RZD Capital Public Limited Company Directors' report and ... · On 29 June 2016, Deutsche...

RZD Capital Public Limited Company Directors' report and audited financial statements

For the financial year ended 31 December 2015

Registered number: 459983

RZD Capital Public Limited Company

Contents Page(s)

Directors and other information 1

Directors' report 2 - 5

Independent auditor's report 6 - 7

Statement of comprehensive income 8

Statement of financial position 9

Statement of changes in equity 10

Statement of cash flows 11

Notes to the financial statements 12 - 25

RZD Capital Public Limited Company Page 1

Directors and other information

Directors Rolando Ebuna (PHL) (Appointed: 29 June 2016)Thomas O' Beirne (Irish) (Appointed: 29 June 2016)Eimir McGrath (Irish) (Resigned: 29 June 2016)Deirdre Glynn (Irish) (Resigned: 29 June 2016)

Registered Office Pinnacle 2 (Up to 29 June 2016)Eastpoint Business ParkDublin 3Ireland

2nd Floor (From 29 June 2016)Palmerston HouseFenian StreetDublin 2Ireland

Corporate Services Deutsche International Corporate Services (Ireland) Limited (Resigned: 29 June 2016)Provider and Pinnacle 2Company Secretary Eastpoint Business Park

Dublin 3Ireland

Cafico Corporate Services Limited (Appointed: 29 June 2016)Palmerston HouseFenian StreetDublin 2Ireland

Cafico Secretaries Limited (Appointed: 29 June 2016)Palmerston HouseFenian StreetDublin 2Ireland

Principal Paying Agent Deutsche Bank AG LondonWinchester House1 Great Winchester StreetLondon EC2N 2DBUnited Kingdom

Solicitor Arthur CoxEarlsfort CentreEarlsfort TerraceDublin 2Ireland

Auditor Ernst & YoungChartered Accountants Harcourt CentreHarcourt StreetDublin 2Ireland

Trustee Deutsche Trustee Company Limited (Resigned: 29 June 2016)Winchester House1 Great Winchester StreetLondon EC2N 2DBUnited Kingdom

Cafico Trust Company Limited (Appointed: 29 June 2016)Palmerston HouseFenian StreetDublin 2Ireland

Bankers Deutsche Bank AG London Bank of IrelandWinchester House 2 Burlington Plaza1 Great Winchester Street Burlington RoadLondon EC2N 2DB Dublin 4United Kingdom Ireland


Directors' report

Principal activities, review of business and future development

On 18 April 2013, the Company issued €1,000,000,000 3.374 percent Loan Participation Notes due 2021 with limited recourse to the Company with thesole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways. These LoanParticipating Notes are listed on Irish Stock Exchange.

The directors present the Directors' Report and audited financial statements of RZD Capital Public Limited Company (the “Company”), for the financialyear ended 31 December 2015. The financial statements have been prepared under International Financial Reporting Standards ("IFRS") as adopted by theEuropean Union ("EU") and in accordance with the provisions of Companies Act 2014.

On 29 March 2010, the Company issued an aggregate principal amount of US$1,500,000,000 5.739 percent Loan Participation Notes due 2017 with limitedrecourse to the Company for the sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company andRussian Railways. These Loan Participating Notes are listed on Irish Stock Exchange.

On 23 March 2011, the Company issued an aggregate principal amount of £350,000,000 7.487 percent Loan Participation Notes due 2031. On 20 June2011, the Company issued a further £300,000,000 7.487 percent Loan Participation Notes due 2031 which were consolidated and form a single series withthe £350,000,000 7.487 percent Loan Participation Notes due 2031. These Loan Participation Notes were issued on a limited recourse basis for the solepurpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways. These LoanParticipating Notes are listed on Irish Stock Exchange.

The Company was incorporated on 15 July 2008. The principal activity of the Company is the issuance of debt securities for the purpose of financing loansto Joint-Stock Company Russian Railways, ("Russian Railways" or the "Borrower"), a joint-stock company established under the laws of the RussianFederation. Russian Railways is one of the largest transportation companies in the world. On 22 January 2013, the Company was re-registered as a publiclimited company as defined in the Companies Act 2014.

On 26 February 2013, the Company issued CHF525,000,000 2.177 percent Loan Participation Notes due 2018 with limited recourse to the Company withthe sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways. These LoanParticipating Notes are listed on Swiss Stock Exchange.

On 26 February 2013, the Company issued CHF150,000,000 2.730 percent Loan Participation Notes due 2021 with limited recourse to the Company withthe sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways. These LoanParticipating Notes are listed on Swiss Stock Exchange.

On 2 April 2012, the Company issued an aggregate principal amount of RUR25,000,000,000 8.30 percent Loan Participation Notes due 2019. On 17October 2012, the Company issued a further RUR12,500,000,000 8.30 percent Loan Participation Notes due 2019 which were consolidated and form asingle series with the RUR25,000,000,000 8.30 per cent Loan Participation Notes due 2019. These Loan Participation Notes were issued on a limitedrecourse basis for the sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and RussianRailways. These Loan Participating Notes are listed on Irish Stock Exchange.

On 5 April 2012, the Company issued an aggregate principal amount of US$1,000,000,000 5.70 percent Loan Participation Notes due 2022. On 16 October2012, the Company issued a further US$400,000,000 5.70 per cent Loan Participation Notes due 2022 which were consolidated and form a single serieswith the US$1,000,000,000 5.70 per cent Loan Participation Notes due 2022. These Loan Participation Notes were issued on a limited recourse basis forthe sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways. These LoanParticipating Notes are listed on Irish Stock Exchange.

The Borrower of the loans and receivables is a reputable company and is one of the largest transportation companies in the world. Their operations areprimarily located in the Russian Federation and consequently, the Borrower is exposed to the economic and financial conditions of the Russian Federationas well as the economic fluctuations on international markets. In 2014, certain sectoral sanctions against Russia were imposed by several countries. Thesanctions continue to be in effect in 2015. While the Borrower is not directly subjected to sanctions, the sanctions along with a drop in crude oil prices anda significant devaluation of the Russian Rouble continue to have adverse effect on the Russian economy. The Borrower has been rated BBB- by Fitch as at31 December 2015 (2014: BBB-). While the directors believe that the Borrower is taking appropriate measures to support the sustainability of its operationsunder the current circumstances, expected further deterioration in the areas described above could negatively affect the Borrower’s results and financialposition in a manner not currently determinable.

On 6 March 2014, the Company issued €500,000,000 4.60 percent Loan Participation Notes due 2023 with limited recourse to the Company with the solepurpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways. These LoanParticipating Notes are listed on Irish Stock Exchange.


Directors' report (continued)

Results and dividends

Directors

Directors, secretary and their interests

Secretary

Going concern

Principal risks and uncertainties

Accounting records

Subsequent events

On 29 June 2016, Eimir McGrath and Deirdre Glynn resigned and Rolando Ebuna and Thomas O' Beirne were appointed as the directors of the Company.Deutsche International Corporate Services (Ireland) Limited resigned and Cafico Secretaries Limited was appointed as the company secretary of theCompany. Deutsche Trust Company resigned and Cafico Trust Company Limited were appointed as the Share Trustee of the Company. From 29 June 2016the registered office of the Company is 2nd Floor, Palmerston House, Fenian Street, Dublin 2, Ireland.

On 19 February 2016, the Company entered into a funding agreement with Russian Railways for the repurchase of €1,000,000,000 3.3744 percent LoanParticipation Notes due 2021.

On 29 June 2016, Deutsche International Corporate Services (Ireland) Limited resigned and Cafico Secretaries Limited was appointed as the companysecretary of the Company. From 29 July 2016 the registered office of the Company is 2nd Floor, Palmerston House, Fenian Street, Dublin 2, Ireland.

The results for the financial year are set out on page 8. The comparative figures are for the financial year ended 31 December 2014. The directors do notrecommend the payment of a dividend in respect of the financial year ended 31 December 2015 (2014: US$nil).

The directors and company secretary who held office on 31 December 2015 had no direct or beneficial interest in shares, shares options, deferred sharesand debentures of the Company, at 31 December 2015 and/or at 1 January 2015, or at the date of appointment if later, requiring disclosure in the Directors'Report pursuant to section 329 of the Companies Act 2014.

The Directors anticipate that the financial assets will continue to generate enough cash flows on an ongoing basis to meet the Company’s liabilities as theyfall due.

The names of the directors who were in office at any time during the financial year are set out below:

Rolando Ebuna (PHL) (Appointed: 29 June 2016)Thomas O' Beirne (Irish) (Appointed: 29 June 2016)Eimir McGrath (Irish) (Resigned: 29 June 2016)Deirdre Glynn (Irish) (Resigned: 29 June 2016)

The Borrower's operations are primarily located in the Russian Federation. Consequently, the Company is exposed to the economic and financial marketsof the Russian Federation which display characteristics of a developing market. The legal, tax and regulatory frameworks continue to develop, but aresubject to varying interpretations and frequent changes which together with other legal and fiscal impediments contribute to the challenges faced by entitiesoperating in the Russian Federation. The political and economic instability witnessed in Ukraine has had and may continue to have a negative impact on the Russian economy. Certain sanctions were implemented by EU and the United States of America against Russian officials and businessmen. So far, theseevents have not had a significant impact on the Company’s operations and financial position. However, the impact of future instability in Ukraine, should itcontinue, and/or additional sanctions against Russia, if they were to be implemented against the Borrower, is at this stage difficult to determine. Thesefinancial statements reflect management’s assessment of the impact of the Russian business environment on the operations and the financial position of theCompany. The future business environment may differ from the Company’s assessment.

The main risks arising from the Company’s financial instruments are credit risk and foreign exchange risk. The Company’s exposure to risks and itsobjectives, policies and processes for measuring and managing risk are outlined in Note 19 of the financial statements.

The measures taken by the board of directors of the Company (the "Board") to secure compliance with the Company’s obligations, under Section 281 to285 of the Companies Act 2014, to keep adequate accounting records are the use of appropriate systems and procedures and ensuring that competentpersons are responsible for the accounting records. The Company appointed the Corporate Services Provider to maintain the accounting records of theCompany independently. The accounting records are kept at 2nd Floor, Palmerston House, Fenian Street, Dublin 2.

On 4 March 2016, €92,178,557 principal amount of the €1,000,000,000 Loan Participation Notes due 2021 were repurchased and cancelled by theCompany and the accrued interest of €2,625,424 on such principal amount were also paid. A corresponding amount of the loan of Russian Railwaystogether with accrued interest is also deemed repaid.

There have been no other subsequent events that require disclosures in these financial statements up to the date of signing this report.


Directors' report (continued)

Annual corporate governance statement

Capital structure

Powers of directors

Audit committee

Independent auditors

________________ ________________Rolando Ebuna Thomas O' BeirneDirector Director

Date: 5 September 2016

Statutory audits in Ireland are regulated by the European Communities (Statutory Audits) Regulations (Directive 2006/43/EC), 2010 (S.I. 220 of 2010).According to the regulations, if the sole business an Irish special purpose vehicle (an "SPV") relates to the issuing of asset backed securities, such SPV isexempt from the requirement to establish an audit committee (under Regulation 91(9)(d) of the Regulations). The Company has availed of this exemptionand has not established an audit committee.

Ernst & Young, Chartered Accountants, has expressed its willingness to continue in office in accordance with Section 383(2) of the Companies Act 2014.

The Board has established processes regarding internal control and risk management systems to ensure its effective oversight of the financial reportingprocess. These include appointing the Corporate Services Provider to maintain the accounting records of the Company independently. The CorporateServices Provider is contractually obliged to maintain adequate accounting records as required pursuant to a corporate services agreement entered intobetween the Company and the Corporate Services Provider. The Corporate Services Provider is also contractually obliged to prepare for review andapproval by the Board the annual report, including financial statements, intended to give a true and fair view. The Board evaluates and discusses significantaccounting and reporting issues as the need arises. From time to time, the Board also examines and evaluates the Corporate Services Provider’s financialaccounting and reporting routines. The Corporate Services Provider has operating responsibility for internal control in relation to the financial reportingprocess.

The Board is responsible for establishing and maintaining adequate internal control and risk management systems for the Company in relation to thefinancial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Company’s financial reportingobjectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Company’s policies, and the Board’s instructions, with relevance for financial reporting are updated and communicated via appropriate channels, suchas e-mail, correspondence and meetings, to ensure that all financial reporting information requirements are met in a complete and accurate manner. TheBoard has an annual process to ensure that appropriate measures are taken to consider and address the shortcomings identified and measures recommendedby the independent auditors.

Given the contractual obligations on the Corporate Services Provider, the Board has concluded that there is currently no need for the Company to have aseparate internal audit function in order for the Board to perform effective monitoring and oversight of the internal control and risk management systems ofthe Company in relation to the financial reporting process.

Other than the share trustees, no person has a significant direct or indirect holding of equity securities in the Company. No person has any special rights ofcontrol over the Company’s share capital.

There are no restrictions on voting rights.

With regard to the appointment and replacement of directors, the Company is governed by its Articles of Association. The Articles of Associationthemselves may be amended by special resolution of the shareholders.

The Board is responsible for managing the business affairs of the Company in accordance with the Articles of Association, which allow it to enter intocontracts and perform all tasks necessary to conduct the business of the Company. The Board may delegate certain functions to the Corporate ServicesProvider and other parties, subject to supervision and direction by the Board.

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Directors' Responsibilities Statement

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The Board confirms that to the best of its knowledge and belief:

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Signed on behalf of the Board of Directors by:


Date: 5 September 2016

The Board is required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of itsprofit or loss for that financial year. In preparing those financial statements, the Board are required to:

state that the Company has complied with IFRS as adopted by the EU and in accordance with the Companies Act 2014.

The Board is responsible for keeping proper books of accounts which disclose with reasonable accuracy at any time the financial position of the Companyand to enable them to ensure that the financial statements are prepared in accordance with the Companies Act 2014. They are also responsible forsafeguarding the assets of the Company and hence for taking reasonable steps for prevention and detection of fraud and other irregularities. The books ofaccount are kept at the Company’s registered office at 2nd Floor, Palmerston House, Fenian Street, Dublin 2.

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

The Board is responsible for preparing this Directors' Report and financial statements in accordance with applicable Irish law and those InternationalFinancial Reporting Standards (“IFRS”) as adopted by the European Union and as applied in accordance with the Companies Act, 2014.

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are responsible and prudent; and

The Board is also responsible for preparing a Directors’ Report and Annual Corporate Governance Statement that complies with the requirements of theCompanies Act, 2014.

the financial statements, prepared in accordance with IFRS as adopted by the EU and as applied in accordance with the Companies Act 2014, give atrue and fair view of the state of the assets, liabilities, financial position and of its profit of the Company for the financial year then ended; and

the Directors’ Report includes a fair view of the development and performance of the business of the Company, together with a description of theprincipal risks and uncertainties that it faces.

it has complied with the above requirements in preparing the financial statements;

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RZD CAPITAL PUBLIC LIMITED

COMPANY

We have audited the financial statements of RZD Capital Public Limited Company for the year ended

31 December 2015 which comprise the Statement of Comprehensive Income, Statement of Financial

Position, Statement of Changes in Equity and Statement of Cash Flows and the related notes 1 to 23.

The financial reporting framework that has been applied in their preparation is Irish law and

International Financial Reporting Standards (IFRSs) as adopted by the European Union and as

applied in accordance with the provisions of the Companies Act 2014.

This report is made solely to the company's members, as a body, in accordance with section 391 of

the Companies Act 2014. Our audit work has been undertaken so that we might state to the

company's members those matters we are required to state to them in an auditor’s report and for no

other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to

anyone other than the company and the company's members as a body, for our audit work, for this

report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ Responsibilities Statement set out on page 5, the directors

are responsible for the preparation of the financial statements and for being satisfied that they give a

true and fair view and otherwise comply with the Companies Act 2014. Our responsibility is to audit

and express an opinion on the financial statements in accordance with Irish law and International

Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing

Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements

sufficient to give reasonable assurance that the financial statements are free from material

misstatement, whether caused by fraud or error. This includes an assessment of: whether the

accounting policies are appropriate to the company’s circumstances and have been consistently

applied and adequately disclosed; the reasonableness of significant accounting estimates made by

the directors; and the overall presentation of the financial statements. In addition, we read all the

financial and non-financial information in the Directors’ Report to identify material inconsistencies with

the audited financial statements and to identify any information that is apparently materially incorrect

based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the

audit. If we become aware of any apparent material misstatements or inconsistencies we consider the

implications for our report.

Opinion on financial statements

In our opinion:

the financial statements give a true and fair view of the assets, liabilities and financial position

of the company as at 31 December 2015 and of its profit for the year then ended;

the financial statements have been properly prepared in accordance with IFRSs as adopted

by the European Union as applied in accordance with the provisions of the Companies Act

2014; and

the financial statements have been properly prepared in accordance with the requirements of

the Companies Act 2014.

Continued /...

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RZD CAPITAL PUBLIC LIMITED

COMPANY (Continued)

Matters on which we are required to report by the Companies Act 2014

We have obtained all the information and explanations which we consider necessary for the

purposes of our audit.

In our opinion the accounting records of the company were sufficient to permit the financial

statements to be readily and properly audited.

The company statement of financial position is in agreement with the accounting records.

In our opinion the information given in the directors’ report is consistent with the financial

statements.

Matters on which we are required to report by exception

We have nothing to report in respect of sections 305 to 312 of the Companies Act 2014 which require

us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions

specified by law are not made.

Martina Keane

for and on behalf of Ernst & Young

Chartered Accountants and Statutory Audit Firm

Dublin

6 September 2016

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Statement of comprehensive incomeFor the financial year ended 31 December 2015

Financial Financial

Noteyear ended

31 Dec 2015year ended

31 Dec 2014US $ US $

Interest and similar income 5 357,670,247 396,013,969 Interest and similar charges 6 (357,691,636) (395,522,538)Other income 7 162,087 319,934

Gross profit 140,698 811,365

Operating expenses 8 (129,320) (300,829)Foreign exchange loss 9 (4,119) (502,907)

(133,439) (803,736)

Profit on ordinary activities before taxation 7,259 7,629

Taxation 10 (1,815) (1,907)

Profit for the financial year 5,444 5,722

Other comprehensive income - -

Total comprehensive income for the financial year 5,444 5,722

All items dealt with in arriving at the profit for the financial year ended 31 December 2015 related to continuing operations.

The accompanying notes on pages 12 to 25 form an integral part of these financial statements


Statement of financial positionAs at 31 December 2015

Note 31 Dec 2015 31 Dec 2014US $ US $

AssetsCash and cash equivalents 11 6,077,021 6,105,391 Interest and other receivables 12 127,617,596 135,859,095 Loans and receivables 13 6,710,908,820 7,063,506,294

Total assets 6,844,603,437 7,205,470,780

Liabilities and equity

LiabilitiesInterest and other payables 14 133,499,161 141,795,863 Debt securities issued 15 6,711,027,705 7,063,603,790

Total liabilities 6,844,526,866 7,205,399,653

EquityShare capital 16 53,597 53,597 Retained earnings 22,974 17,530

Total equity 76,571 71,127

Total liabilities and equity 6,844,603,437 7,205,470,780

On behalf of the Board

The financial statements were approved by the Board of Directors and authorised for issue on 5 September 2016.



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Statement of changes in equityFor the financial year ended 31 December 2015

Retained TotalShare capital earnings equity

US $ US $ US $

Balance as at 1 January 2014 53,597 11,808 65,405

Total comprehensive income for the financial year - 5,722 5,722

Balance as at 31 December 2014 53,597 17,530 71,127

Total comprehensive income for the financial year - 5,444 5,444

Balance as at 31 December 2015 53,597 22,974 76,571



Statement of cash flowsFor the financial year ended 31 December 2015

Financial Financialyear ended


31 Dec 2014US $ US $

Cash flows from operating activities Profit on ordinary activities before taxation 7,259 7,629

Adjustments for:Foreign exchange loss 4,119 502,907 Interest and similar income (357,670,247) (396,013,969)Interest and similar charges 357,691,636 395,522,538 Total 32,767 19,105

Net changes in operating assets and liabilitiesIncrease in other receivables (11,986) (217,772)Decrease in other payables (43,217) (1,628,459)Loans and receivables - (691,333,000)Interest paid (369,247,218) (392,704,280)Interest received 369,247,218 393,204,073 Tax paid (1,815) (1,907)Net cash used in operating activities (24,251) (692,662,240)

Cash flows from financing activitiesProceeds from issuance of debt securities - 691,333,000 Net cash generated from financing activities - 691,333,000

Net decrease in cash and cash equivalents (24,251) (1,329,240)

Cash and cash equivalents at beginning of the financial year 6,105,391 7,937,538

Effect of foreign exchange translation on cash and cash equivalents (4,119) (502,907)

Cash and cash equivalents at end of the financial year 6,077,021 6,105,391



Notes to the financial statementsFor the financial year ended 31 December 2015

1. Corporate information

Re-registration of the Company to a Public Limited Company

On 26 February 2013, the Company issued CHF150,000,000 2.730 percent Loan Participation Notes due 2021 with limited recourse to the Companywith the sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways.

On 18 April 2013, the Company issued €1,000,000,000 3.374 percent Loan Participation Notes due 2021 with limited recourse to the Company withthe sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways.

RZD Capital Public Limited Company (the "Company") is a special purpose company incorporated under the laws of Ireland with limited liability on15 July 2008 with registered number 459983. The principal activity of the Company is the issuance of debt securities for the purpose of financing loans to Russian Joint-Stock Company Railways ("Russian Railways" or the "Borrower"), a joint-stock company established under the laws of the RussianFederation. The Company was re-registered as a public limited company on 22 January 2013 as defined in the Companies Act 2014.

On 29 March 2010, the Company issued an aggregate principal amount of US$1,500,000,000 5.739 percent Loan Participation Notes due 2017 withlimited recourse to the Company for the sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between theCompany and Russian Railways.

On 23 March 2011, the Company issued an aggregate principal amount of £350,000,000 7.487 percent Loan Participation Notes due 2031. On 20 June2011, the Company issued a further £300,000,000 7.487 percent Loan Participation Notes due 2031 which were consolidated and form a single serieswith the £350,000,000 7.487 per cent Loan Participation Notes due 2031. These Loan Participation Notes were issued on a limited recourse basis forthe sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways.

On 2 April 2012, the Company issued an aggregate principal amount of RUR25,000,000,000 8.30 percent Loan Participation Notes due 2019. On 17October 2012, the Company issued a further RUR12,500,000,000 8.30 per cent Loan Participation Notes due 2019 which were consolidates and form asingle series with the RUR25,000,000,000 8.30 per cent Loan Participation Notes due 2019. These Loan Participation Notes were issued on a limitedrecourse basis for the sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and RussianRailways

On 5 April 2012, the Company issued an aggregate principal amount of US$1,000,000,000 5.70 percent Loan Participation Notes due 2022. On 16October 2012, the Company issued a further US$400,000,000 5.70 per cent Loan Participation Notes due 2022 which were consolidated and form asingle series with the US$1,000,000,000 5.70 per cent Loan Participation Notes due 2022. These Loan Participation Notes were issued on a limitedrecourse basis for the sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and RussianRailways

The Loan Participation Notes issued by the Company (altogether, the "Notes") are listed on the Irish Stock Exchange and/or the Swiss Stock Exchange.These financial statements represent the financial performance and position of the Company as an individual entity for the financial year ended 31December 2015.

On 26 February 2013, the Company issued CHF525,000,000 2.177 percent Loan Participation Notes due 2018 with limited recourse to the Companywith the sole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways.

On 22 January 2013, the Company was re-registered as a public limited company as defined in the Companies Act 2006 (as amended by theCompanies Act 2014). The authorised share capital of the Company was increased from €100 to €40,000 by the creation of an additional 39,900Ordinary Shares of €1 each.

On 6 March 2014, the Company issued €500,000,000 4.60 percent Loan Participation Notes due 2023 with limited recourse to the Company with thesole purpose of financing a loan to Russian Railways under the terms of a loan agreement between the Company and Russian Railways.

The Company had no employees during the year (2014: none).


Notes to the financial statements (continued)For the financial year ended 31 December 2015

2. Basis of preparation

(a) Statement of compliance

(b) Basis of measurement

(c) New standards, amendments or interpretations

New and amended standards adopted by the Company

New standards and interpretations not yet adopted

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

The Company has not adopted any other new standards or interpretations that are not mandatory.

(d) Functional and presentation currency

(e) Use of estimates and judgements

The significant accounting policies set out in Note 3 have been consistently applied in preparing the financial statements for the financial year ended31 December 2015, the comparative information presented in these financial statements are for the financial year ended 31 December 2014.

These financial statements have been prepared under the going concern basis.

There were no new standards adopted by the Company for the first time in the financial year ended 31 December 2015.

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015 and havenot been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements of theCompany except the following set out below:

IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 wasissued in July 2014 and is effective for financial periods beginning on or after 1 January 2018, subject to EU endorsement. IFRS 9 replaces IAS 39 inits entirety. This final version of IFRS 9 includes requirements on the classification and measurement of financial assets and liabilities; it also includesan expected credit loss model that replaces the incurred loss impairment model used today. IFRS 9 has three classification categories for debtinstruments: amortised cost, fair value through other comprehensive income and fair value through profit or loss. Classification under IFRS 9 for debtinstruments is driven by the entity's business model for managing the financial assets and whether the contractual cash flow represents solely paymentsof principal and interest. An entity's business model is how an entity manages its financial assets in order to generate cash flows and create value forthe entity. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economicrelationship between the hedged item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually use for riskmanagement purposes. The Company is yet to assess IFRS 9’s full impact and intends to adopt IFRS 9 when it becomes mandatorily applicable.

These financial statements are presented in United States dollar ("US$") which is the Company’s functional currency. Functional currency is thecurrency of the primary economic environment in which the entity operates. The issued share capital of the Company is denominated in Euro and thedebt securities issued are denominated in United States dollar, Euro, British pounds, Swiss franc and Russian rouble. The directors of the Companybelieve that the United States dollar most accurately represents the economic effects of the underlying transactions, events and conditions.

The preparation of the financial statements requires management to make judgements, estimates and assumptions that may affect the application ofaccounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and assumptions are based on historicalexperience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making thejudgements of the carrying value of the assets and liabilities that are not readily apparent from other sources. Actual results may differ from theseestimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financialperiod in which the estimate is revised and in any financial future periods affected.

Other than as indicated above, the directors anticipate that the adoption of those standards or interpretations will have no material impact on thefinancial statements of the Company in the financial period of initial application.

Amendments to IAS 1, ‘Presentation of financial statements’ (effective for financial periods beginning on or after 1 January 2016). The amendmentsclarify guidance in IAS 1 on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure ofaccounting policies. The Company is yet to assess IAS 1's full impact and intends to adopt IAS 1 when it becomes mandatorily applicable.

The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the InternationalAccounting Standards Board (“IASB”) as adopted by the European Union (“EU”) and in accordance with the provisions of the Companies Act 2014,applicable to companies reporting under IFRS.

The financial statements have been prepared under the historical cost convention except for the loans and receivables and debt securities issued whichare measured at amortised cost. The significant accounting policies are set out in Note 3.



2. Basis of preparation (continued)

(e) Use of estimates and judgements (continued)

(f) Russian economic environment

3. Significant accounting policies

(a) Revenue recognition

(b) Taxation

The Borrower's operations are primarily located in the Russian Federation. Consequently, the Company is exposed to the economic and financialmarkets of the Russian Federation which display characteristics of a developing market. The legal, tax and regulatory frameworks continue to develop,but are subject to varying interpretations and frequent changes which together with other legal and fiscal impediments contribute to the challengesfaced by entities operating in the Russian Federation. The political and economic instability witnessed in Ukraine has had and may continue to have anegative impact on the Russian economy. Certain sanctions were implemented by EU and the United States of America against Russian officials andbusinessmen. So far, these events have not had a significant impact on the Company’s operations and financial position. However the impact of futureinstability in Ukraine, should it continue, and/or additional sanctions against Russia, if they were to be implemented against the Borrower, is at thisstage difficult to determine. These financial statements reflect management’s assessment of the impact of the Russian business environment on theoperations and the financial position of the Company. The future business environment may differ from management’s assessment.

Current tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities andtheir carrying amounts for financial reporting purposes.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the financial year when the asset is realised or the liabilityis settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilitiesand the deferred taxes relate to the same taxable entity and the same taxation authority.

Deferred tax

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent thatit is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits andunused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficienttaxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at eachreporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the financialperiod as calculated in accordance with Irish Tax Laws. Taxable profit differs from profit before tax as reported in the statement of comprehensiveincome because it excludes items of income or expense that are not taxable or deductible. The Company's liability for current tax is calculated usingthe tax rate that has been enacted or substantively enacted by the reporting date. The Company is subject to Irish corporation tax on profit at the rate of25%.

The Company reviews its loans and receivables at each reporting date to assess whether an allowance for impairment losses should be recognised inthe Statement of Comprehensive Income. This assessment is based on historical cash flow strength and projected growth assessment of thecounterparty and actual results may differ causing future changes to the allowance. No impairment of assets has occurred during the financial year(2014: US$nil). Details of the Company’s loans and receivables are disclosed in Note 13.

Fees and commissions which represent a return for services provided or risk borne are credited to income over the financial period during which theservice is performed or the risk is borne as appropriate.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and revenue can be reliably measured.

Interest income are recognised in the Statement of Comprehensive Income for all instruments measured at amortised cost using the effective interestmethod. This is a method of calculating the amortised cost of a financial asset or liability and of allocating the interest income over the relevantfinancial period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of thefinancial instrument or, when appropriate a shorter period to the net carrying amount of the financial asset or liability. Interest income includeamortisation of any discount or premium, transaction costs or other differences between the initial carrying amount of an interest bearing instrumentand the amount at maturity calculated at effective interest rate basis.



3. Significant accounting policies (continued)

(c) Cash and cash equivalents

(d) Foreign currency transaction

(e) Financial instruments

- Loans to Russian Railways; and- Loan Participation Notes issued.

Classification

Recognition

Derecognition

Offsetting

Impairment of financial assets

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence thatit is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, andthat the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of anamount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy,adverse changes in the payment status of borrowers or issuers in the Company, economic conditions that correlate with defaults, or the disappearanceof an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its costis objective evidence of impairment.

The Company assesses at each reporting date whether a financial asset or group of financial assets is impaired.

The Company’s financial assets have been recognised as ‘Loans and Receivables’ which have fixed or determinable payments that are not quoted in anactive market. Loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in theStatement of Comprehensive Income when the investments are impaired as well as through the amortisation process. Interest income is recognised, byapplying the effective interest rate, on all receivables whether short-term or long-term as long as the receivables are interest bearing. Financialliabilities are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred.Financial liabilities are subsequently stated at amortised cost, any difference between the proceeds, net of transaction costs, and the redemption valueis recognised in the Statement of Comprehensive Income using the effective interest method.

The Company initially recognises all financial assets and liabilities on the trade date at which the Company becomes a party to the contractualprovisions of the instruments. Purchases and sales of financial assets and financial liabilities are recognised using trade date accounting.

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire or it transfers the rights to receive thecontractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset aretransferred. Any interest in transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturitiesof less than three months, which are subject to insignificant risk of changes in their fair value, and are used by the Company in the management of itsshort term commitments.

The main financial instruments held by the Company include the following:

Financial assets and liabilities are set off and the net amount presented in the Statement of Financial Position when, and only when, the Company has alegal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Income andexpenses are presented on a net basis only when permitted by the accounting standards or for gains and losses arising from a group of similartransactions.

Transactions in foreign currencies are translated to the functional currency of the Company at the rates of exchange ruling at the date of thetransaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the rates of exchange rulingat the reporting date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at thebeginning of the financial period, adjusted for effective interest and payments during the financial period, and amortised cost in foreign currencytranslated at the exchange rate at the end of the financial period. Non-monetary assets and liabilities denominated in foreign currencies that aremeasured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currencydifferences arising on retranslation are recognised in the statement of comprehensive income.



3. Significant accounting policies (continued)

(e) Financial instruments (continued)

Assets carried at amortised cost

(f) Trade and other receivables

(g) Trade and other payables

4. Profit before taxation is stated after charging: Financial Financialyear ended


31 Dec 2014Directors' remuneration US $ US $Auditor's remuneration - -

(26,947) (29,441) (26,947) (29,441)

5. Interest and similar income Financial Financialyear ended


31 Dec 2014US $ US $

Interest on loans and receivables 360,993,733 399,185,549 Accretion of facility fees 2,237,830 2,251,388 Amortisation of premium (5,561,316) (5,422,968)

357,670,247 396,013,969 All interest income relates to the loans with Russian Railways.

6. Interest and similar charges Financial Financialyear ended


31 Dec 2014US $ US $

Interest on debt securities issued (360,993,733) (398,685,756)Accretion of issue cost (2,426,425) (2,422,860)Amortisation of premium 5,728,522 5,586,078

(357,691,636) (395,522,538)

7. Other income Financial Financialyear ended


31 Dec 2014US $ US $

Other income 148,805 285,206 Bank interest 53 462 VAT refund 13,229 34,266

162,087 319,934

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss ismeasured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit lossesthat have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced, with theamount of the loss recognised in the Statement of Comprehensive Income.

Trade and other payables are not interest-bearing and are stated at their nominal value.

Other income relates to income received from Russian Railways to pay for expenses as per the various loan agreements between the Company andRussian Railways.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after theimpairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in theStatement of comprehensive income, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

Trade and other receivables do not carry any interest and are short term in nature and are accordingly stated at their nominal values as reduced byappropriate allowances for estimated irrecoverable amounts.



8. Operating expenses Financial Financialyear ended


31 Dec 2014US $ US $

Professional fees (12,000) (184,647)Other expenses (64,373) (60,741)Audit fees (20,681) (21,725)Administration fees (26,000) (26,000)Tax filing fees (6,266) (7,716)

(129,320) (300,829)

S.322(1) of the Companies Act 2014 requirements for the year ended 31 December 2015 are disclosed in the table below:

Financial Financial

Auditor's remuneration (inclusive of VAT)year ended


31 Dec 2014US $ US $

Statutory audit (20,681) (21,725)Other assurance services - - Tax advisory services (6,266) (7,716)Other non-audit services - -

(26,947) (29,441)

9. Foreign exchange loss Financial Financialyear ended


31 Dec 2014US $ US $

Gain on translation of debt securities in issue 349,273,988 917,545,253 Loss on translation of loans and receivables (349,273,988) (917,545,253)Other loss on translation of cash and cash equivalents at financial year end (4,119) (502,907)Net foreign exchange loss (4,119) (502,907)

10. Taxation Financial Financialyear ended


31 Dec 2014US $ US $

(a) Analysis of profit and loss account charge:Current tax:Irish corporation tax on profit for the financial year (1,815) (1,907)

There was no amount of deferred tax, either provided or unprovided, at the statement of financial position date.

(b) Factors affecting the tax charge for the financial yearProfit on ordinary activities before tax 7,259 7,629

Profit on ordinary activities multiplied by the rate of Irish corporation tax for the financial year at 25% 1,815 1,907

(c) Factors affecting future tax chargesThe tax charge for future financial years will be affected by any future changes to the corporation tax rates in force in Ireland.

The Company is an Irish registered company and is structured to qualify as a securitisation company under Section 110 of the Taxes Consolidation Act1997 (as amended). As such, the profits are chargeable to corporation tax under Cases III Schedule D at a rate of 25% (2014: 25%) but are computed in accordance with the provisions applicable to Case I Schedule D.

The directors received no remuneration from the Company for the financial year (2014: nil). Except for the directors, the Company had no employeesduring the financial year (2014: none) and services required are contracted from third parties.



11. Cash and cash equivalents 31 Dec 2015 31 Dec 2014US $ US $

Cash at bank 6,077,021 6,105,391

All the Company's cash balances are held with Bank of Ireland and Deutsche Bank AG, London.

12. Interest and other receivables 31 Dec 2015 31 Dec 2014US $ US $

Interest receivable 126,189,980 134,443,465 Prepayments 17,096 17,096 Other receivables 1,410,520 1,398,534

127,617,596 135,859,095

All other receivables are current.

13. Loans and receivables 31 Dec 2015 31 Dec 2014US $ US $

Loan to Russian Railways 6,674,279,750 7,023,553,738 Unaccreted facility fees (11,156,768) (13,394,598)Unamortised premium 47,785,838 53,347,154 Net loans and receivables 6,710,908,820 7,063,506,294

Maturity analysis of loans and receivables (gross)Less than 1 year - - 1-2 years 1,500,000,000 - 2-5 years 1,037,414,250 2,645,418,738 Greater than 5 years 4,136,865,500 4,378,135,000

6,674,279,750 7,023,553,738

Movement in loans and receivablesAt beginning of financial year 7,063,506,294 7,292,890,127 Additions during the financial year - 691,333,000 Amortisation of facility fees 2,237,830 2,251,388 Amortisation of premium (5,561,316) (5,422,968)Foreign exchange loss (349,273,988) (917,545,253)At end of financial year 6,710,908,820 7,063,506,294

The Company advanced US$1,500,000,000 as a loan to Russian Railways on 29 March 2010. The loan, maturing on 3 April 2017, bears interest at5.739% p.a. payable in equal instalments semi-annually in arrears, commencing on 3 October 2010. The borrower paid a loan facility fee ofUS$5,191,015, netted off against the proceeds of the loan. The loan facility fee is amortised using the effective interest method over the period of theloan.

The Company advanced a further £350,000,000 as loan to Russian Railways as per a loan agreement dated 23 March 2011. On 20 June 2011, theCompany increased the loan facility by an amount of £300,000,000. The loan, maturing on 25 March 2031, bears interest at 7.487% p.a. payable inequal instalments semi-annually in arrears, commencing on 25 September 2011. The borrower paid a loan facility fees of £90,459 and the Companypaid a premium of £4,776,391, netted off against the proceeds of the loan. The loan facility fee and the premium are amortised using the effectiveinterest method over the period of the loan.

The Company advanced a further RUR25,000,000,000 as loan to Russian Railways as per a loan agreement dated 28 March 2012. On 17 October2012, the Company increased the loan facility amount by RUR12,500,000,000. The loan, maturing on 2 April 2019, bears interest at 8.30% p.a.payable in equal instalments semi-annually in arrears, commencing on 2 October 2012. The borrower paid a loan facility fees of RUR62,500,000 andthe Company paid a premium of RUR254,375,000, netted off against the proceeds of the loan. The loan facility fee and the premium are amortisedusing the effective interest method over the period of the loan.

The Company advanced a further US$1,000,000,000 as loan to Russian Railways as per a loan agreement dated 3 April 2012. On 16 October 2012, theCompany increased the loan facility amount by US$400,000,000. The loan, maturing on 5 April 2022, bears interest at 5.70% p.a. payable in equalinstalments semi-annually in arrears, commencing on 5 October 2012. The borrower paid a loan facility fees of US$3,500,000 and the Company paid apremium of US$50,168,814, netted off against the proceeds of the loan. The loan facility fee and the premium are amortised using the effectiveinterest method over the period of the loan.



13. Loans and receivables (continued)

14. Interest and other payables 31 Dec 2015 31 Dec 2014US $ US $

Interest payable on debt securities issued 126,189,980 134,443,465 Other payables* 7,237,897 7,237,897 Accruals 71,284 114,501

133,499,161 141,795,863

*Other payables relate to premium due to Russian Railways. The premium is payable to Russian Railways on demand.

15. Debt securities issued 31 Dec 2015 31 Dec 2014US $ US $

Loan Participation Notes 6,674,279,750 7,023,553,738 Unaccreted issue costs (13,443,714) (15,870,139)Unamortised premium 50,191,669 55,920,191 Net debt securities issued 6,711,027,705 7,063,603,790

Maturity analysisLess than 1 year - - 1-2 years 1,500,000,000 - 2-5 years 1,037,414,250 2,645,418,738 Greater than 5 years 4,136,865,500 4,378,135,000

6,674,279,750 7,023,553,738

Movement in debt securities issuedAt beginning of financial year 7,063,603,790 7,292,979,261 Additions during the financial year - 691,333,000 Amortisation of debt issue costs 2,426,425 2,422,860 Amortisation of premium (5,728,522) (5,586,078)Foreign exchange gain (349,273,988) (917,545,253)At end of financial year 6,711,027,705 7,063,603,790

Premium amounting to US$7,237,897 (2014: US$7,237,897) is due to Russian Railways. The premium is payable to Russian Railways on demand. Asof the year end, US$42,795,286 (2014: US$42,795,286) of premium has been requested for payment by Russian Railways and has been paid.

The Company advanced a further CHF525,000,000 as loan to Russian Railways as per a loan agreement dated 22 February 2013. The loan, maturingon 26 February 2018, bears interest at 2.177% p.a. payable in equal instalments annually in arrears, commencing on 26 February 2014.

The Company advanced a further CHF150,000,000 as loan to Russian Railways as per a loan agreement dated 22 February 2013. The loan, maturingon 26 February 2021, bears interest at 2.730% p.a. payable in equal instalments annually in arrears, commencing on 26 February 2014.

The Company advanced a further €1,000,000,000 as loan to Russian Railways as per a loan agreement dated 16 April 2013. The loan, maturing on 20May 2021, bears interest at 3.374% p.a. payable in equal instalments annually in arrears, commencing on 20 May 2013.

On 1 April 2010, the Company issued US$1,500,000,000 Loan Participation Notes due 2017 bearing interest at 5.739 % p.a. payable in equalinstalments semi-annually in arrears commencing on 3 October 2010.

On 23 March 2011, the Company issued a further £350,000,000 Loan Participation Notes due 2031. On 20 June 2011, the Company issued a furtheraggregate principal amount of £300,000,000 Loan Participation Notes due 2031 which were consolidated and form a single series with the£350,000,000 Loan Participation Notes due 2031. The Loan Participation Notes bear interest at 7.487% p.a. payable in equal instalments semi-annually in arrears commencing on 25 September 2011.

The Company advanced a further €500,000,000 as loan to Russian Railways as per a loan agreement dated 4 March 2014. The loan, maturing on 6March 2023, bears interest at 4.60% p.a. payable in equal instalments annually in arrears, commencing on 6 March 2015.



15. Debt securities issued (continued)

16. Share capital 31 Dec 2015 31 Dec 2014Authorised € €40,000 ordinary shares of Eur 1 each 40,000 40,000

Allotted, called up and unpaid US $ US $40,000 ordinary shares of Eur 1 each 53,597 53,597 (converted at historical rate of EUR: US$1.3218 and 1.3399)

On 26 February 2013, the Company issued a further CHF525,000,000 Loan Participation Notes due 2018. The Loan Participation Notes bear interestat 2.177% p.a. payable in equal instalments annually in arrears commencing on 26 February 2014.

The £650,000,000 Loan Participation Notes (issued in 2011 and due 2031), RUR12,500,000,000 Loan Participation Notes (issued in 2012 and due2019) and US$400,000,000 Loan Participation Notes (issued in 2012 and due in 2022) were issued at a premium in the amount of £4,776,391,RUR254,375,000 and US$50,168,814 respectively. In 2013, US$35,000,000 and RUR254,375,000 was paid back to Russian Railways in line with theTransfer Instruction Letter dated 20 December 2013. These transaction costs and premium are amortised using the effective interest method over theperiod of the Notes.

Transaction costs incurred in relation to the issuance of the CHF525,000,000 Loan Participation Notes due 2018, CHF150,000,000 Loan ParticipationNotes due 2021 and €1,000,000,000 Loan Participation Notes due 2021 amounted to US$1,712,667, US$489,333 and US$4,582,850 respectively.These costs have been netted off against the principal amount of the Notes.

On 26 February 2013, the Company issued a further CHF150,000,000 Loan Participation Notes due 2021. The Loan Participation Notes bear interestat 2.730% p.a. payable in equal instalments annually in arrears commencing on 26 February 2014.

On 18 April 2013, the Company issued a further €1,000,000,000 Loan Participation Notes due 2021. The Loan Participation Notes bear interest at3.374% p.a. payable in equal instalments annually in arrears commencing on 20 May 2013.

On 2 April 2012, the Company issued a further RUR25,000,000,000 Loan Participation Notes due 2019. On 17 October 2012, the Company issued afurther aggregate principal amount of RUR12,500,000,000 Loan Participation Notes due 2019 which were consolidated and form a single series withthe RUR25,000,000,000 Loan Participation Notes due 2019. The Notes bear interest at 8.30% p.a. payable in equal instalments semi-annually inarrears commencing on 2 October 2012.

On 6 March 2014, the Company issued a further €500,000,000 4.60 per cent Loan Participation Notes due 2023. The Loan Participation Notes bearinterest at 4.60% p.a. payable in equal instalments annually in arrears commencing on 6 March 2015.

Transaction costs incurred in relation to the issuance of €500,000,000 Loan Participation Notes due 2023 amounted to US$1,707,000. These costs havebeen netted off against the principal amount of the Notes.

On 5 April 2012, the Company issued a further US$1,000,000,000 Loan Participation Notes due 2022. On 16 October 2012, the Company issued afurther aggregate principal amount of US$400,000,000 Loan Participation Notes due 2022 which were consolidated and form a single series with theUS$1,000,000,000 Loan Participation Notes due 2022. The Loan Participation Notes bear interest at 5.700% p.a. payable in equal instalments semi-annually in arrears commencing on 2 October 2012.

Transaction costs incurred in relation to the issuance of the US$1,500,000,000 Loan Participation Notes due 2017, £650,000,000 Loan ParticipationNotes due 2031, RUR37,500,000,000 Loan Participation Notes due 2019 and US$1,400,000,000 Loan Participation Notes due 2022 amounted toUS$5,191,015, £564,068, RUR90,625,000 and US$4,700,000 respectively. These costs have been netted off against the principal amount of the Notes.

On 22 January 2013, the Company was re-registered as a public limited company as defined in the Companies Act 2014. The authorised share capital of the Company was increased from €100 to €40,000 by the creation of an additional 39,900 Ordinary Shares of €1 each.



17. Ownership of the Company

18. Related party transactions

Transaction with the Corporate Services Provider

Transactions with Russian Railways

19. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:(a) Market risk;(b) Credit risk;(c) Liquidity risk; and(d) Operational risk.

The Borrower has agreed to pay loan arrangement fees of US$5,195,015 (on the issuance of US$1,500,000,000), £564,068 (on the issuance of£650,000,000) , RUR90,625,000 (on the issuance of RUR37,500,000,000), US$4,700,000 (on the issuance of US$1,400,000,000), US$1,712,667 (onthe issuance of CHF525,000,00), US$489,333 (on the issuance of CHF150,000,000), US$4,582,850 (on the issuance of €1,000,000,000) andUS$1,707,000 (on the issuance of €500,000,000) respectively, netted off against the proceeds of the loans. An amount of US$11,156,768 remainsunamortised at financial year end (2014: US$13,394,598).

The interest income earned during the financial year was US$360,993,733 (2014: US$398,685,756). Interest income receivable as at 31 December2015 was US$126,189,980 (2014: US$134,443,465). Premium amounting to US$7,237,897 (2014: US$7,237,897) is payable to Russian Railways as at31 December 2015.

The Company has advanced US$1,500,000,000, £650,000,000,RUR37,500,000,000, US$1,400,000,000, CHF525,000,000, CHF150,000,000,EUR1,000,000,000 and EUR500,000,000 as loans to Russian Railways between 2010 and 2014. These loans bear interest at 5.739% per annum,7.487% per annum, 8.30% per annum, 5.70% per annum, 2.177% per annum, 2.730% per annum, 3.374% per annum and 4.6% per annumrespectively, and have a scheduled maturity date of 3 April 2017, 25 March 2031, 2 April 2019, 5 April 2022, 26 February 2018, 26 February 2021, 20May 2021 and 6 March 2023 respectively.

The Company paid a premium of £4,776,391, RUR254,375,000 and US$50,168,814 to the Borrower in relation to the £650,000,000,RUR37,500,000,000 and US$1,400,000,000 loan respectively. Pursuant to a Transfer Instruction Letter dated 20 December 2013, US$35,000,000 andRUR254,375,000 was paid back to Russian Railways. An amount of US$47,785,838 remains unamortised at financial year end (2014:US$53,347,154).

As of 31 December 2015, the Company has issued 40,000 shares of which Deutsche International Finance (Ireland) Limited held 39,994 shares, Conor Blake, Carmel Naughton, Elizabeth Kelly, Adrian Bailie, Michael Carroll and Rhys Owens each held one share in the Company. As of 31 December 2015, the shares were held under the terms of a declaration of trust under which the relevant share trustee holds the issued share of the Company in trust for charitable purposes. On 29 June 2016 all issued share capital was transferred to Cafico Trust Company Limited.

All related party transactions are carried at arm's length.

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes formeasuring and managing risk and the Company’s management of capital.

During the financial year 31 December 2015, the Company incurred a fee of US$26,000 (2014: US$26,000) relating to corporate administrationservices provided by Deutsche International Corporate Services (Ireland) Limited. These services are provided under the normal commercial terms.

The Company recognised other income of US$148,805 (2014: US$285,206) relating to amounts received from Russian Railways, the borrower, to payfor expenses.

The Company was incorporated with the purpose of financing loans to Russian Railways by the issuance of Loan Participation Notes due 2017, 2018,2019, 2021, 2022, 2023 and 2031 pursuant to loan agreements dated 1 April 2010, 23 March 2011, 20 June 2011, 28 March 2012, 2 April 2012, 5April 2012, 16 October 2012, 17 October 2012, 26 February 2013, 18 April 2013 and 6 March 2014 between the Company and Russian Railways. TheCompany is not engaged in any other activities.

The Notes are limited recourse secured obligations of the Company. The Notes constitute the obligation of the Company to apply the proceeds fromthe issuance of the Notes solely for the purpose of financing loans to Russian Railways and to account to the Noteholders the amounts equivalent to thesums of principals, interest and additional amounts (if any) actually received by the Company from Russian Railways pursuant to the loan agreement,less any amount in respect of Reserved Rights, as defined in the Trust Deed.



19. Financial risk management (continued)

Risk management frameworkThe directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

(a) Market risk

Interest rate risk

Currency risk

The Company’s exposure to foreign currencies is shown in the following tables:

31 Dec 2015CHF RUR EUR GBP Total

Interest and other receivables 13,121,844 10,539,556 43,309,303 19,123,595 86,094,298 Loans and receivables 672,285,457 519,680,286 1,624,579,700 963,987,967 3,780,533,410 Cash and cash equivalents - - 15,477 12,263 27,740 Interest and other payables (13,121,844) (10,539,556) (43,333,857) (19,123,595) (86,118,852)Debt securities issued (672,301,499) (518,703,883) (1,624,546,364) (962,704,294) (3,778,256,040)Net exposure (16,042) 976,403 24,259 1,295,936 2,280,556

31 Dec 2014CHF RUR EUR GBP Total

Interest and other receivables 13,227,459 35,627,270 25,278,056 20,215,000 94,347,785 Loans and receivables 677,342,275 623,861,180 1,809,427,236 1,018,861,571 4,129,492,262 Cash and cash equivalents - - 34,826 12,939 47,765 Interest and other payables (13,227,459) (12,669,243) (48,303,853) (20,215,000) (94,415,555)Debt securities issued (677,350,218) (622,830,008) (1,809,402,317) (1,017,578,158) (4,127,160,701)Net exposure (7,943) 23,989,199 (22,966,052) 1,296,352 2,311,556

Sensitivity analysis

31 Dec 2015 31 Dec 2014 31 Dec 2015 31 Dec 2014Impact on

profitImpact on profit Impact on net

assetsImpact on net

assetsUS $ US $ US $ US $

5% increase in EUR in relation to US$ (1,213) 1,148,303 (1,213) 1,267

5% decrease in EUR in relation to US$ 1,213 (1,148,303) 1,213 (1,267)

5% increase in GBP in relation to US$ (64,797) (64,818) (64,797) (64,823)

5% decrease in GBP in relation to US$ 64,797 64,818 64,797 64,823

5% increase in RUR in relation to US$ (48,820) (1,199,460) (48,820) (55,193)

5% decrease in RUR in relation to US$ 48,820 1,199,460 48,820 55,193

5% increase in CHF in relation to US$ 802 397 802 397

5% decrease in CHF in relation to US$ (802) (397) (802) (397)

Amount in US $

The sensitivity analysis below considers the effects which a 5 basis point movement in the EUR, GBP, CHF and RUR to US$ exchange rate could haveon the profit for the year and the net assets of the Company. This analysis assumes that all other variables remain constant.

The Company is exposed to movement in exchange rates between US$, its functional currency and certain foreign currencies namely GBP, EUR, RURand CHF.

Both the Notes issued and loans advanced bear the same rate of interest and therefore the Company does not bear any interest rate risk. As such,sensitivity disclosures for interest rate risk are not included.

Amount in US $

Market risk is the potential adverse change in earnings or the value of net worth arising from movements in interest rates, foreign exchange rates orother market prices. Market risk includes three types of risk: interest rate risk, currency risk and price risk.




(a) Market risk (continued)Price risk

Fair value of financial instrumentsAs at 31 December 2015 and 31 December 2014, the fair value of the Company's financial instruments were as follows:

Carrying value Fair value Carrying value Fair valueAssets US $ US $ US $ US $Loans and receivables 6,710,908,820 6,129,818,708 7,063,506,294 6,477,614,159 Interest and other receivables* 127,600,500 127,600,500 135,841,999 135,841,999 Cash and cash equivalents 6,077,021 6,077,021 6,105,391 6,105,391

6,844,586,341 6,263,496,229 7,205,453,684 6,619,561,549

LiabilitiesDebt securities issued 6,711,027,705 6,451,569,978 7,063,603,790 5,956,971,529 Interest and other payables 133,499,161 133,499,161 141,681,362 141,681,362

6,844,526,866 6,585,069,139 7,205,285,152 6,098,652,891

*Amounts exclude prepayments.

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

31 Dec 2015

• In the principal market for the asset or liability, or• In the absence of a principal market, in the most advantageous market for the asset or liability.

31 Dec 2014

The table above shows the estimated fair value and the carrying value for each major category of financial asset and liability in the Statement ofFinancial Position at the reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sellthe asset or transfer the liability takes place either:

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices, whether caused by factors specific toan individual investment, its issuer or all factors affecting all instruments traded in the market to manage its price risk arising from investments. TheCompany does not consider price risk to be a significant risk to the Company as any fluctuation in the value of investments held by the Company willbe borne by the Noteholders, hence sensitivity disclosures for price risk are not included.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

The carrying values of cash and cash equivalents, interest and other receivables and interest and other payables approximate their fair values as thesefinancial instruments are short-term in nature. As the Notes are infrequently traded while there is a quoted price available from Bloomberg, due toabsence of an active market, the directors have deemed that the Notes should be classified as level 3 within the fair value hierarchy. The directorsdetermined the fair value of the loans and receivables using an internal discounted cash flow technique. The key inputs comprise of the expected cashinflows on the loans and receivables and the discount rate, being the weighted average cost of capital. The fair values are within Level 3 of the fairvalue hierarchy. There has been no change in the valuation technique as compared to the prior financial year.




(a) Market risk (continued)Fair value of financial instruments (continued)

Assets and liabilities not carried at fair value but for which fair value is disclosed

31 Dec 2015 Level 1 Level 2 Level 3 TotalAssets US $ US $ US $ US $Loans and receivables - - 6,129,818,708 6,129,818,708

- - 6,129,818,708 6,129,818,708

LiabilitiesDebt securities issued - - 6,451,569,978 6,451,569,978

- - 6,451,569,978 6,451,569,978

31 Dec 2014 Level 1 Level 2 Level 3 TotalAssets US $ US $ US $ US $Loans and receivables - - 6,477,614,159 6,477,614,159

- - 6,477,614,159 6,477,614,159

LiabilitiesDebt securities issued - - 5,956,971,529 5,956,971,529

- - 5,956,971,529 5,956,971,529

(b) Credit risk

Credit worthiness

Geographical analysisThe asset balances as per geographical location are as follows:

Balance% of total

portfolio Balance % of total

portfolioLocationLoans and receivables (Russia) 6,710,908,820 100.00% 7,063,506,294 100.00%Interest and other receivables (Russia) 127,600,500 99.99% 135,841,999 99.99%Cash and cash equivalents (United Kingdom) 6,012,394 98.94% 6,013,022 98.49%Cash and cash equivalents (Ireland) 64,627 1.06% 92,369 1.51%

31 Dec 2015 31 Dec 2014

Credit risk is the risk of the financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arisesprincipally from the Company’s financial assets.

The Company’s principal financial assets are cash and cash equivalents, interest and other receivables and loans and receivables, which represent theCompany’s maximum exposure to credit risk in relation to financial assets.

The Company’s maximum exposure to credit risk in the event that counterparties fail to perform their obligations as at 31 December 2015 in relationto each class of recognised financial assets, is the carrying amount of those assets as indicated in the Statement of Financial Position.

The borrower of the loans and receivables is a reputable company and is one of the largest transportation companies in the world. It is listed on theRussian Stock Exchange and the net assets of the Borrower are more than sufficient to pay its loans and receivables to the Company. Russian Railwayshas been rated BBB- by Fitch as at 31 December 2015 (2014: BBB-).

Cash and cash equivalents are mainly held with Deutsche Bank AG London and Bank of Ireland which are rated BBB+ (2014: A) and BBB- (2014:BB+) respectively by Standard and Poor's.




(c) Liquidity risk

Carrying amountGross contractual

cash flowsLess than one

year

Between one year to less than

two years

Between two years to less than

five yearsMore than five

yearsUS $ US $ US $ US $ US $ US $

Cash and cash equivalents 6,077,021 6,077,021 6,077,021 - - - Interest and other receivables 127,600,500 127,600,500 127,600,500 - - - Loans and receivables 6,710,908,820 8,937,001,191 357,356,642 1,793,441,477 1,744,431,792 5,041,771,280 Interest and other payables (133,499,161) (133,499,161) (133,499,161) - - - Debt securities issued (6,711,027,705) (8,937,001,191) (357,356,642) (1,793,441,477) (1,744,431,792) (5,041,771,280)Net amount 59,475 178,360 178,360 - - -

Carrying amountGross contractual

cash flowsLess than one

year

Between one year to less than

two years

Between two years to less than

five yearsMore than five

yearsUS $ US $ US $ US $ US $ US $

Cash and cash equivalents 6,105,391 6,105,391 6,105,391 - - - Interest and other receivables 135,841,999 135,841,999 135,841,999 - - - Loans and receivables 7,063,506,294 9,797,159,550 377,202,094 377,202,094 3,481,588,487 5,561,166,875 Interest and other payables (141,795,863) (141,795,863) (141,795,863) - - - Debt securities issued (7,063,603,790) (9,797,159,550) (377,202,094) (377,202,094) (3,481,588,487) (5,561,166,875)Net amount 54,031 151,527 151,527 - - -

(d) Operational risk exposure

20. Capital risk management

21. Segment reporting

22. Subsequent events

23.The Board of Directors approved these financial statements and authorised them for issue on 5 September 2016.

On 29 June 2016, Eimir McGrath and Deirdre Glynn resigned, and Rolando Ebuna and Thomas O' Beirne were appointed as the directors of theCompany. Deutsche International Corporate Services (Ireland) Limited resigned and Cafico Secretaries Limited was appointed as the companysecretary of the Company. Deutsche Trust Company resigned and Cafico Trust Company Limited were appointed as the Share Trustee of theCompany. From 29 June 2016 the registered office of the Company is 2nd Floor, Palmerston House, Fenian Street, Dublin 2, Ireland.

Approval of financial statements

31 Dec 2015

31 Dec 2014

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managingliquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressedconditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company’s obligation to the Noteholders is limited to the net proceeds upon the recoverability of the loans and receivables. Should the netproceeds be insufficient to make all payments due to the Noteholders, the other assets of the Company will not be available for payment and the deficitis instead borne by the Noteholders.

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company’s processes, personnel andinfrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements andgenerally accepted standards of corporate behaviour. Operational risks arise from all of the Company’s operations.

All management and administration functions are outsourced to the Corporate Services Provider.

There have been no other subsequent events that require disclosures in these financial statements up to the date of signing this report.

The Company identifies operating segment based on the nature of the activity. All of the activities fall within the operating segment being theprovision of loans. Geographical segmentation of the Company's financial assets is disclosed in Note 19.

On 4 March 2016, €92,178,557 principal amount of the €1,000,000,000 Loan Participation Notes due 2021 were repurchased and cancelled by theCompany and the accrued interest of €2,625,424 on such principal amount were also paid. A corresponding amount of the loan of Russian Railwaystogether with accrued interest is also deemed repaid.

On 19 February 2016, the Company entered into a funding agreement with Russian Railways for the repurchase of €1,000,000,000 3.3744 per centLoan Participation Notes due 2021.

The Company views the share capital and debt securities issued as its capital. The Company is a special purpose vehicle set up to issue debt securitiesfor the purpose of financing loans. Share capital of EUR40,000 was issued in accordance with Irish Company Law and is not used for financing theinvestment activities of the Company. The Company is not subject to any externally imposed capital requirements.

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