Share capital and dividends

The Russian Federation is the founder of and sole shareholder in Russian Railways. The Russian Government exercises shareholder powers on behalf of the Russian Federation.

The charter capital of Russian Railways was formed by the founder through the contribution of the property and assets of federal railway transportation organisations.

As of the end of 2014, Russian Railways had total charter capital of RUB 1,972.2 bln split into 1,972,233,365 common registered shares in uncertificated form with par value of RUB 1,000 each.

In addition, according to Order No. 2757-r of the Russian Government dated 29 December 2014, the Company’s Board of Directors decided to additionally issue 50 mln preferred registered uncertificated shares with par value of RUB 1,000 each for a total nominal value of RUB 50 bln.

After placement, each preferred share grants the shareholder the right to the value paid upon the Company’s liquidation (liquidation value) in the amount of 100% of the par value of the preferred share as well as the right to receive annual dividends amounting to 0.01% of the par value of the preferred share in 2015–2019 and 2.98% of par value after 2020.

The first tranche of National Wealth Fund money in the amount of RUB 50 bln was placed as Russian Railways preferred shares in March 2015.

The Company has decided to set up a special fund comprised of retained earnings from previous years to pay dividends on preferred shares.

Report on the distribution of net profit earned in 2013

Russian Railways earned a net profit of RUB 740 mln in 2013.

In accordance with clause 42 of section 6 of the Russian Railways Charter, the Company must establish a reserve fund amounting to 5% of the net profit of the reporting year (RUB 37 mln).

Projected dividend payments to shareholders for 2014

The dividend policy of Russian Railways is based on the balance of the interests of the Company and its shareholders as it relates to determining the amount of dividend payments, specifically:

• enhancing the Company’s investment appeal;
• strict observance of shareholder rights as envisaged by the legislation of the Russian Federation.

In 2014, Russian Railways incurred a loss of RUB 44.1 bln, which primarily resulted from the revaluation of foreign currency obligations due to the deterioration of the national currency (negative exchange rate differences totalled RUB 142.5 bln).

However, the approved financial plan of Russian Railways for 2014 envisages net profit of RUB 182 mln.

According to the position of the Russian Ministry of Economic Development (No. 8877-AL/D08 dated 29 April 2011), the Company is advised to prioritise dividend payments totalling at least 25% of net profit.

In order to meet the previously planned parameters, Russian Railways proposes paying dividends of RUB 45 mln, which amounts to 25% of the Company’s planned profit for 2014.