PJSC RusHydro: RusHydro Group announces 9M 2021 IFRS results

RusHydro Group announces 9M 2021 IFRS results

November 25, 2021. Moscow, Russia. RusHydro Group (hereinafter referred to as the "Group", ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces its condensed consolidated interim unaudited financial information prepared in accordance with International Financial Reporting Standards (IFRS) for the 3rd quarter and 9 months of 2021. Strong 3Q results following effective utilization of hydropower resources aided by favorable pricing environment.

Key highlights for 9M 2021:

• RUB 333,832 mn - total revenue (+7.3% y-o-y)
• RUB 92,001 mn - EBITDA (+1.6 y-o-y)
• 27.6% - EBITDA margin (-1.5 p.p. as compared to 9M 2020)
• 4.6% increase in manageable cash cost* growth y-o-y
• RUB 52,443 mn - net profit (-13.3% y-o-y)
• 1.0x - net debt**/EBITDA (0.99x in 2020)

Key highlights for 3Q 2021:

• RUB 102,104 mn - total revenue (+9.6% y-o-y)
• RUB 25,638 mn - EBITDA (+12.0% y-o-y)
• 25.1% - EBITDA margin (+0.5 p.p. as compared to 3Q 2020)
• 6.2% increase in manageable cash cost[1] growth y-o-y
• RUB 12,153 mn - net profit (-10.9% y-o-y)

3Q and 9M 2021/2020 highlights (in RUB mn)

Operating results

In 9M 2021, electricity generation by RusHydro Group amounted to 96,421 GWh (-3.4%), including Boguchanskaya hydropower plant***** - 108,942 GWh (-3.5%).

Main factor affecting production was normalization of water inflows to main reservoirs of the hydropower plants of the Volga-Kama cascade, with simultaneous increase of inflows to the reservoirs in Siberia, Far East and Northern Caucasus above the normal level.

Detailed review of operational results is available at the Company's official website at:

https://www.eng.rushydro.ru/investors/IR_news/114225.html

Key events since January 2021

• The Board of Directors appointed Victor Khmarin as Chairman of the Management Board, General Director of the Company and elected the new Management Board;
• PJSC RusHydro and PJSC Polyus have signed a bilateral power purchase agreement for clean electricity produced by Sayano-Shushenskaya HPP;
• Conversion of Anadyrskaya CHPP from coal to Natural Gas has been completed, significantly reducing the impact on the environment and improving the company's ESG profile;
• Analytical credit rating agency (ACRA) confirmed PJSC RusHydro's credit rating and the Company's bonds on national scale at the highest level, AAA(RU) (outlook stable);
• Annual General Shareholders Meeting elected PJSC RusHydro's new Board of Directors and approved 2020 dividends of RUB 0.0530482 per share (dividend yield of 6.4%);
• RusHydro Group has entered into agreement with "Goal Number Seven", the Association of Energy Markets Participants that will certify RusHydro Group's generating facilities upon which issuance of green I-REC certificates will take place. The certificates will acknowledge the origin of electricity that RusHydro Group produces from renewable energy sources;
• The Board of Directors elected Deputy Chairman of the Government of the Russian Federation - Plenipotentiary Representative of the President in the Far Eastern Federal District Yury Trutnev as its Chairman. He has held the position of the Chairman of the Board of Directors since June 2015;
• RusHydro Group has signed an agreement with LLC Transenergoprom to divest 100% share in JSC Chuvashskaya Electricity Sales Company for RUB 300 mn. The transaction has been concluded in September 2021;
• RusHydro Group commissioned the first renewable energy power complex under the energy service agreement. The facility consisting of a modern 600 kW diesel power plant, 400 kW solar power plant and 125 kW energy storage unit will provide reliable electricity supply to remote village in Yakutia;
• RusHydro and Sibur Holding have signed a power purchase agreement for supply of clean electricity produced by Nizhne-Bureyskaya HPP to Amur Gas Chemical Complex.

Revenue

Revenue breakdown in 3Q and 9M 2021/2020 (in RUB mn)

In 9M 2021, total revenue of the Group increased by 7.3% to RUB 333,832 mn as compared to 9M 2020. The change is associated with the following key factors:

• increase of RUB 6,389 mn in Retail segment following mainly at PJSC DEK and PJSC Krasnoyarskenerosbyt and JSC Chuvashskaya Electricity Sales Company on the back of tariff growth and increase in output;
• increase of RUB 5,969 mn on the back of sales volume growth under capacity supply agreements (DPM) following commissioning of Zaramagskaya HPP-1, Verkhnebalkarskaya, Ust-Dzhegutinskaya and Barsuchkovskaya small HPPs;
• increase of RUB 4,198 mn mainly on the back of electricity sales volume growth and subsidies at Far East energy companies segment******;
• increase of RUB 1,004 mn on electricity sales in Hydropower segment following spot market price growth;
• increase of RUB 2,753 mn from heat and hot water sales on the back of increase of heat output including following commissioning of CHPP in Sovetskaya Gavan in the end of 2020.

Operating expenses

Operating expenses breakdown in 3Q and 9M 2021/2020 (in RUB mn)

Total operating expenses in 9M 2021 as compared to the same period last year increased by 9.5% to RUB 265,441 mn due to the following factors:

• increase in purchased electricity and capacity by RUB 11,390 mn mainly in Retail segment by PJSC DEK following increase of purchased electricity compounded by change in supplier structure towards increase of electricity purchase from third parties following divestment of Primorskaya GRES;
• increase in fuel expenses by RUB 2,580 mn mainly in JSC DGK following significant increase in the purchase price of natural gas and coal and commissioning of CHPP in Sovetskaya Gavan;
• increase in depreciation expense by RUB 2,224 mn following commissioning of new facilities as well as modernization at PJSC RusHydro's facilities;
• increase in grid company services on electricity distribution by RUB 2,039 mn mainly in Retail segment following volume and tariff increase;
• increase in employee benefit expenses by RUB 1,547 mn following indexation of salaries in accordance with existing collective agreements.

Profit

In 9M 2021, the Group's net profit decreased by 13.3% to RUB 52,443 mn following absence of significant revaluations of the forward contract on the company's shares which was accounted for in 9M 2020.

In the same period, EBITDA increased by 1.6% to RUB 92,001 mn.

Key indicators of financial position

As of September 30, 2021, the Group's assets increased by RUB 21,931 mn or 2.3% to RUB 963,966 mn against December 31, 2020 mainly following increase in property, plant & equipment (implementation of the Group's investment program).

As at the end of the reporting period, the Group's liabilities decreased by RUB 8,052 mn or 2.4% to RUB 325,043 mn as compared to December 31, 2020 mainly due to decrease of non-current debt.

Events after the reporting date

• RusHydro Group began construction of 23.4 MW Cherekskaya small HPP (earlier Psygansu small HPP) in Kabardino-Balkarian Republic. The facility will go online in the 4th quarter of 2024. The facility has passed competitive selection of investment projects for construction of generating facilities using renewable energy sources with guaranteed return on investment (DPM for renewables);
• Fitch Ratings Ltd has confirmed RusHydro's credit and bond credit ratings both at sovereign investment grade level "BBB", and affirmed the outlook at "Stable";
• S&P Global Ratings for the first time in RusHydro's history has upgraded the company's independent credit rating to investment grade level of BBB-, current sovereign level.

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

* Includes employee benefit expenses, fuel expenses, third parties expenses, other materials and other costs.

** Total net debt at the end of reporting period is calculated as the difference between financial debt and cash & cash equivalents (including bank deposits maturing in one year). Financial debt includes current debt, non-current debt (excluding interest payable), non-deliverable forward contract.

*** Operating profit is calculated as the difference between revenue, other operating income and operating expenses.

**** EBITDA is calculated as operating profit/loss excluding depreciation of property, plant and equipment, amortization of intangible assets, impairment of property, plant and equipment, impairment of financial assets, profit / loss on disposal of property, plant and equipment and other non-cash items of operating income and expenses.

*****The Boguchanskaya hydropower plant is part of the Boguchanskiy Energy and Metals Complex (BEMO), a joint venture (JV) between RusHydro and UC RUSAL, and is not part of RusHydro Group. According to RusHydro's shareholding in the JV (50%), the results of the plant are reported in the official financial statements in "Share of results of associates and jointly controlled entities". Operations of the HPP have been put into the press-release for general reference.

****** 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  of RUB 4.00 / kWh, from 1 January 2018 to RUB 4.30 / kWh, from 1 January 2019 to RUB 4.69 / kWh, from 1 January 2020 to RUB 5 / 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.

About RusHydro

RusHydro Group is the leading producer of renewable energy in Russia with over 400 generating facilities. It is Russia's largest generating company and is the third hydropower company in the world. The Group's total electricity generation capacity including Boguchanskaya HPP is 38.0 GW

For more information:

Investor Relations Department

Tel. +7 (495) 122 0555 ext. 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. One can identify forward-looking statements by terms such as "expect," "believe," "anticipate," "plan", "aim", "target", "forecast", "project", "should", "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 and political conditions, our competitive environment, risks associated with operating in Russia and rapid technological and market changes in our industries, as well as many other risks specifically related to RusHydro and its operations.