February 28, 2019. Moscow, Russia. PJSC RusHydro (MOEX, LSE: HYDR; OTCQX: RSHYY) announces its non-consolidated financial results under Russian accounting standards (RAS) for the full year ended December 31, 2018.

Key highlights:

• Net profit – RUB 36,726 mn (+2%);

• EBITDA – RUB 82,498 mn (+6%);

• Since July 1, 2017, surcharge (premium) to capacity prices in first and second price zones to attain base level of end-user tariffs in the Far East of Russia[i] in reflected in PJSC RusHydro’s revenue and operating expenses. In 2018 the surcharge amount was RUB 35,032 mn, in 2017 – RUB 23,995. Excluding the effect of surcharge revenue and operating expenses (hereinafter):

• Revenue – RUB 127,781 mn (+6%);

• Operating expenses – RUB 61,815 mn (+3%).

Key financials for 2018/2017 under RAS excluding the effect of surcharge (in RUB mn)

Revenue

In 2018, revenue increased by 6% or RUB 7,079 mn as electricity production by PJSC RusHydro’s HPPs increased on the back of higher inflows to reservoirs of the Volga-Kama cascade in the first half of the year and to reservoirs in Siberia in the second half of the year.

Revenue breakdown (RUB mn)

Operating expenses

Operating expenses in 2018 increased by 3% to RUB 61,815 mn as compared to 2017 as a result of the following factors:

• purchased electricity and capacity (RUB 1,221 mn) following growth in unregulated capacity contracts;

• water tax rate increase (RUB 423 mn) following tariff growth and increase in electricity production;

• property tax (RUB 396 mn) following decrease of tax allowance on movable assets;

• repairs and maintenance (RUB 132 mn) in accordance with maintenance schedule/

Operating expenses breakdown (in RUB mn)

Profit

Operating profit in 2018 increased by 8% as compared to 2017 and amounted to RUB 65,966 mn. 

RusHydro's net profit for the reporting period increased by 2% to RUB 36,726 mn.

Net profit adjusted for non-cash items decreased by 3% to RUB 43,072 mn. The difference between the reported and adjusted net profit is attributed mainly to the following non-cash effects:

• loss (net) on provision for impairment of financial investments in the amount of RUB 6,453 mn;

• loss (net) on reversal of bad debt reserves in the amount of RUB 1,758 mn;

• gain on mark-to-market revaluation of financial investments in the amount of RUB 1,448 mn;

• gain (net) from other reserves in the amount of RUB 307 mn.

• gain (net) on provision for impairment of assets in the amount of RUB110 mn.

RusHydro's financial position as of December 31, 2018

The Company's total assets increased by RUB 53,628 mn as of December 31, 2018, or by 5% as compared to the beginning of the year, reaching RUB 1,036,807 mn.

As of December 31, 2018, total liabilities increased by 18% or RUB 28,109 mn and amounted RUB 185,542 mn.

The Company's debt portfolio as compared to December 31, 2017 increased by 21% and reached RUB 147,946. Long-term loans comprise 87% of the total portfolio.

The Company's equity in 2018 increased by 3% to RUB 851,206 mn against RUB 825,684 mn as of the beginning of the reporting year.

The full financial statements are available on the Company’s website at: https://www.eng.rushydro.ru/investors/reports

The Group’s consolidated financial results in accordance with International Financial Reporting Standards will be published on March 14, 2019.

[i] In July 2017, the Resolution of the Russian Government No. 895 “On reaching basic rates (tariffs) for electric power (capacity) in the territories of the Far East Federal region (the “Far East”)” became effective, under which rates for consumers in the territories of the Far East should be reduced starting from 1 January 2017 to the basic level (RUB 4.00 / kWh). According to the Resolution of the Russian Government No. 1614-r of 28 July 2017, PJSC RusHydro was appointed as the recipient of a premium to the price for capacity provided by the Company in the price zones of the wholesale market under CCS agreements. The premium to the price for capacity is set in order to achieve the basic level of rates (tariffs) for electricity (capacity) planned for the next regulation period in the Far East constituent regions. Within the amounts defined by Resolution No. 1615-r of the Russian Government dated 28 July 2017, the Company translates the collected amounts of margin in the form of free-of-charge targeted contributions to the budgets of the respective regions. The Group companies being guaranteeing suppliers will receive compensation for the shortage of income related to the reduction of rates, through subsidies from the Far East constituent regions. In November 2017, according to the Resolution of the Russian Government No. 2527-r of 15 November 2017 the rate for consumers in the territories of the Far East basic was set at RUB 4.30 / kWh.

[ii] EBITDA calculated as gross profit before depreciation.

[iii] Net profit adjusted for the mark-to-market revaluation of listed equity stakes, reserves for financial investment impairment, assets and potentially uncollectible accounts receivable, contingencies This indicator is not reported in the official financial statements under RAS and has been calculated and put into the press release for reference.