PJSC RusHydro: RusHydro announces 1H 2019 RAS results

RusHydro announces 1H 2019 RAS results

July 30, 2019. Moscow, Russia. PJSC RusHydro (MOEX, LSE: HYDR; OTCQX: RSHYY) announces non-consolidated financial results under Russian accounting standards (RAS) for the six months ended June 30, 2019.

Key highlights:

• EBITDA - RUB 39,383 mn (-10%);
• Reported net profit - RUB 23,257 mn (-13%);
• Since July 1st 2017, a surcharge to capacity prices in 1 and 2 price zones in order to attain base level of end-user tariffs in the Far East of Russia is reflected in PJSC RusHydro's revenue and operating expenses*. In 1H19, the surcharge totaled RUB 17,496 mn, in the 1H18 - RUB 19,109 mn; Adjusted for the surcharge revenue and expenses (here and below in the text) were:
• Revenue - RUB 59,675 mn (-6%);
• Operating expenses - RUB 28,651 mn (1%).

Key financials for 2Q and 1H 2019 under RAS (in RUB mn), excluding surcharge

Revenue

In the first half of 2019, revenue decreased by 6% or RUB 4,053 mn to RUB 59,675 mn as compared to the corresponding period last year as HPPs output decreased on the back of high water inflows to the majority of reservoirs in the corresponding period of 2018.

Revenue breakdown (RUB mn)

Operating expenses

Operating expenses in the six months of 2019 increased insignificantly by 1% to RUB 28,651 mn.

The main changes were observed in the following items:

• Purchased electricity and capacity (increase of RUB 635 mn) due to higher day-ahead market prices;
• Property tax (decrease of RUB 705 mn) due to amendments to the Tax code of the Russian Federation affecting property tax, cancelling tax for movable property effective of Jan 1, 2019;
• Rent decreased by RUB 268 mn due to purchase of Gotsatlinskaya HPP and Zaragizhskaya HPP from subsidiaries with simultaneous increase in property tax and depreciation by RUB 46 mn and RUB 115 mn, respectively.

Operating expenses breakdown (in RUB mn)

Profit

Operating profit for the six months of 2019 decreased by RUB 4,444 mn as compared to the same period last year and amounted to RUB 31,024 mn.

Reported net profit for the first half of 2019 decreased by 13% to RUB 23,257 mn.

Net profit adjusted for non-cash items decreased by 12% and reached RUB 22,939 mn. The difference between the reported and adjusted net profit is attributed mainly to the following non-cash effects:

• gain (net) on reversal of bad debt reserves in the amount of RUB 195 mn;
• gain on reversal of other reserves in the amount of RUB 123 mn.

RusHydro's financial position as of June 30, 2019

The Company's total assets increased by RUB 26,414 mn as of June 30, 2019, or 3% against the similar figure as of December 31, 2018, reaching RUB 1,063,222 mn.

As of June 30, 2019, total liabilities increased by 10% or RUB 19,077 mn as compared to the similar figure as of December 31, 2018 and amounted to RUB 204,619 mn.

The Company's debt portfolio decreased by 5% as compared to the beginning of the reporting year and reached RUB 140,981 mn. Long-term loans comprise 83% of the total portfolio.

The Company's equity in the first half of 2019 increased by 1% to RUB 858,545 mn against RUB 851,206 mn as of the beginning of the reporting year.

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

RusHydro Group will announce consolidated 2Q19 IFRS results on August 29, 2019.

* 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.

** EBITDA calculated as gross profit before depreciation.

*** 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.

***

About RusHydro

RusHydro Group is one of Russia's largest generating companies. RusHydro is the leading producer of renewable energy in Russia with over 400 generating facilities in Russia and abroad. The company also manages a number of R&D, engineering and electricity retail companies. Group's thermal assets are operated by subsidiary - RAO Energy System of East in the Far East of Russia. Total electricity generation capacity of the Group is 39.4 GW, heat capacity - 18.9 thousand GCal/h. Russian Federation owns 60.56% in RusHydro, the rest is held by other institutional and individual shareholders (over 360,000). The company's stock is traded on the MICEX and RTS stock exchanges. Company's GDRs in the IOB section of LSE, ADRs - in OTCQX.

For more information:

Investor Relations Department

Tel. +7 (495) 122 0555 ext. 1607, 1319, 1304

ir@rushydro.ru

The information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of RusHydro. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might," the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially from these statements. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to RusHydro and its operations.