2. This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for,
any securities of the Company in any jurisdiction, nor shall it or any part of it nor the fact of its presentation, communication or distribution form the basis of, or be relied on in
connection with any contract or investment decision.
These written materials are not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from
registration under the U.S. Securities act of 1933, as amended. Any public offer or distribution of securities to be made in the United States will be made in accordance with a
prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial
statements. The Company has not registered and does not intend to register any portion of any offering in the United States or conduct a public offering of any securities in the United
States.
This presentation is only addressed to and directed at persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of
the Prospectus Directive (Directive 2003/71/EC) ("Qualified Investors"). In addition, in the United Kingdom, this presentation is being distributed only to, and is directed only at, (i)
Qualified Investors who have professional experience in matters relating to investments who fall within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the "Order") and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) Qualified Investors to whom it may otherwise
lawfully be communicated (all such persons together being referred to as "relevant persons"). This presentation must not be acted on or relied on (i) in the United Kingdom, by
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investment or investment activity to which this presentation relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European
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The distribution of this presentation in other jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform themselves about, and
observe, any such restrictions.
No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No representation or warranty,
express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for
any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.
This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements and reflect the Company’s
intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, performance, prospects, growth,
strategies, and the industry in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertainties because they relate to events and depend
on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that the actual
results of operations, financial condition and liquidity of the Company and the development of the industry in which the Company operates may differ materially from those made in
or suggested by the forward-looking statements contained in this document. In addition, even if the Company’s results of operations, financial condition and liquidity and the
development of the industry in which the Company operates are consistent with the forward-looking statements contained in this document, those results or developments may not
be indicative of results or developments in future periods. The Company does not undertake any obligation to review or confirm expectations or estimates or to update any forward-
looking statements to reflect events that occur or circumstances that arise after the date of this presentation.
By attending this presentation, you agree to be bound by the foregoing limitations.
2
Disclaimer
3. I. About the company. Key highlights of 2014
II. Operating results
IV. Investments and development
V. Priorities and expectations
III. Financial results
4. RusHydro: the leading Russian utilities and renewables company
4
Russia’s largest genco and one of the world’s largest publicly-traded predominantly hydro generation
companies, with capacity of 38.5 GW (ca. 16% of the Russian total)
The biggest winner from electricity market liberalization in Russia due to extensive exposure to low-cost
hydro generation
A developing dividend story: 4 consecutive years of dividend payments since 2010; dividend payout in
the amount of 25% net profit (from 2014 – of net profit under IFRS)
Focus on the Russian market: extension of life-time and improving efficiency of existing hydro assets,
implementation of value-accretive hydro projects
Diversified holding company with hydro engineering and design assets
Prudent financial management: target leverage at ≤ 3х EBITDA
One of the most liquid generating companies of the Russian stock market: local shares in Level 1 list on
MOEX, GDRs listed on the LSE, ADRs trading OTC and OTC QX in New York
Shares included in MSCI Russia – the only utilities company in the index
Green utility – world’s 3rd largest renewable player
RusHydro is due for partial privatization until 2017
5. 50%
RusHydro: the leading Russian utilities and renewables company
5
No.1 Russian power generation company, GWh*
38.5 38 29 25 20 15 117 108 42 34 33 31 25
No.6 heat producer in the world, mn GCalNo.3 world’s hydropower co. by capacity, GW*
14%
Inter RAO, 14%
Gazprom, 15%
Rosenergoatom, 18%
Other, 18%
Enel Russia, 4%
IES Holding, 6%
EON Russia, 6%
Eurosibenergo, 6%
1/7 electricity generation in Russia*
1,025 TWh
Boguchanskaya HPP, 5%
TGK-1, 6,9%
Eurosibenergo, 37,7%
>50% of total hydro output in Russia*
1,025 TWh
Other, 0,4%
* - including Boguchanskaya hydropower plant (50/50 JV with UC RUSAL); ** - as of 2014
36 36 30 30 28 22
6. TSR compared to Russian power generation peers
6
Company TSR
1 E.ON Russia 5%
2 Volzhskaya TGC -19%
3 TGC-9 -38%
4 Enel OGK-5 -59%
5 RusHydro -61%
6 Irkutskenergo -64%
7 Mosenergo -68%
8 TGK-1 -70%
9 Inter RAO -81%
10 OGK-2 -85%
11 TGK-6 -86%
12 Quadra -86%
13 TGK-5 -88%
Company TSR
1 Krasnoyarskaya HPP 81%
2 Quadra 49%
3 E.ON Russia 10%
4 RusHydro -1%
5 Irkutskenergo -12%
6 Mosenergo -17%
7 Inter RAO -23%
8 Enel Russia -31%
9 TGK-1 -32%
10 OGK-2 -35%
11 Volzhskaya TGC -44%
2011-2013* 2014*
Total shareholder return (TSR) over a period
is defined as the net stock price change plus
the dividends and other payments paid to
shareholders during the defined period. TSR is
used as a measure of shareholder value
creation and also to compare the performance
of different companies' stocks and shares over
time. TSR is widely used all over the world for
evaluation of corporate performance, as well
as a metric for management’s remuneration
packages.
* To minimize the effects of sudden share price volatlity, RusHydro uses smoothing period of 22 trading days at the beginning and end of the year
In 2014, RusHydro developed and approved the list KPIs and methodology of calculation and valuation of KPIs in accordance with the government’s guidelines
and in compliance with the Regulation for KPIs of the state-owned companies approved by the Federal Agency for State Property Management
(Rosimushchestvo);
The Company benchmarks its TSR against the TSRs of companies included in MICEX Power Index (MICEX PWR), excluding grid companies and power retail
companies, as well as JSC RAO ES of East, a listed subsidiary of RusHydro.
7. Key points of 2014
7
Evgeny Dod was reappointed as Chairman of the Management Board of RusHydro for the next 5-year period
The Board of Directors approved changes in organizational structure of JSC RusHydro aimed at creation of a “flatter” management
structure, reduction of number of employees and lowering costs
The Board of Directors approved a long-term development program of RusHydro Group aimed at reliability and safety improvement of the
Company’s generating facilities, sustainable development of electricity generation and the Company’s value growth
Corporate events
Securing facilities in total amount of EUR 190 mn from ING Bank and Crédit Agricole Corporate & Investment Bank Deutschland for
modernization of Saratovskaya HPP
RusHydro approved a new dividend policy providing a dividend payout taking into consideration consolidated net profit of the Group
calculated under IFRS
AGM approved payment of the dividend for 2013 in the amount of RUB 0.01358751 per share, or RUB 5.2 bn in total (25% of reported
net profit under IFRS)
RusHydro Group acquired 3.39% of its own shares via a swap for 25% minus 1 share stake in JSC Krasnoyarskaya HPP between JSC
Hydroinvest, 100% subsidiary of RusHydro, and JSC Eurosibenergo
RusHydro agreed to cooperate with PowerChina in development of the Leningradskaya PSPP and China Three Gorges Corporation (CTG)
on joint development of reservoir-based flood-control hydropower projects in the Russian Far East
Board of Directors’ decisions
Liberalization of 65% of capacity sales from hydro in Siberia from May 1, 2014 (fully regulated as of 2011)
Launch all hydropower units at the Boguchanskaya hydropower plant
Successful completion of restoration of the Sayano-Shushenskaya HPP
Increase in installed capacity / power market changes
8. New management structure
8
Key expected results
creation of a “flatter” organizational structure;
clearer allocation of responsibilities and duties
among managers;
decrease in the number of the executive staff and
lower administrative costs.
Key optimization highlights
reduction of number of the Management Board
members from 14 to 5; the same reduction in the
Management Board of RAO ES of East;
exclusion of a category “Directors of business
dimensions” – 18 persons;
exclusion of directorates – 10 business units;
reduction of number of divisions from 40 to 22;
divisions will be managed by directors of divisions;
reduction of non-operating personnel;
moratorium on hiring non-operating personnel
Evgeny Dod, General
Director – Chairman of the
Management Board
Boris Bogush, Member of
the Management Board,
First Deputy General
Director – Chief engineer
George Rizhinashvili,
Member of the
Management Board, First
Deputy General Director
Strategy, M&A, Innovations
Mikhail Mantrov, Member
of the Management Board,
First Deputy General
Director
Finance and Economics
Operations and maintenance
Vladimir Tokarev, Member
of the Management Board,
First Deputy General
Director
Construction and Engineering
CEO
Sergey Kirov
Member of the
Management Board, First
Deputy General Director
Economics, investments, procurements
Evgeny Gorev,
Deputy General Director
Corporate Governance
Sergey Tolstoguzov,
General Director
RAO ES of East
Stanislav Savin,
First Deputy General
Director
Marketing and power trading
Sergey Tsoy,
Deputy General
Director, State-secretary
PR, GR
Vladimir Pekhtin,
Deputy General Director
R&D
Rakhmetulla Alzhanov,
Adviser to General
Director
Konstantin Bessmertny,
Adviser to General
Director
Sergey Abrashin,
Deputy General Director
Security
Investments, procurements
Khmarin Viktor,
Deputy General Director
Management Board
till Oct 1, 2014
Current Management
Board composition
9. 29
39
19
36
38.5
43
45
63
99
140
Eurosibenergo*
China Yangtze Power
Hydro Quebec*
Vattenfall*
Eletrobras
Iberdrola
EON
Enel
EDF
Hydro
Other renewables
Nuclear
Thermal
37%
17%
54%
85%
34%
99%
99%
77%
9
Global ‘green energy’ player
The number of the plants that have implemented Environmental
Management System ISO 14000 has increased from 3 in 2010 to
6 in 2013
RusHydro is active participant o in the UNDP-GEF-Ministry of
Natural Resources Project on the biodiversity conservation
“RusHydro Red Book” project is underway, includes the
interaction with the 11 local reserves in regions of the Company’s
presence
Emissions in line with global peers, poised to further decline
One of the top international green energy producers
* Unlisted
** Purely nuclear generators are not included
2013 data. Size of bubble represents volume of hydroelectric and renewable capacity in GW
Improvement of eco-standards. Cooperation.
Commitment to sustainable energy production
RusHydro:
One of Russia’s largest energy holdings, a leader in the production
of energy from renewable energy sources
Installed electric capacity 38.5 GW: 78% - hydro & renewable,
22% – fossil-fuel generation (ca. 50% coal)
# 4 global player by hydro & renewable capacity, # 3 by purely
hydro capacity
Mission & strategy: provide society with "clean" energy, paying
adequate attention to environmental preservation
The Group takes active measures to increase energy efficiency and
energy savings
New hydro units commissioning will increase share of renewable capacity
while Far East projects completion will reduce CO2 emissions
% of hydroelectric and
renewable capacity in
total installed capacity
19%
78%
0%
20%
40%
60%
80%
100%
-1000100200300400500
RusHydro Eletrobras
Eurosibenergo
EDF
IberdrolaEnel
Vattenfall
E.ON
Hydro
Quebec
China
Yangtze
Statkraft
% of hydro & renewable capacity
kg CO2/MWh
10. I. About the company. Key highlights of 2014
II. Operating results
IV. Investments and development
V. Priorities and expectations
III. Financial results
11. 30 001 31 156
15 924 14 873
FY'13 FY'14
Far East hydro
RAO ES of East
(fossil fuel)
42 354 38 334
8 106
6 257
27 276
22 492
FY'13 FY'14
Siberia
South of Russia
Center of Russia
11
4Q’14 and FY’14 operating results
* - including the results of 3 GW Boguchanskaya hydropower plant, a 50/50 JV with UC RUSAL, not consolidated in the Group’s financial
results. 8/9 of the plant’s nominal capacity was launched in September 2014
4Q’14/4Q’13 – Europe & Siberia (price zones), GWh 4Q’14/4Q’13 – Far East (non-price zone), GWh
FY’14/FY’13 – Europe & Siberia (price zones), GWh FY’14/M’13 – Far East (non-price zone), GWh
9 663 7 781
1 540
1 364
6 860
4 632
4Q'13 4Q'14
Siberia
South of Russia
Center of Russia
-24%
-14% +0.2%
8 329
10 080
4 290
3 091
4Q'13 4Q'14
Far East hydro
RAO ES of East
(fossil fuel)
+4%
lower than FY2013 and long-run average water inflow to reservoirs of the Volga-Kama cascade;
water inflow to Sayano-Shushenskoe reservoir – lower than normal;
increase in electricity generation by TPPs of the Far East due to decreased hydro production in the unified power system of the Far East as
well as growth in electricity consumption;
launch of the last three hydropower units at the Boguchanskaya HPP in the second half of 2014.
12. Water inflow to major reservoirs in 2014
12
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
янв фев мар апр май июн июл авг сен окт ноя дек
2013 2014 Long-term average
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
янв фев мар апр май июн июл авг сен окт ноя дек
2013 2014
Water inflow to reservoirs of the Volgo-Kama cascade, m3/s Water inflow to the Sayano-Shushenskaya HPP, m3/s
0
50
100
150
200
250
300
350
400
450
500
янв фев мар апр май июн июл авг сен окт ноя дек
2013 2014
Water inflow to the Chirkeyskaya HPP, m3/s
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
янв фев мар апр май июн июл авг сен окт ноя дек
2013 2014
Water inflow to the Zeyskaya HPP, m3/s
13. Hydro production trends 2011- 1Q’2015
13
Center of Russia, GWh
South of Russia & N. Caucasus, GWh
Siberia, GWh
Far East, GWh
1 500
2 000
2 500
3 000
3 500
4 000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2011
2012
2013
2014
2015
Long-run average
1 000
1 500
2 000
2 500
3 000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2011
2012
2013
2014
2015
Long-run average
800
1 000
1 200
1 400
1 600
1 800
2 000
2 200
2 400
2 600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2011
2012
2013
2014
2015
Long-run average
800
1 000
1 200
1 400
1 600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2011
2012
2013
2014
2015
Long-run average
15. Water inflows forecast to major reservoirs for Apr-Dec 2015
15
0
500
1000
1500
2000
2500
0
500
1000
1500
2000
2500
Rybinskaya
Gor'kovskaya
Cheboksarksaya
Zhigulevskaya
Saratovskaya
Volgogradskaya
Kamskaya
Novosibirskaya
Sayno-Shushenskaya
Volga Kama Ob' Enisey
2015, м3/с max 2014, м3/с 2015, м3/с min Норма, м3/с
m³/s m³/s
16. 16
Unregulated market overview
European part of Russia (1st pricing zone), RUB/MWh* Siberia (2nd pricing zone) RUB/MWh*
* Data from the Administrator of the Trading System (ATS) of wholesale electricity market; ** - 2015F is data from ATS as March’15, 2016-2017F – ATS forecast from Dec’14
915 925
1 143
1 037
1002
1043
1 254
1 136
1116
1204
1233
1120 1122
800
900
1000
1100
1200
1300
1400
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013
4Q
2013
1Q
2014
2Q
2014
3Q
2014
4Q
2014
1Q
2015
665 672
714
763
777
764
639
677
723
662
762
983
1026
600
700
800
900
1000
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013
4Q
2013
1Q
2014
2Q
2014
3Q
2014
4Q
2014
1Q
2015
1 031 1 028
1 124 1 177
1 118 1 126 1 155
481
677 658
633
898
824 848
2011 2012 2013 2014 2015F 2016F 2017F
Europe Siberia
Historical and forecasted “day-ahead” market price dynamics, RUB/MWh**Key highlights
European pricing zone: Non-indexation of gas tariffs for industrial
consumption as of July 2014 and moderate dynamics of power
consumption growth contributed to somewhat lower or flattish spot prices
in the second half of 2014;
Siberia: decrease in power supply by hydropower plants in Siberia and
increase in load of thermal power plants as a result of improved
interconnection with the 1st pricing zone led to increase in demand of price
setters’ supply. Also, a decrease in hydro output led to higher load of more
expensive capacities in the eastern regions, contributing to higher prices.
17. Regulated market overview
17
2 247 2 313
2 076 2 066 2 003 2 063
203 113 111 105 127 114
2011 2012 2013 2014 2015F 2016F
DPM - Europe KOM - average (Europe and Siberia)
13,37 13,50 13,71
15,75 15,90
16,05
2013 2014 2015F
Europe Siberia
112,5 114,4 116,4
66,1
42,4 42,8
2013 2014 2015F
Europe Siberia
Capacity prices in pricing zones, ‘000 RUB/MW/month Weighted average capacity tariffs in pricing zones, ‘000 RUB/MW/month
Weighted average electricity tariffs in pricing zones, RUB/MWh Heat and electricity tariffs of RAO ES of the East
Electr.tariffs Heat tariffs
2014/2013 2015/2014 2014/2013 2015/2014
DGK 3.54% 3.48% 7.91% 7.36%
DEK 6.95% 7.02% - -
Kamchatskenergo 6.51% 4.81% 6.95% 9.31%
YuESK 0.21% 8.09% 11.90% 10.29%
Magadanenergo 11.23% 5.7% 8.81% 5.15%
Chukotenergo 6.73% 7.20% 14.88% 3.46%
Sakhalinenergo 11.70% 9.74% 5.62% 6.06%
Yakutskenergo 3.18% 6.85% 10.13% 6.28%
Sakhaenergo 7.55% 7.59% 12.64% 8.48%
Peredvizhnaya energetika 10.22% 11.35% - -
18. I. About the company. Key highlights of 2014
II. Operating results
IV. Investments and development
V. Priorities and expectations
III. Financial results
19. 19
Financial results overview
RUB billion FY’14 FY’13 chg 4Q’14 4Q’13 chg 3Q’14 3Q’13 chg 2Q’14 2Q’13 chg 1Q’14 1Q’13 chg
Revenue, total, incl.: 342.0 326.9 4.6% 100.9 94.2 7.1% 70.2 69.0 1.7% 76.2 74.4 2.4% 94.7 89.3 6.0%
Revenue from operations 329.6 313.6 5.1% 96.3 88.2 9.2% 68.0 67.1 1.3% 73.7 71.7 2.8% 91.6 86.5 5.9%
Government grants 12.4 13.3 -6.8% 4.6 6.0 -23.3% 2.2 1.9 15.8% 2.5 2.7 -7.4% 3.1 2.8 10.7%
Expenses 290.8 265.8 9.4% 85.8 72.9 17.7% 65.1 60.3 8.0% 65.4 62.1 5.3% 74.6 70.5 5.8%
EBITDA* 73.2 79.2 -7.6% 21.7 26.6 -18.4% 10.1 13.5 -25.2% 15.9 15.7 1.3% 25.5 23.4 9.0%
Net profit 24.1 21.0 14.8% - - - - - - - - - - - -
Net profit (adj.)** 39.8 52.7 -24.5% 13.4 22.8 -41.2% 2.1 6.8 -69.1% 8.5 8.5 0.0% 15.9 14.6 8.9%
EBITDA margin 21.4% 24.2% -2.8pp 21.5% 28.2% -6.7pp 14.4% 19.6% -5.2pp 20.9% 21.1% -0.2pp 26.9% 26.2% +0.7pp
Net margin 11.6% 16.1% -4.5pp 13.3% 24.2% -10.9pp 3.0% 9.9% -6.9pp 11.2% 11.4% -0.2pp 16.8% 16.3% +0.5pp
FY’14 EBITDA – RUB 73,249 (-7.5%); FY’14 underlying (adjusted) net profit** – RUB 39,777 mn (-24.5%);
Weighted-average EPS for 2014 increased by 8% to RUB 0.0689 per share;
Decrease in year-on-year electricity output was partly offset by:
a) higher unregulated prices in Siberia, almost flat price in the European part of Russia;
b) resumption of “last mile” arrangement in the Far East;
c) partial liberalization of capacity sales in Siberia as of May 2014;
Negative factors affecting profitability:
a) low hydro output;
b) non-indexation of regulated gas tariffs (“tariff freeze”) resulting in flattish unregulated power prices in the 1st price zone;
c) higher inflation in 4Q’14;
d) higher expenses for personnel, depreciation and electricity distribution;
Key highlights
* EBITDA is calculated as operating profit / loss excluding depreciation of property, plant and equipment and intangible assets, impairment of property, plant and equipment, available-for-sale financial assets,
accounts receivable, long-term promissory notes, loss on disposal of property, plant and equipment, loss on remeasurement of net assets of subsidiary acquired exclusively with a view for resale, and gain from
curtailment in pension plan and pension payment, disposal of subsidiaries and associates.
** Net profit is adjusted for the effects of impairment of property, plant and equipment and remeasurement of net assets of subsidiary acquired exclusively with a view for resale, impairment of available-for-sale
financial assets, accounts receivable, property, plant and equipment of associates, long-term promissory notes, loss on disposal of property, plant and equipment, reversal of impairment of investments and
property, plant and equipment of associates and gain from curtailment in pension plan and pension payment.
20. 79,171
+15,110 -2,167-2,882
-8,207
-3,360 -1,147 -1,188
-2,081
73,249
EBITDA 2013 Increase in total
revenue and
other operating
income
Increase in
purchased
electricity and
capacitry expense
Increase in fuel
costs
Increase in
employee
benefits
Increase in
electricity
distribution
expenses
Increase in third
party services
Increase in other
materials costs
Other income and
expenses
EBITDA 2014
79,171
-5,770
+903 -1,634 +1,257 -678
73,249
EBITDA 2013 JSC RusHydro ESC RusHydro subgroup
(electricity retail)
RAO ES of East subgroup Other Misc undistributed
operations
EBITDA 2014
20
FY14 EBITDA: segment and cost analysis
EBITDA bridge – segment review
EBITDA bridge – cost analysis
21. RUB mn FY’14 FY’13 chg 4Q’14 4Q’13 chg
Employee benefit expenses 65,114 56,907 14.4% 17,668 15,563 13.5%
Purchased electricity and capacity 57,504 54,622 5.3% 18,340 14,254 28.7%
Fuel expenses 46,639 44,472 4.9% 15,411 13,199 16.8%
Electricity distribution expenses 41,282 37,922 8.9% 11,455 10,707 7.0%
Third parties services 29,299 28,152 4.1% 8,737 8,846 -1.2%
Depreciation of PP&E and intangible assets 21,340 18,218 17.1% 5,856 4,346 34.7%
Other materials 10,787 9,599 12.4% 2,616 2,292 14.1%
Taxes other than on income 9,008 9,295 -3.1% 2,337 1,778 31.4%
Water usage expenses 2,656 2,742 -3.1% 594 705 -15.7%
Social charges 2,274 2,082 9.2% 564 474 19.0%
Other expenses/income 4,935 1,752 181.7% 2,235 713 213.5%
Total expenses 290,838 265,763 9.4% 85,813 72,877 17.8%
21
OPEX overview
Key highlights
Employee benefit expenses: indexation of salaries of personnel of JSC RusHydro branches as well as annual indexation of salaries of personnel of
subsidiaries and associates of RusHydro Group; one-off bonus payment to the Company’s employees for execution of a three-year program aimed to
enhance operational and investment efficiency.
Purchased electricity and capacity: electricity and capacity expense was up mostly due to higher purchase prices from unregulated market, increase in
electricity purchase by Zagorskaya PSP and higher purchase cost from Bilibinskaya NPP.
Electricity distribution expenses: an increase in electricity distribution expenses is attributable to higher electricity transmission tariffs
Depreciation of property, plant and equipment and intangible assets: increase in depreciation of fixed assets due to reclassification of DRSK (Far
Eastern grid operations) following the management’s decision not to sell DRSK
22. 39,586
-2,600
-501
+1,288
+6,603
+1,781
+8,884
24,131
Net income, adj. 12M'14
Deferred taxes effect
Curtailment in pension plan
Loss on disposal of PP&E
Impairment of accounts
receivable
Impairment of
financial assets
available-for-sale
Impairment of PP&E
Net income, 12M'14
22
Net Income 2014 – effect from non-cash items
Net income – from reported to adjusted
23. 65
20 16
2
33
2
49
20
29
8
0,4
10
0,4
4
16
49
24
2
42
3
53
17
Ликвид-
ность
2015 2016 2017 2018 2019 2020-2034
РАО ЭС Востока
(итого=51.3 млрд. руб.)
РусГидро (итого=121.5
млрд. руб.)
318
Cash(2)
RUB-denominated bonds
Undrawn credit facilities
Liquid investments in shares
Exchange-traded RUB-denominated bonds
program
23
RusHydro Group debt profile
Comfortable debt repayment profile (1) (RUB bn)Key highlights
A low interest and FX risk debt portfolio with 87% of the facilities being
RUB-denominated and 78% bearing fixed interest rate as of 31.03.2015
Strong relationship with state-owned banks, that currently account for
ca. 40% of the debt portfolio as of 31.03.2015
A stable multicurrency effective interest rate of 10.4%
Duration of debt portfolio – 4.13 years(3)
Significant liquidity cushion (cash, short-term deposits, undrawn credit
facilities, liquid financial investments) in the amount of RUB 98 bn,
exchange-traded bonds program in the amount of RUB 200 bn, two
registered domestic bonds issues in the total amount of RUB 20 bn
Several available sources to refinance redemption of bonds in October
2015 (ruble-denominated bonds, financing from banks)
(1) As of 31.03.2015 excluding BoGES guarantee (RUB 27.19 bn), debt of retail companies (RUB 3.3 bn), lease payments (RUB 1.6 bn)
and liabilities under derivative contracts (RUB -0.05 bn)
(2) Including cash and short-term deposits (up to 1 year)
(3) Including BOGES guarantee
Source
Currency
Rate
40% – state banks
32% –
public instruments
28% –
other
78% – fixed rate
87% – RUB denominated
JSC RusHydro
121.59
Other (financial lease, debt of
retail co, derivatives)
4.9
RAO ES of East
51.3
BoGES guarantee
27.9
RUB 205.5
bn
200
Transparent debt composition Low-risk debt portfolio(1)
RAO ES of East
(total = RUB 51.3 bn)
RusHydro
(total = RUB 121.5 bn
Total
liquidity
25. I. About the company. Key highlights of 2014
II. Operating results
IV. Investments and development
V. Priorities and expectations
III. Financial results
26. 26
Capacity commissioning timeline
2012-2014
* The Boguchanskaya hydropower plant is part of the Boguchanskiy Energy and Metals Complex (BEMO), a 50/50 joint venture (JV) between RusHydro and UC RUSAL
** First 4 units of Sayano-Shushenskaya HPP were temporarily recovered prior to 2012, after that the company started gradual replacement of all units
2015-2019
DPM
Reconstruction / modernization
Electricity (capacity) purchase agreements / unregulated market
Old TPP generation replacement tariff /other mechanisms
333
10,1 GW
333
640
640
333
168 333
145 140 100 140 31 320
342
142 120
193 120
120
840
346
333
640
640
333
333
333
640
640
333
BoguchanskayaHPP*
Sayano-ShushenskayaHPP
Sayano-ShushenskayaHPP
BoguchanskayaHPP*
Ust'-SrednekanskayaHPP(1ststage)
BoguchanskayaHPP*
Technicalupgradeandmodernization
ofHPPs
ZelenchugskayaHPP-PSPP**
GotsatlinskayaHPP**
VostochnayaTPP
ZaragizhskayaSmallHPP
Nizhne-BureyskayaHPP
ZaramagskieHPP
Ust'-SrednekanskayaHPP(2ndstage)
BlagoveschenskayaTPP
YakutskayaTPP-2
TPPinSovetskayaGavan
SakhalinskayaGRES-2
ZagorskayaPSPP-2
Technicalupgradeandmodernization
ofHPPs
Totalcapacitycommissioningin2012-
2019
27. 34,5 30,8
44,0 44,2 45,5 42,1 47,0
27,8
24,4
31,2 22,1
8,3
0,8
0,8
12,7 27,9
28,0
16,1
22,2
26,4
33,7
22,1
22,6
19,9
20,8
3,5
3,0
1,1
1,2
2,9
0,6
0,5
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
2014
факт
2015F 2016F 2017F 2018F 2019F 2020F
Hydro rehab/modernization Hydro construction
4 thermal projects RAO ES of the East
Other
Funding of project groups, RUB bn (incl. VAT)
Funding of the investment program for 2015-2020
Key highlights
Funding of the Group’s investment program, RUB bn (incl. VAT)*
27
Own funds, 82%
Debt, 18%
Funding sources (estimated)
100,8
112,5
103,2
77,7 79,3
63,3 69,2
35.0**
20**
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
2014 2015F 2016F 2017F 2018F 2019F 2020F
Funding not guaranteed, subject to optimization/sequestration**
Capex outlays upholding gross debt/EBITDA≤3.0x
* - excluding BEMO project (50/50 JV with UC RUSAL)
** - the indicated amount could be cut in case of risk to exceed the 3x gross debt/EBITDA covenant and lack of non-debt funding sources
As a result of development plan in 2015-2020 the company plans to finalize
the construction of its key hydro and thermal projects, which will result in
installation of 2.9 GW and 876 GCal/h of new electric and heat-generation
capacity;
The current capex update was sent to the Ministry of Energy for approval in
March 2015, and hasn’t been yet approved by the Board of Directors;
The major sources of funding are mostly company’s own sources: operating
profit, depreciation and VAT reclaim;
The company plans to raise funds from investors for construction of Verkhne-
Naryn cascade of hydropower plants in Kyrgizia and rehabilitation of
Perepadnye hydropower plants in Abkhazia (projects not included in the
current capex update)
28. Key development projects (1/3)
28
Boguchanskaya HPP Nizhne-Bureyskaya HPP Gotsatlinskaya HPP Zaragizhskaya Small HPP
Project location
Krasnoyarsky region, on the
Angara river
Amurskiy region, Bureyskiy
district, Novobureyskiy
settlement
On the border between
Khunzakhsky and
Gergerbilsky area, Republic
of Dagestan
Kabardino-Balkar
Republic
Project objective
Construction of the
Boguchanskaya HPP on the
Angara river
Regulator of the
Bureyskaya HPP, electricity
generation
Improvement of reliability
of supply in the Republic of
Dagestan
New capacity
commissioning, use of
the Nizhne-Cherekskie
HPPs’ flow for power
generation
Installed capacity, MW 2 997 320 100 30,6
Number of hydro-units, units (MW) 9 (333) 4 (80) 2 3 (10.2)
Average annual output, GWh 17 600 1 650 350 114
Year and commissioned capacity
2012 – 1 332 MW, 2013 –
666 MW, 2014 – 999 MW
2016 –320 MW 2016 – 100 MW *,** 2015 - 30,6 MW
Year of construction completion and
launch
2016 (including the 8th
stage)
2017 2016 год ** 2015
* In case of timely reservoir filling
** In accordance with recommendations on amendments to investment program of JSC RusHydro for 2015-2017 submitted to the Ministry of Energy of Russia.
95% 42% 88% 47%
- percentage of project readiness as of the end of 2014%
29. Key development projects (2/3)
29
Main project stages Zaramagskie HPPs Zelenchugskaya HPP-PSPP Ust’-Srednekanskaya HPP
Project location Alania, Alagirsky region
Karachayevo-Cherkessian
Republic, on the base of the
Zelenchugskaya HPP in opration
Magadan region
Project objective
Electricity generation, elimination
of the lack of electricity in Alania
from 80% to 30%
Reliability improvement of the
united power system of the South
of Russia
Economic and social development
of Magadan region
Installed capacity, MW 352 140/160 (in pump mode) 310.5
Number of hydro-units, units (MW) 2 (10+171 MW) 2 (70/80 MW) 4
Average annual output, GWh 842 162 2 550
Year and commissioned capacity
Main HPP – 15 MW (launched on
18.09.2009 );
HPP-1 – 342 MW (to be
commissioned in 2017)
2015 - 140 MW
2013 – hydro-unit 1 launch and low
head hydro-unit 2,
2018 – launch of hydro-unit 3
Year of construction completion and launch 2018 2015 2018
44% 64% 50%
- percentage of project readiness as of the end of 2014%
30. Key development projects(3/3)
30
Main project stages
Blagoveshenskaya CHPP Sakhalinskaya TPP-2,
1st stage
Sovetskaya Gavan’
CHPP
Yakutskaya TPP-2,
1st stage
Project location Blagoveshensk Sakhalin
Sovetskaya Gavan’ city,
Khabarovsk region
Republic of Sakha Yakutia ,
Yakutsk city
Project objective
elimination of the lack of heat
power in Blagoveshensk;
Reliability improvement of power
supplies
elimination of the lack of
electricity in Sakhalin;
replacement of retired capacity
of operating Sakhalinskaya TPP
meet the electric capacity
demand in the region, provide
Sovetskaya Gavan’ city with
the centralized heat supply
replacement of retired
capacity of operating
Yakutskaya TPP, reliability
improvement of power
supplies
Installed capacity, MW / GCal
120 MW
188 GCal/h
120 MW/ 18,2 GCal/h 120 MW/ 200 GCal/h 193,48 MW/ 469,6 GCal/h
Average annual output, GWh 464 840 630 1 440,407
Year and commissioned capacity
2015 – 120 MW
188 GCal/h
2017 – 120 MW/18,2 GCal/h 2016 – 120 MW / 200 GCal/h
2016 – 193,48 MW/
469,6 GCal/h
Year of construction completion and
launch
2015 2017 2016 2016
37% 1% 6% 5%
- percentage of project readiness as of the end of 2014%
31. 3131
Hydropower rehabilitation & modernization plan
Technical parameters and objectives
Replacement of 154 turbines or 55% of total turbine fleet*;
Replacement of 119 generators or 42% of total generator fleet*;
Replacement of 176 transformers or 61% of total transformer fleet*;
Increase in installed capacity by 2025 – ca. 800 MW, increase in output –
1,4 TWh/year (see slide 50);
Key expected effects: improvement of reliability and safety of facilities,
extension of time of operation by 30-40 years, efficiency improvement,
decrease in the amount of water released through spillways during flood
periods, decrease in operating costs.
88% 89%
98% 100% 100% 100%
69% 68% 65%
56%
65%
54%
32% 35%
44%
50%
40%
34%
w/o rehab % of wear-out as of 01.01.2011 Target wear-out
Key aspects
The plan was approved by the Board of Directors in the end of 2011
The main reasons for plan implementation: 1) ageing and decrease in
reliability of equipment (see slide 49), 2) lack of investments in the 90-s
and 00-s, 3) strengthening of control of the regulator as well as risks of
non-receipt of readiness certificates for a number of facilities, 4) need for
comprehensive approach to the technical upgrade and reconstruction;
The funding of program in 2014-2017 will amount ca. USD 1 bn per year.
Management and the Board of Directors approve and amend the funding
plan on an annual basis;
Major contractors: Power machines, Alstom, Voith AG, Turboatom, ABB
37%
20%
17%
13%
6%
5%2%
Turbines
Generators
Auxiliary equipment
Safety, automatics
Reconstruction of hydro structures
Transformers
Design works
Funding requirements
Targets, % of technical wear-out
* - including 2011
32. I. About the company. Key highlights of 2014
II. Operating results
IV. Investments and development
V. Priorities and expectations
III. Financial results
33. Outlook for 2015
33
Construction
Revision of 2015 capex plan as compared to earlier funding plan in 1Q’15 based on external funding availability, observance of covenants and
prioritization of projects;
Completion of 100 MW Gotsatlinskaya and 140 MW Zelenchukskaya hydropower plants by year-end;
Increase of Boguchanskaya reservoir level and hydropower plant’s rated capacity during spring flooding in 2015;
Launch of the first production at Boguchansky aluminium smelter by year-end
Further rehabilitation and modernization of hydropower plants
Corporate development/Financials
Further divestment of non-core assets or non-controlling stakes
Headcount reduction of 20% of non-operating personnel in parent company – JSC RusHydro – and all major subsidiaries
Payout of 25% of net profit as dividend
Focus on repayment of outstanding debt with own cash, existing committed credit lines and potential refinancing with domestic or other sources
Regulatory environment/power market
Weak consumption dynamics in 2015 expected, but effect on hydropower generation will be limited;
Indexation of regulated gas tariffs at least 7.5% starting from 2H’15 should somewhat support unregulated power prices;
No change in DPM contracts (at least until 2021) or KOM remuneration for hydro;
Deregulation of 65% of capacity sales from hydro in Siberia as of May 2014 through 2016, 80% - in 2016, 100% - in 2017 and onwards. Additional
EBITDA from deregulation in 2015 – ca. RUB 2-2.5 bn;
Updated capacity auctions (KOM) rules for 2016 expected by year-end.
34. Financial outlook
34
26
37
44
64
79 7326
24 13
2009 2010 2011 2012 2013 2014 2015
Operating EBITDA (RUB bn) Special investment component (RUB bn)
Factors/opportunities for growth in 2015
↑ Implementation of operating cost optimization program;
↑ Increase in prices on the “day-ahead” market in the 1st pricing
zone following indexation of gas prices for industrial consumers
from June 1, 2015;
↑ Launch of the Zelenchugskaya HPP-PSPP and Gotsatlinskaya HPP
in terms of DPM till the end of 2015;
↑ Deregulation of capacity sales from hydro in the second price
zone;
↑ Increase in prices of the competitive capacity auctions (KOM) in
the 2nd pricing zone in 2015 as compared to 2014;
↑ Divestment of non-core assets;
↑ Extended flood period in case of moderate temperatures and
heavy rainfalls in the 1st and 2nd pricing zones;
↑ Decrease in the number of non-operating personnel
Risks to growth in 2015
↓ Water inflows to major reservoirs of the pricing zones lower
than long-run average
↓ Decrease in prices of the competitive capacity auctions (KOM)
in the 1st pricing zone in 2015 as compared to 2014
↓ Stagnation/decrease in prices on the day-ahead market due to
lower demand
↓ Increase in fuel expenses due to increase in heat load and/or
interruptions in fuel supplies
35. 2,5 2,5
3,7
5.2
6.0
2010 2011 2012 2013 2014
35
Distribution of profit and dividend payment
0,86
0,79
0,96
1,36
1.56
0,6%
1,0%
1,3%
2,3%
ca.3%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
4,0%
0
0,5
1
1,5
2
2010 2011 2012 2013 2014
DPS, kopecs.
Div. yield, %
CAGR - 25%
Dividend payments*
DPS and dividend yield**
Ключевые моменты
In March 2014, BoD approved changes to RusHydro’s dividend policy aimed
at dividend payout from consolidated net profit of the Company calculated
under IFRS;
Minimal amount of dividend payment set by the dividend policy – 5% of net
profit, the main shareholder’s – Russian government – requirement is 25%
payout;
RusHydro is one of the few Russian state-owned utilities companies paying
and consistently increasing dividend payments from 2010;
RusHydro is committed to gradual and consistent increase of yearly dividends
to benefit all shareholders, together with the company’s development
priorities and its financials.
2011 2012 2013 2014
Krasnoyarskaya HPP 0.00% 4.87% 0.00% 0.00%
Quadra 1.94% 2.59% 0.00% 0.00%
E.ON Russia 0.00% 2.57% 10.81% 16.18%
RusHydro 0.52% 0.79% 1.29% 2.42%
Irkutskenergo 0.44% 0.77% 3.27% 5.38%
Mosenergo 0.62% 1.72% 2.20% 4.60%
Inter RAO 0.03% 0.00% 0.00% 0.00%
Enel Russia 0.00% 0.00% 0.00% 4.99%
TGK-1 0.22% 0.51% 1.72% 2.59%
OGK-2 0.27% 0.13% 0.00% 0.00%
Volzhskaya TGK 0.00% 0.00% 0.00% 0.00%
Dividend yield of comparable Russian companies
* - Expected dividend payment for 2014. As of April 13, 2015, the company has not announced the Board of Directors ‘recommendation to the AGM
** - The dividend payment is calculated as at the date of announcement of the Board of Directors ‘recommendation to the AGM on the dividend
36. Efficiency improvement and financial strengthening action plan
36
Strengthening of operating control over customers’ payment discipline on the retail market, individual interaction with major constant non-payers;
Implementation of measures aimed at retention of customers in the area of controlled retailers (last resort suppliers) and attraction of new consumers;
Differentiation of retail premiums to reduce retail premiums for major customers;
Improvement of measures aimed at collecting overdue accounts receivable: total and partial limitation, claims and prejudicial actions;
Line and operating personnel efficiency improvement through rationing the most intensive operations and functions;
Development of own billing system based on the newest technological platform with advanced options in terms of accounts receivable (more automated
options, speeding up data processing, customer base quality improvement);
Securing concessional loans to rebuilt current assets in terms of anti-crisis measures implemented by the Russian government.
Moratorium on external borrowings till rates decrease to acceptable levels;
Decrease in technical upgrade and reconstruction outlays;
Flattering of capex outlays in terms of construction of new projects and completion of construction;
Reduction of non-operating personnel in JSC RusHydro and all major subsidiaries;
Creation of own transport company and transfer of transportation services to the Group level;
Transfer to the unified treasury of the Group;
Divestment of non-core assets
Implementation of measures aimed to increase energy efficiency: efficient load of equipment; actions aimed at energy savings;
Improvement of the efficiency of fuel supply: implementation of gas supply program; implementation of experimental alternative (off-design) coal-firing
program; signing of the addendum to the agreement with the investors of “Sakhalin-1” project in terms of decrease in current gas price with lowering
coefficient;
Decrease in the number of personnel as well as optimization of organizational structure;
Reduction of outlays for technical upgrade and reconstruction;
Flattering of capex schedule for new and continuing projects.
JSCRusHydroJSCRAOESofEastJSCESCRusHydro
37. 37
RAO ES of East Subgroup: current position
37 39 48 47 57 6546 44 52 53 65 7811 12 13 12 17 15
2009 2010 2011 2012 2013 2014
Net debt
Financial debt
EBITDA
RUB 39.9 bn of current loan portfolio were transferred to RAO ES of East
holding on July 1, 2008, in the process of restructuring of JSC RAO UES of
Russia
Coverage of the lack of funds as a result of insufficient tariffs – RUB 16.15 bn
Working capital financing, incl. coverage of growth of accounts receivable –
RUB 5.9 bn
Implementation of the investment projects with no return on investments
(gas supply to generating facilities, preparation to APEC 2012) – RUB 20.47
bn – as per government’s requests
RAO ES of East Holding debt vs. EBITDA dynamics Average annual inflation, tariffs, costs for 2009-14
Proposed solutions to improve the company’s financial situaitonContributing factors for high leverage of RAO ES of East
Grants to compensate part of interest on loans;
Improvement of direct long-term bilateral agreements with customers (incl.
take-or-pay) in non-pricing zone and isolated energy systems through
amendments to the federal law “On electric power” (the amendments have
been developed);
Introduction of long-term model for tariff regulation calculating return on
capital invested in the Far-Eastern electric power development;
Approval of mechanism for compensation of shortfall in income of RAO ES of
East;
Implementation of mechanisms of tax benefits for new power projects;
Transfer of supply companies to direct payments with customers.
7,8%
7,3%
11,0%
9,8%
7,6%
12,0%
Average annual inflation
Average annual el. tariff
Average annual heat tariff
Average fuel price
Average annual growth of repair costs
Average annual growth of personnel costs
38. 38
RAO ES of East Subgroup: move to efficient long-term regulation
Annual losses;
Downgrading of operating assets
due to lack of funds to upgrade the
equipment;
Lack of funds for repayment of
loans and interest payment.
Существу
ющий
тариф
On April 2, 2015, The Federal Tariff Service of Russia submitted to the government draft proposals on the long-term tariff regulation in the Far East of Russia
Flexible mechanisms of return on invested
capital considering small territories of isolated
energy systems (similar to DPM);
Return to special investment funds mechanism
in capacity tariff;
Introduction of tax levy to stimulate
development of renewables;
Increase in conservative expenditure base of
power suppliers (consequence of tariff
regulation policy) during tariff-setting
Extension of the long-term regulation period
to 20 years for grid companies of non-pricing
zone;
Enabling of the long-term regulation of grid
companies of isolated energy systems;
Development of simplified version of RAB-
regulation and long-term indexation for grid
companies of isolated energy systems;
Limitation of smoothing mechanisms’ use by
the regulators.
Development of budget programs for
minimization of negative consequences from
introduction of a new tariff regulation system
for consumers;
Consideration of parameters of the long-term
forecast of social and economic development
of Russia drawn up by the Ministry of
economic development.
Existing tariff (in general)
𝑇𝑖 = 𝑂𝑝𝐸𝑥 ∗ 𝑖𝑖 + 𝐶𝑎𝑝𝐸𝑥/𝑚
𝑖_𝑖 – inflation
m – period of capital depreciation
Tariff includes depreciation, return on capital is
not included.
Tariff required by investor
𝑇𝑖 = 𝑂𝑝𝐸𝑥 ∗ 𝑖𝑖 + 𝐶𝑎𝑝𝐸𝑥 ∗/𝑛 + 𝐶𝑎𝑝𝐸𝑥 ∗ 𝑟𝑖
𝑟𝑖 – capital yield higher than inflation
n – period of return on capital
Tariffs for power generation Grid tariffs End-consumer tariffs
39. Measures to improve the investment attractiveness of hydro power
39
In the current economic conditions construction of hydro projects is
unattractive to investors due to the following factors:
far-off locations of promising generating projects with no required
infrastructure;
high capital intensity of power generating facilities‘ construction and
long period of construction due to large size of these projects and use
of unique project schemes.
New hydropower projects have a number of unique characteristics in terms
of availability of power, transport and water infrastructures:
Flexible capacity
No fuel component in production costs
Renewable and environmentally friendly sources used for electricity
generation that reduce emissions and increase energy efficiency of
the economy.
Deterrent factors of new hydropower development Infrastructure role of hydropower
In the environment of lack of budget funds required for implementation of all planned projects, private investments should be attracted, the
model of wholesale and retail electricity and capacity markets should be improved, public-private partnership mechanisms should be
developed.
Essential measures to improve investment attractiveness for new hydropower development
Implementation of hydropower projects based on public-private partnership (PPP)
(development of legal act regulating opportunity to apply PPP mechanism in hydro power);
Providing long-term state guarantees to strategic investors;
Establishment of long-term policies on the electricity and capacity markets;
Tax benefits and guarantee of availability of long-term funding.
40. The state via authorized company (JSC ‘Dam’) funds project works (PD), construction of hydro technical facilities and reservoir zone through acquiring long-term
bonds;
Private investor via its own subsidiary (JSC ‘HPP’) acquires the equipment and funds power distribution scheme;
After project commissioning JSC ‘Dam’ leases hydro technical facilities to JSC ‘HPP’.
The amount of rent is determined based of capital investments of JSC Dam and maturity of bonds (30-35 years).
JSC ‘HPP’ operates the hydropower plant and pays rent to JSC ‘Dam’ from the revenue from electricity and capacity sales.
Proposal for PPP mechanism in new hydro power development
40
shares investmentslong-term bondsinvestments
hydro dam rent
rent payment
State Private investors
JSC ‘Dam’
(100% state-owned)
JSC ‘HPP’
(100% subsidiary of
investor/consortium of investors)
R&D Institutes
Civil works contractors
Suppliers
Customers
cash
other flows/
services
41. Long-term development program and new KPIs
41
5%
10%
15%
15%
15%
5%
5%
10%
10%
5%
5%
TSR, 5%
ROE, 10%
Limitation of net debt/EBITDA, 15%
Reliability criteria, 15%
Implementation of capacity
commissioning schedule, 5%
Financial leverage ratio, 15%
Share of procurements from small and medium
businesses, 5%
Labor intensity (Number of employees per
100 MW of available capacity), 10%
Share capital efficiency (EBITDA / Average annual
share capital), 10%
Introduction of corporate governance code in
accordance with the requirements, 5%
Integrated innovative factor, 5%
reliability and safety improvement of the Company’s generating
facilities
sustainable development of electricity generation
value accretion
Strategic goals of the long-term development program
Increase in asset value through implementation of modernization of operating
facilities and further development of electricity generation;
Maintenance of the key infrastructure utility systems, their operations and
safety;
Extend and improve the Company’s presence in growth territories and
enhance operating efficiency;
Implementation of innovative projects to ensure technological leadership and
sustainable development
Long-term development program objectives of RusHydro Group
On November 20, 2014, the Board of Directors approved a long-term development program of RusHydro Group.
In order to evaluate execution of all indicators, included in the methodology of calculation and valuation of indicators of the long-term development program, the
integrated ratio of implementation of the long-term development program had been developed to evaluate performance based on percentage of each indicator
(see below).
42. 2015 disclosure & IR calendar
42
April 23 1Q 2015 operating results
April 29 1Q 2015 RAS results
April 28-30 JPMorgan CEEMEA Conference (London)
May (TBC) VTB Capital Investment Forum "Russia calling!" (London)
May 20-21 Morgan Stanley GEMs (London)
June 9-10 BofA Merrill Lynch Utilities & Renewables Conference (London)
June (TBC) Renaissance Capital Investor Conference (Moscow)
Late June * Annual General Meeting of Shareholders
Early July** Dividend record date
July 8-9 Morgan Stanley GEMs Conference (New York)
June 30 1Q 2015 IFRS results & conference-call
July 23 2Q 2015 operating results
July 30 1H 2015 RAS results
August 28 1H 2015 IFRS results & conference-call
September (TBC) Sberbank CIB Russia & CIS Conference (London)
September 10 HSBC Conference (London)
September (TBC) Morgan Stanley Utility Conference (London)
Sep 30 – Oct 2 VTB Capital Investment Forum "Russia calling!" (Moscow)
October 22 9M 2015 operating results
October 29 9M 2015 RAS results
November (TBC) BofA Merrill Lynch Russia & CIS Investor Conference (London)
November 9-10 Goldman Sachs CEEMEA Conference (London)
December 15 9M 2015 IFRS results & conference-call
* - The Annual General Shareholders Meeting is held no earlier
than two months and no later than six months after the end of the
fiscal year.
** - In accordance with the Federal law No. 282-FZ of December
29, 2013, from 2014 the dividend record date may not be earlier
than 10 days, and may not be later than 20 days after, the date of
the resolution of the general shareholders meeting approving the
payment of the dividend.
44. Segment review* (1/3) – Hydropower: hit by low water and “tariff freeze”
44
FY’14 and 4Q’14 results (IFRS), RUB mn
Average selling spot power prices in European Russia in FY’14
– RUB 1,227/MWh (+9.1%), in 4Q’14 – RUB 1,241/MWh
(+4.8%); in Siberia in FY’14 – RUB 777/MWh (+18.1%), in
4Q’14 – RUB 977/MWh (+48.9%);
In 4Q’14, hydropower and pumped storage power plants
decreased electricity generation by 23.5% to 17,527 GWh, in
FY’14 – by 12.1% to 84,115 GWh;
Gas tariffs were hiked 15% from July 1, 2012 and July 1,
2013; cancellation of gas tariff indexation in 2014 so far led
to stabilization of spot prices in the 1st price zone;
Weak production was partly offset by partial liberalization of
capacity sales in Siberia.
Key highlights
* See full segment information in Note 5 of the IFRS report
4Q’14 4Q’13 chg FY’14 FY’13 chg
Revenue 23,433 25,303 -7.4% 98,581 99,138 -0.6%
from external
companies
21,136 21,636 -2.3% 89,177 88,882 0.3%
- sales of electricity 14,119 15,747 -10.3% 64,016 66,132 -3.2%
- heat sales 54 47 14.9% 144 141 2.1%
- sales of capacity 6,722 5,783 16.2% 23,467 22,317 5.2%
- other revenue 241 59 308.5% 1,550 292 430.8%
from intercompany
operations
2,297 3,667 -37.4% 9,404 10,256 -8.3%
Gain on disposal of
subsidiaries and
associates
- 224 n/a - 224 n/a
Operating expenses (12,080) (10,474) 15.3% (41,233) (36,244) 13.8%
Depreciation (3,674) (2,408) 52.6% (12,173) (11,380) 7.0%
Non-cash items (5,358) (17,628) -69.6% (9,560) (28,826) -66.8%
EBITDA 11,353 15,053 -24.6% 57,348 63,118 -9.1%
EBITDA margin 48.4% 59.5% -11.1pp 58.2% 63.7% -5.5pp
Capex 15,277 10,819 41.2% 42,496 35,632 19.3%
Debt 113,060 102,576 10.2%
45. Segment review* (2/3) – RAO ES of East: supported by low hydro and T&D business
45
The electricity generation by the plants of RAO ES of East in 4Q
2014 – 10,079 GWh (+21.0%), in FY 2014 – 31,155 GWh (+3.8%);
Heat output was down by 2%;
Ca. 7% average power tariff increase in FY’14
Government grants in FY’14 decreased by 6% to RUB 12.4 bn;
Additional revenue as a result of resumption of “last mile”
arrangement in the Far East;
Key highlights
* See full segment information in Note 5 of the IFRS report
FY’14 and 4Q’14 results (IFRS), RUB mn
4Q’14 4Q’13 chg FY’14 FY’13 chg
Revenue 52,925 48,908 8.2% 162,699 152,829 6.5%
from external
companies
48,150 42,494 13.3% 149,935 138,925 7.9%
- sales of electricity 29,167 25,059 16.4% 93,888 86,550 8.5%
- heat sales 11,780 11,111 6.0% 33,912 33,002 2.8%
- sales of capacity 1,084 910 19.1% 4,268 3,102 37.6%
- other revenue 6,119 5,414 13.0% 17,867 16,271 9.8%
from intercompany
operations
186 407 -54.3% 351 671 -47.7%
government grants 4,589 6,007 -23.6% 12,413 13,233 -6.2%
Operating expenses (43,792) (37,642) 16.3% (147,301) (135,797) 8.5%
Depreciation (1,816) (1,486) 22.2% (7,289) (5,174) 40.9%
Non-cash items (4,772) (4,875) -2.1% (5,372) (4,830) 11.2%
EBITDA 9,133 11,266 -18.9% 15,398 17,032 -9.6%
EBITDA margin 17.3% 23.0% -5.7pp 9.5% 11.1% -1.6pp
Capex 8,158 7,838 4.1% 19,486 16,821 15.8%
Debt 54,496 44,492 22.5%
46. Segment review* (3/3) – Retail: slow recovery
46
Gradual recovery in profitability on the back of higher retail tariffs;
Total electricity output in 1Q’14 – 10,632 GWh (-9.6% year-on-year);
in 2Q’14 – 7,937 GWh (-13% year-on-year) in 3Q’14 – 7,776 GWh
(+0,7 year-on-year); in 4Q’14 – 10,622 GWh (+3% year-on-year).
In FY’14, RusHydro's electricity retail companies have decreased
output by 5% to 37,564 GWh as several major industrial consumers
switched to their own wholesale purchases following market
liberalization.
Key highlights
4Q’14 4Q’13 chg FY’14 FY’13 chg
Revenue 24,113 22,209 8.6% 82,230 79,168 3.9%
from external companies 24,108 21,765 10.8% 82,211 78,712 4.4%
- sales of electricity 23,833 22,026 8.2% 81,307 77,951 4.3%
- other revenue 275 -261 n/a 904 761 18.8%
from intercompany
operations
5 444 -98.9% 19 456 -95.8%
Operating expenses (23,941) (22,015) +8.7% (81,092) (78,933) +2.7%
Depreciation (178) (173) 2.9% (695) (670) 3.7%
Non-cash items (526) (527) -0.2% (560) (1,170) -52.1%
EBITDA 172 194 -11.3% 1,138 235 384.3%
EBITDA margin 0.7% 0.9% -0.2pp 1.4% 0.3% 1.1pp
Capex 74 114 -35.1% 146 233 -37.3%
Debt - - 3,403 2,196 55.0%
* See full segment information in Note 5 of the IFRS report
FY’14 and 4Q’14 results (IFRS), RUB mn
47. Multiples of select international peer group
47
2015E 2016E 2017Е
RusHydro 4,3 4,1 3,9
Discount to “hydro companies”* -49% -44% -47%
Discount to RES companies of developed markets -50% -50% -47%
Discount to RES companies of developing markets -53% -50% -46%
«Hydro companies»
Verbund (Austria) 12,5 11,8 11,0
Cia Energetica de Sao Paulo (Brasil) 3,1 7,3 8,4
Tractebel Energia SA (Brasil) 8,9 6,9 5,9
AES Tiete (Brasil) 5,8 6,9 5,8
Jaiprakash Hydro Power Ltd (India) 11,4 7,2 5,9
NHPC (India) 8,0 7,6 7,5
CEMIG (Brasil) 6,8 7,0 8,9
China Yangtze Power (China) 11,2 11,3 n/a
Average 8,5 8,2 7,6
Median 8,5 7,2 7,5
For reference. Russian peers
TGK-1 3,1 3,1 3,2
EV/EBITDA EV/ Revenue
2015E 2016E 2017Е
RusHydro 1,0 0,9 0,9
«Hydro companies» (median) 3,9 4,2 3,9
Discount to “hydro companies” -75% -78% -77%
RES companies of developed markets 5,7 5,7 5,3
Discount to RES companies of developed markets -83% -84% -83%
RES companies of developing markets 5,9 5,4 5,7
Discount to RES companies of developing markets
-83% -83% -84%
P/E
2015E 2016E 2017Е
RusHydro 5,0 4,7 4,1
«Hydro companies» (median) 13,0 11,8 9,2
Discount to “hydro companies” -62% -61% -55%
RES companies of developed markets 31,0 23,5 21,2
Discount to RES companies of developed markets -84% -80% -80%
RES companies of developing markets 15,0 13,0 10,6
Discount to RES companies of developing markets -67% -64% -61%
48. Potential development of flood control hydropower plants in the Far East
48
Projects
commissioning after 2025commissioning is possible before 2025
control of over 90% of water flow into the creek of the Zeya river;
territories of over 80,000 ha are safe from floods;
more than 300,000 people are protected from floods.
Gilyuyskaya HPP, 462 MW
Selemdzhinskaya HPP, 300 MW
Nizhne-Nimanskaya HPP, 600 MW
Nizhne-Zeyskaya HPP, 400 MW
Guaranteed sale of electricity produced by HPPs:
– technical ability to supply power to deficient regions of the Russian Far East (the South of Primorye)
– exploring potential and taking essential actions to provide export of power to China
Determine funding sources and securing economic efficiency of projects (implementation of public private partnership mechanism, strategic
partners’ participation)
Alternative technical solutions (construction of flood control hydro technical facilities without power generation capacity) should be sufficiently
explored and ruled out
Construction of flood control HPPs could result in:
The following conditions are required to make an investment decision on projects
The abnormal floods in the Far East of Russia in 2013 revealed an
unresolved problem of unregulated rivers. RusHydro has been
commissioned to develop the feasibility studies of storage-based
hydropower plants in order to prevent future abnormal floods in
the region.
49. Age of HPPs in Russia and in the world
49
0
1000
2000
3000
4000
5000
6000
7000
Russia, MW
0
1000
2000
3000
4000
5000
6000
Brazil, MW
0
1000
2000
3000
4000
5000
Canada, MW
0
500
1000
1500
2000
2500
India, MW
0
1000
2000
3000
4000
5000
6000
USA, MW
0
5000
10000
15000
20000
25000
30000
China, MW
The Russian Federation operates one of the
largest and at the same time one of oldest
hydropower generation fleets;
Underinvestment in the 1990s and 2000s
negatively impacted reliability and safety of
generating facilities and the equipment;
Technical reconstruction and modernization
of hydropower allows to extend the operation
period of the equipment by an average of 30-
40 years.
6%
1%
22%
20%
40%
10%
21%
34%
48%
57%
47%
90%
73%
65%
30%
23%
13%
China
India
Brazil
Canada
Russia
USA
≥ 51 yrs 31-50 yrs ≤ 30 yrs
Age of HPPs per country
50. Increase in output and capacity as a result of hydro modernization
50
0,0
200,0
400,0
600,0
800,0
1 000,0
1 200,0
1 400,0
1 600,0
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Increaseofoutput,GWh*
Increaseofcapacity,MW
Прирост выработки за счет внутристанционной оптимизации
Прирост выработки за счет снижение холостых сбросов воды
Прирост выработки за счет увеличения КПД ГА
Прирост выработки за счет сокращения технических ограничений
Прирост мощности в МВт
* - accumulated increase of output
Increase of output due to in-house optimization
Increase of output due lower water spills
Increase of output due to efficiency gains from new units
Increase of output due to removal of technical constraints
Increase of installed capacity, in MW
51. Thomson Reuters Extel 2011:
No.1 IR Team in Russian Utilities
Thomson Reuters Extel 2012:
No.1 IR Team in Russian Utilities
IR contacts
tel.: +7 (495) 225-3232 ext. 1607, 1319, 1304
ir@rushydro.ru
Thomson Reuters Extel 2013:
No.1 IR Team in Russian Utilities
Best CFO, mid-cap (Russia), #1
Best IRO. mid-cap (Russia), #2
Best overall IR, mid-cap (Russia), #3
