RusHydro Group 1H 2021 IFRS results & market update - August 26, 2021
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RusHydro Group
1H 2021 IFRS results &
market update
August 26, 2021
Disclaimer
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part, may be published or distributed, directly or indirectly in or into the United States.
This Presentation has been prepared by PJSC “RusHydro” (the “Company”). It contains certain statements that are neither reported financial results nor
other historical information. These statements are forward-looking statements which reflect current views and estimates of the Company. These forward-
looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors that are beyond the Company’s ability to control or estimate precisely, such as future
market and economic conditions, the behaviour of other market participants, the ability to successfully integrate acquired businesses and achieve
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numerical figures included in this Presentation have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables
may not be an arithmetic aggregation of the figures that preceded them.
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By attending this presentation, you agree to be bound by the foregoing limitations.
2Key figures & highlights of 1H 2021
Stable results following improvement of financial performance in the 2nd quarter of 2021 maintaining a strong EBITDA
margin
63.7 231.7 66.4 28.6% 40.3 201.3 0.79x
TWh RUB bn RUB bn EBITDA margin RUB bn RUB bn net debt/
Power output in 1H’21 (1) Revenue EBITDA in 1H’21 (+0.6 pp vs 2020) Net profit in 1H’21 financial debt of EBITDA (3)
(-7.6% y-o-y) in 1H’21 (+6.3% y-o-y) (-1.9% y-o-y) (-14,0% y-o-y) RusHydro Group (2)
1
• Revenue growth of 6.3% to RUB 231.7 bn
Financial performance • Solid EBITDA margin of 28.6% (+0.6 b.p. vs. 2020)
• Reduction of hydropower output partially mitigated by spot market price growth (please see slide 9)
2
• Board of Directors approved investment program for 2021-2025
Investment plan • 6 Far East projects with guaranteed return on investment (4 are natural gas powered)
• Final decree is pending approval by the government
3
Asset Management •• Board of Directors approved divestment of JSC Chuvash Energy Retail Company
Decrease of debentures by up to RUB 1.5 bn
4
Operating efficiency • Manageable costs in 1Q 2021 increased a mere 3.8% - well below inflation
•
5
ESG profile Conversion of 50 MW Anadyrskaya CHPP from coal to natural gas
6 • All-time high payout in the Company’s history - RUB 23.3 bn for 2020 (div. yield of 6.4%)
Dividends • Current dividend policy extended for 6 years until May 2027 – guaranteed payout (slide 13)
• Governmental decree 1589-r from 11.06.2021 stipulates dividend payout at the level of 50% of
adjusted net income – consistent solid payout
(1) including electricity output of Boguchanskaya HPP (50/50 JV with UC RUSAL), excluding JSC MEK and Primorskaya GRES.
(2) as of July 31, 2021.
(3) Net financial debt is calculated as gross financial debt minus cash and cash equivalents (including bank deposits maturing in less than one year)
31H 2021 Revenue
Increase of water inflows and diversified asset base
Key highlights of 2Q and 1H 2021 2Q and 1H 2021 Revenue dynamics
Revenue in 2Q and 1H 2021 increased by 7.5% and 6.3% to Hydropower +6.3%
RUB 107.9 bn and RUB 231.7 bn, respectively due to: Retail 231,7
Far East 218,1 2,1; 1%
Other 3,0; 1%
- capacity sales (DPM projects)
- retail revenue (volume related) 84,5; 36%
77,6; 36%
- electricity sales in the Far East (volume related) +7.5%
107,9
- heat & hot water sales (volume related) 100,4
1,3 73,2; 34% 78,7; 34%
- spot market price growth 1,6
37,0
33,6
34,3
71,5% of revenues in 1H 2021 came from electricity and 32,1
66,4; 29%
64,2; 29%
capacity sales (in line with 1H 2020) 33,0 35,4
2Q 2020 2Q 2021 1H 2020 1H 2021
1H 2020 Sales review 1H 2021 Sales review
Heat and hot water sales
Heat and hot water sales
24.7 11.3% 27.1 11.7%
Capacity sales
28.0 12.8% Capacity sales
Other revenue 33.0 14.2%
RUB 6.2% RUB
13.5 231.7 bn Other Revenue
218.1 bn
11.9 5.2%
Gov’t subsidies
127.7 132.9 Gov’t subsidies
24.2 11.1%
26.8 11.6%
Electricity sales Electricity Sales
58.6% 57.3%
41H 2021 EBITDA
Solid hydropower performance, stable in Far East
Key highlights of 2Q and 1H 2021 2Q and 1H 2021 EBITDA dynamics
2Q EBITDA increased by 1.3% to RUB 31.5 bn -1.9%
2Q margin - 29.2% (vs. 1Q of 28.2%)
1H EBITDA decreased slightly (by 1.9%) to RUB 66.4 bn
1H margin of 28.6% (-2.4 b.p. vs. 1H’20, +0.6 b.p. vs. 2020)
Main driver for EBITDA performance – fuel cost RUB +1.9 bn
+1.3%
Manageable operating expenses (57% of total) increased by 67,7 66,4
3.8% - well below inflation
Far East segment’s EBITDA margin in line with last year 11.8% 31,0 31,5
in 1H’21 (vs. 12.0% in 1H’20)
2Q 2020 2Q 2021 1H 2020 1H 2021
1H 2021 EBITDA & EBITDA margin dynamics 1H 2021 Operating expenses
EBITDA 1H'20 Increase in purchased electricity & capacity (from 11% to 18%)
70,4% EBITDA 1H'21 67,7 66,4 mitigated by revenue growth
Employee benefits
EBITDA margin 1H'20
65,1% 1% Fuel costs
EBITDA margin 1H'21
50,3 49,3 4% 3% 1%
9% Grid company services
on electricity distribution
31,0% 9% 22% Purchased electricity
& capacity
28,6% RUB Third party services
14,2 14,3 181.1 bn
Depreciation
3,1% 12,0% 11,8%
2,5 3,2 0,7 0,7% 18% Taxes
3,7% -1,3% -0,4
Other materials
Hydropower Retail Far East Other RusHydro 22%
Group 11% Water usage
(consolidated)
Other expenses
52021 outlook and key drivers of financial performance
1
• RusHydro maintains stable operational outlook through 2021
Operations
• 2021 hydropower production – in line with forecast, slightly below 2020 on the back of record-high base effect
2
• 2021 Revenue – RUB 457.2 bn (-0.8% vs. forecast, +6.4% vs. 2020)
Financial
performance • 2021 EBITDA – RUB 110.4 bn (in line with forecast, -8.2% vs. 2020)
3
• Expecting approval of guaranteed rate of return regarding 6 projects in the Far East (Vladivostokskaya CHP-2, Artyomovskaya
CHP-2, Khabarovskaya CHP-4, Yakutskaya GRES-2, Neryungrinskaya GRES and Partizanskaya GRES), 4 out of 6 DPM projects
in the Far East will be powered by natural gas
Far East
• Expected return – 12.5%, effective return – 11,0%, return of investments – 20 years
business
• Draft decree approved by relevant authorities. Ministry of Energy to submit it for approval by the Government.
• Expected before the end of 2021
4
Capacity • Increase of installed capacity by 48 MW in 2021: Krasnogorskaya small HPP-1 (25 MW, DPM for renewables project) and
additions modernization (23 MW)
5
• 2021 Net Debt/EBITDA – 1.5x (vs. forecast of 1.7x)
Leverage
• 2021 Debt/EBITDA – 1.7x (vs. forecast of 2.3x)
6Appendix 7
1H 2021 operating results
Stable production, water inflows at normal level or above
• Electricity output in 1H 2021 was at the normal level or above
• Decrease year-on-year on the back of high base effect
• Record-high 2Q production in Siberia
63.7 TWh (-7.6%) – total electricity production by power plants of RusHydro Group in
↗ Volga-Kama HPPs, Siberia and Far East: water
2020:
inflows to major reservoirs at the normal level or
• 49.5 TWh (-9.7%) – total production by hydropower plants;
slightly above;
• 14.1 TWh (+0.6%) – electricity production by fossil fuel plants in the Far East;
• 0.2 TWh (-2.2%) – electricity production by renewables.
↗ RAO ES East: electricity generation growth
15.9 million GCal (-6.2%) – total heat output by thermal plants.
following consumption growth in the region.
9.4 TWh (+6.4%) – electricity production of Boguchanskaya HPP.
1H 2020 / 1H 2021 – Total electricity production, TWh 1 1H 2020 / 1H 2021 – Hydropower production, TWh 2
Center
Hydro + renewables Siberia
South of Russia
Thermal
Far East
-7.4% -10.1%
68,8
63,7 54,8
49,5
13,8 9,1
14,1
3,3 9,8
3,7
13,6
14,8
55,0
49,7
28,8
21,2
1H 2020 1H 2021 1H 2020 1H 2021
(1) Excluding Armenia, Primorskaya GRES and Boguchanskaya HPP
(2) Excluding renewables
8Market overview.
Solid pricing environment
Spot market price dynamics:
1Q 2021: 1st price zone – 1,327 RUB/MWh (+15.7% y-o-y), 2nd price zone - 861 RUB/MWh (-2.2% y-o-y)
2020: 1st price zone – 1,209 RUB/MWh (-6.9% y-o-y), 2nd price zone - 838 RUB/MWh (+8.3% y-o-y)
Decrease in HPP output partially mitigated by spot market prices growth
Capacity price dynamics:
1Q 2021: 1st price zone – 157k RUB/MW/month (+24.5% y-o-y), 2nd price zone - 257k RUB/MW/month (+20.8% y-o-y)
2020: 1st price zone – 125k RUB/MW/month (+1.7% y-o-y), 2nd price zone - 210k RUB/MW/month (-2.0% y-o-y)
KOM prices are expected to show stable performance until 2025 with indexation (LY inflation less 0.1%)
HPPs under DPM projects:
1Q 2021: average selling capacity price - 2,212k RUB/MW/month
2020: average selling capacity price - 2,285k RUB/MW/month
Launch of Zaramagskaya HPP-1, Verkhnebalkarskaya, Ust-Dzhegutinskaya and Barsuchkovskaya small HPPs, will bring in additional
annual revenue of RUB 11 bn.
Electricity tariffs for RusHydro’s HPPs in pricing zones Capacity tariffs for RusHydro’s HPPs in pricing zones
RUB/MWh ‘000 RUB/MW/month
1
1,297.9 1,326.7 2
1,284.7 257.4
1,209.0
214.0 209.6
200.4
2
1
860.8 157.3
838.1
825.3 773.7 125.0
119.3 122.9
2018 2019 2020 1H 2021 2018 2019 2020 1H 2021
European Russia Siberia European Russia Siberia
(1) Spot market price as of 30.06.2021
(2) Capacity tariffs as of 30.06.2021
9Hydropower production trends 2017-2021
Stable production expected in 3Q’21
Solid 1H results: 3Q’21 outlook:
• Volga-Kama cascade, Siberia and the Far East – inflows at the normal • Siberia – inflows above the normal level
level or slightly above • Far East – inflows close to the normal level
• South of Russia – inflows at the normal level • Volga-Kama cascade and South of Russia – inflows below the normal
level or close to it
Stable performance expected for 3Q’21
Center of Russia, GWh Siberia, GWh
4 500 2017
2017
6 500 2018
2018
6 000 2019 4 000 2019
2020 2020
5 500 Long-run average 3 500 Long-run average
5 000 2021 2021
3 000
4 500
4 000 2 500
3 500
2 000
3 000
2 500 1 500
2 000 1 000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
South of Russia & N. Caucasus, GWh Far East, GWh
2017 2017
1 200 2018 1 750
2018
1 100 2019 1 650 2019
2020 2020
1 000 Long-run average 1 550 Long-run average
900 2021 2021
1 450
800
1 350
700
1 250
600
500 1 150
400 1 050
300 950
200 850
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
10Debt profile (1)
Solid financial position. Ruble-denominated debt
Key highlights Debt repayment profile (3) (RUB bn)
Total financial debt as of July 31, 2021: RUB 201.3 bn
Total debt is 100% ruble-denominated
Sustainably low leverage with a Net Financial Debt / EBITDA at 0.8х (2)
Average RUB interest rate of 6.9% p.a.(3) and comfortable weighted-
average maturity of debt at 2.0 years
Current RusHydro Group’s credit ratings at sovereign level
67.5
32.4
S&P Moody’s Fitch АCRА 29.7 29.4 23.2
BBB- (stable) Baa3 (stable) BBB (stable) AAA(RU) (stable)
August - Dec 2021 2022 2023 2024 Since 2025
Transparent debt composition (RUB bn) Debt portfolio
Other
7.8% Interest
RAO ES East 86% – Fixed rate
Subgroup Liabilities under derivative
37.2% financial instruments
4.8% (4)
RUB Currency 100% – RUB
201.3 bn
PJSC RusHydro
50.2%
State banks Local Eurobonds Other
Sources bonds
55% 35% 8%
2%
(1) As of July 31, 2021
(2) In accordance with the latest RusHydro Group’s IFRS results as of 30 June 2021
(3) Debt excluding interest payments, lease liabilities and obligations under derivative financial instruments (forward contract with VTB)
(4) Liabilities under derivative financial instruments recorded at fair value in RusHydro Group’s IFRS as of 30 June 2021 (forward contract with VTB in the amount of RUB 9.731 bn)
11Capex: investment plan 2021-2025
Well-balance in terms of financing sources
On April 14, 2021 the Board of Directors approved RusHydro’s new investment program for RUB 517 bn2.
Key highlights Investment plan for 2021-2025, RUB bn (incl. VAT)
Other (1)
Far East subsidiaries
• CAPEX forecast based on highest capped figures, and
New costruction
management seeks to optimize annual spending to ensure stable Modernization projects (decree 1544-r, DPM-2)
financial position of the Group. 123,9 Modernization (hydro)
4,0 114,9
• 1.9 GW of new electric capacity and 2,682 Gcal/h of heat 3,0
104,8
capacity
2,0
41,2
• Construction and modernization of over 135 km of heat and 41,3
89,8
29,5 2,2 83,8
7,794 km of power lines 2,5
23,2
• No major projects for 2021-2022 17,5 7,3 21,5
12,7 0,2
0,0
• 4 new gas-fired projects with guaranteed return on investment
(please see slide 27 in Appendix) 35,0 33,2
34,0 27,7 32,0
• Decommissioning of 4 outdated fossil-fuel power plants
• Project documentation for additional 2 projects (expected
guaranteed return on investment in line with modernization 27,2 30,2 31,0 31,0 27,7
projects under decree 1544-r)
• Investment program is balanced in terms of financing sources. 2021 2022 2023 2024 2025
• Modernization program is carried out according to the schedule
(1) Investment plans of retail subsidiaries, other subsidiaries and R&D
(2) Excluding Boguchanskaya HPP
12Dividends
Current policy with guaranteed payout extended for 6 years
Key highlights
To improve predictability and consistency of forecasting dividend payments Board of Directors prolonged the current
dividend policy for six years years:
Divmin = (Div-3year+ Div-2year + Div-1year) / 3
The new dividend policy maintains 50% of IFRS net profit as base case.
Minimum dividend threshold is set at the average dividend paid over the previous three years.
Dividend payout (RUB bn)
Dividends paid, RUB bn 23.3
19.9
Dividend per share, kopecks
15.0 15.9 15.7
11.2
6.0 5.3
5.2 4.7
2.5 3.7 3.9 3.7 3.6
2.6
1.4 1.6
0.8 1.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(25% of IFRS net (50% of RAS net (50% of IFRS net (50% of IFRS net (50% of IFRS net 3yrs avg (50% of IFRS net
income) income) income) income) income) (guaranteed level) profit)
13Thank you for your attention
IR contact details
tel.: +7 (495) 122 05 05
ext. 1304
ir@rushydro.ru
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