in the rouble equivalent of foreign freight transportation and infrastructure became the undisputed leader in financial currency-denominated borrowings amid services decreasing by 4.2% (by 2.2% innovation as it had made the first-ever the weakening of the national currency on a comparable basis, excluding placement of perpetual and social bonds against major currencies. At the same TransContainer’s 2019 results, with a among Russian companies. On top of time, the Group sticks to a conservative 2.7% drop in handling volumes), and that, the Company remains the only approach as regards increasing its income from passenger transportation borrower representing Russia in the global leverage in the long run to ensure a high and logistics services going down 41.7%, market of public green financing and the level of financial stability. due to imposed restrictions, and 8.1%, largest ESG borrower locally, given its respectively. The Group’s operating commitment to sustainable development expenses for the year decreased by 4.1% and eco-friendliness. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 92 | 93

Debt policy Russian Railways’ debt portfolio breakdown by currency,1 RUB bn

2020 64 % 4 % 10 % 18 % 4 % 1,514 Russian Railways uses debt Debt portfolio The Company drew down bilateral short- performance in 2020 term (from several days to one year) 2019 69 % 5 % 9 % 13 % 4 % 1,460 to finance its investment bank and intra-group loans throughout 2018 69 % 9 % 9 % 9 % 4 % 1,245 and operating activities. The the reporting year for the day-to-day In 2020, Russian Railways raised a total of management of liquidity and refinancing of 2017 65 % 15 % 9 % 6 % 5 % 1,060 Company relies on long- RUB 452.9 bn in long-term financing in the liabilities. The reporting year also saw the 2016 62 % 19 % 10 % 4 % 5 % 905 term borrowings to fund primary market, including RUB 313 bn as Group significantly reduce its short-term part of the perpetual bond issue supported liabilities by issuing perpetual bonds, with RUB USD EUR CHF GBP its investment programme by the Russian President. The Company short-term loans and borrowings standing and refinance outstanding also borrowed funds through public debt at RUB 92.3 bn as at the year-end. instruments offered to Russian and foreign Russian Railways’ debt portfolio breakdown by maturity,1 RUB bn liabilities, while short-term investors and loans from international The Company’s total outstanding debt development institutions. excluding accrued interest stood at 2020 64 % 20 % 16 % 1,514 borrowings provide flexibility RUB 1,513.8 bn. in managing the current In 2020, Russian Railways repaid a total of 2019 63 % 15 % 22 % 1,460 RUB 88.5 bn of long-term debt (excluding 2018 62 % 18 % 20 % 1,245 liquidity. local bond redemption). The Company’s debt portfolio was negatively impacted by 2017 66 % 22 % 12 % 1,060 a dramatic rouble depreciation causing the 2016 77 % 15 % 8 % 905 revaluation of the FX-denominated debt and an increase in its rouble equivalent Over 3 years 1–3 years Below 1 year as at the year-end. In relative terms, the FX-denominated debt accounted for ca. 36% (within the limit stipulated by Maturity schedule of Russian Railways’ debt portfolio,2 RUB bn the debt policy) after Russian Railways had successfully redeemed part of its 2021 97 55 152 Eurobonds for EUR 250 m. 2022 20 73 40 133

2023 15 111 40 166 Russian Railways’ debt portfolio as at 31 December 2020 2024 55 44 25 124

Indicator 2020 Target Comments 2025 74 35 30 139

2026 45 27 50 122 Share of 36.3 % At or Foreign currency-denominated liabilities FX-denominated below 40% in the Company’s debt portfolio add to 2027 40 45 85 debt its exposure to FX fluctuations. However, the interest rate on foreign currency- 2028 85 13 98 denominated borrowings is much lower 2029 31 42 73 than on rouble borrowings. Hence, one of the debt policy’s primary objectives is to 2030 15 15 find balance between foreign currency- and rouble-denominated borrowings. 2031 63 15 78 2033 60 60 Short-term debt 16.1 % At or Short-term liabilities offer greater below 20% flexibility in managing the debt portfolio. 2035 17 17

Average 6.7 7 years The Company works to increase and 2038 25 25 maturity1 maintain the average maturity of the debt 2039 25 25 portfolio that would be consistent with the long payback period of investment 2040 60 60 projects financed by such borrowings. 2043 25 25

2044 25 25 1 Principal debt. As at 31 December of the relevant year. 2 Principal debt. Debt obligations as Rouble-denominated debt at 31 December 2020. FX payments Foreign currency liabilities calculated on the basis of the FX rates as at 1 Excluding short-term liquidity management tools Local bond redemption 31 December 2020. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 94 | 95 Securities Key events of the year Bonds The Group made three initial offerings of local bonds worth RUB 40 bn.

Global capital markets December 2020 saw Russian Railways Russian Railways Russian Railways placed perpetual bonds, a new instrument which has a reaffirm its status as an innovator in the In 2020, Russian Railways reaffirmed capital markets. After defining the deal is the leader in unique feature of being classified as equity. In 2020, the Company placed seven bond issues worth its leadership in the sustainable finance parameters, the Company closed the RUB 313 bn, including a green RUB 100 bn issue named by Cbonds as the Deal of the Year in the ESG market as March saw it successfully book for Russia’s debut issue of social responsible financing category. offer another issue of 6-year 0.84% bonds. The 7.25-year securities worth CHF-denominated green Eurobonds RUB 25 bn were priced at 6.598%, a in Russia The second offering of 6-year 0.84% green Eurobonds worth CHF 250 m was successfully completed. worth 250 m. The placement featured record-low yield for RUB-denominated the lowest-ever coupon among the 5+ years Eurobonds. This is the We are the only company The Company placed its first-ever RUB 25 bn social Eurobonds maturing in 7.25 years at 6.598%. Company’s Eurobonds in various longest-dated public offering of RUB- representing Russia in the currencies. It also marked an all-time denominated Eurobonds in the history of international green bond market, Russian Railways received a prestigious international Green Bond Pioneer Award from the London record among CHF-denominated Russian issuers. The Company will use and also the largest ESG borrower Stock Exchange and Climate Bonds Initiative, a developer of environmental standards, as the first Eurobond issues of Russian and CIS the proceeds in social projects to improve in the domestic market. Russian Russian company to enter the green financing market. issuers. The deal’s green label helped transport accessibility, healthcare and Railways places green and social secure strong investor demand, and it education. bonds in accordance with Russian The Company used loans from development banks as a new financing option (CHF 500 m from the success is all the more remarkable given and international principles of New Development Bank and RUB 24 bn from the Asian Infrastructure Investment Bank). an increased volatility in international A real breakthrough for Russian sustainable financing and uses the capital markets caused by the spread of corporates, the deal broke the record proceeds to finance environmental The Company redeemed its Eurobonds for EUR 250 m. As at the end of 2020, foreign currency- the coronavirus. in terms of maturity, size and pricing. and social projects pursuant to the denominated borrowings accounted for 36% of the debt portfolio (within the 40% limit). The issue was prepared in accordance published sustainability project In November 2020, as part of its with the International Capital Markets financing and social finance ongoing efforts to optimise the currency Association’s Social Bond Principles, and frameworks. breakdown of its debt portfolio, the certified for compliance by Sustainalytics, Company performed an early redemption a leading independent ESG expert and of EUR-denominated Eurobonds maturing rating agency. in 2021. As a result of the tender offer, the Company purchased EUR 250 m On top of that, Russian Railways worth of bonds. continued to diversify its financing sources. In 2020, it received loans from international development institutions to finance development projects and reduce the negative impact of the coronavirus pandemic.

Over the year, an equivalent of ca. RUB 100 bn was raised using global instruments.

For the materials on green and social bonds see the Company’s website ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 96 | 97

Projects financed by social bonds

Russian Railways will use the proceeds from social financing instruments, including social bonds, to fund projects in line with its Social Finance Framework and the UN Sustainable Development Goals.

Compliance of projects financed by social bonds with UN SDGs

Key projects UN Sustainable Development Target group of population Goals (UN SDGs)

Affordable transport infrastructure and transport accessibility Urban Commuter Train Passengers with reduced mobility People living far from the city centre Development of railway station infrastructure Urban population and accessibility for people with limited mobility Construction and reconstruction of railway lines

for passenger transportation

Healthcare About the project to purchase Lastochka electric trains Healthcare services, including construction, Underserved, owing to the lack of quality access reconstruction and maintenance of healthcare to healthcare in Russian regions The Lastochka is an electric high-speed passenger train based on the Siemens Desiro platform. It is used for both facilities Russian population as a whole suburban and long-haul transportation. The purchase of these trains qualifies as a Clean Transportation Project in line with the Green Bond Principles.

As proven by the Company’s indicative measurements of the environmental impact from Lastochka trains, rail Education passenger transport boasts a significant advantage over motor vehicles. In 2020, CO2 emissions from Lastochka Educational services, including construction, Underserved, owing to the lack of quality access trains were 7.8 times lower than those from motor vehicles used to transport the same number of passengers. reconstruction and maintenance of educational to education in Russian regions facilities Children and young people Total spending on Lastochka trains: • 2017 – RUB 15 bn; • 2018 – RUB 18.7 bn; • 2019 – RUB 21.4 bn; Other social projects • 2020 – RUB 20.4 bn. Protecting people from COVID-19 Russian population as a whole Infected people Key projects People affected by natural disasters Target group of population

Social Finance Framework of JSC Russian Railways (ENG) ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 98 | 99

Passengers transported by Lastochka electric trains1, m people Share capital and dividends

2016 2017 2018 2019 2020 Share capital Dividend policy Shareholders will be paid dividends Suburban transportation 21,830.2 29,741.0 41,324.5 53,347.9 39,604.5 for 2020 in accordance with the Russian Moscow Central Circle 27,163.1 110,829.5 129,633.0 147,538.4 115,259.0 Russian Railways has been included in In 2020, Russian Railways paid dividends Government’s Order. The Long-Term the list of strategically important companies on preference shares for 2019 pursuant Development Programme provides TOTAL 48,993.3 140,570.5 170,957.5 200,886.3 154,863.5 approved by Russian President's Decree to Order No. 2509-r of the Government for the payment of dividends on No. 1009 dated 4 August 2004. of the Russian Federation dated preference shares only (RUB 134.5 bn

Indicative CO2 emissions from On 7 May 2020, at a meeting with The first offering took place in June 2020. 30 September 2020. The preference worth of shares with a 2.98% yield), with Lastochka electric trains vs motor Russian President Vladimir Putin on the The book saw orders from a wide range The Russian Federation is the founder and shareholders received RUB 2,667.1 m the remaining net profit to be invested 2 vehicles, kt CO2 development of the transport industry, of investors, which helped secure a more sole shareholder of Russian Railways. for 2019, which is 4.99% of the RAS net in accordance with the Comprehensive Russian Railways got the go-ahead for its than two-fold oversubscription. As a The Government of the Russian Federation profit. Plan for Upgrading and Expanding Core 829.2 perpetual bonds as a new instrument to result, the Company reduced its coupon exercises shareholder powers on behalf Infrastructure. 2020 105.9 secure robust local demand for domestic guidance several times, from 7% to the of the Russian Federation. industry products. As part of its registered final 6.55%, while increasing the deal Distribution guidance 1,110.0 2019 RUB 370 bn perpetual bond programme, size from RUB 15 bn to RUB 30 bn. In July The Company’s charter capital consists for the 2020 net profit 190.7 the Company placed seven bond issues 2020, the Company placed the second of the properties of Russian federal 879.3 worth RUB 313 bn, an outstanding result RUB 20 bn issue of perpetual bonds at railways. As at 31 December 2020, In 2020, Russian Railways earned 2018 191.5 for the new instrument. 7.3%. the Company’s charter capital amounted to RUB 0.3 bn in net profit. Pursuant to RUB 2,440,639,343,000.1 It is comprised of Clause 42, Section 6 of the Company's 655.6 2017 September 2020 saw Russian Railways successfully close 2,330,639,343 ordinary registered shares Charter, RUB 14.1 m, or 5% of net profit 91.4 with a nominal value of RUB 1,000 each and for the reporting period, is to be allocated 419.5 Russia’s first-ever issue of perpetual 110,000,000 preference registered shares to reserve capital. 2016 with a nominal value of RUB 1,000 each. 65.6 green bonds Motor vehicles Lastochka electric trains certified for compliance with both Russian and international Net profit distribution in 2015–2019, RUB bn green financing standards. During book-building, the Company received bids from pension funds, insurance and management Indicator 2015 2016 2017 2018 2019 Local capital market companies, and banks, which enabled us to reduce our guidance range thrice (the first coupon rate was set at 7.25%, Net profit 0.3 6,5 17.5 18.4 53.5 In 2020, the Company successfully placed with all other coupons equal to the 5-year OFZ yield + 1.65%) Reserve capital 0.02 0.3 0.9 0.9 2.7 three primary rouble bond issues in the and increase the deal size to RUB 100 bn. This is the largest local market along with secondary bond local bond placement in the Company’s history and Russia’s Dividends accrued on 0.3 5.1 8.8 13.4 2.7 offerings. landmark green offering by size recognised by Cbonds as the ordinary shares 0.3 5.1 8.8 13.4 – Deal of the Year in the ESG category. preference shares 0.005 0.005 0.005 0.007 2.7 Russian Railways first tapped the local bond market in early March placing a 10-year issue for RUB 15 bn, with the first coupon of 6.44% and all other coupons In 2019, RUB 2,672.8 m was allocated equal to the 7-year OFZ yield + 0.5%. to reserve capital.2 No other allocations In October 2020, the Company placed a equal to the 5-year OFZ yield + 1.65%. were made. April 2020 saw the Company successfully RUB 80 bn issue of perpetual bonds with December 2020 saw the Company sell close the book for the two RUB 10 bn and the first coupon priced at 7.25% and all two more perpetual bond issues worth 15 bn 7-year issues priced at 7.55% and other coupons equal to the 5-year OFZ RUB 50 bn, with the first coupon rate of 7.35%, respectively. yield + 1.65%. In November 2020, Russian 7.25% each. Railways offered a RUB 33 bn issue of perpetual bonds with the first coupon In 2020, the Company raised a total of priced at 7.25% and all other coupons RUB 353 bn in the local capital market.

1 1 Including the Moscow Central Circle. In accordance with Resolution No. 2004 of the Russian Government dated 3 December 2020. 2 2 Based on the same number of transported passengers. In accordance with Russian Government’s Order No. 2509-r dated 30 September 2020. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS PERFORMANCE OVERVIEW 100 | 101

Rating agencies and investors

Russian Railways' credit investment grade of BBB with a stable of the issuer's credit rating, with a stable With account of the measures taken to ratings outlook, on a par with the sovereign outlook. In December 2020, Expert RA curb the spread of COVID-19, Russian rating, as well as the standalone credit also reaffirmed the Company’s credit Railways continued its dialogue with Despite a challenging macroeconomic rating of Russian Railways (excluding rating at the same highest level – ruAAA Russian and foreign financial investors situation and the transportation country risks) at BBB+, one notch above with a stable outlook. Thus, the Company in 2020 through one-on-one telephone companies’ ratings declining as a result the basic rating. maintains an additional independent calls and through participating in online of the pandemic, the Russian Railways’ assessment of its high credit quality as industry conferences. In November 2020, credit ratings assigned in 2020 by In November, amid lingering a borrower from national rating agencies. the Company took part in VTB Capital's international and national rating agencies macroeconomic challenges and 12th Annual Investment Forum "Russia were maintained at the investment level. uncertainty about the pace of recovery In the reports issued during the year, Calling!” held online. of the Russian and global economies, the agencies recognised the negative In February 2020, Moody’s reaffirmed the Company held additional online impact of the COVID-19 pandemic on the rating of Russian Railways at the meetings with ACRA and S&P analysts, the Company's operations and noted Disclosure and investment grade of Baa2 with a stable also attended by representatives the importance of timely and sufficient reporting policy outlook, one notch above Russia’s of the Ministry of Finance of the support from the state, which, among sovereign outlook. In June, the agency Russian Federation. Representatives other things, included the approval of Russian Railways is committed to ensuring changed the outlook to negative to of the Russian Railways' shareholder a perpetual bond placement. In addition, full transparency of its operations in reflect the impact of the pandemic on the commented on issues related to the the agencies noted high levels of liquidity line with applicable legal requirements transportation industry as a whole, while railway development strategy and and diverse sources of borrowings. and the interests of investors and other confirming the Baa2 grade. support measures from the state. stakeholders. Information is disclosed The participation of the shareholder's Historical data on Russian Railways' pursuant to the Regulation on the In June 2020, amid a worsening representatives in the dialogue with credit ratings Information Policy adopted by Russian epidemiological situation, S&P reaffirmed the rating agencies is of great importance Railways’ Board of Directors. the Company's final rating at BBB- for the Company. investment grade with a stable outlook. Russian Railways discloses its accounting Soon after the three-way dialogue, and financial statements in line with In August 2020, Fitch reaffirmed the ACRA reaffirmed the rating of Russian Russian (RAS) and international (IFRS) Russian Railways' credit rating at the Railways at AAA(RU), the highest level standards. As an issuer of securities traded on the Moscow Exchange, it also makes online disclosures in accordance Credit ratings of the Russian Federation and Russian Railways with the Russian securities market laws. as at the end of 2020 The Company’s annual report provides Issuer Agency Rating Outlook essential details about its operations in line with regulatory requirements Russian Federation Standard & Poor’s BBB- stable and is submitted to the shareholder in preparation for the general meeting. Moody’s Baa3 stable The corporate website offers a wealth of information about the Company, including Fitch BBB stable access to its internal regulations. Some Russian Railways Standard & Poor’s BBB- stable essential information relevant for foreign stakeholders is disclosed in English. Moody’s Baa2 negative

Fitch BBB stable

ACRA AAA(RU) stable

RAEX ruAAA stable Caring about everyone’s future

Russian Railways is committed to the principles of the UN Global Compact and actively contributes to the development of “green” transport. A priority focus is the policy of social responsibility towards employees, community, and the state.

For more details see p.104

RUB 100+ BN amount of guarantees and benefits under the Collective Bargaining Agreement

RUB 4 BN investments in environmental protection SUSTAINABLE DEVELOPMENT SUSTAINABLE ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 104 | 105 Sustainable development Social policy management

Russian Railways is the largest issuer of sustainability bonds in Russia and the only Russian representative on the international green finance market since 2019. In March 2020, it successfully offered another issue of CHF-denominated green Eurobond, with theproceeds used to purchase Lastochka electric trains. In September, Russian Railways issued the first perpetual RUB-denominated green The year 2020 became a tough challenge for the Russian economy bonds, and in December we became the first Russian company and healthcare system, for the Group as a team and for each to place RUB-denominated global bonds to cover social needs. employee personally. However, we managed to achieve the key targets and implement the scheduled projects. Our Company is first Russian Railways’ successful commitment to sustainability is proven and foremost a team of professionals committed to the common cause by the Company’s high positions in ESG rankings of reputable of railway transportation development. It is this unity of our employees international agencies, such as RAEX-Europe, MSCI and Sustainalytics. that enabled us to make decisions ensuring seamless operations and Russian Railways is ranked on a par with the leading European railway attainment of our goals amid the COVID-19 outbreak. companies: SNCF and Network Rail.

Dmitry Shakhanov Vadim Mikhailov Deputy CEO of Russian Railways Russian Railways First Deputy CEO, Russian Railways Development in the Group’s is committed social sphere is underpinned to the UN Global by unbiased assessment of The key strategic goals of the social Social development is regulated by the Alongside the Global Compact, Russian Railways’ strategic priority policy are: following documents at Russian Railways: Compact, the largest the Company complies with in terms of sustainability is to achieve added value created through • to make the Group an employer of choice; • Russian Railways’ Collective Bargaining international initiative the principles of socially responsible the UN Sustainable Development employee support initiatives, • to recruit and retain the Group Agreement for 2020–2022 (stipulating business practices enshrined in the Goals (SDGs) that focus on efficient and management of assets personnel with the required skills; the social and labour relations between in social responsibility. Social Charter of the Russian Business use of limited resources, implementation • to manage the headcount in an the employees and Russian Railways); developed by the Russian Union of of environmentally friendly and and social facilities to provide efficient manner, with due account • the Company’s Code of Business The Company is a member 1 Industrialists and Entrepreneurs (RSPP). resource/energy saving technologies, market services. The priority for new equipment and cutting-edge Ethics (establishing the corporate of the National Network The Company is a regular contributor and support social and cultural stability, technologies; standards and rules of business to the RSPP’s Corporate Practices as well as integrity of biological and focus is the policy of social • to implement the competency-based conduct mandatory for the Board of the Participants Collection. In pursuing its corporate physical ecosystems. The Company’s approach to HR management; of Directors and all employees, responsibility towards to the Global Compact social responsibility policy, the Company commitment to the 17 UN SDGs • to build a talent pool; and setting out the relations with complies with international treaties, is reflected in its efforts to ensure employees, community, and • to ensure continuous personnel shareholders, government authorities, for Implementing laws and regulations of the Russian economic stability, environmental safety development; legal entities and individuals); Federation, local laws and regulations. and social security. the state. • to foster corporate culture; • Regulation on Private Pension the Principles of • to manage the personnel in an efficient Schemes for Employees of Russian manner and provide social support; Railways2 (covering the relations Responsible Business • to offer healthcare services. between the employees and Russian in Corporate Practice Railways within the framework of non-

1 governmental pension plans); Association. Approved by Russian Railways’ Order No. 1143r • Russian Railways Housing Policy dated 6 May 2015. 2 3 Approved by Russian Railways’ Order No. 2580r Concept until 2020 ; dated 28 December 2006, in the version set • Regulation on Professional Training at out by Russian Railways’ Order No. 556r dated Russian Railways.4 22 March 2019. 3 In the version set out by Russian Railways’ Orders No. 57r dated 18 January 2016, Russian Railways’ Collective Bargaining No. 2345r dated 21 November 2016, No. 1993r Agreement for 2020–2022 dated 7 September 2018. 4 Approved by Russian Railways’ Order No. 907r dated 17 April 2013. Russian Railways’ Code of Business Ethics ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 106 | 107

Russian Railways’ youth Supporting retired and Russian Railways’ Performance under Supporting specific policy in 2020 soon-to-be-retired employees key ethical principles the Collective personnel groups The share of employees under 35 years of age accounts for 38.3% of the total Corporate pension system Bargaining headcount at Russian Railways. This Make people our top priority. People are Be result-oriented. In following this makes social support of young talent even All the Company’s employees can benefit the Company’s main asset. We see real principle, we always keep in mind that Agreement in 2020 Supporting women more important. from the corporate non-government people – employees, passengers, and we work to deliver specific results such pension system. In terms of its goals and clients – behind the statistics. Everything as higher profits for Russian Railways, The Company has a Coordination Council 2020 saw over 800 activities and projects purpose, a private (corporate) pension is that we do is about people’s welfare and completion of new projects, client Russian Railways’ Collective Bargaining tasked with improving the conditions carried out as part of Russian Railways’ an additional measure of social support comfort. satisfaction and people’s trust. Agreement is an important motivation of work, leisure, and social support of Youth target programme (2016–2020) to workers regardless of the state pension tool within its recruitment and retention women.1 The council regularly holds onsite in order to ensure comprehensive system. Its strategic target is to ensure Do our best. We work hard to perform our Make well-informed decisions. As our framework. Its key functions include: meetings with female employees and development and acquisition of industry- a replacement rate of at least 40% of duties to the letter, deliver on all promises, decisions can affect many people and • social protection of employees; organises video conferences with railway specific competencies by young an employee’s lost earnings. Russian achieve the targets, while having zero organisations, we always think them • maintaining social stability among coordination councils to collect feedback employees, engage them in improvement Railways’ corporate pension is operated tolerance to any kind of corruption, and through focusing on safety and risk employees; from female employees and discuss any of Russian Railways’s operations, and by the Blagosostoyanie Private Pension measuring up to the privilege of being part response, as well as economic feasibility • boosting Russian Railways’ concerns they might have. build a corporate culture for the young. Fund. of Russian Railways. and commercial interests of Russian attractiveness as an employer; Ca. 250,000 young employees across Railways. • developing social partnership. In 2020, the Company completed its the Company’s footprint took part in the The total number of the Company Be proud to work at Russian Railways. three-year Action Plan to improve the events. participants to the plan reached Every Russian Railways employee feels Promote commercial interests of Russian Despite the economic disturbances conditions of work, leisure, and social almost 588,000 persons in 2020. Over honoured to be part of a company that Railways. We develop the culture of at the national and global level, in support of women at Russian Railways. Russian Railways’ Youth target 310,000 retired employees receive has a unique history, rich traditions and continuous improvement, multiply and 2020 the Company delivered on all In 2020, we performed the following programme (2021–2025) was adopted corporate pension. In 2020, pensions ambitious plans for the future. We respect save our earnings to the extent that does of its obligations under the Collective activities under the Plan: to ensure efficient implementation were granted to 11,065 Russian Railways traditions and pay tribute to industry not contradict law and ethics, or affect Bargaining Agreement. There were • improved sanitary conditions and of the corporate youth policy, and to employees, the average corporate veterans. We strive to maintain and quality and safety. no collective labour disputes. The amenities for women; build a talent pool of committed young pension 2020 being RUB 8,938. The augment Russian Railways’ reputation as decisions on securing employment • ensured that women could work as employees in line with the priorities of average accrued corporate pension was a rapidly growing national transportation Be a leader. As Russian Railways is and personnel earnings ensured social as assistants to some traction stock Russian Railways. RUB 4,936, or RUB 122 higher y-o-y. company. a leading Russian company, we expect stability among employees, enabling operators; our employees to have leadership the Company to maintain its status as a • carried out the annual survey of the Stage 4 of the Young Leaders exchange Promote teamwork. Being part of a qualities to set the pace, embrace socially responsible employer. Russian working conditions of Russian Railways programme was held in partnership with Social support for non-working team means being considerate and changes, and serve as role models for Railways delivered on its obligations for female employees. The findings were VR Group (Finnish Railways) within the retirees of Russian Railways honest with colleagues, managers and colleagues and people outside Russian 2020 under the Collective Bargaining that 76.7% women were satisfied with framework of the effective memorandum subordinates, putting the Company’s Railways. Agreement 2020–2022. their employment at the Company on talent development cooperation. The Company’s social responsibility interests before our own. Mutual trust and (against 72% in 2019); efforts include benefits to senior retirees well-coordinated teamwork are our main Aspire to change and evolve. • increased the number of women Another key event of 2020 was the of railway enterprises. strengths. We constantly strive for excellence receiving corporate benefits packages PROyouth online education forum seeking ways to improve efficiency, to 17,433 (against 4,675 in 2018, and aimed to involve the Company’s Non-working retirees receive medical care Rely on experience. We learn from our introduce innovations, acquire new 10,940 in 2019); young employees in discussing and at Russian Railways’ corporate health predecessors and use their experience knowledge, and develop personal and • transferred over 58,000 women to implementing the Russian Railways’ Youth centres in line with the local compulsory in a creative way to excel in what we professional skills. Innovations are key to flexible working hours and remote work (2021–2025) programme. The forum was health insurance programmes, and high- do and develop professional skills and Russian Railways’ growth and prosperity to protect them during the COVID-19 attended by ca. 1,500 young employees cost treatment according to the list of competencies, and pass it on to young and personal development of our pandemic; and over 100 experts and resulted in services stipulated by the Company. We talent. employees. • provided a “woman’s leave” to over over 450 projects in six areas of the grant free railway transportation to non- 17,000 female employees in 2020 target programme. Twelve best projects working retirees annually, as stipulated by (under the Russian Railways’ Collective proposed by the participants were the Company. In 2020, corporate benefits Bargaining Agreement, a woman is included in the target programme action of the Company included health resort entitled to an unpaid day off once a plan 2021. recreation of 9,200 non-working retirees. month for personal reasons); • carried out an online corporate The Company developed and adopted social event for female employees in the target programme Russian Railways’ November 2020: How To Be Successful Veterans (2021–2025) aimed to enhance and Happy. the living standards and expectancy of the veterans’ lives by establishing a comprehensive support system.

1 Approved by Russian Railways’ Order No. 266r dated 9 February 2018 On the Establishment of the Coordination Council to Improve the Conditions of Work, Leisure, and Social Support of Women. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 108 | 109 HR management

Headcount and workforce composition

A key focus of the HR In 2020, the Company approved its There are two external factors that will The Company identifies the tasks set by Russian Railways’ staff composition Human Capital Development Programme shape the Company’s HR management the national government as a priority policy is to develop until 2025. It was developed to achieve framework in the long run. The first one area, including several instructions of Russian Railways’ human the ambitious targets of comprehensive is the emergence of next generation the Russian President on preservation Age structure, % Gender composition, % development in the railway sector set by employees with completely different job of jobs and earnings of individuals in 3.5 capital through a set of the Long-Term Development Programme expectations. The other one is automation, the context of the lockdown measures. 14.8 38.3 30.5 measures promoting until 2025. which helps boost the volume of data In order to achieve this, the Company under 35 processed, making all processes faster suspended headcount optimisation, and 36–45 Women continuous training, In line with the Long-Term Development and simpler. At the same time, the market refrained from introducing large-scale 13.3 46–50 Men Programme, HR management processes sees new types of jobs that increasingly part-time work arrangements from March above 50 employee engagement retirement age are centred on: require employees to develop digital to September 2020. 69.5 and occupational health, • enhancing the existing crucial HR competencies. practices; In 2020, the headcount of Russian 30.1 as well as shaping a stable • implementation of advanced HR In accordance with Russian Railways’ Railways reduced by 2.6% y-o-y to reach technologies. Code of Business Ethics, heads of the 723,500 persons. and favourable working Education, % Personnel categories, % Company’s branches and business units environment. In 2020, in order to develop the current ensure equal rights and opportunities The year 2020 saw a minor reduction in 7.9

approaches, the Company: for all persons when they apply for a job the shares of women (to 30.5% from 30.7% 38.3 33.6 29.2 • approved the Programme of Russian or work their way up the career ladder, y-o-y) and employees aged under 35 Higher Managers education Railways’ Interaction with Railway regardless of their gender, age, race, (38.3% against 39.8% in 2019). The share Oce workers Secondary Universities until 2025; nationality, language, origin, financial and of employees with higher education vocational Technical • approved the Programme of Employee employment status, place of residence, increased by 0.8 pp to 33.6% of the total education workers Other1 Development and Training System I religious and political beliefs, and other headcount by 31 December 2020. The 62.9 until 2025; traits. proportion of employees with secondary 28.1 • was implementing the Master-Сlub vocational education amounted to 28.1% Programme for the Management Board (up 0.1 pp y-o-y). At the same time, the members, directors, heads of Russian share of employees with secondary Staffing and turnover Labour productivity Railways’ departments and branches, (complete and incomplete) and first-level as well as regional railways and professional education reduced to 38.3% The employee turnover rate reduced by External forces reducing railway directorates; against 39.2% y-o-y. 0.4 pp to reach 6.2%. transportation volumes in 2020 prevented • was implementing the Digital the Company from meeting the targets of Transformation Leaders educational In 2020, the Company formed a labour productivity growth. Therefore, the programmes; contingency payroll provision in the Company’s Board of Directors endorsed • improved the features of the distance amount of RUB 1.134 bn to ensure salary its proposal to abolish the established learning system to enhance its usability adjustment for core employees in the annual target of increasing labour and administration. regions with high employee turnover and productivity by 5%.2 Nevertheless, Russian insufficient salaries of railway employees Railways managed to contain the decline against the regional economy. in labour productivity, despite the adverse macroeconomic impact. In 2020, labour productivity of transportation dropped by 2.1%, the target being 2.9%.

1 incomplete secondary, complete and first-level vocational education 2 Meeting on 20 May 2020 (Minutes No. 16). ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 110 | 111

Employee remuneration and incentivisation

By offering a competitive salary, the The average monthly salary across all (except for the Yamal-Nenets Autonomous Company promotes work in the railway Russian Railways’ operations increased Area and the Sakhalin Region). industry and prevents the outflow of by 4.9% y-o-y to RUB 61,375, while real skilled professionals. In 2020, we adjusted company-wide salaries grew by 1.5%. The Company keeps incentivising its salaries by 3% as per the Collective employees for implementation of cost- Bargaining Agreement: by 2% in March The Company’s wages are 20% above the efficient projects. In 2020, it allocated and by 1% in October. country’s average and exceed the pay RUB 318.2 m to remuneration of level across nearly all Russian regions 16,700 persons for these achievements.

Salary

Indicator 2016 2017 2018 2019 2020

Average monthly salary across all operations, RUB 46,852 50,404 54,934 58,504 61,375 Y-o-y growth, % +5.3 +7.7 +9.0 +6.5 +4.9

Employee training and development

The Company has a comprehensive Management and office Training and self-training are also employee training and development workers training available to employees via the Distance system, from entry level to top Learning System. In 2020, we updated management. In the context of the According to the Russian Railways its functions to improve usability and 2020 pandemic, distance learning was in Human Capital Development Programme administration. The number of distance the highest demand. Timely conversion until 2025, the main goal of white-collar learning courses available to all Russian First female assistants to drivers start working at of the training programmes to the online employees training development is to Railways’ employees has exceeded 200. format was among the key factors boost efficiency by ensuring accessibility, An improved design and interface enabling the Company to meet all its quality and focus of educational prototype were developed and prepared Russian Railways education-related targets in 2020. opportunities aimed to build all kinds of for a pilot run. corporate and professional competencies. In 2020, women received the opportunity to master the driver’s profession for the first time in Russia. Only The Company’s corporate education In order to ensure continuous men could be employed in this capacity, until in July 2019 the Ministry of Labour and Social Protection system was highly acclaimed by the In 2020, over 211,000 managers and office development of Russian Railways’ expanded the list of professions available to women. international community in 2020. workers received training, including over employees using a distance self- Educational initiatives of the Russian 110,000 trained at the Russian Railways education platform, we carried out In 2020, Russian Railways announced enrolment of women in the training programme for assistants to Railways Corporate University won Corporate University. preliminary activities for the Knowledge operators (the first stage required to master the profession of the driver) at its Moskovsky, Sverdlovsky and prestigious awards from the European Hour project. It aims to develop corporate Oktyabrsky education centres and the High-Speed Train Personnel Training Centre. Foundation for Management Development The Russian Railways Corporate and professional competencies within a and the International Association of University is in charge of developing fixed limit of one working hour. The 2020 The assistant driver is a co-driver of the train. Their responsibilities include monitoring instrument readings, Facilitators. It showed well-deserved the Company managers’ corporate preliminary stage of the project defined controlling the locomotive operation, traffic lights, signals and signposts to ensure maximum traffic safety. appreciation of the Corporate University competencies. Its portfolio covers over eight pilot areas and five groups for celebrating its 10th anniversary. 250 advanced professional training distance courses development, as well as Over 50 women were enrolled in this programme, and 43 of them graduated in 2020. The 24-week course and retraining programmes, including the procedure for setting the Knowledge included on-the-job training at operating locomotive and power car sheds. All the graduates have been comprehensive MBA-level corporate Hour time. Over 200 distance learning employed by the Company in the positions they were trained for, starting January 2021. programmes to build management courses were created. competencies. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 112 | 113 Health and safety Training and development of standards. In 2020, the Company technical schools, and colleges. The technical workers developed eight new professional Federal Transportation Inspection standards for railway industry occupations Service held theoretical examinations The corporate vocational education and updated 15 existing ones. Overall, for locomotive driving licences, and system is based on 15 education centres Russian Railways has 92 professional 6,485 persons trained at the Company with 67 branches covering the whole standards covering 203 positions and centres passed them. country, from Kaliningrad to Sakhalin. professions in railway transportation. In 2020, the Company approved the A milestone of 2020 in personnel Programme of Employee Development In 2020, the Company trained development was the first-ever enrolment The implementation of new Russian Railways is a member of the The reporting year saw the following and Training System Improvement 46,600 employees in key jobs, where of women in training to become assistant Vision Zero global campaign, which reductions in workplace injuries across the until 2025. 30,000 gained the professional skills engine drivers. instruments and measures has completely reshaped corporate Company vs 2019: for the first time, and 16,400 persons to prevent workplace approaches to health and safety • overall injury rate (total number The centres’ educational programmes were retrained. Also, 207,300 employees management. This strategy requires of injuries) down by 22% to and curriculums comply with professional upgraded their skills at training centres, injuries within Russian actors at all levels, from executives to 119 employees; Railways’ health and safety employees, to act with awareness in order • fatal injury rate (number of fatal to prevent any work-related accidents. injuries) – by 30% to 14 employees; management system • severe injury rate (number of severe Employee healthcare The core document that sets out the injuries) – by 5% to 41 employees. helps to reduce the annual Company’s goals and objectives in workplace injury frequency this field is the Health, Environmental, The workplace injury frequency rate Protecting the health of its employees is Promotion of sports and As part of the Collective Bargaining rates regardless of severity. Industrial and Fire Safety Policy of the dropped as follows: one of the top priorities of the Company’s healthy lifestyle Agreement, the Company holds annual Russian Railways Group, updated in • overall (number of injuries per social policy. Health resort treatment, events aimed at improving health and 2020. Upon joining the Vision Zero global 1,000 workers) – by 20%, to 0.172; recreation and leisure activities are Russian Railways adopted its Healthy promoting sports and fitness among campaign, Russian Railways extended the • fatal (number of fatal injuries per available at 60 corporate health resorts, Lifestyle Concept for 2020–2025, its employees and their families. Major Policy with a view to running occupational 1,000 workers) – by 29%, to 0.020. holiday hotels, recreational centres and outlining a single corporate policy competitions include championships in injuries and health impairment prevention camps across Russia (from Kaliningrad in this area. Action plans have been cross-country skiing, football, chess, activities, as well as introducing an to the Far East). Despite epidemiological approved to implement this Concept badminton, table tennis, basketball and occupational safety culture. In order Changes in workplace injury rates complications, 53,500 employees across the Company’s footprint. They are cross-country running. With the restrictive to integrate the Vision Zero concept at Russian Railways and their family members received implemented in line with the schedules, measures, the reporting year saw into its health and safety practices, recreational services in 2020. taking into consideration the current 51,000 people take part in the Company’s Russian Railways developed the Vision As at 31 December 2020, 91% units of epidemiological situation and regional sports events. Zero Implementation Programme for Russian Railways’ branches most prone to restrictive measures. The regional 2019–20211. injuries kept showing their commitment to railways taken together carried out ensuring occupational safety. No cases of approximately 6,000 activities in all areas occupational fatalities have been recorded of the Concept. Health training sessions there for over five years. are run for Russian Railways’ employees.

1 Approved by Russian Railways’ Order No. 1179/r dated 13 June 2019. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 114 | 115

Evolution of workplace injury Non-occupational injuries in the Labour conditions Environmental protection metrics at Russian Railways, traffic area number of injuries, persons and occupational In 2020, Russian Railways reduced the 119 y-o-y levels of non-occupational injuries: safety improvement • total injuries – by 305 persons, down 2020 41 13.4% (from 2,254 to 1,949 persons); 14 • including fatal injuries – In 2020, Russian Railways outlined 152 by 215 persons, down 13.9% occupational risk management activities 2019 43 (from 1,552 to 1,337 persons); and included them in the Comprehensive 20 • injuries of non-adults – by 22 persons, Health and Safety Improvement 168 down 15.5% (from 142 to 120 persons); Programme for 2018–2020, based on the • including fatal injuries of non-adults – risk assessment results. The Company 2018 51 by 15 persons, down 16.7% (from 90 spent RUB 28.5 bn on its implementation 21 Despite the unprecedented external challenges of 2020, Russian to 75 persons). in 2020. In 2020, the Company also Railways retained its global leading positions in energy efficiency 182 adopted the Comprehensive Health and sustainability among international companies. In its technological 2017 51 Primary causes of non-occupational and Safety Improvement Programme for advancement, the Company keeps prioritising contribution to the 26 injuries include: 2021–2023. achievement of sustainable development goals, which, in terms of 223 • unauthorised walking along railway environmental safety, focus on promoting resource/energy saving tracks with a train approaching – 87.9%; 2016 64 technologies, eliminating environmental damage accumulated • running the red lights at a pedestrian 28 as a result of railway operations of previous years, efficient use of crossing – 6.8%; natural resources, and preservation of natural systems. Total injuries • unauthorised attempts to climb (jump incl. severe injuries off) a platform – 3.4%. incl. fatal injuries Sergey Kobzev Deputy CEO, Chief Engineer Key health and safety indicators

Indicator 2016 2017 2018 2019 2020

Health and safety improvement expenses, RUB m 18,715.5 20,121.1 22,596.1 23,914.6 28,542.1 Workplace injury frequency rate (number of injuries per 1,000 employees) 0.30 0.25 0.23 0.21 0.17 Russian Railways is a major natural resource user Number of workplaces with hazardous working conditions, operating in 77 regions of Russia. The Company has set thousand 95 88 84 81 79 its priorities in the rational use of natural resources Improved working conditions, thousand workplaces 32.0 37.0 41.0 40.6 40.6 and improving environmental safety until 2025 in line with the basic principles of state environmental development policy for the period through 2030.1 Consistent with government’s environmental priorities, Russian Railways’ efforts are focused on improving The Company’s environmental activities environmental safety, ensuring rational use of resources are primarily governed by the Health, Environmental, Industrial and Fire Safety and preserving natural systems. Policy of the Russian Railways Group.2

1 Approved by the Russian President on 30 April 2012 and by the Russian President’s Decree No. 204 On National Goals and Strategic Objectives of the Russian Federation through 2024 dated 7 May 2018. 2 Approved by Russian Railways’ Order No. 102/r dated 21 January 2020. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 116 | 117

Russian Railways’ key environmental initiatives in 2020

In 2020, Russian Railways approved Reducing environmental Air protection and noise the Environmental Strategy through 2030, impact exposure reduction which reflects the Company’s commitment to the UN global goals and national In reducing its environmental impact, As part of the corporate Environmental sustainable development goals. the Company follows the Environmental Strategy, the Company cut its emissions Strategy through 2020 and potentially from stationary sources in 2020 by As part of the Environmental Strategy through 2030 and the Climate Doctrine 13% y-o-y. implementation, significant steps were of the Russian Federation. Russian taken to enhance the environmental Railways responsibly implements For the purpose of noise control and management framework, adopt a programme for reducing GHG emissions reducing emissions in residential areas, resource-saving technologies and in its operations. the Company draws noise maps for environmental best practices, ranking risks and developing a priority and reduce the environmental footprint GHG emissions management is action plan to respond to them. Other of the Company’s business units. an element of Russian Railways’ corporate factors contributing to noise reduction: strategy, Russian Railways submits annual • continuous welded rails; Russian Railways’ contribution to the data for GHG emission assessment for • grinding of rails and interlocked goals of sustainable development and the purpose of CDP reporting and attends turnouts; climate agenda include participation working group meetings of the Russian • turnout replacement; in the task forces of the UN organisations Union of Industrialists and Entrepreneurs • use of anti-vibration pads; and International Union of Railways (RSPP) and the Ministry of Economic • aluminothermic welding of rails; (UIC). In July 2020, Oleg Belozerov, Development. The Company takes part • installation of noise protection screens CEO and Chairman of the Management in discussions on federal regulations, as part of railway upgrade and Board of Russian Railways, signed the submitting proposals and comments construction. UIC Declaration on Sustainable Mobility, based on specifics of the railway Action plan to protect Lake Baikal which proclaims railway companies’ transport. Russian Railways always looks for commitment to reducing specific energy innovative solutions to reduce noise levels. In November 2020, Russian Railways and the Ministry of Natural Resources and Environment approved consumption and CO2 emissions, In late 2019, to develop the GHG the Action Plan for environmental protection in Lake Baikal’s natural territory during the construction and achieving carbon neutrality by 2050, emissions accounting and management upgrade of the BAM and Trans-Siberian Railway infrastructure. and reaching sustainable development system, Russian Railways adopted Waste management goals. a programme of organisational and Its key elements include: technical initiatives for 2020–2025. Up to 80% of the waste generated by • a unified environmental monitoring system to oversee the works in Baikal’s natural territory (stationary According to the Long-Term Development Russian Railways is decontaminated, environmental laboratories, video recording units, local stationary posts and mobile control units); In 2020, the Company’s investment Programme, specific GHG emissions reused or recycled. Most of it (ferrous • cleaning up the shores of Lake Baikal between the villages of Baikal and Talovka (361 km); in environmental projects in 2025 will be 4.5% down vs 2018. and non-ferrous scrap metals and used • reducing the negative impact on the territory of the Slyudyanskoye Lake and Shamansky Cape regional amounted to ca The decline will be attributable to new petroleum products) is handled by waste natural monuments; solutions which reduce fuel consumption processing professionals. Waste is also • switching 14 heating units for track labourers from furnaces to electric energy; in traction and stationary power reused within the Company, including • developing a separate waste collection system; RUB 4 bn. generation. The deployment of modular waste hazard classes 5 and 2–4 as per • restoration of 20 ha of forests; gas-fired boilers instead of those fuelled the waste management licence obtained • engaging fire trains in extinguishing forest fires near the railway infrastructure. by coal and fuel oil significantly reduces by Russian Railways. In 2020, the share pollutant emissions. of the production and consumption waste The construction and upgrade of infrastructure facilities required to increase the throughput capacity of the that was decontaminated, reused or BAM and Trans-Siberian Railway covers 144 facilities in Lake Baikal’s natural territory, 47 of which are already Shifting to new types of rolling stock recycled in the total waste generation in progress. 69 facilities have received the approvals of the state environmental and technical review boards. is essential for reducing GHG emissions. increased by 0.3 p.p. y-o-y. An environmental certificate covering compensatory measures and environmental monitoring and control data In particular, the indicative environmental is provided for each facility. impact of Lastochka electric trains In 2020, Russian Railways generated calculated by the Company showed 1.406 mt of production and consumption a significant advantage of rail passenger waste, of which 0.064 mt was disposed transport as compared to motor vehicles. of or decontaminated by the Company’s In 2020, Lastochkas emitted 105.9 kt units. 1.477 mt of waste was transferred to

of CO2 vs 829.2 kt of CO2 which motor third parties, including: vehicles would emit for transporting • 1.066 mt for subsequent disposal; the same number of passengers over • 0.165 mt for decontamination; the same route (7.8 times higher). • 0.246 mt for dumping. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 118 | 119

Waste decontamination, reuse Biodiversity conservation Energy efficiency and and recycling (%) The Company pays great attention to 2020 83.2 conservation the conservation of biodiversity in railway 2019 82.9 infrastructure areas and next to railway stations. Parts of tracks often crossed by 2018 81.7 animals are equipped with reflective tape, 2017 78.5 and are monitored together with forestry and hunting sector representatives. Russian Railways maintains Every year, the Company shapes and Energy intensity of the Russian 2016 77.6 implements the Energy Savings and Railways’ operations, leadership in energy Energy Efficiency Programme as part of kJ / virtual tkm net efficiency and environmental the Company’s Energy Strategy through 2020 and potentially through 2030. In 2020 86.7 friendliness among global 2020, the Company set out to develop 2019 87.7 1,522 t freight and passenger its new Energy Strategy through 2025 with an outlook through 2035, with a 2018 88.7 railway companies. Russia view to analysing the implementation 2017 89.7 of paper, plastic, and glass ranks first globally in terms of the current strategy and updating the were delivered for disposal priorities of the Russian Railways’ energy 2016 93.4 in 2020. of energy efficiency in management and the targets of the rail freight transportation, Company’s energy efficiency. outperforming European Energy efficiency and energy intensity of the railways, as well as those Russian Railways’ operations in China, India, Japan and the USA. As regards energy Target Target for 2020 Actual for 2020 efficiency in passenger Reduction in the energy intensity of transportation, Russia comes operations, % –0.6 –1.0 in fourth after India, China, Energy efficiency improvement, % 0.6 1.0 and Japan. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS SUSTAINABLE DEVELOPMENT 120 | 121 Charity In the reporting year, the Energy Efficiency Russian Railways is carrying out Despite a decline in the capacity for fuel Programme helped to achieve fuel innovative development to use liquefied and energy saving, the rate of Russian and energy savings of 6,566.4 TJ, or natural gas as an alternative energy Railways’ energy intensity reduction is RUB 5.3 bn. source for train traction, in line with quite stable against the benchmarks set the President’s and the Government’s by the UIC (kJ/tkm), largely due to Russian In 2020, initiatives implemented by the instructions. The programme stipulates Railways’ investments in energy saving. Company’s divisions as part of the Energy development, production and Efficiency Programme saved: maintenance of new gas powered In 2020, the investment project on • 814.7 m kWh of electricity for locomotives, as well as deploying introduction of resource-saving Russian Railways puts social In 2020, our charity initiatives focused on: The charity spending in 2020 RUB 2,982 m; liquefied natural gas supply infrastructure technologies in railway transport covered • financial support to the COVID-19 amounted to around • 44.2 kt of diesel fuel for RUB 1,897 m; and drafting regulations. Liquefied natural the launch of 1.2 k technical facilities to responsibility at the heart response initiatives (aid to the All- • 0.9 kt of petrol for RUB 40 m; gas for locomotive operation is supplied the amount of RUB 1.3 bn (98% of the of its corporate strategy. Russian Public Movement of Medical • 12.4 kt of fuel oil for RUB 140 m; by Gazprom. target), including: Volunteers, contribution to the All- RUB 5.5 bn. • 21.9 kt of coal for RUB 49 m; • 858 resource-efficient locomotive The objectives and core Russian fundraiser to assist home • 13.6 mcm of natural gas for RUB 74 m; Energy efficiency improvement of the onboard systems; principles of the charity schooling); • 69.6 k Gcal of heat energy for stationary power facilities saved more • IoT-based energy-efficient lighting • assistance in remediation of the areas RUB 142 m. than RUB 1.7 bn. This included: systems, including those at 4 station activities are set forth in the affected by a flood in the Irkutsk • activities to boost energy efficiency railyards and track maintenance Region (financial contribution to school The activities improving energy efficiency of thermal generation and heating stations; Charity and Sponsorship construction in Tulun, helping to of the transportation process served systems facilities, which served to • 164 high-mast lighting units using Policy.1 Under this Policy, transport children from the region to to save 621.3 m kWh of electric power save fuel and energy resources in the advanced lighting devices; summer vacation sites and back); and 34.5 kt of diesel fuel, accounting amount of RUB 369.2 m; • 15 heat pumps at the domains of charity predominantly covers • targeted aid to retired railway for over RUB 3.7 bn. The bulk of savings • introduction of LED devices, energy- the Privolzhsk and North Caucasus regions of the Company’s employees, honoured railway (54.6%) was achieved by improving efficient lighting fixtures and control Railways to replace the obsolete employees, and veterans of World traffic management procedures, for devices, optimisation of the lighting inefficient small boilers; footprint and prioritises War II, as well as celebration of the example, using energy efficient firm- operation patterns at the station • 84 rolling stock jack stoppers; institutions, foundations, and 75th anniversary of the victory in the time slots, including installation of railyards, terminals, technical • 5 scale test cars; war; automatic locomotive operation and driver and administrative buildings, and • 16 sets of reference equipment for performance groups working • fostering education, research and information systems, reduction in train warehouses, with the resulting metrology. with Russian Railways. professional skills development, downtime at intermediate stations and in economy of RUB 256.3 m; including assistance to industry- the empty-run ratio. • initiatives aimed to improve energy The 2020 savings from using the Relations with local specific universities and colleges. efficiency of the workflow and resource-efficient technologies deployed communities are governed Apart from rendering monetary aid, The initiatives improving locomotive infrastructure, resulting in fuel and in 2019 amounted to RUB 313 m, or 132% the Company provided equipment and operation saved 117.7 m kWh of electricity energy savings in the amount of of the target. by the Russian Railways materials; and 16.0 kt of diesel fuel for the amount RUB 448.9 m. Group’s regional policy.2 • donations to children’s charities, exceeding RUB 1.1 bn. disabled persons, disadvantaged population, including support of the Children’s Hospice autonomous non-profit organisation, So-Edinenie Support Fund for the Deaf-Blind, and Obereg autonomous non-profit organisation; • supporting environment-related causes; • supporting charitable projects for restoration and conservation of Russian historical and architectural landmarks; • promoting mass sports, physical training and healthy lifestyle.

1 Approved by the Company’s Board of Directors on 8 November 2016. 2 Approved by the State Secretary, Vice President Anatoly Meshcheryakov on 10 June 2016, No. 395. in every decision in Efficiency Efficiency Instructions of President the Instructions decision-making efficiency. decision-making Russian Railways is Russian are Federation of 100 % and Government of the For more details see p. 124 p. see details more For practices and boosting and boosting practices The focuses Company corporate governance on implementing best best implementing on critical importance. critical state owned

CORPORATE GOVERNANCE ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 124 | 125 Corporate governance system

Russian Railways’ corporate In implementing its corporate governance The Board of Directors of Russian Governance structure of Russian Railways framework and tools, Russian Railways Railways approved the new versions of governance system is based also complies with documents issued the Charter and Regulation on the Board 2 on applicable standards and by the Bank of Russia as the regulator of Directors and submitted the documents Audit Commission and the Federal Agency for State to federal executive authorities to arrange GENERAL MEETING OF SHAREHOLDERS the nature of its operations Property Management as the corporate for adopting relevant government The supreme governance body of Russian Railways. The Russian and governance as a governance methodologist for state- regulations. Federation, represented by the Russian Government, is the sole owned companies. Russian Railways’ shareholder of Russian Railways. 100% state-owned single Board of Directors is the key component In 2020, the Board of Directors reviewed 1 of the corporate governance framework, the corporate governance practice at economic entity. Instructions leading the development of the Russian Railways3 recognising the action of the Russian Government, Company’s best practice of corporate plan (“road map”) to implement the governance. provisions of the Corporate Governance which places a special focus 4 Code as generally fulfilled. BOARD OF DIRECTORS Committees of the Board of on improving the quality of In 2020, Russian Railways updated the Directors Elected by Russian Railways’ shareholder. Pursues a policy that corporate governance in Charter and Regulation on the Board of Directors to improve the Company’s supports the Company’s dynamic growth, improves sustainability and Corporate Secretary state-owned companies, corporate governance quality, reflect increases profits. changes in the Russian laws, and take are of critical importance into account the recommendations of the for shaping the corporate Bank of Russia’s Corporate Governance Code and the Moscow Exchange’s governance practice in the corporate governance requirements for Company. bond issuers. The proposed amendments CHIEF EXECUTIVE OFFICER – Advisory bodies under the are based on best practices and seek to CHAIRMAN OF THE MANAGEMENT BOARD Chief Executive Officer – redistribute the competences of Russian Chairman of the Management Railways’ governance bodies, update Appointed by the Government of the Russian Federation. Board criteria for transactions requiring the consent of Company’s Board of Directors and Management Board, and optimise the Board of Directors’ competence in relation to Russian Railways’ controlled entities. MANAGEMENT BOARD Advisory bodies under the Management Board Russian Railways’ collective executive body. Members are appointed by the Board of Directors, with the exception of Chairman of the Management Board – Chief Executive Officer.

EXECUTIVE OFFICE Advisory bodies run by heads of departments and other Departments, divisions and other units of the executive office executives responsible for operational management.

1 As defined by Federal Law No. 29-FZ On the Specifics of Administration and Disposal of Railway Transport Property dated 27 February 2003. 2 Minutes No. 20 dated 30 July 2020 and No. 22 dated 23 September 2020. 3 Minutes No. 19 dated 24 July 2020. 4 Approved by the Company’s Board of Directors (Minutes No. 18 dated 12 December 2016). ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 126 | 127 General Meeting of Board of Directors Shareholders

The supreme governance body of • approval of the Company’s auditor; In 2020, one Annual General Meeting The Board acts pursuant to the laws of the • approval of budget implementation expiry6. It was resolved that the new Russian Railways is its General Meeting • due increase or reduction of the of Shareholders and five Extraordinary Russian Federation, the Charter of Russian reports for 2019, approval and Board would comprise 14 directors, and of Shareholders. As all of the Company’ Company’s charter capital; General Meetings of Shareholders were Railways1 and the Regulation on the Board adjustment of budgets for 2020, new Board members were elected. shares belong to the sole shareholder, the • approval of annual reports, annual held. Russian Railways’ Annual General of Directors of Russian Railways2. 2021–2022; Russian Federation, represented by the financial statements, including Meeting of Shareholders2 adopted the • approval of material transactions; Directors who left the Board: Russian Government, all resolutions on profit and loss statements (income following resolutions: The key objective of the Board of • dividend payouts; • Maxim Akimov; matters reserved to the General Meeting statements) of the Company, and • approval of the annual report, balance Directors is to pursue a policy that • participation in and withdrawal from • Grigory Berezkin; of Shareholders are adopted in writing distribution of the Company’s profit sheet and income statement for 2019; supports the Company’s robust growth, other legal entities. • Arkady Dvorkovich; by the Russian Government and take the (including payment (declaration) • distribution of net profit and losses improves the sustainability of its • Dmitry Patrushev; form of the sole shareholder’s orders and of dividends except for the profit based on financial performance operations, and increases profitability. Furthermore, the Board of Directors • Vladimir Puchkov; resolutions1. distributed as dividends for the first in 2019; The Board also determines the Company’s regularly reviewed procurement reports • Mikhail Rasstrigin. quarter, first half, or nine months of the • payment of dividends to the holders of business priorities, approves its long-term for 2019 and 2020, reports on the disposal The matters reserved to the General financial year) or losses as at the end Russian Railways’ preference shares plans and core programmes, including the of non-core assets, as well as reports on Newly elected directors: Meeting of Shareholders of Russian of a financial year; based on performance in 2019 and budget and the investment programme, the allocation of funds for charity and • Andrey Belousov; Railways are defined by the Federal Law • determining the proceedings of the remuneration to members of the Board and defines general principles of and sponsorship activities. • Maxim Reshetnikov; on Joint Stock Companies (Article 48) General Meeting of Shareholders; of Directors and Audit Commission; approaches to risk management in the • Alexey Sazanov; and the Charter of Russian Railways • resolutions approving material • determination of the Board of Directors Company. In 2020, Russian Railways implemented • Irek Fayzullin; (Clause 62). The matters reserved to transactions and interested-party and Audit Commission composition and an action plan to improve the efficiency of • Sergey Frank; the General Meeting of Shareholders of transactions, including those involving appointment of their members; In line with international corporate the Board of Directors3. In particular, the • Dmitry Chernyshenko. Russian Railways include: restricted property where so provided • approval of the auditor for 2020. governance practices, independent following documents were developed and • amendments to and modifications of for by Articles 79 and 83 of the Federal directors have been elected to the approved by the Board: Andrey Belousov was elected Chairman of the Company’s Charter or approval of a Law On Joint Stock Companies, and Russian Railways’ Extraordinary General Board of Directors of Russian Railways • Onboarding Procedure for Newly Russian Railways’ Board of Directors7. new version of the Company’s Charter; reserved by the said Federal Law to the Meetings of Shareholders adopted the since 2008. Elected Members of the Board of • reorganisation of the Company; General Meeting of Shareholders; following resolutions3: Directors;4 In September 2020, when the sole • liquidation of the Company, • resolutions on joining financial and • on determining the number and The Board of Directors supervises the • Procedure for the Preparation shareholder was making the decisions appointment of the liquidation industrial groups, associations, or other election of the Board members of Company’s corporate governance and Submission of Materials and that fall within the competence of the committee and approval of interim and unions of business entities; Russian Railways, as well as early practices. Pursuant to the Company’s Information to Russian Railways’ Board Annual General Meeting of Shareholders, final liquidation balance sheets; • approval of internal documents termination of their office; Charter and the recommendations of the of Directors and the Committees of the the number and composition of the • determining the number and election governing the Company’s bodies • on increasing the Company’s charter Corporate Governance Code, the Board Board of Directors.5 Board of Directors did not change. As at of the Board members, as well as (regulations on the General Meeting capital; of Directors plays a key role in decision- 31 December 2020, Russian Railways’ termination of their office; of Members, Board of Directors, • on issuing perpetual bonds; making with respect to the Company’s The Board of Directors also approved Board of Directors comprised 14 members. • determining the number of the Management Board, and Audit • on amending the Charter of Russian controlled entities. the Regulation on Internal Audit, Management Board members; Commission); Railways. which provides for the functional • election of members of the Company’s • dealing with any other matters In 2020, the Board determined the subordination of the Head of Internal Audit Commission and termination of provided for by the Federal Law On voting position of the Company (its Audit to the Board of Directors. The Board their office; Joint Stock Companies. representatives) at meetings of the approved the candidate for the Head governance bodies of its controlled of Internal Audit and the terms of their entities on the following matters: remuneration. • approval of the agenda for general meetings of shareholders; In 2020, the composition of the Board of • election of members of the boards of Directors underwent a number of changes. directors and chairmen of the boards of In March 2020, Russian Railways’ sole directors; shareholder decided to terminate the • election of audit commissions; powers of the Board of Directors before

1 Approved by Resolution No. 585 of the Russian Government dated 18 September 2003. 1 In line with Article 47 of the Federal Law On Joint-Stock Companies, Article 5 of the Federal Law On the Specifics of Administration and Disposal of Railway 2 Approved by Order No. 265-r of the Russian Government dated 25 February 2004. Transport Property, and Clause 67 of the Company’s Charter. 3 Approved by the Company’s Board of Directors, Minutes No. 1 dated 24 July 2019. 2 Order No. 2509-r of the Russian Government dated 30 September 2020. 4 Minutes No. 19 dated 24 July 2020. 3 Order No. 552-r of the Russian Government dated 6 March 2020, Resolution No. 244 of the Russian Government dated 7 March 2020, Order No. 890-r of the 5 Minutes No. 4 dated 21 December 2020. Russian Government dated 4 April 2020, Resolution No. 450 of the Russian Government dated 4 April 2020, Order No. 1260-r of the Russian Government dated 6 Order No. 552-r of the Russian Government dated 6 March 2020. 13 May 2020, Order No. 3190-r of the Russian Government dated 3 December 2020, Resolution No. 2004 of the Russian Government dated 3 December 2020. 7 Resolution of the Board of Directors dated 25 March 2020, Minutes No. 14. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 128 | 129

Participation of the Board of Directors in sustainable UN Sustainable Development Goals The role of the Board of Directors development management The investment programme for 2021–2023 approved by the Board of Directors on 29 December 2020 (Minutes No. 5) aims at developing and upgrading the railway infrastructure of the Russian Federation, including in major metropolitan areas. Sustainable development management is provides for a number of investment The Board of Directors regularly reviews an essential part of the Board’s activities. projects to improve the lives of Russian reports on the implementation of the Within its scope of authority, the Board of residents, create a comfortable and safe Charity and Sponsorship Policy, the Directors reviews and approves the basic environment for life and development Group’s Comprehensive Innovative The Board of Directors approved the Consolidated Programme to Improve Operational internal documents and monitors their of tourism (the Ultra High-Speed Development Programme, and the Efficiency and Optimise Costs in 2019–2025 (resolution dated 28 June 2019, Minutes implementation. Railway Lines project, infrastructure Consolidated Programme to Improve No. 20). Programme implementation reports are reviewed on a quarterly basis. development projects at Central and Operational Efficiency. In 2020, the Board In 2020, the Board adopted the following St Petersburg transport hubs); also reviewed a report on the progress resolutions on social and environmental • resolved to donate social, educational, against the Conceptual Framework for the matters: sports and cultural facilities to Reform of the Russian Railways Preschool The Board of Directors approved the Group’s Comprehensive Innovative Development • approved the Group’s Comprehensive municipal and regional public law and School Education for 2017–2020. Programme until 2025 (resolution dated 26 February 2020, Minutes No. 13), which Innovative Development Programme entities. contains a set of measures (including KPIs) aimed at improving energy efficiency and until 2025, which includes, among reducing greenhouse gas emissions. Programme implementation reports are reviewed other things, the achievement of Amid the COVID-19 pandemic, Russian annually. 2025 KPIs for energy efficiency, safety Railways’ Board of Directors supported and reduction of greenhouse gas the executive bodies’ proposals aimed emissions; at mitigating the damage from the • approved a RUB 370 bn perpetual restrictions introduced in the spring bond programme, with the first in and summer of 2020. Russian Railways Composition of the Board of Directors as Meetings of the Russia issue of green bonds placed in refused to limit working hours for its September 2020; staff, safeguarding a stable working at 31 December 2020 Board of Directors • approved Russian Railways’ investment environment and decent working programme for 2021–2023, which conditions. in 2020 Representatives of the Russian Independent directors: Federation: • Christian Kern; Role of the Board of Directors in overseeing the achievement of the UN Sustainable Development Goals • Andrey Belousov; • Sergey Nedoroslev; In 2020, the Board of Directors of • Oleg Belozerov; • Sergey Stepashin. Russian Railways held 17 meetings, UN Sustainable Development Goals The role of the Board of Directors • Yevgeny Ditrikh; including 2 meetings held in person and • Kirill Dmitriev; Members of the Board of Directors hold 15 conducted in the form of absentee In 2017, the Board of Directors approved the Conceptual Framework for the Reform • Andrey Ivanov; no stakes in the charter capital of Russian voting. The Board of Directors considered of Healthcare Facilities of Russian Railways (resolution dated 11 September 2017, • Maxim Reshetnikov; Railways. 132 matters focusing on a variety of the Minutes No. 9). • Alexander Ryazanov; Company’s business areas. • Alexey Sazanov; • Irek Fayzullin; • Sergey Frank; The Conceptual Framework for the Reform of the Russian Railways Preschool and • Dmitry Chernyshenko. School Education for 2017–2020 is in place (resolution dated 11 September 2017, Minutes No. 9). Brief biographies of the Board members are available on the Company’s website at

In 2019, Russian Railways’ Long-Term Development Programme until 2025 was approved in order to achieve the national goals and strategic objectives of the Russian Federation. The financial plan and investment programme for 2021–2023 approved by the Board of Directors on 29 December 2020 (Minutes No. 5) provide more details on the Long-Term Development Programme. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 130 | 131

Report on the performance of the Board of Directors and For taking on additional responsibilities, attending (producing a written opinion for) Compensation Paid to Members of Board members are paid additional at least 75% of the in-person committee Russian Railways’ Board of Directors does material resolutions adopted in 2020 remuneration calculated as the basic meetings held over the course of the not apply to directors who are members of portion of remuneration multiplied by the corporate year. the executive bodies of Russian Railways following ratios: or who are restricted or prohibited by In 2020, as part of its key tasks and • resolved to terminate and appoint • prepared recommendations for the • 3.5 – for the functions performed by If a member of the Board of Directors Russian laws from receiving any payments responsibilities, Russian Railways’ Board members of Russian Railways’ Company’s Annual General Meeting the Chairman of the Board (excluding performs the functions of a member and/ from commercial organisations. of Directors: Management Board; of Shareholders on the approval of an individuals who perform the functions or the chairman of a Board committee • approved the Non-Core Assets • authorised members of Russian auditor for Russian Railways for 2020 of the Chairman of the Board of on several committees, additional In the reporting year, the Annual General Disposal Plan for 2020; Railways’ Management Board to hold and approved the auditor fees; Directors in their absence); remuneration is paid for the functions Meeting of Shareholders of Russian • approved the Standard for Assessing positions in the governance bodies of • prepared recommendations for the • 1.5 – for the functions performed by the performed on each committee. Additional Railways resolved to allocate a total the Implementation of the Long-Term other entities; Company’s Annual General Meeting chairman of a Board committee; remuneration is calculated and paid of RUB 45.37 m in remuneration to Development Programme and KPI • decided on the price and terms for of Shareholders on the maximum • 0.5 – for the functions of a member of a for the period of actual performance of members of the Russian Railways Board Achievement; the placement of additional Russian dividend amount, payment procedure Board committee. additional functions. of Directors. • approved the Regulation on Internal Railways shares, and approved the for the 2019 dividends, and distribution Audit; prospectus of perpetual bonds; of net profit for 2019; Additional remuneration for participation A Board member may waive their • approved the Onboarding Procedure • resolved to withdraw from RRC-2, • prepared recommendations for the in the work of the Board committees is remuneration in full or in part. The for Newly Elected Members of the RZD-ZDOROVIE, Vologda RRS, BET, Company’s Annual General Meeting paid subject to the director personally Regulation on Remuneration and Board of Directors; TransWoodService, and EKZA; of Shareholders on the remuneration • approved the Procedure for the • resolved to participate in Federal payable to members of the Board of Preparation and Submission of Passenger Company and Innovative Directors and the Audit Commission Materials and Information to the Board Engineering Centre as a founder, as based on their performance in the Committees of the Board of Directors of Directors and the Committees of the well as in RRC-1 and Yakutia Railways; 2019–2020 corporate year. Board of Directors; • pre-approved Russian Railways’ • approved the Regulation on the Quality Annual Report for 2019 and For the purposes of preliminary Strategic Planning Committee • monitoring the progress on priority Management System at Russian prepared recommendations for the consideration of the most important investment projects, including Railways; Company’s Annual General Meeting matters and preparation of relevant The Strategic Planning Committee implementation efficiency indicators; • approved Russian Railways’ financial of Shareholders on the approval of the recommendations, Russian Railways’ develops recommendations for the Board • issuing and placing the Company’s plan and investment programme report; Board of Directors has the following of Directors on the following matters: securities; for 2021 and the planning horizon • pre-approved and prepared committees in place: • determining the priority areas of the • Russian Railways’ dividend policy; extending to 2022 and 2023; recommendations for the Company’s • Strategic Planning Committee; Company’s activities; • participation of Russian Railways in • approved the report on the Annual General Meeting of • Audit and Risk Committee; • determining the priority areas of other organisations (including direct implementation of Comprehensive Shareholders on the approval of the • Personnel and Remuneration investment and laying out the key and indirect acquisition and disposal of Innovative Development Programme of Russian Railways’ annual RAS financial Committee; principles of the investment policy; stakes, and encumbering shares); the Russian Railways Group until 2020 (accounting) statements for 2019 • Digital Transformation and Innovation • defining the strategic goals of • reorganisation and liquidation of the in 2019; (including the income statement); Committee. Russian Railways and its subsidiaries Company or its controlled entities; and affiliates, monitoring the • innovative development of the The committees are elected by Russian implementation of their respective Company and its subsidiaries and Railways’ Board of Directors and act in strategies, and preparing affiliates; Remuneration of the Board of Directors accordance with the regulations on the recommendations for the Board of • approving long-term plans and core committees approved by the Company’s Directors to revise the development programmes, including the annual Board of Directors.1 strategy of Russian Railways and its budget and investment programme. In 2020, the Annual General Meeting According to the Regulation on Remuneration of a member of the subsidiaries and affiliates; of Shareholders of Russian Railways Remuneration and Compensation Company’s Board of Directors consists of adopted a resolution to pay remuneration Paid to Members of Russian Railways’ the basic and additional components. The to the Company’s directors for the Board of Directors2, remuneration and basic component is calculated depending 2019–2020 corporate year in the compensation are calculated and paid to on the participation of directors in amount recommended by the Board of members of the Board of Directors for the Board meetings. The maximum basic Directors1 and in the manner prescribed corporate year and proportionally to the remuneration for a member of the Board by the Regulation on Remuneration time during which they were performing is RUB 4,000,000. and Compensation Paid to Members of their functions for a fee. Russian Railways’ Board of Directors.

1 The Regulation on the Strategic Planning Committee of Russian Railways’ Board of Directors was approved by resolution of the Board of Directors of 25 April 2014 (Minutes No. 8) and amended by resolution of the Board of Directors of 19 November 2020 (Minutes No. 1). The Regulation on the Audit and Risk Committee 1 Resolution of Russian Railways’ Board of Directors dated 29 September 2020, Minutes No. 23. of Russian Railways’ Board of Directors was approved by resolution of the Board of Directors of 25 April 2014 (Minutes No. 8). The Regulation on the Personnel 2 Approved by resolution of Russian Railways’ Board of Directors dated 26 June 2018, Minutes No. 25. Developed in accordance with the Federal Law on Joint and Remuneration Committee of Russian Railways’ Board of Directors was approved by resolution of the Board of Directors of 25 April 2014 (Minutes No. 8). The Stock Companies, other laws and regulations of the Russian Federation, recommendations of the Federal Agency for State Property Management and the Regulation on the Digital Transformation and Innovation Committee of Russian Railways’ Board of Directors was approved by resolution of the Board of Directors Corporate Governance Code, as well as the Regulation on the Board of Directors of Russian Railways. of 30 May 2019 (Minutes No. 17) and amended by resolution of the Board of Directors of 19 November 2020 (Minutes No. 1) ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 132 | 133

Members of the Strategic Planning Committee (as at 31 December 2020) The following persons take part in the • authorising the Chairman or members • selecting an independent consultant work of the Committee as permanent of the Management Board to hold to advise on the remuneration of Maxim Reshetnikov Chairman of the Committee, director invitees with the right to provide advice on positions in the governance bodies of members of the Company’s executive agenda items: other entities; bodies and other key executives. Yevgeny Ditrikh director • Dmitry Filatov, Aide to the First • determining the remuneration and Kirill Dmitriev director Deputy Prime Minister of the Russian compensation to be paid to members Order No. 552-r of the Russian Andrey Ivanov director Federation; of the Audit Commission; Government dated 6 March 2020 • Anatoly Chabunin, Deputy CEO, • determining the remuneration and approved a new Board of Directors Christian Kern independent director Director for Internal Control and Audit, compensation to be paid to members of Russian Railways. By resolution of Sergey Nedoroslev independent director Russian Railways; of the Board of Directors; the Board of Directors dated 25 March • Sergey Burkov, independent expert; • determining the voting position of 2020 (Minutes No. 14), the Committee’s Alexander Ryazanov director • Andrey Zhemchugov, Corporate Russian Railways (its representatives) membership was changed. Alexey Sazanov director Secretary, Russian Railways. on matters regarding the number or election of directors or early Sergey Frank director In 2020, the Committee held twelve termination of their office, or the meetings, including two in the form of appointment or dismissal of heads Order No. 552-r of the Russian Audit and Risk Committee • preparing recommendations for the absentee voting.1 of governance bodies or members Government dated 6 March 2020 Board of Directors on determining the of supervisory bodies to be resolved approved a new Board of Directors The Audit and Risk Committee develops Company’s position when evaluating upon by the general meetings of of Russian Railways. By resolution of recommendations for the Board of assets (property, shares, etc.) before Personnel and Remuneration shareholders and boards of directors the Board of Directors dated 25 March Directors on the following matters: potential transactions; Committee of the respective subsidiaries and 2020 (Minutes No. 14), the Committee’s • Russian Railways’ accounting • working with the Audit Commission; affiliates included in the list annually membership was changed. (financial) statements; • analysing proposals and developing The Personnel and Remuneration approved by Russian Railways’ Board • risk management, internal control recommendations for the Board of Committee develops recommendations of Directors; The following persons take part in the and corporate governance, including Directors on the approval of long- for the Board of Directors on the following • developing and reviewing Russian work of the Committee as permanent control over the reliability and term plans and core programmes of key matters: Railways’ remuneration policy in invitees with the right to provide advice on efficiency of the risk management subsidiaries and affiliates, as well • determining the Management Board respect of the Company’s directors, agenda items: and internal control system and the as their annual budgets included in membership (except for the CEO, members of its executive bodies, and • Grigory Berezkin, Chairman of the corporate governance system; a list annually approved by Russian Chairman of the Management Board); other key executives; Board of Directors, ESN; • reviewing transactions that fall Railways’ Board of Directors, and the • Alexey Brischuk, Aide to the First within the competence of the Board corresponding budget reports. Deputy Prime Minister of the Russian of Directors in order to identify Members of the Personnel and Remuneration Committee (as at 31 December 2020) Federation; potential interested- or related-party In 2020, the membership of the Audit and • Dmitry Filatov, Aide to the First transactions; Risk Committee changed twice: Sergey Nedoroslev Chairman of the Committee, independent director Deputy Prime Minister of the Russian • conducting internal and external • Irek Fayzullin and Andrey Ivanov joined Alexander Ryazanov director Federation; audits, including ensuring the the Committee upon resolution of the Sergey Frank director • Vadim Mikhailov, First Deputy CEO, independence and impartiality of Board of Directors dated 25 March Russian Railways; the internal audit function, as well 2020 (Minutes No. 14); • Alexander Plutnik, Deputy CEO, as verifying the independence and • existing members were elected by The following persons take part in the • Alexey Brischuk, Aide to the First Russian Railways; impartiality of Russian Railways’ resolution of the Board of Directors work of the Committee as permanent Deputy Prime Minister of the Russian • Andrey Zhemchugov, Corporate external auditors and establishing dated 19 November 2020 (Minutes invitees with the right to provide advice on Federation; Secretary, Russian Railways. whether they have any conflicts of No. 1). agenda items: • Andrey Zhemchugov, Corporate interest; • Dmitry Shakhanov, Deputy CEO, Secretary, Russian Railways. In 2020, the Committee held seven • combating misconduct by the Russian Railways; meetings.1 Company’s employees or third parties; • Vladimir Gaponko, Director for In 2020, the Committee held seven Operational Efficiency – Head of the meetings.2 Department of Economics, Russian Members of the Audit and Risk Committee (as at 31 December 2020) Railways;

Sergey Stepashin Chairman of the Committee, independent director Sergey Nedoroslev independent director Andrey Ivanov director Irek Fayzullin director

1 For the list of items considered see the Appendix. 2 1 For the list of items considered see the Appendix. For the list of items considered see the Appendix. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 134 | 135 Corporate Secretary Digital Transformation and • defining the policy and evaluating Order No. 552-r of the Russian Innovation Committee the effectiveness of Russian Railways Government dated 6 March 2020 and its controlled entities as regards approved a new Board of Directors The Digital Transformation and Innovation information security and the reliability of Russian Railways. By resolution of Committee develops recommendations of information systems; the Board of Directors dated 25 March for the Board of Directors on the following • considering the budget, investment 2020 (Minutes No. 14), the Committee’s key matters: programme priorities, and key membership was changed. • determining the priority areas for investment projects of Russian digital transformation and innovative Railways and its controlled entities The Corporate Secretary of Russian to settle conflicts involving violation duties and responsibilities are listed in the development of Russian Railways and as regards digital transformation, Railways is a dedicated officer whose of shareholder rights, and arranging Regulation on the Corporate Secretary its controlled entities; information technology and innovative responsibilities include ensuring that the interaction between Russian Railways of Russian Railways and the Office of the • control over the implementation of development, as well as control over Company’s bodies and officials comply and its shareholders and between the Corporate Secretary. digital transformation and innovative their execution and implementation; with the requirements of the laws of Company’s governance bodies. development strategies and the • control over the implementation of the the Russian Federation and Russian Since September 2018, Andrey development of recommendations for import substitution policy as regards Railways’ Charter and internal documents The Corporate Secretary is appointed and Zhemchugov has been the Corporate their revision; information technology and software. that guarantee the respect of rights and released from office based on a resolution Secretary of Russian Railways. legitimate interests of the Company’s of the Board of Directors passed by a shareholders, organising measures majority vote. The Corporate Secretary’s Members of the Digital Transformation and Innovation Committee (as at 31 December 2020)

Dmitry Chernyshenko Chairman of the Committee, director Born in 1973. Kirill Dmitriev director Christian Kern independent director In 1994, he graduated with honors from the Faculty of Economics of the Lomonosov Moscow State University; in 1998, he received the degree of Candidate of Economic Sergey Nedoroslev independent director Sciences, having completed postgraduate studies at the Institute of the USA and Canada Russian Academy of Sciences. The following persons take part in the • Dmitry Shcherbinin, Deputy Head of work of the Committee as permanent the Office of the First Deputy Prime Career: invitees with the right to provide advice Minister of the Russian Federation. • 2007-2017 – Director of the Stock Market and Investor Relations PJSC TransContainer; on agenda items: • since March 2017 – First Deputy Financial Director PJSC TransContainer; • Sergey Kobzev, Chief Engineer and In 2020, the Committee held two • In September 2018, by the decision of the Board of Directors of Russian Railways, Deputy CEO, Russian Railways; meetings.1 he was appointed to the position of Corporate Secretary of Russian Railways. • Yevgeny Charkin, Deputy CEO, Russian Railways;

ZHEMCHUGOV Andrey

1 For the list of items considered see the Appendix. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 136 | 137

Management Board Members of the Management Board

No. Full name Position

1 Oleg Belozerov CEO, Chairman of the Management Board 2 Anatoly Krasnoshchek First Deputy CEO 3 Vadim Mikhailov First Deputy CEO As a collective executive body, the The Management Board is responsible for:1 • establishing a compensation system • setting, extending and changing tariffs, The total remuneration of the 4 Sergey Pavlov First Deputy CEO Company’s Management Board is • preparing and submitting the and incentives for the Company’s fees and rates for services provided by Management Board members accrued responsible for the general management Company’s priorities and long-term employees; Russian Railways. and paid in 2020 was RUB 1,307.285 m, 5 Elena Kharybina Chief Accountant of business operations (except for matters plans, including annual budgets and • approving the Company’s internal including RUB 781.7 m in salaries 6 Sergey Kobzev Deputy CEO, Chief Engineer that are reserved to the General Meeting the investment programme, to the documents on matters that are and RUB 525.585 m in bonuses. The of Shareholders, the Board of Directors or Board of Directors; preparing progress reserved to the Management Board; Remuneration of the annual bonus for 2019 was paid to 7 Oleg Valinsky Deputy CEO, Head of the Directorate of Locomotive Traction the CEO – Chairman of the Management reports; and developing and approving • resolving other matters related to the Management Board the Management Board members in 8 Gennadiy Verkhovykh Deputy CEO, Head of the Central Directorate of Infrastructure Board as per the Federal Law On Joint current operation plans; Company’s ongoing operations that accordance with the resolution of Russian Stock Companies and the Company’s • approving internal estimated tariffs, are submitted for consideration of the In 2020, the remuneration of the Railways’ Board of Directors (Minutes 9 Olga Gnedkova Deputy CEO Charter, unless otherwise stated by the fees and payments for work (services) Management Board by the Chairman of members of the Russian Railways No. 17 dated 5 June 2020). 10 Andrey Makarov Deputy CEO Charter). performed (provided) by the Company the Management Board, the Board of Management Board was paid in that are not related to natural Directors or the shareholder. accordance with the Regulation on the 11 Vyacheslav Pavlovsky Deputy CEO In line with its key responsibilities, the monopolies; Remuneration System for Members of 12 Dmitry Pegov Deputy CEO Management Board is tasked with • approving rules that arrange for and While performing the above functions in Russian Railways’ Management Board1. 13 Alexander Plutnik Deputy CEO developing proposals on the Company’s ensure accuracy of accounts, as well 2020, the Management Board of Russian The remuneration system is focused business strategy, implementing its as submitting the Company’s annual Railways held 88 meetings that reviewed on improving the effectiveness of the 14 Rashid Saybatalov Deputy CEO, Head of the Central Directorate of Traffic Management financial and business policy, making report and other financial statements and resolved on a number of matters individual and collective performance of 15 Oleg Toni Deputy CEO, Head of the Central and Saint Petersburg Transport Hubs decisions on the most important to the relevant government authorities related to the development of the Russian the Management Board members and Development Centre matters of its day-to-day operations in a timely manner and providing Railways Group. The key matters included: based on the achievement of KPI targets, and coordinating activities between its information about the Company’s • reviewing the Company’s financial personal performance assessment 16 Nikolay Fedoseyev Deputy CEO divisions, improving the effectiveness of operations to shareholders, creditors of each member, and performance and business performance and the 17 Anatoly Chabunin Deputy CEO, Director for Internal Control and Audit the internal control and risk monitoring and the media; delivery on the Company’s investment assessment of the Management Board systems, and ensuring respect of • submitting prospectuses of securities programme and financial plan; and Russian Railways as a whole. 18 Yevgeny Charkin Deputy CEO shareholder rights and their legitimate and other documents related to the • approving key documents for individual 19 Shevket Shaydullin Deputy CEO, Head of the Traffic Safety Department interests. issuance of the Company’s securities to business lines, including the Russian The KPI framework used for bonus the Board of Directors; Railways Healthy Lifestyle Programme calculation purposes comprises a set 20 Dmitry Shakhanov Deputy CEO The Management Board carries out its • arranging for implementation of long- for 2020–2025, the Marketing Concept of corporate and functional indicators. 21 Alexey Shilo Deputy CEO, Head of the Centre for Corporate Transport Services activities in accordance with the laws of term and current plans of the Company, of Promoting the Export-oriented The list of corporate KPIs and KPI targets the Russian Federation, the Company’s as well as its investment, financial and Portfolio of the Russian Railways are approved by the Company’s Board 22 Vladimir Gaponko Director for Operational Efficiency – Head of the Department of Economics Charter, resolutions of the General other projects; Group in Foreign Markets, the Russian of Directors2. The lists of functional KPIs 23 Vadim Bynkov Head of the Legal Department Meeting of Shareholders and the Board of • establishing the procedure for keeping Railways IT Development Programme and relevant KPI targets are approved by Directors, the Regulation on the Russian an account of the Company’s affiliates; until 2025, the Human Capital the CEO – Chairman of the Management Railways Management Board, and the • reviewing and coordinating the Development Programme until 2025, Board on an annual basis. Company’s internal documents. The Company’s draft Collective Bargaining the Russian Railways Group Non- Management Board acts in the Company’ Agreements and regulations on Organic Growth Strategy Programme In 2020, the Company’s Board of interests and reports to the Company’s industry-wide private pension schemes, until 2025 and potentially until 2036, Directors approved3 amendments to General Meeting of Shareholders and mandatory pension insurance, and the improvement of the Company’s the Regulation on the Remuneration the Board of Directors. Members of the professional pension insurance and an private pension plans; System for Members of Russian Railways’ Russian Railways Management Board industry-wide railway tariff agreement, • reviewing performance under the Management Board introducing the right are appointed by the Company’s Board as well as submitting them to the Collective Bargaining; of any member of the Management Board of Directors (with the exception of the Company’s CEO and Chairman of the • Agreement obligations and to waive their bonuses, in full or in part. Chairman of the Management Board, who Management Board; compliance with the terms of For the biographies of the is appointed by the Government of the • establishing the procedure for keeping employee competitions, and updating Management Board members, Russian Federation). shareholders up-to-date with Company the Collective Bargaining Agreement see the Company’s website at: developments; for 2020–2022;

1 Approved by the Company’s Board of Directors (Minutes No. 11 dated 18 December 2019). 2 1 As per the Regulation on the Russian Railways Management Board approved by Order No. 265-r of the Minutes No. 5 dated 30 December 2020. 3 Government of the Russian Federation dated 25 February 2004. Minutes No. 16 dated 20 May 2020. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 138 | 139 Members of the Management Board

Oleg Anatoly Vadim Sergey Elena Sergey Oleg Gennadiy Olga Andrey Vyacheslav Dmitry Alexander Rashid Oleg Nikolay Anatoly Yevgeny Shevket Dmitry Alexey Vladimir Vadim BELOZEROV KRASNOSHCHEK MIKHAILOV PAVLOV KHARYBINA KOBZEV VALINSKY VERKHOVYKH GNEDKOVA MAKAROV PAVLOVSKY PEGOV PLUTNIK SAYBATALOV TONI FEDOSEYEV CHABUNIN CHARKIN SHAYDULLIN SHAKHANOV SHILO GAPONKO BYNKOV ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 140 | 141

Audit and control Internal control and audit

At Russian Railways, the internal control • governance bodies such as the Board The Deputy Chief Executive Officer – system (internal control) is understood of Directors and its Audit and Risk Director for Internal Control and Audit of Audit Commission to include follow-up internal control Committee, the Chief Executive Officer Russian Railways supervises the internal and internal control as part of the – Chairman of the Management Board control and internal audit activities, with integrated risk management and internal of Russian Railways, relevant deputies the Zheldorkontrol Internal Control Centre The Audit Commission is a standing body, • auditing the timeliness and accuracy Members of the Audit Summary of the Audit • electing the Deputy Chairman of the In December 2020, the Audit Commission control system (for details see the Risk of the Chief Executive Officer, and the and the Zheldoraudit Internal Audit Centre which oversees financial and business of payments to/from counterparties Commission Commission’s work in 2020 Audit Commission; prepared and submitted to the Company Management section). Director for Internal Control and Audit reporting directly to the Director. operations of the Company. The Audit and the government, payroll and social • electing the secretary of the Audit its base request for documents and are responsible for putting internal Commission acts in accordance with insurance payments, as well as the The Audit Commission of Russian In 2020, the Audit Commission of Russian Commission; data necessary for the 2020 audit of The Company’s internal control system controls in place at the corporate level; The Zheldorkontrol Internal Control the laws of the Russian Federation, the accrual and payment of dividends; Railways consists of seven members, Railways1 audited the Company’s business • approving the Work Plan of the Audit the Company’s financial and business is designed to provide reasonable • heads of branches, departments, Centre is a structural unit of Russian Charter of Russian Railways, resolutions • checking the legality of business as per Order No. 2509-r of the Russian and financial operations for 2019. The Commission for FY 2020–2021 (the operations. assurance that Russian Railways will divisions and units are responsible for Railways. It has the following key of the General Meeting of Shareholders operations under contracts signed on Government dated 30 September 2020. current members of the Audit Commission “Work Plan”); achieve its goals. Russian Railways’ putting internal controls in place and responsibilities: and the Board of Directors, and the the Company’s behalf; met twice in 2020 to approve the structure • approving the Audit Programme for The Audit Commission of Russian internal control system leverages the ensuring their smooth running at the • to organise and conduct follow-up Regulation on the Audit Commission of • auditing assets and other Company One of its members, Olga Kabanova, of its Audit Report and Opinion, and Russian Railways; Railways has fully implemented its 2020 most up-to-date organisational and operational level; internal control focused on promoting Russian Railways approved by Order resources for efficient use, identifying resigned from the Audit Commission at her approve the 2019 Audit Report and • approving the base list of information Work Plan. methodological framework and best • employees are responsible for the the economic stability and financial No. 265-r of the Russian Government causes of downtime and overhead own request on 17 November 2020. Opinion of the Audit Commission. to be requested from Russian Railways; international and national professional timely and efficient execution of the transparency, including follow-up dated 25 February 2004. costs; • approving the resignation of Olga practices, operating in full compliance existing internal control procedures; control procedures and audits of • auditing compliance with improvement In accordance with Order No. 2509-r In preparation for the 2020 audit of Kabanova as a member and the with the ethical standards applied by the • in addition to implementing internal financial and business operations orders to address the gaps identified of the Russian Government dated the Company’s business and financial Deputy Chair of the Audit Commission; internal audit and control functions in the controls and ensuring their smooth of the Company’s business units, its The Audit Commission is by the Audit Commission; 30 September 2020, the total amount operations, the current members of the • reviewing the progress on the Action Russian and global business communities. running in relevant business units, subsidiaries and affiliates as required, responsible for: • auditing business-related resolutions allocated for the remuneration of non- Audit Commissions held four meetings in Plan to remove identified gaps and certain departments and divisions as well as other companies, including adopted by the Chief Executive government employees sitting on the 2020 to discuss the following matters: implement recommendations made by The main objectives of the internal control are also responsible for exercising non-commercial entities of Russian • auditing the Company’s business and Officer – Chairman of the Management Audit Commission was RUB 4,993,718 in • electing the Chairman of the Audit the Audit Commission on the basis of system are: functional internal control within the Railways; financial operations for any given year Board, the Board of Directors and the 2020. Commission; its 2019 audit of Russian Railways. • to ensure the efficiency and robustness given terms of reference in relation to • to provide Company management and at any time as it thinks fit or as Management Board of the Company of business operations; end-to-end processes; with timely information on business resolved by the General Meeting of for compliance with Russian Railways • to safeguard assets and use resources • special internal control structures are and financial performance; violations Shareholders, the Company’s Board Charter and resolutions of the General Members of the Audit Commission in a cost effective manner; responsible for select functions. The and gaps; tax, financial and other of Directors or requested by the Meeting of Shareholders; • to identify and manage risks; Zheldorkontrol Internal Control Centre risks identified at business units, shareholder; • providing recommendations to • Alexander Tikhonov For more details on the Audit Commission • to ensure the accuracy and is in charge of follow-up internal control subsidiaries, affiliates and other • auditing and reviewing the Company’s the Board of Directors and the (Chairman); see the Company’s website at: completeness of financial (accounting) to identify violations and materialised entities of the Company, as required, financial and solvency position, its Management Board of the Company on • Igor Belikov; and other types of statements; risks. The Zheldoraudit Internal Audit for management decision-making internal control system and the system preparing and adjusting the Company’s • Alexander Varvarin; • to ensure compliance with the laws and Centre is responsible for assessing the purposes; of financial and operational risk budgets; • Olga Kabanova; regulations of the Russian Federation organisation and functioning of the • to ensure timely elimination of management, asset liquidity and debt • other matters under its purview as • Mikhail Sorokin; and by-laws of Russian Railways. internal control system. violations and gaps in the operations to equity ratio; per the Federal Law on Joint Stock • Sergey Ubugunov; of the Company’s business units and • verifying the accuracy of the Companies, the Company’s Charter • Vasily Shipilov. The Company’s internal control system Russian Railways’ Board of Directors and other entities identified by the Centre. Company’s annual report, annual and the Regulation on the Audit is determined by its focus areas and its Audit and Risk Committee determine financial statements and other Commission. internal control structures. The internal the overall concept of the internal disclosures or financial documents; control system focuses on the business control system, review its performance • auditing the accounting and reporting operations of Russian Railways’ units and assessment results, and analyse its procedures used in the course of the Company’s business processes. The actual state subject to the nature, scale business operations; main structures in charge of the internal and conditions of Russian Railways’ control function and their responsibilities operations. are as follows:

1 The composition of the Audit Commission of Russian Railways was approved by Order No. 2509-r of the Russian Government dated 30 September 2020. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 142 | 143

The main focus areas of the Centre’s The internal audit has the following key Russian Government, the Listing Rules In 2020, External audit follow-up control at business units, objectives: of the Moscow Exchange2, Internal subsidiaries, affiliates and other entities of • to organise and conduct internal audits Auditor Occupational Standard3, subject Zheldoraudit The Company’s auditor for 2020 was the Company, as required, include: at Russian Railways to improve the to International Standards for the selected following an open electronic • control of business and financial efficiency and effectiveness of business Professional Practice of Internal Auditing, won the tender1 to conduct a statutory audit of operations; processes, reliability of reporting, to the extent they do not contradict Russian Railways’ accounting (financial) • control of the progress of investment safety of assets, compliance with the Russian laws, and the Regulation on the Best Internal statements and the consolidated IFRS projects and capital repairs plans; laws of the Russian Federation and Zheldoraudit Internal Audit Centre. financial statements for 2020. • control of procurement; by-laws of Russian Railways; Audit Function • control of transportation operations • to systematically and consistently The Regulation on Internal Audit ensures Order No. 2509-r of the Russian and the completeness of revenue assess the design, reliability and that Zheldoraudit complies with the award in the annual National Government, dated 30 September 2020, collection; efficiency of the risk management and requirement for the segregation of Efficient Internal Control and approved by Ernst & Young as Russian • control of property management. internal control system and evaluate administrative and functional reporting Internal Audit Awards run by the Railways’ auditor for 2020. corporate governance practices; lines and is functionally reporting to the National Union of Internal Auditors The Centre has 15 regional departments • to promptly and accurately inform Board of Directors and administratively and Controllers. The external auditor disclosed and situated across the Company’s operating Russian Railways’ management and reporting to the CEO – Chairman of submitted to the Audit and Risk Committee domains. governance bodies about the state the Management Board; provides for a of the Board of Directors information on all of financial and business operations, balance of internal audit competences relations and matters to be assessed for the efficiency of business processes, between Russian Railways’ Board of compliance with independence criteria. In Internal audit and the reliability and efficiency of Directors, its Audit and Risk Committee, performing its duties, the auditor had no risk management and internal control and the CEO – Chairman of the conflict of interest. The continuous development and procedures and corporate governance Management Board; and guarantees the enhancement of the internal audit function practices at Russian Railways and its adherence to the principle of independent Ernst & Young’s remuneration for is focused on supporting the strategic business units; and objective internal audit to enable the conducting the 2020 statutory audit goals of Russian Railways and improving • to prepare proposals and fulfilment of the main internal audit tasks of the Russian Railways’ accounting operational performance and the recommendations on improving and functions. (financial) statements and consolidated effectiveness of business processes, the operations, enhancing the reliability IFRS financial statements is RUB 138 m, reliability and efficiency of the Company’s and efficiency of the risk management Zheldoraudit’s headcount is 58 FTEs. including VAT of RUB 23 m. risk management and internal control and internal control system and systems, and corporate governance corporate governance practices for the practices. entities subject to internal audit and/or Russian Railways as a whole. The objective of the internal audit function is to assist the Board of Directors and The Zheldoraudit Internal Audit Centre, executive management bodies with a structural unit of Russian Railways enhancing the efficiency of management (“Zheldoraudit”), is in charge of internal practices and improving business and audit. The work of Zheldoraudit financial performance of the Company is governed by the Regulation on through a systematic and consistent Internal Audit1, which was developed approach to the review and assessment in accordance with methodological of the risk management and internal guidelines and recommendations on control system and corporate governance internal audit prepared by the Federal practices to provide reasonable assurance Agency for State Property Management that the Company will achieve its goals. and approved by instructions of the

1 Approved by the Company’s Board of Directors (Minutes No. 19 dated 22 July 2020) and enforced by Russian Railways’ Order No. 1795/r of 21 August 2020. 2 Approved by the Supervisory Board of the Moscow Exchange on 21 January 2020. 1 Held in accordance with Federal Law No. 44-FZ On the Contract System in the Procurement of Goods, Works and Services for State and Municipal Needs dated 3 Approved by the Ministry of Labour and Social Protection of the Russian Federation on 24 June 2015. 5 April 2013. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 144 | 145 Anti-corruption Seeking independent due diligence, the conflicts of interest. Officers responsible The Company has a Conflict of Interest Company took part in the Anti-Corruption for resolving conflicts of interest were Commission established to identify Rating of Russian Business 2020 run by appointed at the Executive Office, and eliminate causes of and conditions the Russian Union of Industrialists and branches and business units of Russian conducive to the emergence of conflicts Entrepreneurs. As a result, the Company’s Railways. of interest, ensure an objective and timely anti-corruption activities were found to consideration and resolution of conflicts be fully compliant with the international In 2020, Russian Railways pioneered of interest, protect the legitimate interests anti-corruption standard and the provisions digital solutions to identify conflicts of Russian Railways and the rights of Russian Railways’ anti-corruption Anti-Corruption Hotline performance of the Anti-Corruption Charter for Russian of interest, introduced automated its employees, and implement anti- policy is based on a set of interrelated Business. Russian Railways was assigned processes for consolidating business unit corruption measures. The Commission principles and procedures designed Total messages 500 the top A1 rating as a company with the reports on anti-corruption activities, and held two meetings in 2020. All of the to prevent and combat corruption and received 654 highest level of anti-corruption efforts implemented an automated reporting 16 railways of the Company have regional respond to corruption risks. It is intended and a minimum level of corruption risks, system, Declarant AIS. The number of conflict of interest commissions. In 2020, to ensure that the Company’s managers Potential oence 212 associated with a minimum threat to conflict of interest disclosures reviewed they held 24 meetings on 31 employees. reports and employees, as well as its directors, 319 investors, creditors, business partners, and in 2020 grew 2.5 times year-on-year to Cases reviewed by the commissions in the investment community and other Confirmed 49 other stakeholders. 2,381 disclosures from 979 disclosures 2020 mainly concerned the resolution stakeholders align around the idea of reports 56 in 2019. Similarly, the number of of conflicts of interest arising from zero tolerance to corruption in all forms unsolicited conflict of interest disclosures a subordinate relationship with a and manifestations and inevitability of 2020 Conflicts of interest tripled year-on-year to 763 disclosures relative, as well as equity participation punishment for corruption-related offences. 2019 from 245 disclosures in 2019. In 2020, in and holding management offices at Resolution of conflicts of interest is a 522 conflicts of interest (vs 184 conflicts companies doing business with Russian The Company operated in accordance top-priority objective of the Company’s in 2019) were identified and resolved. The Railways. with the National Anti-Corruption Plan for 3 disciplinary penalties, 28 reprimands The Company is engaged in implementing anti-corruption policy. Russian Railways Company applied disciplinary actions 2018–20201 and Russian Railways’ Anti- and 8 dismissals. Seven reports were a number of joint anti-corruption initiatives has put in place procedures to identify for failure to comply with anti-corruption Corruption Action Plan for 2018–2020. escalated to law enforcement agencies. and is represented on the Expert Task and prevent conflicts of interest. rules to 27 employees (14 employees As required by the Russian Government’s Force On Improving Legal Mechanisms of were reprimanded, 11 employees were order, the Company provided timely Russian Railways’ centralised system Preventing Corruption of the Prosecutor The conflict of interest procedures for admonished, and 2 were dismissed). reports to the Government on the of mandatory anti-corruption training General’s Office, the rating committee the members of the Company’s Board of progress of implementing the National proved to be equally effective. More and expert group for the Anti-Corruption Directors are outlined in the Regulation Anti-Corruption Plan. In 2020, it submitted than 188,000 employees were able to Rating of Russian Business run by the on the Board of Directors of Russian Conflict of interest resolution eight reports to the Executive Office of the complete the training online despite the Russian Union of Industrialists and Railways.1 The members of the Company’s Russian Government and two reports to pandemic. Entrepreneurs, the Anti-Corruption Board of Directors, acting reasonably Total disclosures 2,381 the Russian Ministry of Labour and Social Compliance and Business Ethics Council and in good faith, are expected to make reviewed 979 Protection. In accordance with the 2020 plan of the Chamber of Commerce and Industry decisions considering all available for the training and development of the Russian Federation, and the information, in the absence of a conflict of Unsolicited 763 disclosures To ensure a common approach to of Russian Railways managers and technical committee on the development interest. The members of the Company’s 245 1 implementing the Company’s anti- office workers , 500 employees of the of the Anti-Corruption Activities standard Board of Directors may not use their Identified conflicts 522 corruption policy, Russian Railways’ Company responsible for anti-corruption established by the resolution of the official position and information about the of interest 184 subsidiaries implemented their anti- activities were enrolled in an educational Federal Agency on Technical Regulation Company’s operations for their personal corruption plans and relied on relevant programme at the Law School of the and Metrology under the Russian Ministry advantage or allow using the same by Number of disciplined 27 corporate procedures to introduce and Russian University of Transport (MIIT). of Industry and Trade. third parties. Directors have a duty to employees 19 update their internal anti-corruption In 2020, the Company held 16 academic disclose to the Board of Directors any regulations. workshops on the important aspects of In December 2020, the Russian Railways matter under consideration by the Board 2020 implementing anti-corruption policies Group approved a Comprehensive Anti- of Directors in which they have a personal 2019 The Company has an effective feedback at state-owned companies at the Law Corruption Promotion Programme for interest before the discussion of such channel in place – Russian Railways’ Anti- School of the Russian University of 2021–2023 focused on promoting zero matter begins and a duty to abstain from Corruption Hotline. Out of 500 messages Transport, in cooperation with the Moscow tolerance towards corruption offences voting on any such matter. received via the Hotline in 2020, Interregional Transport Prosecutor’s Office among employees. 212 messages reported potential corrupt and the Centre for Security Studies of the In accordance with the Regulation on behaviour. Having investigated these Russian Academy of Sciences. More than the Settlement of the Conflict of Interest reports, the Company took disciplinary 500 employees of Russian Railways took of Russian Railways,2 all employees action against 39 employees, including part in the workshops. are required to immediately disclose

1 Approved by Order No. 265-r of the Russian Government dated 25 February 2004 (as amended). Developed in accordance with applicable Russian laws, the 1 Approved by the Russian President’s Decree No. 378 dated 29 June 2018. Corporate Governance Code and the Charter of Russian Railways. 2 Approved by Russian Railways’ Order No. 1545/r dated 20 July 2020. 2 Approved by Russian Railways’ Order No. 321r dated 24 February 2016. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 146 | 147 Risk management

Highlights

Effective risk management at Russian • development and launch of onsite and • international and Russian best Hierarchy of the Company’s risk management and internal Railways is a consistent ongoing process online risk management courses practices of corporate governance, risk control policies and guidelines that spans all organisational layers and is at the Russian Railways’ Corporate management and internal control. integrated with the business and decision- University; workshops involving making processes to make targets more representatives of affiliates and youth The corporate policies and guidelines as Level 1 achievable. programmes; well as the mid-term RMICS development • RMICS development in affiliates based programme define the consistent ongoing RISK MANAGEMENT AND The internal control is an integral part on the common guidelines; process of risk management integrated INTERNAL CONTROL POLICY of the risk management system, and the • identification of trends and alignment with the business and decision-making risk management and internal control of the risk management policies and processes to make Company’s targets, system (the “RMICS”) forms part of the guidelines for business lines with the including the strategic ones, more corporate governance system ensuring corporate RMICS documents; achievable. sustainable development of the Company implementation of weekly routine • Level 2 amid external uncertainties and changes, reporting on material risks impacted by For a systematic and consistent approach which is reflected both in the adopted COVID-19. to the integrated RMICS development, policies and guidelines as well as in the the Russian Railways Group has been constantly improved and developed The Company has developed and implementing its Risk Management and RISK MANAGEMENT AND REPORTING PROCEDURES risk management process. The overall implemented a hierarchy of risk Internal Control Development Programme coordination and methodological support management and internal control policies for 2019–2024, which involves: of RMICS risk management process at and guidelines in line with: • shaping the risk management Russian Railways are led by the Risk • instruction of the President of the infrastructure (including regulatory Management and Internal Control Centre Russian Federation No. Pr-3013 dated and methodological support, process Level 3 (the “Centre”). 27 December 2014; automation, development of risk • Article 87.1 of Federal Law On management and internal control skills The main results of the Centre activity in Joint-Stock Companies; and expertise); RISK APPETITE GUIDELINES the reporting year with respect to RMICS • Corporate Governance Code;1 • continued monitoring and notification development include: • guidelines for drafting risk of governance bodies; • approval of the Risk Appetite management policies developed by • self-assessment; Guidelines and the risk appetite by the the Federal Agency for State Property cascading the applied methodology; • RISK MANAGEMENT AND 2 Board of Directors; Management; • building/developing RMICS in Russian INTERNAL CONTROL GUIDELINES • implementation of the procedures to • concepts of the Committee of Railways’ affiliates based on a unified monitor the risk tolerance and the risk Sponsoring Organisations of the approach to ensure the integrity of the appetite; Treadway Commission (COSO): risk management process within the • implementation of the self-assessment Enterprise Risk Management – Group. tools to identify further development Integrating with Strategy and Level 4 focus and needs, feedback-based Performance (COSO ERM, 2017) RMICS is subject to regular independent improvement of risk management and Internal Control – Integrated assessment through internal audits processes; Framework (COSO IC, 2013); for higher effectiveness and timely INDIVIDUAL RISK MANAGEMENT AREAS • development and approval of the GOST R ISO 31 000:2010 Risk adjustment. UNDER CORPORATE RMICS functional requirements for the Management – Principles and 3 Company-wide risk management Guidelines; POLICY PROVISIONS AND automation; INDUSTRY STANDARDS FOR RMICS AREAS

DOCUMENTS DETAILING ELEMENTS FOR RMICS AREAS (PROCEDURES, INSTRUCTIONS)

1 Approved by the Bank of Russia’s Board of Directors on 21 March 2014. 2 Approved by the Russian Government’s Order No. ISh-P13-4148 dated 24 June 2015. 3 Approved by Rosstandart’s Order No. 883-st dated 21 December 2010. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 148 | 149

Risk management and Participants of the Russian Railways’ risk management and internal control system internal control system BOARD OF DIRECTORS

Goals and objectives of Defence model involving the following Risk management process is regulated AUDIT AND RISK COMMITTEE participants of risk management process: by internal regulatory documents of the The main purpose of RMICS is to provide • Russian Railways’ Board of Directors, Company. RMICS process generates CEO reasonable assurance that Russian including its Audit and Risk Committee; risk reports which are submitted to Railways will achieve its goals. • Russian Railways’ Audit Commission; and approved by the executive bodies, The Company’s goals include, but not • risk management and internal control the Audit and Risk Committee, and the MANAGEMENT BOARD limited to: unit; Board of Directors. The reports include • strategic goals; • the unit responsible for independent information about the risks, risk response DEPUTY CEOS • operational goals; assessment of individual RMICS measures, and RMICS performance. • compliance goals; elements and overall RMICS operation. • goals related to the reliability, Main reports and records are generated timeliness and quality of reporting of Effective RMICS operation is underpinned based on the risk IDs and include the

any type. by interaction and information exchange summary of monitoring the key risks, risk First line of defence Second line of defence Third line of defence Regulator between the participants of the risk appetite, maximum acceptable risk level, External auditor The RMICS serves to: management and internal control system. and risk portfolio of the Company, as well Units: Risk Management and Internal audit center – Commission Audit • put in place the necessary As risk management and internal control as the RMICS self-assessment results. Internal Control Centre – RMICS performance Identification; infrastructure, policies and guidelines; procedures form an integral part of the coordination, regulatory assessment • integrate risk management and internal business processes, operations and Information exchange as well as Analysis and evaluation; and methodological

consulting support consulting control processes and procedures corporate governance, the interaction vertical and horizontal interaction of Risk response; into the strategic and operational within RMICS is based on the established participants are key to RMICS efficiency. Coordinating units dimensions of the Company; governance structures, segregation of Interaction and consultations are not Monitoring and revision. Information exchange and and exchange Information Controlling units and exchange Information • raise risk awareness of RMICS duties, corporate culture and code of limited by reporting periods because risk participants and other stakeholders; conduct, business process and activity management and internal control are • reduce the number of contingencies structure. ongoing and integrated into business that could undermine the Company’s processes and corporate governance. ability to achieve its goals. The correlation between RMICS and Risk appetite and risk KPIs links the strategic, operational, The Company operates its RMICS in management process compliance and reporting reliability line with GOST R ISO 31 000:2010 Risk goals and defines the relevant criteria Management – Principles and Guidelines1 Russian Railways sets its risk appetite, to achieve them. Risk management stages as amended by GOST R ISO 31 000:2019 which then shapes the decision-making Risk Management – Principles and on risk responses and controls and serves Guidelines.2 to maintain a balance between risks and opportunities. RISK IDENTIFICATION Risk ID RMICS organisational Risk appetite is determined by structure the Company’s Board of Directors and represents the maximum acceptable ANALYSIS AND EVALUATION Allocation of RMICS rights and obligations level of risk that the Company is willing Register of the Company’s in line with the Company’s policies and to accept and hold on while pursuing risks, register of the guidelines is based on the Three Lines its goals. Company’s key risks RISK RESPONSE Reporting and recording Reporting and MONITORING AND REVISION Risk monitoring report Information exchange and consulting and exchange Information

1 Approved by Rosstandart’s Order No. 883-st dated 21 December 2010. 2 Approved and enacted by Rosstandart’s Order No. 1379-st dated 10 December 2019. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 150 | 151

RMICS assessment In 2020, efforts were made to develop Key risks and improve RMICS in line with the RMICS must be subject to regular Russian Railways Risk Management assessment to verify its relevance to and Internal Control Development Risks associated with the Long-Term Development Programme the Company’s current needs, higher Programme for 2019–2024 and based effectiveness and timely adjustment. on the internal audit recommendations. The key risks associated with the Long-Term Development Programme until 2025 The Company uses internal (including The internal assessment resulted in the are identified based on their impact on the Company’s performance. Then, they are self-assessment and assessment by the internal audit report on RMICS current decomposed as risk factors by business line. internal audit function, which is at the third status, compliance with the main RMICS line of defence) and external assessment. requirements and the opinion on efficient The internal assessment is carried out development and improvement of the from time to time at least once a year. Russian Railways’ risk management and Risk factor group Risk factor description Mitigants The external assessment is carried out internal control system. by an independent expert. Its frequency Macroeconomic Weaker than forecasted macroeconomic Keeping in constant touch with the Government and is set by Russian Railways’ Board of performance and lower freight volumes, including key customers to provide them with complete and Directors as recommended by its Audit Plans for risk management as a result of more rigorous sanctions objective information about potential adverse effects and Risk Committee. In 2020, no external development in 2021 of the adopted decisions assessment was carried out. Higher than expected growth of prices for consumed products, including petroleum products Efficiency improvement initiatives, long-term In 2021, it is planned to continue contracts with suppliers The results of RMICS self-assessment developing RMICS by: and electricity Resolutions to provide development institutions with in 2019 were discussed by the Russian • expanding the training coverage additional liquidity Railways’ Board of Directors in July 2020 of Russian Railways employees, following a preliminary study by the Audit knowledge sharing, further State regulation No government resolutions on long-term financing Searching for alternative sources and tools of and Risk Committee and the Management improvement of the training of the railway transport development or a failure to financing Board. The Board of Directors plans programmes; implement such resolutions Optimising technical solutions for capital investment to review the RMICS self-assessment • increasing the number of knowledge projects report 2020 in June 2021. sharing sites within and outside the Changes in the regulatory framework / regulations Breaking down projects into stages with their Group; providing support to other transport modes subsequent implementation in the order of priority Russian Railways’ risk management • enhancing feedback tools and weakening the competitiveness of railway and internal control system is assessed developing proactive risk management transport Keeping in constant touch with the Government and key customers to provide them with complete and from time to time at least once a year by improvement measures; Liberalisation of the railway passenger objective information about potential adverse effects Zheldoraudit Internal Audit Centre. implementing a single information • transportation market of the adopted decisions for Russian Railways platform (portal) for RMICS, developing Liberalisation of the railway freight transportation Zheldoraudit assessed the risk risk management automation; market management and internal control system • further comprehensive risk analysis, of the Company in accordance with evaluation and modification of Reduced public financing Russian Railways’ internal audit plan for risk responses; using the results A gap between the existing regulatory framework 2020. The audit was conducted in line with in decision-making and further and ongoing railway transformations the Internal Audit Manual on Assessment RMICS integration into the process Market Significant changes in cargo types and Building long-term relations with customers and of the Risk Management and Internal management model; transportation routes versus the forecast improving consumer feedback strategies Control System.1 In 2020, the internal audit • further building uniform approaches in was focused on RMICS compliance with the Group by improving RMICS of the Enhancing market flexibility and expanding business the established requirements and involved affiliates. in deregulated segments risk management assessment in individual Strengthening logistics capacities to satisfy customer business processes of the Company. demand for comprehensive services Implementing the initiatives included in the Comprehensive Plan for Upgrading and Expanding Core Infrastructure Investment Insufficient investment in infrastructure Optimising technical solutions development Failure to comply with the investment programme Improving the investment project management implementation schedule framework Tax Higher tax burden driven by tighter fiscal policies Staying in constant contact with the federal and in Russia amidst social and economic uncertainties regional tax authorities Management Insufficient management competencies Improving the management framework

1 PR.003-2019 approved by Russian Railways’ Order No. 2941/r dated 20 December 2019. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 152 | 153

Risk factor group Risk factor description Mitigants Russian Railways’ risk map for 2020 and 2021

HR Deficit of qualified staff due to the insufficient Keeping compensation on a level above the competitiveness of Russian Railways as an Russian average for a competitive employee value TOTAL SCORE employer proposition Offering staff development opportunities in line with low Stronger competition in the labour market on the best practices in training medium high back of a decrease in Russia’s working population Implementing dedicated social programmes high in the medium term Developing a compensation and benefits package 2020 that meets employee needs 2021 R&D and technology Weaker competitiveness of the railway transport Implementing the Comprehensive Innovative due to a technology gap with other modes of Development Programme of Russian Railways Group transport Underperformance in adoption and utilisation of 15 29 29 3 7 9 13 innovative R&D solutions 6 6 25 26 26 21 22 30 4 Insufficient cooperation with global railway medium engineering leaders IMPACT 2 12 19 27 31 14 Technology Slower debottlenecking at associated transport Keeping in constant touch with the operators of facilities (port capacities, warehouse terminals) associated transport modes to synchronise the versus the forecasts contained in the Company’s investment programmes investment programme

Failure to meet the freight transportation market Cooperating with rolling stock operators to improve 2 12 19 27 31 30 14 needs due to the inefficient freight railcar fleet railcar fleet management efficiency 5 8 28 11 11 1 10 16 16 low The most significant of them are: To prevent these risks and respond Russian Railways’ risk profile1, which • insufficient revenue rate growth below to them in a timely manner, Russian is generally unchangeable in spite 18 18 17 20 23 24 the indexation of tariffs amid growing Railways maintains an ongoing dialogue of changing internal and external prices for products consumed by with government authorities and key environment, reflects its strong focus Russian Railways; customers keeping them informed about on key business lines and continuous low medium high • no government resolutions on long- potential adverse effects of the adopted improvement of risk management PROBABILITY term financing of the railway transport decisions. To reduce potential negative practices to ensure the Company’s development or a failure to implement risk impacts, the Company enhances ability to work towards its ambitious such resolutions; its customer focus and the quality of goals amid constantly changing external Business line • significant changes in freight and services while also running an efficiency environment. passenger transportation markets improvement programme. 1. Traffic safety 12. Corporate programmes and initiatives 24. Property management with a contracting share of the Russian 2. Government relations 13. International operations 25. Intangible asset management Railways Group across transportation 3. Public relations 14. Traffic management 26. HR management (personnel segments. (PR and communication with 15. Organising and conducting audits, and social development) the business community) control activities 27. Social facility management 4. Freight transportation 16. Passenger transportation 28. Reporting 5. Procurement 17. Legal support and compliance 29. Economics and finance 6. IT and information security (excluding corruption risks) 30. Operation, maintenance and 7. Capital construction, upgrade and 18. Infrastructure services repairs of infrastructure facilities overhaul 19. Locomotive traction services (infrastructure maintenance 8. Corporate security 20. Other services and repairs) 9. Corporate governance 21. Infrastructure and rolling stock 31. Rolling stock operation, 10. Corporate governance and development maintenance and repairs coordination at the railway domains 22. Strategic planning and target setting (rolling stock maintenance 11. Corporate governance of affilates 23. Inventory management / logistics and operation)

1 The Annual Report does not include a comprehensive description of all risks which might affect the Company’s activity. Other risks not mentioned in this Report may also be material and considerably undermine the Company’s performance. 1 Colour highlights indicate the 2021 vs 2020 trend. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 154 | 155

As of 2021, the following areas have and safety of the employees and appeals, participation in employee of nine possible corruption schemes were the effect of external risk factors on the The key information security measures the most material changes in risk customers and ability of the Company meetings, interaction with the trade added to the register. 39 new possible condition and reliability of engineering implemented by Russian Railways include: assessment compared to 2020: to continue as a going concern. union. corruption schemes were defined and structures. • classification and categorisation of the • IT and information security, which 31 known corruption schemes were Company’s information systems; is primarily connected with the The measures taken in 2020 helped fleshed out. • information security threat modelling; increasing attention of Russian Sustainability risks to increase employee satisfaction and Procurement risks • proper arrangement of the information Railways’ customers to this area as awareness, fulfil social responsibility and As part of corruption risk management infrastructure components with due well as more stringent regulatory Russian Railways pays particular employee protection obligations, attract and internal control system functioning The main procurement risks include: account of information security; environment and specific features attention to sustainability risks. and retain employees, create decent in the reporting year, in Russian Railways’ • procurement of materials and • development of information protection of the processes as a result of the Sustainable development of the living conditions for the retirees. and its affiliates’ units and subsidiaries resources at a suboptimal price; requirements; pandemic; Company is underpinned by its which have units carried out over 50 • procurement of materials and • design and implementation of • passenger transportation amidst economic, environmental and social anti-corruption compliance audits and resources in volumes that are information protection systems in the the COVID-19 pandemic and related performance as one of Russia’s major Health and safety risks approved corrective actions. insufficient for Russian Railways’ Company’s information infrastructure; restriction risks. economic entities. The Company’s results units; • assessment of the system compliance are set out in its public sustainability In 2020, production departments of • failure to perform the obligation to with information security requirements; At the same time, there is a positive trend reports. Russian Railways analyses the Company’s branches assessed Climate change risks procure required volumes from small • employee training in information in traffic management, locomotive traction international sustainability trends, professional risks for the main types of and medium-sized businesses; protection; services and management of social reviews and improves its activity with hazardous occupations by conducting The Company pays great attention to • failure to provide or untimely • information security of the Company’ facilities. a sustainable perspective, which makes an integral assessment, defining the climate change risks, analysing the provision of information about Russian information systems in use; it possible to identify growth drivers and acceptable risk levels and making lists climate change impact and taking it into Railways’ procurement activity • arrangement of the Company’ workflow Key measures to respond to risks leverage new sustainability opportunities of unacceptable and undesirable risks. account when planning its activities. according to the procurement laws with due account of information implemented in 2020 by business lines in its activity balancing the opportunities The measurement results were then The key threat that can potentially and Russian Railways’ regulations; security requirements; included: for the Company and respective risks. evaluated and rated by the regional affect the Company’s business is the • violation of laws when arranging and • identification and handling of • review and improvement of internal business units and summarised in risk growing number of meteorological holding procurements; information security incidents; processes for identifying key gaps, matrices for the main types of hazardous hazards that jeopardise railway • violation of laws when making • enhancement of the Company’s developing and implementing Social risks occupations. operations. These include heavy procurement disclosures; information security policies and systematic mitigants to reduce rains and snow, extremely low and • improper preparation of documents guidelines; risk impact and prevent future The Company addresses risks with For example, professional risk high temperatures, huge temperature for competitive procurements. • internal investigations of information negative developments (including regard to its employees and retirees management initiatives were developed swings, glaze, rime and greater impact security violations. enhancement of the Company’s as well as other social partnership and included in the Comprehensive of dangerous hydrological phenomena, The Company has the following internal regulations), based, among entities and personalities. Dealing with Health and Safety Improvement such as spring floods and freshets, etc. procedures in place to eliminate or In 2020, Russian Railways took steps to other things, on the best practices; the risk of ineffective social policy is Programme for 2018–2020 based To address these risks to infrastructure, respond to procurement risks: implement and maintain the information • automation and digitisation, including primarily aimed at creating sustainable on the risk assessment results. In 2020, the Company implements various • development and updating of protection system, including: measures to improve the reliability working environment, fulfilling the the Company spent RUB 28.5 bn strengthening solutions (anti-washout Russian Railways’ regulations • automated information security and efficiency of data, reduce the obligations under the Collective on the Programme. slab covers, rock dumping, rock defining the steps to be taken management system; human factor and manual labour, and Bargaining Agreement and cultivating anchorage) and builds structures for by the Company’s units involved • centralised access node for information increase the speed of management the Company’s positive image to prevent protection of the track bed from natural in procurements; systems; decision-making; decrease in labour productivity, staff Corruption risks hazards (such as mudflows, landslides, • procurement process automation; • solution for monitoring and controlling • legislative initiatives aimed at motivation, and performance, avoid avalanches and rockfalls). • training of employees involved in information transmission channels; increasing the transparency of the collective labour disputes and strikes. Russian Railways’ Board of Directors procurement; • hardware and software for controlling Company’s operations, including approved the risk appetite statements The Company has approved the work • control of compliance with Russian access of privileged users; through implementing the regulatory In 2020, the following measures were for 20201 under which the Company request for Comprehensive Analysis laws and Russian Railways’ regulations • system for evaluating the security guillotine mechanism to eliminate taken to respond to this risk: follows the principle of zero tolerance of of the Exposure of Russian Railways’ when arranging and holding of automated information and outdated regulations; • employee training; corruption in any form or manifestation Infrastructure to External Factors procurements. telecommunication systems of Russian • employee training and increasing the • analysis of the performance under thereof and takes all necessary actions as part of its R&D plan for 2021. Railways; level of employee competencies; the Collective Bargaining Agreement to prevent and combat corruption, The work will result in the creation of • system for detecting and preventing • taking into account the factors in • improvement and development of respond to fraud risks and build a common a hardware and software system based Cybersecurity risks cyberattacks on information connection with the COVID-19 spread, social benefits and guarantees for understanding of zero tolerance of on Russian Railways’ Geoinformation infrastructure. economic downfall in the countries Russian Railways’ employees and corruption among all stakeholders. Platform to forecast and take account Information security risks are of no small of operation, changes in foreign retirees; Following the corruption risk assessment, of changing environmental and importance for Russian Railways. If they In 2021, it is planned to: enhance the exchange rates, changing geopolitical • staff monitoring, continuous information Russian Railways’ consolidated register anthropogenic factors affecting the materialise, information security threats information security management and situation in some countries of sharing and surveys through of corruption risks for 2020 was updated technical condition of the engineering may disrupt or suspend IT services, control systems monitor the security of operation, including development corporate channels, implementation and approved on 21 August 2020. Two structure during its operating lifetime the process flow and operations of the the Company’s information infrastructure and implementation of respective and development of electronic more items – Information Technology and according to the methodology developed Company, including leakage of information enhance the Company’s information mitigants to ensure, inter alia, health communication tools, analysis of public Traffic Safety – including the description as part of the said work to calculate with restricted access. security policies and guidelines.

1 Minutes No. 13 dated 26 February 2020. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS CORPORATE GOVERNANCE 156 | 157

Financial risk management Credit risks Liquidity risk The Company minimises its foreign Each case of foreign currency exposure currency risks by reducing its foreign is analysed for applicability of hedge The Company lays a strong emphasis To manage its credit risks, Russian The Company manages its liquidity based currency exposure, which includes the use accounting under the Russian and on managing financial risks and Railways has put in place procedures on the balance of payments, payment of financial derivatives, and seeks to keep international financial reporting standards. insuring its property and liability. In to calculate credit limits and regulatory schedule and payment position as per it close to neutral with cash inflows and As at 31 December 2020, over 90% of the 2020, key objectives in the realm of documents governing operations with the approved budgets. Depending on the outflows in foreign currencies offsetting Company’s borrowings denominated in financial risk management included bank guarantees and sureties, including current liquidity situation, the Company each other. The assessment of interest risk foreign currencies were subject to hedge framework adjustment to potential the unified corporate standard of the promptly raises or deposits funds under is based on the analysis of the floating accounting. adverse geopolitical and macroeconomic Russian Railways Group for dealing with the best market conditions. The Company interest rate volatility and its impact on factors, and further efforts to ensure collateral instruments. The Company manages its liquidity based on Reuters Russian Railways’ loan portfolio. The implementation of uniform financial risk assesses financial institutions and and Bloomberg systems. The Company Company also develops and reviews the Insurance management principles across the Group. calculates relevant credit limits so as is also promoting the use of cash pooling foreign currency exposure of the Russian to manage bank transactions involving for intercompany liquidity management Railways Group in order to assess its risk The Company insures its real estate, The key internal regulation governing deposits and bank guarantees based purposes. profile and coordinate solutions across rolling stock, employees, liability of a financial risk management at Russian on the financial standing of the financial the Group. railway infrastructure owner, carrier Railways is the Company’s Financial institution. The assessment of financial liability, and liability of directors and Risk Management Policy. All related institutions is based on the analysis Currency and interest risks Taking into account the heightened officers working for the Company or its decisions are made by the Financial Risk of their qualitative and quantitative risk of changes in the Russian rouble 99 subsidiaries and affiliates. Management Commission, a collective performance indicators in accordance To assess this category of risks, the exchange rate, starting from 15 July 2015, body headed by the First Deputy CEO with the internal methodology developed Company builds models and evaluates Russian Railways has been applying Over 1,380 insurance claims were settled of the Company. The financial risk with input from leading risk management budget parameters factoring in potential hedge accounting model to liabilities in the reporting year, with total insurance management proved the Commission’s experts. The Company lays a strong volatility of the relevant market indicators. denominated in foreign currencies in compensation exceeding RUB 794.6 m. efficiency as a management decision- emphasis on improving and developing Assessment of Russian Railways’ line with its approved foreign currency making centre due to the involvement the approaches to assess financial currency risks and selection of a currency risk management policy. The Company of all respective units in discussing and institutions taking into account the latest risk management tool are based on hedges revenue from transit shipments making well-informed decisions taking into changes in the Russian banking sector. the analysis of the Company’s foreign through the Russian Federation account all related risks. The Financial Risk Credit limits are calculated using an currency exposure, the Company’s denominated in Swiss francs, as well as Management Commission holds regular automated system. operations are broken down into and euro-denominated investments in GEFCO. meetings. In 2020, over ten meetings analysed by investment, operating and The hedging tools include loans and were held to discuss numerous issues, In its dealings with the real sector financial activities. borrowings in Swiss francs and US dollars including management of the Company’s companies, Russian Railways relies (after conversion into Swiss francs) and foreign currency exposure, approaches on a system of management standards The amount and structure of the estimated a portion of the euro-denominated loan to hedging, financial risk management as that include standard terms of settlement foreign currency exposure have further corresponding to the net investment in part of implementation of the first priority with counterparties, provisional remedies, implications for the Company’s borrowing GEFCO. investment projects. treasury control, limitation of receivables policy and hedging approach. Russian and payables, bank guarantees Railways regularly revises its foreign Hedge accounting allows the Company Russian Railways approaches to financial underpinning the parties’ commitment currency exposure and adjusts its to recognise the effect of the currency risk management are based on best to competitive bidding, proper approach to managing currency risk and risk management policy and reduce practices in financial risk management, performance and repayment of advances. FX-denominated loan portfolio. volatility of its financial results caused principles of diversification through the These tools help to protect Russian by movements in the currency exchange use of various risk management tools Railways against the risk of counterparty rates. As a result, translation differences and reliable counterparties. The risk default. Financial institutions that issue on hedged loans are recognised in equity management policy excludes speculative bank guarantees and sureties are and later reclassified to profit or loss when risk management tools, as well as selected based on their credit record and FX revenue is received and/or FX asset is operations with unreliable counterparties. existing credit limits. disposed of. ANNEXES ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ANNEXES 160 | 161 RAS financial statements and Meetings of the Board of auditor’s report for 2020 Directors’ Committees and Russian Railways Annual Report is based on the audited RAS financial statements for 2019 their agenda and 2020; the statements and the auditor report are available on Russian Railways’ website at https://company.rzd.ru/ru/9471#RFRS Strategic Planning Committee of the Board of Directors

No. Meeting Meeting Meeting form Meeting agenda date minutes

1 14 February No. 4 of In-person meeting • Preliminary approval of Russian Railways’ withdrawal from 2020 17 February TransWoodService. 2020 • Inclusion of RRC-2’s shares in Russian Railways’ register of non-core assets. • Russian Railways’ withdrawal from RRC-2. • Approval of the Russian Railways non-core assets disposal plan for 2020. • Review of a high-level project delivery and target achievement IFRS financial statements and schedule for key projects implemented in pursuance of the instructions given by the Russian President and the Russian Government. • Results of implementing a roadmap for the launch of a system to auditor’s report for 2020 manage and control Russian Railways’ large-scale construction projects in 2019. • Amendments to Russian Railways’ series 001P exchange-traded The consolidated IFRS financial statements of Russian Railways and its subsidiaries bond programme and prospectus. for 2020 and the auditor report are available on Russian Railways’ website at • Improvements in labour productivity. https://eng.rzd.ru/en/9637 • Assessment of whether there are currently implemented or planned large-scale investment projects.

2 29 April No. 5 of In-person meeting • Amendments to Russian Railways’ series 001P exchange-traded 2020 30 April 2020 via video conference bond programme and prospectus. • Voting position of Russian Railways (its representatives) regarding the payment (declaration) of dividends for 2019 and the dividend payout procedure to be resolved upon by the governance bodies of entities included in the list of controlled entities annually approved by Russian Railways’ Board of Directors. • Position of Russian Railways (its representatives) at the annual general meeting of shareholders of UTLC regarding the payment (declaration) of dividends by UTLC for 2019 and the dividend payout procedure. • Approval of the standard for assessing the implementation of the Long-Term Development Programme and KPI Achievement. • Approval of the terms of reference for assessing the implementation of Russian Railways’ Long-Term Development Programme until 2025 and KPI achievement in 2019. • Progress in delivering Russian Railways’ investment programme and financial plan for 2020 based on performance in 1H 2020.

3 3 July 2020 No. 6 of In-person meeting • Progress in delivering Russian Railways’ Long-Term Development 14 July 2020 via video conference Programme until 2025. • Preliminary approval of Russian Railways’ withdrawal from TransWoodService. • Russian Railways’ participation in Federal Passenger Company. • Position of Russian Railways (its representatives) regarding certain items to be resolved upon by the governance bodies of Federal Passenger Company. • Assessment of whether there are currently implemented or planned large-scale investment projects. • Proposals of Russian Railways’ management regarding key approaches to upgrading the tariff system for railway freight transportation after 2024. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ANNEXES 162 | 163

No. Meeting Meeting Meeting form Meeting agenda Audit and Risk Committee of the Board of Directors date minutes No. Meeting date Meeting Meeting form Meeting agenda minutes 4 24 July No. 7 of In-person meeting • Draft updated Charter of Russian Railways. 2020 27 July 2020 via video conference • Draft development strategy of the TransTeleCom group of companies until 2025. 1 28 January No. 7 of In-person meeting • Zheldoraudit Internal Audit Centre performance report for 9M 2019 2020 29 January and interim performance report for 2019. • Position of Russian Railways (its representatives) regarding certain items to be resolved upon by the governance bodies of 2020 • Review of the Zheldoraudit Internal Audit Centre plans for 2020. Company TransTeleCom. • Approval of the Zheldoraudit Internal Audit Centre budget for 2020. • Progress in improving and developing the integrated risk 5 26 August No. 8 of Absentee voting • Approval of additions to Russian Railways’ register of non- management model. 2020 26 August core assets (such additions being the property required for the • Review of statements on Russian Railways’ risk appetite in 2020. 2020 creation of a Russian-Japanese centre for preventive medicine and • Review of the Russian Railways key risks in 2020 in connection diagnostics to be set up in the Khabarovsk Territory). with its risk portfolio. • Inclusion of Uraltransbank’s shares in Russian Railway’s register of • Approval of the standard for assessing the implementation of the non-core assets. Long-term Development Programme and KPI Achievement. • Preliminary approval of a transaction involving the shares of • Approval of the terms of reference for assessing the implementation business entities included in Russian Railway’s register of non-core of the Russian Railways’ Long-Term Development Programme until assets. 2025 and KPI achievement in 2019. • Preliminary approval of Russian Railways’ participation in RZD Asset Management. 2 21 February No. 8 of In-person meeting • Progress in implementing the Action Plan to remove identified gaps 2020 25 February and act on the recommendations made by the Audit Commission on • Preliminary approval of Russian Railways’ withdrawal from OCRV. 2020 the basis of financial audits and pursuant to the instructions of the • Preliminary approval of Russian Railways’ participation in RZD Technologies. President and Government of the Russian Federation. • Corporate governance in Russian Railways. • Position of Russian Railways (its representatives) regarding RRC-1’s membership in the Union of Railway Car Repair Enterprises to be • Report on improvements in internal controls to ensure the integrity, resolved upon by the board of directors of RRC-1. reliability and accuracy of Russian Railways’ accounting (financial) statements and disclosure of the Russian Railways accounting • Preliminary approval of a transaction involving UTLC’s shares. department risks ranked by materiality. 6 8 September No. 9 of In-person meeting • Results of the transactions to sell Russian Railway’s non-core assets • Status of the risk management and internal control systems during 2020 10 September via video conference included in the Russian Railways register of non-core assets, the implementation of Russian Railways investment programme. 2020 in 2H 2019. • Key indicators showing the status of the internal control system • Approval of additions to Russian Railway’s register of non-core in Russian Railways and its subsidiaries and affiliates, monitoring assets. procedure and evolution of the indicators, and analysis results • Preliminary approval of Russian Railways’ withdrawal from of compliance with the internal control system requirements by Aeroexpress. Russian Railways and its subsidiaries and affiliates. • Preliminary approval of Russian Railways’ withdrawal from • Results of monitoring anti-corruption risk management and internal Metallist – Remputmash Experimental Plant. control processes and effectiveness of anti-corruption measures • Results of operating efficiency improvement and cost-cutting taken by the Russian Railways in 2019. initiatives. • Review of the Zheldoraudit Internal Audit Centre performance to plan in 2019. 7 7 December No. 1 of In-person meeting • Draft procedure for the preparation and submission of materials 2020 10 December via video conference and information to the Board of Directors and the Committees of the • Approval of the check-list to assess internal audit annual 2020 Board of Directors of Russian Railways. performance by the Audit and Risk Committee of the Russian Railways Board of Directors. • Approval of the list of controlled entities resolutions on which are to be passed by the Russian Railways Board of Directors in 3 13 April 2020 No. 9 of Absentee voting • Election of the secretary of the Audit and Risk Committee of Russian accordance with Clause 71.23 of the Russian Railways Charter. 15 April 2020 Railways’ Board of Directors. • Approval of additions to Russian Railway’s register of non-core • Determination of the price (monetary value) of the property to be assets. contributed to the Russian Railways charter capital. • Approval of the terms of reference for assessing the implementation • Results of Russian Railways procurement activities in 2019. of Russian Railways’ Long-Term Development Programme until • Results of internal audit performance assessment in 2019 by the 2025 and KPI achievement in 2020. Audit and Risk Committee of the Board of Directors. • Approval of the action plan of the Strategic Planning Committee of • Results of the analysis of the efficiency of the disposal of Russian Russian Railways’ Board of Directors for the 2020–2021 corporate Railways’ educational facilities in 2017–2019 (including analysis year. of intended use of the disposed assets) in accordance with the Conceptual Framework for the Reform of the Russian Railways Preschool and School Education for 2017–2020. • Disclosures to the persons responsible for corporate governance at the audit close-out stage. • Review of the report on the allocation of funds for charity and sponsorship activities in 2019. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ANNEXES 164 | 165

No. Meeting date Meeting Meeting form Meeting agenda No. Meeting date Meeting Meeting form Meeting agenda minutes minutes

4 29 April 2020 No. 10 of In-person meeting • Review of the Russian Railways risk monitoring report for 2019 6 5 June 2020 No. 12 of In-person meeting • Review of the draft Regulation on Internal Audit. 30 April 2020 via video conference (including the self-assessment report on the risk management and 5 June 2020 via video conference • Review of the draft Regulation on the Quality Management System internal control system). at Russian Railways. • Amendments to the Regulation on the Procurement of Goods, Work • Position of Russian Railways (its representatives) at the meeting of and Services for the Needs of Russian Railways approved by the Company TransTeleCom Board of Directors regarding approval of Board of Directors on 28 June 2018. the Company TransTeleCom budget performance report for 2019. • Annual assessment of corporate governance, risk management and • Position of Russian Railways (its representatives) at the meeting internal control systems by the Zheldoraudit Internal Audit Centre. of RRC-1 Board of Directors regarding approval of RRC-1 budget • Criteria used by the Zheldoraudit Internal Audit Centre to select performance report for 2019. subsidiaries and controlled entities for audits, and collaboration • Position of Russian Railways (its representatives) at the between the with Zheldoraudit Internal Audit Centre, Zheldorkontrol extraordinary meeting of UTLC Logistics shareholders regarding Internal Control Centre, audit commissions of subsidiaries and approval of UTLC Logistics budget performance report for 2019. controlled entities and the external auditor regarding audits of • Review of GEFCO performance report for 2019. subsidiaries and controlled entities. • Results of Russian Railways procurement activities in Q1 2020. • Position of Russian Railways (its representatives) at the meeting of • Free transfer of Russian Railways non-core assets to public law the FFC Board of Directors regarding approval of the FFC budget institutions. performance report for 2019. 7 16 June 2020 No. 13 of In-person meeting • Review of the draft updated Charter of Russian Railways. • Review of the report on RZD Logistics budget performance in 2019. 16 June 2020 via video conference • Review of the draft procedure for the preparation and submission • Preliminary approval of Russian Railways withdrawal from of materials and information to the Board of Directors and the Metallist – Remputmash Experimental Plant (valuation matters). Committees of the Board of Directors of Russia Railways. 5 21 May 2020 No. 11 of In-person meeting • Review of Russian Railways annual report for 2019. • Preliminary review of the draft Regulation on Russian Railways’ 21 May 2020 via video conference • Preliminary approval of Russian Railways annual RAS financial Board of Directors. (accounting) statements for 2019, including the income statement. 8 15 July 2020 No. 14 of Absentee voting • Appointment and remuneration of the head of the internal audit • Review of the auditor’s report on Russian Railways accounting 15 July 2020 function. (financial) statements for 2019. • Review of the consolidated IFRS financial statements of Russian 9 22 July 2020 No. 15 of In-person meeting • Amendments to the Regulation on the Procurement of Goods, Work Railways for 2019. 23 July 2020 via video conference and Services for the Needs of Russian Railways approved by the • Review of the auditor’s report on Russian Railways consolidated Board of Directors on 28 June 2018. financial statements for 2019. • Position of Russian Railways (its representatives) at the meeting of • Recommendations to the general meeting of shareholders as to Company TransTeleCom Board of Directors regarding approval of approval of the Russian Railways auditor for 2020. Company TransTeleCom budget adjustments in 2020. • Independence, objectivity and no conflict of interests of Russian • FFC budget performance and necessity of budget adjustments Railways auditor nominated for 2020. based on the market trend analysis in Q1 2020. • Proposals regarding remuneration of the auditor in 2020. • Review of RZDstroy budget performance report for 2019 (including • Report of the Audit Commission on the Russian Railways progress in delivering the Integrated Programme for Financial operational and financial performance in 2019. Rehabilitation of RZDstroy). • Position of Russian Railways (its representatives) at the meeting of • Review of the report on Blagosostoyanie Private Pension Fund the FPC Board of Directors regarding approval of the FPC budget performance in 2019. performance report for 2019. • Report on the Zheldoraudit Internal Audit Centre performance in • Review of the progress report on the Consolidated Programme Q1 2020. to Improve Operational Efficiency and Optimise Costs at FPC in • Measures taken by the Zheldoraudit Internal Audit Centre to act 2018–2020. on the recommendations from the Audit and Risk Committee of the • Form and procedure to inform the members of the Board of Directors Board of Directors of Russian Railways. about operational and financial performance of Russian Railways. • Progress under Agreement No. 145 of 24 October 2018 between Russian Railways and Rusenergosbyt, including criteria for price category selection. • Charitable co-financing of the school construction in Tulun, Irkutsk Region. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ANNEXES 166 | 167

No. Meeting date Meeting Meeting form Meeting agenda Personnel and Remuneration Committee of the Board of Directors minutes No. Meeting date Meeting Meeting form Meeting agenda minutes 10 29 September No. 16 of In-person meeting • Review of Russian Railways risk monitoring reports for Q1 2020 and 2020 30 September via video conference 1H 2020. • 2020 • Results of procurement activities in 1H 2020. 1 20 February No. 3 of In-person meeting Appointment of a member of Russian Railways’ Management Board. • • Report on the Zheldoraudit Internal Audit Centre performance in 2020 20 February Candidates to the boards of directors of the companies included in 1H 2020. 2020 the list of controlled entities approved by Russian Railways’ Board • Review of GEFCO performance report for 1H 2020. of Directors resolutions on which are to be passed by Russian • Free transfer of Russian Railways non-core assets to public law Railways’ Board of Directors in accordance with Clause 71.23 of the institutions. Russian Railways Charter. • • Approval of adjustments to UTLC Logistics budget for 2020. Candidates’ compliance with the independence criteria set for • Performance of the Audit and Risk Committee of Russian Railways’ independent directors serving on the boards of directors of Board of Directors in the 2019–2020 corporate year. controlled entities. • Approvals for members of Russian Railways’ Management Board to 11 27 November No. 1 of In-person meeting • Election of the secretary of the Audit and Risk Committee of Russian hold positions in the governance bodies of other entities. 2020 30 November via video conference Railways’ Board of Directors. • Self-assessment by Russian Railways’ Board of Directors for the 2020 • Adjustments to FFC budget for 2020. 2019–2020 corporate year. • Adjustments to FPC budget for 2020. • Review of the progress report on the Consolidated Programme 2 27 April 2020 No. 4 of In-person meeting • Election of the secretary of the Personnel and Remuneration to Improve Operational Efficiency and Optimise Costs at FPC 27 April 2020 via video conference Committee of Russian Railways’ Board of Directors. in 2018–2020 for 1H 2020 and management of FPC key risks in • Holding an introductory meeting with the candidates to be 1H 2020. appointed as independent directors of the boards of Russian • Review of the report on RZD Logistics performance in 1H 2020. Railways’ controlled entities and nominated for the first time. • Review of RZDstroy budget performance report for 1H 2020 and • Results of self-assessment by Russian Railways’ Board of Directors progress in delivering the Integrated Programme for Financial for the 2019–2020 corporate year. Rehabilitation of RZDstroy. • Amendments to the Regulation on the Remuneration System for • Review of the report on the allocation of funds for charity and Members of the Management Board of Russian Railways. sponsorship activities in 1H 2020. • Progress of approving the Regulation on the Remuneration to • Adjustments to the charity and sponsorship fund of Russian Members of the Board of Directors of Russian Railways. Railways in 2020. 3 19 May 2020 No. 5 of In-person meeting • Recommendations for the Company’s Annual General Meeting • Action plan of the Audit and Risk Committee of Russian Railways’ 19 May 2020 via video conference of Shareholders on the remuneration payable to members Board of Directors for the 2020–2021 corporate year of the Audit Commission based on their performance in the 12 8 December No. 2 of In-person meeting • Approval of the action plan of the Audit and Risk Committee of 2019–2020 corporate year. 2020 9 December via video conference Russian Railways’ Board of Directors for the 2020– 2021 corporate • Recommendations for the Company’s Annual General Meeting 2020 year. of Shareholders on the remuneration payable to members • Review of adjustments to RRC-1 budget for 2020. of the Board of Directors based on their performance in the • RZDstroy performance improvement programme 2019–2020 corporate year. • Amendments to the Regulation on the Procurement of Goods, Work • Results of KPI achievement and general qualitative assessment and Services for the Needs of Russian Railways approved by the of performance by the Management Board and the entire Russian Board of Directors on 28 June 2018. Railways in 2019. • Results of procurement activities for 9M 2020. • Approvals for members of Russian Railways’ Management Board to • Free transfer of Russian Railways’ non-core asset to the city of hold positions in the governance bodies of other entities. Moscow. • Approval of the onboarding procedure for newly elected members • Free transfer of Russian Railways non-core assets to public law of the Board of Directors. institutions. • Amendments to the regulations on committees of the Board of • Disclosure of information to the auditor of Russian Railways. Directors. • Determination of the initial (maximum) price of the contract • Adoption of policies on key performance indicators and for statutory audit of Russian Railways’ financial (accounting) remuneration of the management teams of Russian Railways’ statements and consolidated IFRS financial statements for 2021. subsidiaries. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ANNEXES 168 | 169

No. Meeting date Meeting Meeting form Meeting agenda Digital Transformation and Innovation Committee of the Board of Directors minutes No. Meeting date Meeting minutes Meeting form Meeting agenda

4 16 June 2020 No. 6 of In-person meeting • Termination and appointment of members of Russian Railways’ 16 June 2020 via video conference Management Board. 1 20 February No. 2 of 20 February In-person • Approval of Russian Railways Group’s Comprehensive Innovative • Candidates to the boards of directors of RRC-1, Company 2020 2020 meeting Development Programme until 2025. TransTeleCom, and Federal Passenger Company included in the • Russian Railways’ IT Development Strategy until 2025. list of controlled entities approved by Russian Railways’ Board • Membership of Company TransTeleCom in the Digital Transport and of Directors resolutions on which are to be passed by Russian Logistics Association for transport and logistics market participants. Railways’ Board of Directors in accordance with Clause 71.23 of the Russian Railways Charter. 2 30 June 2020 No. 3 of 30 June Absentee • Review of the report on the implementation of Russian Railways’ • Approvals for members of Russian Railways’ Management Board to 2020 voting Comprehensive Innovative Development Programme until 2020 in hold positions in the governance bodies of other entities. 2019. • Review of the draft updated Charter of Russian Railways. • Review of the draft development strategy of the TransTeleCom • Review of the draft procedure for the preparation and submission group of companies until 2025. of materials and information to the Board of Directors and the • Preliminary approval of Russian Railways’ participation in committees of the Board of Directors of Russian Railways. RZD Technologies. • Preliminary review of the draft regulation on Russian Railways’ Board of Directors.

5 23 September No. 7 of In-person meeting • Termination and appointment of members of Russian Railways’ 2020 23 September via video conference Management Board. 2020 • Approvals for members of Russian Railways’ Management Board to hold positions in the governance bodies of other entities. • Position of Russian Railways (its representatives) on the agenda items of the general meeting of shareholders and the meeting of the board of directors of Federal Passenger Company included in the list of controlled entities approved by Russian Railways’ Board of Directors resolutions on which are to be passed by Russian Railways’ Board of Directors in accordance with Clause 71.23 of the Company’s Charter, as well as on items “Election of Federal Passenger Company’s CEO” and “Re-election of Federal Passenger Company’s Board of Directors”. • Position of Russian Railways (its representatives) on the agenda item of the general meeting of shareholders of UTLC Logistics included in the list of controlled entities approved by Russian Railways’ Board of Directors resolutions on which are to be passed by Russian Railways’ Board of Directors in accordance with Clause 71.23 of the Company’s Charter. • Recommendations for the Russian Railways Annual General Meeting of Shareholders on the remuneration payable to members of the Board of Directors based on their performance in the 2019–2020 corporate year. • Recommendations for the Russian Railways Annual General Meeting of Shareholders on the remuneration payable to members of the Audit Commission based on their performance in the 2019–2020 corporate year. • Performance of the Personnel and Remuneration Committee of Russian Railways’ Board of Directors in the 2019–2020 corporate year.

6 26 November No. 1 of In-person meeting • Election of the secretary of the Personnel and Remuneration 2020 26 November via video conference Committee of Russian Railways’ Board of Directors. 2020 • Appointment of a member of Russian Railways’ Management Board. • Approval of the action plan of the Personnel and Remuneration Committee of Russian Railways’ Board of Directors for the 2020–2021 corporate year.

7 25 December No. 2 of In-person meeting • Appointment of First Deputy CEO of Russian Railways. 2020 25 December via video conference • Adjustment of corporate-wide KPI targets for 2020. 2020 • Approval of corporate-wide KPI targets for 2021. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS ANNEXES 170 | 171 Profitability analysis (RAS) Disclaimer

1 ROE ROE (net income / equity), % This Annual Report (“Annual Report”) has • Corporate Governance Code approved Apart from the official information on been prepared based on the information by the Bank of Russia’s Board of Russian Railways performance, the In 2020, ROE (return on equity) available to the Open Joint Stock Directors on 21 March 2014; report contains information obtained 2020 0.01 totalled 0.01%. Company Russian Railways (“Russian • Bank of Russia Regulation No. 660-P, from the third parties and the sources 2019 1.25 Railways” or the “Company”) and its dated 16 November 2018, On General which the Company deems reliable. subsidiaries (the “Group” or “Russian Meetings of Shareholders. Nevertheless, the Company does not 2018 0.42 Railways”) as at the issue date. guarantee the accuracy of this information The Annual Report contains an overview as it may be condensed or incomplete. Russian Railways’ Annual Report for 2020 of activities and performance results Russian Railways does not provide disclosed information to provide the of Russian Railways for the year ended any guarantees that the actual results, Company’s shareholder represented 31 December 2020 and major trends scale and performance indicators of the Sales profitability, Sales profitability, EBITDA margin, by the Government of the Russian that may affect the Company’s future Company’s operations or those of the operational efficiency, and % % Federation, as well as government performance. industry in which the Company operates EBITDA margin authorities, potential and actual will be consistent with the results, scale 2020 (actual) 6.5 2020 (actual) 22.2 investors, shippers, passengers and other For the purposes of this report, the word and performance indicators expressly In 2020, sales profitability totalled 6.5%, stakeholders and users with the most “Company” and the pronoun “we” in all stated or implied in any forward- down 2.5 pp y-o-y (+1.3 pp vs plan), 2020 (plan) 5.2 2020 (plan) 22.0 full and relevant data on the operations their forms refer to Russian Railways. looking statements contained herein or while EBITDA margin stood at 22.2%, 2019 9,0 2019 22.6 of Russian Railways in 2020 and the otherwise. Russian Railways shall bear down 0.4 pp y-o-y (+0.2 pp vs plan). The Company’s development trends. In this report, the Russian Railways Group no responsibility for any losses that may decrease at the end of the reporting 2018 7.8 2018 21.1 refers to a nominal group of entities be incurred by anyone due to the fact period was due to the decline of sales This Annual Report meets the that includes Russian Railways and its that such a person relied on the forward- revenue by 29.4% y-o-y. requirements of the following laws and subsidiaries, affiliates and controlled looking statements. Revenue rate, EBITDA, regulations: companies in which the Company owns kopecks / 10 tkm RUB bn • Resolution of the Government of an interest. Except as expressly required by the Russian Federation No. 1214 applicable law, the Company assumes no 2020 464.2 2020 (actual) 402.3 On Improvement of the Procedure for The Annual Report may contain obligation with regard to the distribution Managing State-Owned Open Joint- forward-looking statements that or publication of any updates or changes 2019 454.9 2020 (plan) 390.4 Stock Companies Whose Shares are reflect expectations of the Company’s in the forward-looking statements to 2018 440.1 2019 417.2 under Federal Ownership and Federal management. reflect any changes in expectations or State Unitary Enterprises dated new information, as well as subsequent 2018 380.2 31 December 2010; These forward-looking statements are events, conditions or circumstances. • Resolution of the Government of not based on actual circumstances and the Russian Federation No. 1211 include all statements with respect to On Amendments to the Approximate the Company’s intentions, opinions Operating profitability Net profit margin, Structure of the Annual Report of Open or current expectations pertaining to (net profit margin) % Joint-Stock Company Whose Shares its performance, financial standing, are under Federal Ownership dated liquidity, growth prospects, strategy, 10 November 2015; and the industry in which the Company 2020 0.02 Lower income for the reporting period • Federal Law No. 39-FZ On Securities operates. By their nature, forward-looking led to a 2.88 pp drop in net profit margin 2019 2.90 Market dated 22 April 1996; statements involve risks and uncertainties (operating profitability). • Regulation of the Bank of Russia because they relate to events and 2018 1.00 No. 454-P On Information Disclosure by depend on circumstances that may or the Issuers of Issue-Grade Securities may not occur in the future. Such words as dated 30 December 2014; “anticipate”, “believe”, “expect”, “predict”, • Federal Law No. 208-FZ On Joint Stock “intend”, “plan”, “project”, “consider”, Companies dated 26 December 1995 “could” and other similar or equivalent • Order No. 228 of the Federal Agency expressions, including those used with for State Property Management negations, generally indicate a forward- Onthe regulation of activities of the looking statement. These assumptions Federal Agency for State Property involve risks and uncertainties, expected Management in corporate governance or unexpected by the Company. (with recommendations for the Russian Therefore, future performance may Federation to form an opinion on the differ from current expectations, and the approval of the annual report of an recipients of the information contained open joint-stock company whose herein may not rely solely on the shares are held by the Russian information provided in the Annual Report 1 Net profit / Equity Federation) dated 26 July 2005; in their assumptions. ANNUAL REPORT − 2020 RUSSIAN RAILWAYS

Contact information

Legal address Corporate Finance Press Service of Russian 107174, Moscow, Department of Russian Railways ul. Novaya Basmannaya, 2 Railways Postal address 107174, Moscow, Trade Finance and Debt Portfolio Contact telephone ul. Novaya Basmannaya, 2 Servicing Department +7 (499) 262-66-70 (for media only)

Contact telephone Contact telephone E-mail +7 (499) 262-99-01 +7 (499) 260-33-51 [email protected]

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E-mail E-mail [email protected] [email protected]