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Global Reach
22 Jan 2013

The Board of Directors Approved the Company’s Strategy until 2020

On 21 January 2013 the Board of Directors of JSC TransContainer approved the strategy of the Company until 2020. The Board confirmed that the strategic goal of the Company is to increase capitalisation by means of improving the scale and efficiency of its business as well as confirmed the business model of the Company as a vertically integrated provider of Transportation equipment for shipping cargo via various means of transport. Containers are durable enough for repeated use and can be stacked. Containers are divided into medium-duty (three- and five-tonne), which conform to former Soviet Union standards and are still used for shipments in Russia and the CIS, and ISO (20- and 40-foot) containers, which are used for Russian and international shipments. The universal standard unit TEU (twenty-foot equivalent unit) was introduced to measure transport flow volumes.
transportation and The process of organising a chain of delivery, and managing that chain in the broadest sense. This chain may encompass both deliveries of raw materials needed for production and management of material resources at an enterprise, delivery to warehouses and distribution centres, sorting, handling, and final distribution at the points of consumption. In the context of transportation services, the main service is that of delivering cargo across a delivery route.

The strategy of the Company is based on the expected long-term growth of the container market in Russia and the CIS driven by fundamental factors, such as the low container penetration ratio as compared to the developed markets, the continuing growth of the economy and consumer demand, as well as a further increase in industrial production of value-added products.

The strategy envisages maintaining the leading positions of TransContainer in the growing container transportation market, further optimisation of terminal handling business based on the forecast of further development of TransContainer’s cargo base and the continuing write off of medium duty containers from the Russian Railways network, as well as further development of the integrated A form of payment for sea transportation of cargo, or the use of a ship for a certain period of time. Freight payment is determined by the volume of cargo delivered to the destination
or by the volume of cargo loaded onto the ship.
forwarding and logistics business. The strategy indicates the Company’s measures to further improve operational efficiency.

While the strategy is based on the organic growth of the Company in the key markets of Russia and the CIS it does not exclude the possibility of new acquisitions in other markets should the acquisition be economically efficient and create material synergies for the Company.

Under the base case scenario the updated strategy assumes the stable growth of profitability, an increase in container transportation volumes up to 2.7 million TEU in 2020, with the A specialised type of rolling stock designed to carry ISO containers.
fleet increasing to 42 thousand units and the share of logistics and freight forwarding services increasing to up to 50% of revenue.

To achieve these goals the Company plans to invest 20% to 30% of net revenue annually in capital expenditure with the total accumulated CAPEX reaching up to 110 billion rubles (ca. US$ 3.6 billion at the exchange rate set by the Central Bank of Russia as of 22 January 2013) by 2020. The major component of this expenditure will be on the expansion and improvement of the Company’s Cars for carrying cargo or passengers designated for railway transportation.
rolling stock

The Board believes the new strategy will serve to strengthen the leadership of JSC TransContainer in the container transportation market and secure sustainable growth of the Company’s value for the benefit of its shareholders.

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