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Research and production corporation «United Wagon Company»

MoscowApril 2015

Section 1

UWC - unique investment opportunity

2

Product Sales and Maintenance ServiceProduction of Railcars and Components

UWC is one of the greatest railway holdings on the market of innovative railcars in Russia and CIS

3

TVSZ and TikvinChemMash (TChM): production of innovative rolling

stock with the capacity of up to 22,000 railcars and 30,000 car sets of

heavy casts per year;

NPC Springs: production of up to 30,000 car sets of railroad springs per

year;

VNICTT: research-and-development and design complex for freight

railway rolling stock, which specializes in development and launching

into manufacture of innovative railcars and components;

The group closely collaborates with international leading manufacturers

of railcars and components (JV with Wabtec and Timken).

The companies under RAIL1520 brand provide railcars for long-term

operating lease;

UWC operates a fleet of about 20 000 railcars, comprising, in particular,

TVSZ innovative railcars;

Vostok1520: operator of innovative railcar fleet;

Existing infrastructure to render complex transportation services and

provide railcar maintenance;

More than 20 current clients

Evolution: from designer of railcars to provider of integrated railway solutions

R&D Know-how Production Leasing ServiceTransportation

Services

2004 – 2010 2011 – 2012 2013 – н.в.

СП

2,2

17,1

0

2

4

6

8

10

12

14

16

18

2012 2014

bn r

ub.

… and the leader on the market of innovative railcars

4

Market shareComments

Operational results Financial results

Source: Company’s analysis

Growth: 14 p.p. Growth: 58 p.p.

Railcars production Innovative railcars production

Production (TVSZ) Fleet under operation

CAGR: 181% CAGR: 108%

Revenue EBITDA

CAGR: 171% CAGR: 83%

Within three years UWC has become one of the largest railcar manufacturers and the leader in innovative railcar production Deliveries of new cars from the building plant under UWC operation have allowed to enlarge the running fleet and to take a leading position on the market of operational leasing:

The fleet is about 20(1) ths railcars, the most of them are innovative railcars from TVSZ Number 1 in innovative railcar fleet

Source: Company’s analysisSource: Company’s analysis

1%

15%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2012 2014

%

0

58%

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

2012 2014

%

1,3

9,6

0

2

4

6

8

10

12

2012 2014

ths c

ars

5,7

19,0

0

2

4

6

8

10

12

14

16

18

20

2012 2014

ths c

ars

0,8

3,6

0

0,5

1

1,5

2

2,5

3

3,5

4

2012 2014

bn r

ub.

(1) February 2015 г. (including owned and managed fleet)

Investment opportunities: key factors

5

Significant economic benefits of the Innovative railcar

Market demand switches to innovative railcars

Government support of the innovative railcar production

Flexible business model resistant to market volatility

Fast growing business with high performance indicators

High potential of the innovative railcar due to “old” car operation

being economically inefficient

Experienced and highly-qualified management

Leadership in production of innovative railcars

High potential of the innovative railcar due to “Old” car operation being economically inefficient

6

…conflicted with market needs and resulted in railcar surplus

Overproduction of old generation railcarsin 2010-2012 …

50 49

69 73

39

91

115 121

88

65

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Rolling stock production in the CIS (ths items)

…which, in its turn, caused rates falling below the service level

+ 80-140% vs to 2005

…and reduced earnings of operators as per the structure of transportation cost

0

350

700

1 050

1 400

1 500

2 000

2 500

3 000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Cargo turnover, bln t-km (left line)Fleet, thous. rail cars (right line)

Market lease rate for new gondola cars (RUB/day)

400

600

800

1 000

1 200

1 400

1 600

1 800

Jan-1

2

Apr-

12

Jul-12

Oct-12

Jan-1

3

Apr-

13

Jul-13

Oct-13

Jan-1

4

Apr-

14

Jul-14

Oct-14

Jan-1

5

Service level(2) ~830

1 650

550

Cargo turnover and fleet imbalance

Since 2005: +40%

Since 2005: +24%

Fleet structure(1)

1,219ths

69%60% 61%

79% 83% 85%

31%40% 39%

21% 17% 15%

2010 2011 2012 2013 2014 2015

Operator earnings (railcar part) RZD earnings (infrastructure fees)

Structure of carbon transportation cost(3)

Source: The Industrial Cargos

Source: Industrial Cargos, Ministry of Industry and Trade of the Russian Federation Source: Industrial Cargos, RZD, Company’s analysis

Source: Federal State Statistics Service, Russian Railways (RZD)

Source: RZD

78%

22%

Fleet in operation Surplus fleet

Notes: (1) railcar fleet structure in January 2015; (2) Includes maintenance, replacement of railcar components, staff expenses, and lease

payments; (3) Structure of coal transportation cost in the major export route Erunakovo-Nakhodka Vostochnaya (exp.) in the 18-100 bogie railcar

Significant economic benefits of the innovative railcar(1)

7

Technical and Economic Advantages of the Railcar Equipped with Barber Bogie

Key Parameters

ParameterNew Generation railcar by TVSZ

Standard railcar

Gondola Car

Bogie (technology) Barber 18-100

Life 32 years 22 years

Carrying Capacity 75-77 67-70

Empty Run Discount 10-30% ̶

Maintenance Schedule:

Before the first roundhouse servicing

6 years 3 years

Before overall repair

18 years 11 years

Before wheelsetchange

10-12 years 5-7 years

Number of unplanned repairs(4) 4.4 147

Substantial economic benefits for railway operators due to:

Increased carrying capacity of the railcar

Empty run discounts due to reduced impact on the track

Increased life

Increased run between repairs

Fewer unplanned repairs

Innovative railcars by TVSZ equipped with Barber bogie feature a number of operational advantages resulting in additional daily

saving of 875 rubles, which is in line with the economically reasonable daily rate exceeding 1,300 rubles and provides additional

saving of about 2.8 mln rubles per railcar

Note: (1) Based on gondola cars; (2) Chelutai-Vanino coal transportation route;(3) Discounted savings on useful life at the 12% discount rate, constant prices, no infation;(4) Estimated ratio of unplanned repairs per 100 railcars in 2014 according to SUEK data

CommentsSavings(2), RUB

Per day Per railcar(3)

Reduced Cost of Operation

Fewer repairs

Increased life

276

18

903,000

60,000

Empty Run Discount

Depends on transportationdistanceVaries from 10 to 30%

254 831,000

Effect from Increased CarryingCapacity

Lower tariff Lower required fleet

28343

927,000142,000

Total 875 2,863,000

Source: RZD, FST, SUEK data Source: Company’s analysis

8

75

RZD empty run tariff, rub.

18-100 Barber 25

19 849 15 277

Rent rate, rub./day 500 1 037

Turnover, days 18 days

Total rent for railcar, rub.

9 000 18 674

RZD loaded run tariff, rub

41 807 42 849

Total transportation costs, rub.

70 656 76 800

The volume of cargo, tons

69

Transportation cost per 1 ton, rub.

1 024 1 024

Additional revenues of innovative railcar is more than 500 rubles higher than for railcars on 18-100 bogie car at an equivalent cost of tons of cargo transportation

Currently, rental rates for innovative TVSZ gondolas carrying capacity of 75 tons is 850 rub./day, which ensures a great saves to the operator and the necessary profitability to the Company

That is, the pricing mechanism is based on a comparison of economies of old generation and innovative car on a particular route, while maintaining the benefits for the operator

In this example, the route Chelutay - Vanino, at the same transportation cost per 1 ton of cargo, estimated additional revenue for innovative cars is higher on 537 rub./day

At the conclusion of the contract this effect is divided in the ratio agreed with the operator

Economy of innovation car provides a higher profit for the operator

Excellent economy of innovative railcar allows UWC to offer a balanced rate above the market average and provides significant savings for the operator

Market demand switches to innovative railcars 1/2

9

Innovative railcars are replacing old generation railcars in production structure

Comments

Market daily rate for Barber railcars is above old generation railcars’ rate by 50-75%

Innovative railcars already making a substantial part of the clients’ fleet

Lease rate for the innovative gondola car(1) vs market rate

In spite of overall railcar production slowdown, production of innovative railcars continues to grow, their share in the production reached 69%. The UWC share in production of innovative railcars makes is about 60%

Economic benefits and technological advantages of innovative railcars are highly appreciated in the market, which is evidenced by a higher lease rate offered by the rolling stocks operators

Due to increased economic benefit of the innovative railcar, clients operate TVSZ railcars in economically efficient long-run export routes

Gondola sales by the CIS plants

55%

Source: Industrial Cargos

16%

84%

69%

31%

Source: Company’s data (as at January 2015) Source: Industrial Cargos, Company’s data

Notes: (1) Lease rate for the UWC innovative car (25 ton/axle

400

500

600

700

800

900

Oct-13

Nov-

13

Dec-

13

Jan-1

4

Feb

-14

Mar-

14

Apr-

14

May-

14

Jun-1

4

Jul-14

Aug-1

4

Sep-1

4

Oct-14

Nov-

14

Dec-

14

RU

B/D

ay

18-100 Barber

484 655 940 1132 1035 1280 1415882

12851723 1619 1880

2552 21092188

2349

14971908 1843

18481659

1685

886836

Jan 2

014

Feb2014

Mar2

014

Apr2

014

May 2

014

Jun 2

014

Jul2

014

Aug 2

014

Sept

2014

Oct

2014

Nov 2

014

Dec 2

014

Innovative railcars 18-100

26%24%

19%

11% 11% 9%8%

69%

6% 6%6%

3%

2%

2%

6%

Coal

Fertilizers

Oil

Ore

Ferrous metals

Building materials

Grain

Other

30%

11%

8%8%7%

6%5%

25%

SUEKUGMKNefteTransServiceZapSub-TransservicePMKRVD-ServiceBALTSERVICE

10

15

23

0

5

10

15

20

25

2012 2013 2014

Number of clients

Market demand switches to innovative railcars 2/2

10

The growth of customer base Backlog (January 2015)

Company's leading position in the production of innovative cars confirmed by strong demand for the products of UWC. Agreements signed for10.2 ths of innovative cars

Railcar typeVolume, ths

railcarsStatus

Gondola9,9

2,0

Agreements signed

Agreements in negotiation

Flat car0,2

0,4

Agreements signed

Negotiations in progress

Hopper0,1

0,5

Agreements signed

Agreements in negotiation

Tank 0,1 Negotiations in progress

Total 13,1100% of production plan 2015

Source: Company data


The structure of customer base(1)

Notes: (1) By railcars (as of February 2015)

By key clients By markets


Government support of the innovative railcar production

11

Tariff discount for empty run

Notes: (1) According to Federal Freight, as at October 2014: 30 bn rubles for prolongation of life of 45,000 railcars

Development of heavy haulage

traffic in the Eastern Polygon

Subsidy for purchase of

innovative rolling stock

Limitation of railcar lifetime extension

Due to reduced impact on railroad infrastructure of innovative railcars, Federal Tariff Service introduced a special tariff scheme for empty run of innovative railcars (including produced by TVSZ)

Specifically, empty run tariff for innovative gondolas by TVSZ is 10-30% lower vs old generation railcars

RZD is implementing a large-scale project related to increasing the working capacity of the Baikal-Amur mainline and the Trans-Siberian Railway (investment amount of 560 bnrubles)

One of the priorities is increasing train tonnage, which can be achieved only through operating the “new generation” rolling stock

The innovative railcar fleet required to implement heavy-haulage transportation in the Eastern Polygon amounts to 175,000 railcars

The Russian Government established a subsidy for purchase of innovative railcars via indemnifying the interest payments on the loans for purchase of the innovative railcars in the amount of 90% of the discount rate

The subsidy currently makes about 140,000 rubles per railcar

In August 2014 there were introduced technical regulations requiring the prolongation of railcar life to be mandatorily certified

Such procedure cost amounts to approximately 670,000 rubles(1), which renders railcar life prolongation economically inefficient

This resulted in a greater number of old railcars being written off, which triggered growth in demand for innovative rolling stock to replace the old one

Flexible business model resistant to market volatility

12

Production of railcars and components

Sales

Railcar sale

Engineering / Development

Railcar lease

Launching new models in production

Railway transportation

services Market needsClient

Vertical integration business model(1)

exclusive to RussiaBusiness model: resilience factors

UWC business model provides efficient cooperation of the group companies at every stage of the value chain: from

development to distribution of the product

Synergistic effect of car production and lease business

Business resilience to market volatility

Guaranteed supply of innovative railcars

Stable and foreseeable financial flow from the lease subdivision

High demand for products – confirmed backlog for the whole production output in 2015

Minimal FX risks

In-house components production, thus independent from competitors’ products and import

In-house R&D center

ICT Group of Companies support

Notes: (1) The business model includes main operating companies. UWC structure also includes a number of other infrastructure companies and three joint ventures

Railway transportation

19.4

9.6

5.83.5 2.6

Leadership in production of innovative railcars

13

…and leader in innovative railcar production…UWC is one of the largest railcar

manufacturers in Russia…

TOP 5 railcar manufacturers in Russia, 2014 (ths items)

…having unique competitive advantages

UVZ UWC Altaivagon Ruzhimmash Roslavlsky VRZ

58%28%

14%

16.5ths

Largest manufacturers of innovative railcars in Russia, 2014

~2х

Advantage

Specializing in production of railcars

In-house bogies

Diversified portfolio of railcars

Own foundry

State-of-the-art and highly efficient production

Own integrated engineering bureau

Other(1)

2.3

Notes: (1) Other manufacturers include Altaivagon (UVZ-bogie), Roslavlsky VRZ (partnership with TVSZ) and Novokuznetsky VSZ (partnership with TVSZ and UVZ)

4.69.6

Source: Company analysis

Source: Industrial Cargos, Company’s data Source: Industrial Cargos, Company’s data

9.6

4.6

6,30,1

10,6

26,0

25,520,8

8,3

14,5

32,3

25,6

20,819,0

14,5

тыс. ед.

Инновационный парк Типовой парк

Competitive environment in the operational leasing segment

14

Leasing companies’ fleet as of the end of 2014Commentary

Source: RZD, Company data

OTEKO

Competitor review

Competitive advantage

Fleet growth potential

Specialisation in operational leasing

Fleet diversification

Focus on innovative railcars

As of the end of 2014, UWC (whose operational leasing companies operate under the RAIL1250 brand) was the largest owner of innovative railcars in Russia, and the second-largest dedicated operating lasing company in Russia

Large fleet of innovative railcars with improved economic and operational characteristics enables UWC to ensure a stable demand from freight transportation companies

The high level of fleet diversification allows UWC to provide services to customers from different sectors of the Russian economy

Source: Company analysis

ОТЕКО

‘000 u

nits

Innovative fleet Standard fleet

15

To increase market share

New products design with high value added1

Customer base diversification2

Service center chain development3

Operation efficiency increase 4

Further expertise in operation services5

To maximize economic benefit from innovative freight railcars operation

Effective strategy focused on growth

Key strategic objectives The main ways of achieving

Experienced and Highly-Qualified Management

16

Roman Savushkin

Chief Executive Officer

Joined UWC upon its incorporation

Worked at Brunswick Rail

Has an MBA from University Antwerp Management School

Dmitry Bovykin

First Deputy CEO for General Management



Graduated from the Moscow Institute of Physics and Technology

Alexey Tsyplakov

Deputy CEO, Finance and Economy


Worked at McKinsey&Co

Has an MBA from INSEAD

Anton Saykin

Chief Financial Officer



Graduated from the Finance Academy under the Government of the Russian Federation

Anton Ustinov

Deputy CEO, Chief Operating Officer

Joined UWC in June 2014

Worked at En+

Has an MBA from University Antwerp Management School

Alexander Lukyanenko

Deputy CEO, Strategic Sales

Joined UWC in May 2012

Worked at SUEK

Graduated from Lomonosov Moscow State University

Maxim Kuzemchenko

Deputy CEO, Business Development


Worked at Severstal

Has an MBA from Duke University

Vasiliy Somov

Head of Corporate Communications


Worked at the press office of KhartsyzskPipe Works

Graduated from the Military University of the Ministry of Defense

Dmitry Losev

Deputy CEO, Technological Development

Joined UWC in August 2012

Worked at Freight One

Graduated from the Novosibirsk Institute of Railway Transportation Engineers and Omsk State Transport University

Andrey Tsyganov

Head of Research

Joined UWC in June 2014


Graduated from Tver State University

Lyudmila Pakhomova

Deputy CEO, Chief Legal Officer


Worked at Brunswick Rail and White&Case

Graduated from Moscow State University for International Relations

Alexander Ten

Deputy CEO, Car building

Joined UWC in December 2014

Worked at Promtractor –Vagon

Graduated from the Dnepropetrovsk national university of railway transport

Company Management and Board of Directors

17

UWC Board of Directors Corporate governance

UWC audit has been executed since 2012, audit of individual companies starting from 2009.

The Company`s auditor is JSC Deloitte and Touche CIS

Company`s audit

Consists of 3 independent directors

Renumeration committee

Consists of 3 independent directors

Audit committee

Consists of 9 members: 3 independent directors, 3 non-executive and 3 executive directors

Board of DirectorsNikolay Dobrinov

Chairman of the BoardNon-executive Director

Ilya Uzhanov

Independent DirectorMember of Committees for audit, renumerationand nominations

Alexander Pleshakov

Member of Committees for audit, renumerationand nominations

Igor Tsyplakov

Non-executive Director

Dmitry Bovykin

Executive Director(1)

First Deputy CEO UWC RPC CJSC for General Management

Alexey Tsyplakov

Executive Director(1)

Deputy CEO UWC RPC CJSC for Finance and Economy

Zumrud Rustamova

Non-executive Director

Roman Savushkin

Executive Director (1)

UWC RPC CJSC CEO

Gennadiy Zhuzhlev

Independent DirectorMember of Committees for audit, renumerationand nominations

Notes: (1) Company`s Top Management

Section 2

UWC’s financial situation

18

19

RevenueComments

EBITDA

UWC revenue amounted to 17,1 bn. rub. in 2014

In consideration of approved Company`s corporate strategy the increase in revenue is anticipated due to growth in production capacity and production volumes build-up in the next years

In addition, as part of the development of relations with partner plants, an increase in sales volumes of innovative cars is anticipated

EBITDA of the Company was 3,6 bn. rub. in 2014, margin − 21%. The level of profitability at the consolidated level depends on the margins of divisions

The Company plans to achieve and maintain EBITDA margin at 40%, primarily due to:

Achieve full production capacity and targeted production volumes

Implementation of activities related to improving the efficiency

Growth of business volumes of «Sales» division as a result of further promotion of innovative standards in the market

Source: audited IFRS financial statements

UWC has high rates of financial growth


21673071

17057

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2012 2013 2014

Revenue, mln rub.

825

1403

3572

38%

46%

21%

-5%

5%

15%

25%

35%

45%

55%

65%

75%

85%

95%

0

500

1000

1500

2000

2500

3000

3500

4000

2012 2013 2014

EBITDA, mln rub. EBITDA profitability, %

5 291

3 5361 870 1 870 1 870

4 255

3 884

3 470 2 9442 171

1 685 1 059 537

9 546

7 420

5 3404 814

4 041

1 6851 059

53796

0

2 000

4 000

6 000

8 000

10 000

12 000

2015 2016 2017 2018 2019 2020 2021 2022 2023

Bonds interest payments, mln. rub. Loans interest payments, mln. rub.

15 000 15 000

4 550

4 403

5 0148 210

5 285

6 961 6 298 7 275

2 791

4 550

19 403

5 014

8 210

20 285

6 961 6 2987 275

2 791

0

5 000

10 000

15 000

20 000

25 000

2015 2016 2017 2018 2019 2020 2021 2022 2023

Bond repayment, mln. rub. Loans repayment, mln. rub.

93,3

%

6,7%

RUB EUR

22,1%

20,0%

19,9%

3,3%2,6%

1,1%

31,0%

Sberbank

VEB-EDB

Otkritie

EDB

Gazprombank

Rosnano

Bonds

20

Debt portfolio structureComments

Source: Company`s management accounts

UWC debt portfolio as of 31.12.2014 (1)

By lenders By currency

89,9 bn. rub.

89,9 bn. rub.

Principal repayment schedule Interest repayment schedule(2)

Notes: (1) Without shareholder’s loan; (2) In view of the subsidy compensation of interest on loans under the RF Government Decree of 30.09.2009 №262

Source: management accounts, UWC analysis

The debt is 90 bn. rub. at the end of 2014, the share of debt in foreign currency - 6.7%

The volume of the Company's debt burden depends on market conditions and the shares of rail cars sold to third parties and transferred to “Distributions” division

Development program of fleet under management will be implemented through borrowed funds

Management assesses the comfortable debt level not more than 3,0x net debt/EBITDA


3,62,8 2,3

7,1

1,0

0,3

0,1

0,1

11,0

3,9

2,4

2015 2016 2017

Other pprojects

Product portfolio expanding

Operational efficiency

21

Historical CapEx structure, bn. rub.(2)


UWC capital expenditures (1)

Planned capital expenditures for

2015-2017., bn. rub. (2,3)

Source: UWC capital expenditures program

Comments

Notes: (1) Excluding investments in the acquisition of railcars by «Sales» division; (2) Excluding VAT; (3) The capital expenditure program is nominated in 2015 prices

Historical investment costs of the Company for the last 3 years were 3-4 bn. rub. annually. The majority of these costs in 2012 were spent at the final stages of construction of the TVSZ plant and in 2013-2014 –to reduce costs, optimize processes and expand the product portfolio

Capital expenditure program for 2015-2017 years was approved by management. First of all the capex relates to the implementation of strategic plans to increase the product portfolio, increase capacity, flexibility and operational efficiency of railcars production

According to UWC management substantial capital expenditures are not required after the implementation of the approved for 2015-2017 development program, only ongoing costs of maintaining production will be carried out

The proportion of costs in foreign currency is about 70% - a large part of these costs accounts for purchase of fixed assets abroad. The remaining 30% are construction and installation works denominated in rubles. The share of ruble costs will rise in the medium term

4,2

1,8 1,8

0,2

1,8

0,3

0,3

0,00

0,04

4,2

2,3

3,9

2012 2013 2014

Other pprojects

Assets purchasing

Product portfolio expanding

Operational efficiency

Plant building

22

Annex I

Industry Review

Rail industry is the backbone of the Russian economy

23

…and Russia has one of the largest rail markets in the world…

Rail transport is significant due to the following factors:

Significant volumes of bulk freight transportation (coal, ore, construction materials)

Long transportation distances

The road network is not sufficiently developed

Extreme climatic conditions

Lack of suitable waterways to transport goods

Rail is a key element of Russia’s transport infrastructure…

Average distance(‘000 km)

Fleet(‘000s railcars)

Freight turnover (bn tonne-kilometres)

1,9

1,6

1,1

0,9

0,8

Россия

США

Канада

Казахстан

Китай

1 336

1 219

673

248

159

США

Россия

Китай

Индия

Украина

2 753

2 541

2 295

673

231

Китай

США

Россия

Индия

Казахстан

…with a significant share in Russia’s freight turnover…

…and growing dynamics

86%

48%

20% 18%

Россия США Китай Евросоюз

Source: Russian Railways (RZD) and statistics services of other countries

Source: RZDSource: RZD and statistics services of other countries

191

171

198189 191 188 192 191 193 195 196 198

188

174

янв фев мар апр май июн июл авг сен окт ноя дек

Диапазон 2008-2013 2014 2015

Freight turnover in Russia (bn tonne-kilometres)

Note: (1) Excluding pipelines

Rail transport’s share of freight turnover(1)

Russia

USA

Canada

Kazakhstan

China

USA

Russia

China

India

Ukraine

China

USA

Russia

India

Kazakhstan

Russia USA China EU

2008-2013 range

J F M A M J J A S O N D

4145 47 48 50 50 50 50

106111

73

3729 30

2519

0

20

40

60

80

100

120

2015P 2016P 2017P 2018P 2019P 2020P 2021P 2022P

Production (‘000) Write-offs (‘000)

Main drivers of demand for new railcars

24

Age structure of the Russian railcar fleetCommentary

Railcar write-offs and production

Source: RZD, Ministry of Industry and Trade of the Russian Federation

Source: RZD, INFOLine

1,16 1,09 1,06 1,07 1,08 1,10 1,12 1,14

6 12 15

15

16

13 15 17

17

14 23

8 16 3

2 35 38 42

61

60

33

80 88

82

71

57

17 1

7 16 18 22

24 21 21

20

12 2

1 2 4 4 6 7 8 8 10 11 13

13 15

25

16

13

10

6 4 3 3

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

тыс. ед.

Нормативный срок не превышен Нормативный срок превышен

Despite growth in production in 2010-2012, the age structure of Russian rolling stock remains uneven

In 2015-2022 ca. 460,000 railcars are expected to be written off (35% of the total Russian fleet)(1)

Demand for rolling stock in the medium term will be driven by railcar write-offs and growth in rail freight traffic:

The introduction of the Custom Union’s technical regulations on the safety of railway rolling stock has led to a sharp increase in railcar disposals from the Russian Federation’s fleet. Nearly 90,000 railcars were disposed of in 2014 – 40,000 were moved to the out-of-service fleet, and 50,000 were actual write-offs

In the run up to 2022, the base volume of railcar write-offs will be 460,000 (an average of nearly 55,000 railcars per year)

Given the current surplus of rolling stock on the network, growth of the Russian Federation’s railcar fleet is not expected before 2019

Total railcar production in 2015-2022 will amount to ca. 380,000 railcars (around 50,000 per year)(1)

293,000 railcars exceeded their service life

Notes: (1) INFOLine data; (2) RZD data

Normal service life was not exceeded Normal service life was exceeded

Railcar fleet (‘000 000)

‘000 u

nits

Main competitors on the railcar production market in Russia and the CIS

25 Notes: (1) Based on total production volume for the CIS in 2014; (2) UWC’s production volume in 2014; (3) Capacity to reach 22,000 railcars in 2016

10 of the largest railcar producers occupy over 80% of the CIS market, with the two biggest players

(Uralvagonzavod and UWC) controlling nearly 45% of the market.

Tikhvin Freight Car Building Plant (TVSZ) is the largest producer established over the last 10 years,

with a current production capacity of 16,000 railcars and 30,000 railcar castings per year

Source: Industrial freight

Largest railcar producers in the CIS in 2014

# Company Country Sales (railcars)Capacity (railcars)

Capacity usage, (%)

Market share(1)

1 Uralvagonzavod Russia 19,430 28,000 69% 29.9%

2 UWC Russia 9,637(2) 13,000(3) 74% 14.8%

3 Altaivagon Russia 5,777 9,100 63% 8.9%

4 Ruzkhimmash Russia 3,519 8,800 40% 5.4%

5Kryukov Railcar Building Plant

Ukraine 2,651 11,200 24% 4.1%

6Roslavl RailcarRepair Plant

Russia 2,644 3,000 88% 4.1%

7 ZMK Russia 2,535 5,700 44% 3.9%

8 PromTractor Russia 2,459 5,800 42% 3.8%

9Novozybkov

PlantRussia 1,818 2,000 91% 2.8%

10Kazakhstan Railcar

PlantKazakhstan 1,604 1,700 94% 2.5%

Others 12,904 59,700 19.9%

Total 64,978 148,000 100%

Ukraine

Kazakhstan

Overview of the railcar castings market

26

Market price dynamics for old generation castings

Commentary

Production volume of railcar castings

Source: Industrial freight, company data

Source: Industrial freight, company data

Due to higher demand for innovative rolling stock, there

will be a growing need for innovative castings for railcar

production and repair in the medium term

Production of innovative castings will grow from the

current 15,000 units to 50-55,000, with 30,000 being

produced at TVSZ and the remaining 20-25,000 being

made at other plants

Approximately 15,000 castings for the 18-100 bogie will

be manufactured by other plants to ensure maintenance

requirements for the older generation railcars are met

Since TVSZ’s capacity for castings production exceeds its

capacity for railcar assembly, and the market is seeing

great demand for innovative railcars, one of the channels

through which TVSZ will sell castings is through partner

programmes:

For example, deliveries for nearly 1,000 railcar sets

were carried out to the Roslavl, Novokuznetsk and

Mogilev plants as part of the partner programme in

2014

Such deliveries are expected to grow to 7,500 per

annum from 2016

0

100

200

300

400

500

600

700

800

900

янв

-08

май-0

8

сен-0

8

янв

-09

май-0

9

сен-0

9

янв

-10

май-1

0

сен-1

0

янв

-11

май-1

1

сен-1

1

янв

-12

май-1

2

сен-1

2

янв

-13

май-1

3

сен-1

3

янв

-14

май-1

4

сен-1

4

тыс. руб./вкп

0,3 0,5 0,0 0,4 0,4 3,0 14,4

55,0

96,6

52,5

90,2103,7 107,0

77,7 54,3

15,0

96,9

53,0

90,2104,1 107,4

80,768,8 70,0

2008 2009 2010 2011 2012 2013 2014 2020

тыс. вкп

Инновационное литье Типовое литье

21%

79%79%

21%‘0

00 R

UB/r

ailcar

unit

‘000 r

ailcar

units

Innovative castings Standard castings

Jan ‘08

May ‘08

Sep ‘08

Jan ‘09

May ‘09

Sep ‘09

Jan ‘10

May ‘10

Sep ‘10

Jan ‘11

May ‘11

Sep ‘11

Jan ‘12

May ‘12

Sep ‘12

Jan ‘13

May ‘13

Sep ‘13

Jan ‘14

May ‘14

Sep ‘14

The rapidly developing operating leasing segment with significant growth potential

27

Growth potential for Russia’s operational leasing segment

Commentary

Structure of new railcar purchases in Russia

Source: RZD, GATX, Company analysis

Source: RZD

182 264 420735

970 937 841765

1 152 1 201 1 2611 500

РФ 2012

РФ 2014

РФ 2020

Северная

Америка

2014

тыс. ед.

Операционный лизинг и краткосрочная аренда Собственность

16% 33% 49%

30 26 3415

26

47 54 43

5017

38 5

7

14

8088 82

72

57

2010 2011 2012 2013 2014

тыс. ед.

Собственность Финансовый лизинг Операционный лизинг

4%

24%

84% 67%51%

22%

78%

37%

59%

46%

30%

Demand for leasing products in the freight rolling stock segment will be driven by the following factors in the medium term:

The advantages of operating leasing compared to railcar ownership:

• Shift to ‘light-asset’ model and optimization of balance sheets

• Limited access to financing

• Limited expertise in maintenance and fleet management

The advantages of operating leasing over the spot market:

• Fixed transport expenses for a long period duringperiods of high volatility of prices and rates

• Guaranteed long-term transportation safety of the business

The penetration rate of the operational leasing model is 2.5 times lower in Russia than in North America

In times of economic difficulty when freighters have limited access to financing, operational leasing is their only option to secure access to new railcars and it gives them the opportunity to continue growing

‘000 u

nits

Russia

2012

Russia

2014

Russia

2020

Nort

h

Am

erica

2014

Operational leasing and short-term leasing Ownership

‘000 u

nits

Ownership Financial leasing Operational leasing

Railcar market prices

28

Price dynamics for old generation railcars equipped with 18-100 bogies(1)

Источник: Промышленные грузы, ИНФОЛайн, анализ Компании

After peaking in 2012, railcar prices have been falling over the last 3 years due to a railcar surplus and weak demand from freight transportation companies

The average price for a gondola equipped with a 18-100 bogie currently stands at around RUB 1.5-1.6mn. A slight increase for 2015 is due to higher production costs following a rise in the export price of steel

As a result of increased production costs, the average price of a gondola car will continue to rise throughout 2015 to RUB 1.7mn

Prices for UWC’s innovative railcars exceed those of railcars equipped with 18-100 bogies by RUB 500-600,000 due to the significant technical and operational advantages of the innovative railcars

The prices of other manufacturers of innovative rolling stock (Uralvagonzavod and Altaivagon) are lower due to thereduced effectiveness of their operations (RUB 2.0-2.2 mln)

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2 400

2 600

янв

-08

мар-0

8

май-0

8

июл-0

8

сен-0

8

ноя-0

8

янв

-09

мар-0

9

май-0

9

июл-0

9

сен-0

9

ноя-0

9

янв

-10

мар-1

0

май-1

0

июл-1

0

сен-1

0

ноя-1

0

янв

-11

мар-1

1

май-1

1

июл-1

1

сен-1

1

ноя-1

1

янв

-12

мар-1

2

май-1

2

июл-1

2

сен-1

2

ноя-1

2

янв

-13

мар-1

3

май-1

3

июл-1

3

сен-1

3

ноя-1

3

янв

-14

мар-1

4

май-1

4

июл-1

4

сен-1

4

ноя-1

4

янв

-15

тыс. руб.

Полувагон Хоппер

Notes: (1) Excluding VAT

Price for a UWC innovative gondola and hopper in Q4 2014: RUB 2,400,000

‘000 R

UB

Source: Industrial cargos, INFOLine, Company analysis Gondola car Hopper car

Jan ‘08

Mar

‘08

May ‘08

Jul ‘0

8

Sep ‘08

Nov ‘08

Jan ‘09

Mar

‘09

May ‘09

Jul ‘0

9

Sep ‘09

Nov ‘09

Jan ‘10

Mar

‘10

May ‘10

Jul ‘1

0

Sep ‘10

Nov ‘10

Jan ‘11

Mar

‘11

May ‘11

Jul ‘1

1

Sep ‘11

Nov ‘11

Jan ‘12

Mar

‘12

May ‘12

Jul ‘1

2

Sep ‘12

Nov ‘12

Jan ‘13

Mar

‘13

May ‘13

Jul ‘1

3

Sep ‘13

Nov ‘13

Jan ‘14

Mar

‘14

May ‘14

Jul ‘1

4

Sep ‘14

Nov ‘14

Jan ‘15

400

600

800

1 000

1 200

1 400

1 600

1 800

янв

-08

апр-0

8июл-0

8

окт

-08

янв

-09

апр-0

9июл-0

9окт

-09

янв

-10

апр-1

0июл-1

0окт

-10

янв

-11

апр-1

1

июл-1

1окт

-11

янв

-12

апр-1

2

июл-1

2окт

-12

янв

-13

апр-1

3июл-1

3окт

-13

янв

-14

апр-1

4июл-1

4окт

-14

руб./сутки


Operational leasing rate dynamics for railcars

29

Leasing rates for TVSZ’s innovative railcars(1)Leasing rates for railcars equipped with the 18-100 bogie(1)

Source: Industrial cargos, Company analysis

The market leasing rates for railcars equipped with 18-100 bogies peaked in 2012 as a result of the post-crisis recovery of the rail transportation market

Leasing rates for railcars equipped with 18-100 bogies have fallen over the last three years due to a surplus of rolling stock and weak demand from freighters

On the back of the fleet surplus decreasing, leasing rates for gondolas are expected to recover in 2015-2016 to a ‘service level’ of RUB 830/day(2)

UWC started producing innovative railcars equipped with Barber bogies in 2013

Since production began, leasing rates for innovative railcars have demonstrated stable and positive trends

Rates for innovative railcars exceed those for railcars equipped with 18-100 bogies due to the clear technical and operational advantages of the innovative railcars

The effect of operating innovative railcars will grow over the long term following RZD’s indexation of tariffs (which is usually in line with inflation)

400

600

800

1 000

1 200

1 400

1 600

1 800

4кв. '13

1кв. '14

2кв. '14

3кв. '14

4кв. '14

руб./сутки


Notes: (1) Excluding VAT; (2) The ‘service level’ is specified in accordance with data from the Ministry of Trade and Industry of the Russian Federation

RU

B/d

ay

Gondola car Hopper car

RU

B/d

ay

Gondola car Hopper car

Jan ‘08

Apr

‘08

Jul ‘0

8

Oct

‘08

Jan ‘09

Apr

‘09

Jul ‘0

9

Oct

‘09

Jan ‘10

Apr

‘10

Jul ‘1

0

Oct

‘10

Jan ‘11

Apr

‘11

Jul ‘1

1

Oct

‘11

Jan ‘12

Apr

‘12

Jul ‘1

2

Oct

‘12

Jan ‘13

Apr

‘13

Jul ‘1

3

Oct

‘13

Jan ‘14

Apr

‘14

Jul ‘1

4

Oct

‘14

4Q

‘13

1Q

‘14

2Q

‘14

3Q

‘14

4Q

‘14


30

Annex II

Company’s profile

Innovation at all stages of the production process

31

Lowering the cost of the railcar life cycle

Cost reduction by introducing new products

Safety and increased speed on the network

Production of components with high added value

Unique competitive advantages of production

Barber bogies with improved performance that have less impact on the rail infrastructure

Un

dercarria

ge

New railcar designs to maximise the potential of the 25 ton bogie

Desig

n

IBB/TMX railcar brake system, brake blocks and air diffusers

New generation case bearings designed for heavy loads

Springs using advanced nanosubstructure technology

Co

mp

on

en

ts

UWC has exclusive rights to produce innovative railcars in Russia

32

Exclusive production rights for innovative railcars with Barber bogies in Russia, as well as UWC’s strong R&D

activities, ensure there are high barriers to entry for potential competitors

Barber S-2-R

ASF Motion Control

UWC has been collaborating with Wabtec since 2010 and the company has the exclusive right to produce Barber S-2-R bogies in the 1520 gauge area:

Producing and selling bogies in the 1520 gauge area

The exclusive production rights will last until 2025, with the possibility of extending them by 10 years

UWC is actively working on ways to enhance the chassis, improving the operational and economic characteristics of the bogie:

Given the extensive experience UWC has in operating railcars equipped with Barber bogies and developing innovative new technologies (both realised and potential), the Company will have a substantial competitive advantage even if the exclusive licence expires

UWC has been working with Amsted Rail Company, Inc. since 2013 and it has the exclusive right to manufacture Motion Control bogies in the 1520 gauge area:

Producing and selling bogies in the 1520 gauge area

The exclusive production rights will last indefinitely

The Production division overview

33

Moscow

Izhevsk(1 200 km far from Moscow)

Tikhvin(650 km far from

Moscow)

The production capacities of the Company are located on two sites:

In Tikhvin, Leningrad region, where Tikhvin Freight Car Building Plant (TVSZ), TikhvinChemMash (TChM) and production joint ventures are located

In Izhevsk, where NPC Springs is located

TVSZ is the second in railcar building in the country after UVZ in 2014

The production division of the Company specializes in production of innovative railcars with advanced technical and economical features.

All the intellectual property rights for railcars engineeringincluding exclusive rights for producing innovative bogies belong to the United Wagon Company

NPC Springs created in 2011 with support of ROSNANO is a manufacturer of nanostructured springs of the highest quality which do not have analogs in Russia

NPC Springs provides TVSZ with the components of high quality and exclusive rights for using them in the production

The United Wagon Company cooperates with the world leading railcars manufacturers; joint ventures with Wabtec and Timken are created for the purpose of localization, intellectual property rights for the bogie Motion Control are obtained from Amsted Rail

Distribution division overview

34

GalleryDistribution division

UWC business model provides a client with a wide range of opportunities to receive innovative railcars:

Direct sale

Leasing of innovative railcars

Operating services

The total fleet under UWC operation is more than 20 thsfreight railcars as of February 2015i

The long-term operating leasing is the main distribution channel:

The division includes RAIL1520 - one of the leading leasing companies in Russia

Established in 2011, RAIL1520 currently belongs to top 5 in the country and also leads in the innovative cars fleet

RAIL1520 business focuses on the operating leasing market, it also provides repairs and maintenance services

Due to UWC balanced business model, customers have access to various integrated solutions in the rail transport and truly innovative product

The production portfolio

35

ProductsCapacity(2015)

Project capacity(2016)

Price of realization(1 q. 2015)

Gallery

Casting 90 ths tons 90 ths tons150–170

ths rub./ton

TOTAL 90 ths tons 90 ths tons

GondolaLinea №1 and №3 (TVSZ)

12,8 ths railcars 14,9 ths railcars 2,4 mln.rub.

HopperLine №4 (TVSZ)


Tank carLines №5 and №6 (TChM)

− up to 3,6 ths railcars(1) 2,6 mln.rub.(2)

Flat carLine №2 (TVSZ)


TOTAL 16,0 ths railcars up to 22,0 ths railcars

Source: Company’s data

Comment : (1) reaching the project capacity in 2016; (2) The minimum price of selling. Market launch is planed in the second half year 2015.

36

Annex III

Operational and financial information

The railcars production dynamics The casting production dynamics

The structure of railcars production The structure of casting production

The dynamics of key operational indicators

10% 30% 74% 80%

Capacity

37

(1)

Comment : (1) reaching the project capacity in 2016

Source: The Company’s data Source: The Company’s data

Source: The Company’s data

13,0 13,0 13,0 22,0

Loading capacity Capacity Loading capacity

Source: The Company’s data

(1)

(1) (1)

0% 11% 34% 100%

30,0 30,0 30,0 30,0

0,03,3

10,2

30,0

2012 2013 2014 Target level

Fact, thousandcar-set castings

1,3

3,9

9,6

17,5


Fact, thousand railcars

100%86%

58%

14%

25%

17%


Own use For partner plants Sales to third party

100%

80% 78% 71%

20% 21%

12%

1%

6%11%


Gondola Hopper Flat car Tank car

16%

41%7%

15%100%

77%

44%

2012 2013 2014

Gondola Barber Hopper Barber Railcar 18-100

5,710,2

19,0

60,0

2012 2013 2014 Target levelRailcar fleet, thousands of raicars

38

Comments

Growth dynamics of the fleet under control

Key performance indicators

The target level of the fleet under operation will be achieved within 5 years

Growth rate of the fleet, as well as the future structure of the fleet by type of cars will depend on market conditions

(1)

Structure of the fleet under operation

Notes: (1) There were 6 platforms Barber in the structure of the fleet in 2014

Source: Company data Source: Company data

39

Comments

Production division financials

Revenue

EBITDA

Revenue was more than 23 bn. rub in 2014, exceeding the same factor in 2012 by more than 11 times

Since the beginning of production in 2012 till the end of 2014 there was a significant positive trend due to both increased production and growth of sale prices

By 2014 the division reached he profitable level in terms of EBITDA, which amounted to 1,3 bn. rub., with margin of 6%

According to management, the target EBITDA margin is anticipated to reach up to 25% with the achievement of target production

Target level of profitability will be achieved primarily through:

Implementation of a flexible technological solutions in the production, which will allow to respond quickly to changes in demand

Implementation of projects for increasing production capacity

Cost reduction activities



1 998

7 103

23 166

0

5000

10000

15000

20000

25000

2012 2013 2014

Revenue, mln rub.

(3 371)(2 941)

1 293

-4000

-3000

-2000

-1000

0

1000

2000

2012 2013 2014

EBITDA, mln rub.

40

Comments

Distributions division financials

Revenue

EBITDA

Revenue of division grew steadily, having reached 4,4 bn. rub. in 2014

It is caused by systematic expansion of the fleet of cars, which as of February 2015 was more than 20 ths cars

The Company plans to increase the fleet under management up to 60 ths cars over the next 5 years

In 2014, EBITDA of the division was 3.3 bnrub., profitability of this indicator has reached 76%. A slight decrease in profitability is due to one-time sale of railcars at the end of 2014

The Company plans to maintain an average EBITDA margin of «Distributions» division at a stable level of 80% – 85%

Primarily, the maintaining of target level of profitability will be done by increasing the share of innovative railcars with improved technical and economic parameters in its own fleet under management, including modernization of railcars based on the 18-100 bogie owned by UWC



1773

2269

334982% 84%

76%

-5%

5%

15%

25%

35%

45%

55%

65%

75%

85%

95%

0

500

1000

1500

2000

2500

3000

3500

4000

2012 2013 2014

EBITDA, mln rub. EBITDA profitability, %

2172

2689

4379

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2012 2013 2014

Revenue, mln rub.

41

Comments

UWC divisions cost structure

«Distributions» division cost structure in2014

The cost structure of each division had come to stable level by the end of 2014

In the cost structure of the «Production» division the major share of the cost falls on inventory items: metal, parts and accessories of bogie, braking equipment, etc.

In the cost structure of the «Distributions» division the major share of the cost is depreciation due to the own fleet expansion, which has exceeded 20 ths railcars as of February 2015

A substantial part of the cost items for both divisions is not bound to a foreign currency

The Company intends to implement activities related to the realization of the program of operating costs optimization, which would reduce the current level of COGS

«Production» division cost structure in 2014



70,6%

15,1%

12,8%

1,5%

Inventories Salary Depreciation Other

14,0%

10,2%

67,5%

5,9%2,4%

Inventories Property tax

Depreciation Maintenance and repair

Other

42

Annex IV

Corporate Information

43

UWC Legal Structure

TVSZProduction of cars

TikhvinChemMashProduction of cars

NPC SpringsProduction of components

JV with WabtecJV with TIMKEN

RAIL1520Leasing of cars(2)

MRC1520Leasing of cars

JV with Mitsui&Co Ltd.

Vostok1520Cargo transportation

VNICTTR&D

Other infrastructure companies

99,97%

100%

100%

100%

Production. .

Sales .

50%

100%

100%

100%

UWC PLCJersey

UWC RPC (Issuer)Russia

100%(1)

100%(1)100%(1) 100%(1)

ICT Holding

100%(1)

Other

49%

Source: Company`s data

Notes: (1) Effective ownership. Legal structure is given in simplified form, intermediate (technical, holding)companies are not indicated; (2) RAIL1520 brand combines several operating companies

Final beneficiaries(1)

50,00%

9,99%

9,24%

9,10%

9,04%

8,75%

3,88% Alexander Nesis

Igor Finogenov

Nikolay Dobrinov

Igor Tsyplakov

Dmitry Sokolov

Alexey Gudaitis

Konstantin Yanakov

44

UWC STATEMENT OF PROFIT OR LOSS

ths RUB 2012 2013 2014

Revenues 2 166 529 3 070 975 17 057 489

Cost of sales, incl. (905 888) (1 684 685) (14 984 530)

Raw materials (127 450) (289 498) (8 744 580)

Depreciation (548 743) (898 241) (3 087 284)

Payroll and social funds (14 427) (45 320) (1 861 439)

Maintenance and repairs (11 007) (24 299) (804 051)

Property tax (185 625) (224 083) (214 819)

Insurance (3 762) (4 491) (8 715)

Other (14 874) (198 753) (263 642)

GROSS PROFIT 1 260 641 1 386 290 2 072 959

Selling, general and administrative (1 032 627) (807 699) (1 644 648)

Impairment loss (2 990 254) (1 801 142) (27 309)

Other operating (income)/expenses, net (71 607) (91 798) 23 371

OPERATING PROFIT/(LOSS) (2 833 847) (1 314 349) 424 373

Finance income 88 273 154 176 647 313

Finance costs (2 100 923) (2 786 552) (6 516 137)

Foreign exchange gain/(loss), net 324 611 (1 266 404) 4 604 625

Derivative financial instruments valuation gain/(loss), net (86 532) 31 434 -

Profit before tax (4 608 418) (5 181 695) (839 826)

Income tax expense/(benefit) 91 134 (531 060) 1 389 146

Net profit/(loss) for the year (4 517 284) (5 712 755) 549 320

Net profit for the year related to:

Company’s shareholders (4 517 284) (5 712 755) 557 373

Non-controlling interests - - (8 053)


45

UWC STATEMENT OF FINANCIAL POSITION 1/2

ths RUB 2012 2013 2014

ASSETS

Non-current assets

Property and equipment, net 43 730 219 55 415 840 68 483 344

Advances for non-current assets 1 127 921 757 833 2 336 192

Intangible assets 1 600 459 2 769 043 2 838 785

Deferred tax assets 607 - 1 852 555

Investments to Joint venture 303 575 308 538 158 838

Long-term Loans 193 990 2 047 121 1 658 939

Other accounts receivable - - 30 000

Finance lease receivables long term - - 260 818

Total non-current assets 46 956 771 61 298 375 77 619 471

Current assets

Inventories, net 117 178 93 933 266 972

Trade and other accounts receivables, net 338 992 1 078 235 7 578 533

Finance lease receivables short term - - 8 803

Short-term loans 751 147 235 313 16 255 261

Prepayments to suppliers and other assets 789 356 842 193 705 374

VAT receivable 1 473 137 1 804 589 1 653 166

Cash and cash equivalents 418 295 710 807 2 386 595

Total current assets 3 888 105 4 765 070 28 854 704

TOTAL ASSETS 50 844 876 66 063 445 106 474 175


46

UWC STATEMENT OF FINANCIAL POSITION 2/2

ths RUB 2012 2013 2014

Equity

Share capital 10 10 10

Not registered share capital - - 99 990

Additional paid in capital 14 071 764 9 005 233 12 428 965

PY (retained earnings)/accumulated deficit 186 245 (5 526 510) (4 969 137)

Equity related to shareholders 14 258 019 3 478 733 7 559 828

Non-controlling interests - 78 721 668

Total equity 14 258 019 3 557 454 7 560 496

Non-current liabilities

Long-term debt 31 693 730 35 084 592 44 493 124

Bonds, long-term portion - 10 029 994 27 891 700

Finance lease payables, long-term portion 34 260 18 263 2 637

Deferred tax assets, long-term portion 187 035 809 036 1 200 984

Total non-current liabilities 31 915 025 45 941 885 73 588 445

Current liabilities

Short-term debt 2 496 053 11 384 750 16 953 742

Trade payables 1 760 462 4 535 429 6 357 576

Advances received and other current liabilities 314 722 557 261 1 395 571

Derivative financial instruments 86 532 - -

Finance lease payables, short-term portion 14 063 18 557 19 384

Bonds, short-term portion - 68 109 598 961

Total current liabilities 4 671 832 16 564 106 25 325 234

TOTAL LIABILITIES 36 586 857 62 505 991 98 913 679

TOTAL LIABILITIES AND EQUITY 50 844 876 66 063 445 106 474 175


47

UWC STATEMENT OF CASH FLOWS 1/2

ths RUB 2012 2013 2014

OPERATING ACTIVITIES

Loss before taxation (4 608 418) (5 181 695) (839 827)

Adjustments for:

Depreciation and amortization 668 446 916 458 3 119 976

Impairment loss 2 990 254 1 801 142 27 309

Changes in provision for doubtful accounts receivable 16 231 36 886 (36 886)

Loss on disposal of property, plant and equipment 17 661 - -

Loss on JV - - 157 219

Currency translation income (270 074) 1 266 404 (4 628 269)

Loss on valuation of derivative 86 532 (31 434) -

Finance expenses 2 100 923 2 786 552 6 516 140

Finance income (88 958) (154 176) (647 313)

Operating cash flows before Working capital changes 912 597 1 440 137 3 668 349

Working capital changes

Increase in trade and other accounts receivables (122 569) (398 404) (7 075 851)

Increase in prepayments to suppliers and other current assets (65 544) (47 351) (284 099)

Increase /(decrease) in VAT receivable 200 177 (331 453) 166 413

Increase /(decrease) in inventories (37 374) 115 674 (172 056)

Increase /(decrease) in trade and other accounts payable 21 019 (67 335) 838 310

Increase in advances received and other current liabilities 161 963 242 539 418 597

Cash flows from operating activities 1 070 269 953 807 (2 440 337)

Income tax paid (3 980) - (34 190)

Finance costs paid (2 497 421) (3 097 817) (4 947 025)

Net cash flows from operating activities (1 431 132) (2 144 010) (7 421 552)


48

UWC STATEMENT OF CASH FLOWS 2/2

ths RUB 2012 2013 2014

INVESTING ACTIVITIES

Purchase of property, plant and equipment, including advances paid (11 258 668) (10 708 281) (15 584 815)

Proceeds from sale of property, plant and equipment 13 712 - -

Purchase of Intangible assets (505 852) (176 358) (295 305)

Purchase of currency forward contracts - (59 301) -

Loans issued (1 616 618) (1 610 204) (16 924 040)

Cash flows from loans repaid 763 986 272 904 9 422 914

Interest receivable 40 607 154 176 111 388

Net cash payments for acquisitions of subsidiaries - (406 958) (499 824)

Cash paid on acquisition of the investment in the JV (310 930) - -

Net cash flows from investing activities (12 873 763) (12 534 022) (23 769 682)

FINANCING ACTIVITIES

Capital contributions, net 9 460 417 (5 444 269) 3 865 920

Proceeds from loans 15 943 278 35 644 105 67 058 348

Loans repayments (11 122 899) (25 286 962) (55 841 729)

Proceeds from bonds issue - 10 029 994 17 861 705

Finance lease payments (10 167) (11 503) (26 579)

Net cash flows from financing activities 14 270 629 14 931 365 32 917 665

Net increase in cash and cash equivalents (34 266) 253 333 1 726 431

Effect of exchange rate changes (49 313) 39 179 (50 643)

Cash and cash equivalents at the beginning of the year 501 873 418 295 710 807

Cash and cash equivalents at the end of the year 418 295 710 807 2 386 595


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