RusHydro Investor presentation

ATON Utilities Day, September 17, 2018 Key figures and facts

Key figures 39.0 140 71 >60% 104 11.2 1.0x 68% GW TWh Of ’s RUB bn RUB bn net debt/ EBITDA margin of thousand installed hydro LTM EBITDA hydropower Installed electric Total output of FY2017 EBITDA Dividends for employees capacity controlled as of 1H’18 segment in capacity of RusHydro Group in FY2017 paid in 2018 by RusHydro 1H ‘18 RusHydro Group(1) 2017 (1) Group

Largest generating company in Russia and one of the largest publicly traded generating company with predominantly hydro assets in the world with installed capacity of 39.0 GW (1) (ca.16% of Russia’s total installed electric capacity)

A developing and successful dividend story: 7 consecutive years of increasing dividend payments since 2010; dividend payout in the amount of 50% of net profit in 2016-2017

Focus on the Russian market: implementation of new construction projects, extension of life-time and improving efficiency of existing assets

Diversified holding company with hydro and thermal generation assets, alternative renewables, transmission and distribution, retail, R&D and repair assets

One of the most liquid generating companies of the Russian stock market: local shares included in Level 1 list on MOEX, DRs listed on the LSE and trading on OTCQX in New York, included in MSCI Russia index.

Green utility – one of the world’s largest renewable energy players, a sustainable development leader in Russia

(1) Including 3 GW Boguchanskaya hydropower plant, 50/50 JV with UC 2 Geography of key assets - benefitting from high diversification

Far East European Russia Siberia(1) Key facts Electricity Heat 72(1) 35 >100,000 km 0,1 hydro power major fossil fuel plants of electricity grids 5,1 plants 14.6 10.2 13.5 18,147 5 GW GW GW Gcal/h 4 ~ 4,000 km 8,3 types of non-hydro retail companies of heating networks renewables 14,6 10,2 18 147

Hydro(2) Fossil fuel Non-hydro renewables

Hydropower

Hydropower u/construction

Non-hydro renewables

Fossil fuel plants

Electricity retail

3 4

2

5 1 6 400 Armenia 561 MW

2 997 2 671 2 467 2 010 1 467 1 403 1 370 1 330 1 200 1 020 1 000 900 720 552 520

Sayano- Boguchanskaya Volzhskaya Zhigulevskaya Bureyskaya Primorskaya Saratovskaya Cheboksarskaya Zeyskaya Zagorskaya Votkinskaya Chirkeyskaya Kolymskaya Khabarovskaya Kamskaya Nizhegorodskaya Shushenskaya HPP HPP HPP HPP TPP HPP HPP HPP PSP HPP HPP HPP TPP-3 HPP HPP HPP (1) Including 2,997MW (total capacity) of Boguchanskaya HPP (50% owned by RusHydro) (2) Including 1,200MW of pumped storage capacity 3 RusHydro: preliminary results of transformation

2015 2017

38.7 (1) Installed electric capacity, GW 39.0 (1)

127 (1) Electricity generation, TWh 140.2 (1)

73 104 EBITDA, RUB bn/ EBITDA margin, % 20% 27%

6 20(2) Dividend, RUB bn/ Dividend per share, kopecks 1.56 4.66(2)

197 Total debt, RUB bn / 190(3) 2.0x Net debt/EBITDA 1.1x(3)

-49% (4) 3-year total shareholder return (TSR) +45% (5)

(1) Including capacity of Boguchanskaya HPP, a 50/50 JV with UC RUSAL (2) Dividends paid in 2017 (3) Reflecting cancelation of guarantee of Boguchanskaya HPP loan by PJSC RusHydro (4) For 2012-2014 (5) For 2015-2017 4 Corporate governance

Key highlights Shareholder structure(1)

. The Russian government directly owns 60.6% of RusHydro. Other shareholders A special Presidential decree stipulates minimum government's JSC Avitrans ownership at 60.5% 20.1% 6.0% . RusHydro’s shares are listed on the Exchange and on the London Stock Exchange in the form of ADRs (ticker - HYDR) VTB Bank Russian . The Board of Directors includes 13 reputable representatives 13.3% Federation and is headed by Mr. Yuri Trutnev – Deputy Prime Minister and 60.6% Authorized Representative of the President in the Far Eastern Federal District

Board of directors CEO Non-independent / Executive Directors Independent Directors(2)

Vyacheslav Kravchenko Sergey Shishin Deputy Minister of Energy Senior Vice-President, VTB Bank Pavel Grachev CEO of Pavel Livinsky Andrei Shishkin General Director of Vice-President, Sergei Ivanov PJSC General Director of RT-Capital Artem Avetisyan Nikolai Shulginov Director of New Business at Agency Maxim Bystrov Yuri Trutnev Chairman of the Management Board of Strategic Initiatives for Promotion Chairman of the Management Nikolai Shulginov Chairman of the Board - General Director of RusHydro of New Projects Board, ATS, NP Market Council Chairman of the Deputy Prime Minister Management Board - and Authorized Mikhail Rasstrigin Nikolai Rogalev Vyacheslav Pivovarov General Director of Representative of the Deputy Minister of Economic Head of the National Research CEO of Altera Capital RusHydro President in the Far Development University “MEI” Works in the electricity Eastern Federal District sector since 1976

(1) As at 30 June 2018 (2) Independent Directors in accordance with the UK Corporate Governance Code 5 Key factors of RusHydro Group value growth plan (1)

On October 27, 2017, the Board of Directors approved the value growth plan of RusHydro Group through 2021 and commissioned the Management Board to prepare necessary applications to the Government of the Russian Federation for organization of measures in support of the Plan, as well as draft regulations aimed at introduction of long-tem tariffs and return on investment principles.

Current market cap ↗ Increase in company transparency and improved corporate Decrease of market discount governance quality; ↗ Ensuring sustainably high and predictable dividend;

Base fundamental value ↗ Increased liquidity of local shares and depositary receipts, weight increase of RusHydro’s shares in key indices; ↗ Diversification of shareholder base; Operating efficiency and opex optimization 13.7 ↗ Increased profile for international financial audiences; ↗ Compliance with sustainable development criteria. Decrease of cost of production through modernization 0.8

Decrease in transmission and distribution losses 0.6

Increase in efficiency of electricity retail and 1.0 Changing tariff system in the Far East Federal accounts receivable management District with the view to establish long-term tariff regulation for operating facilities, Sale of non-core assets 0.5 providing economically justified tariffs, enabling return on invested capital, as well Other measures 1.3 as amending regulation in order to include lost income in the tariffs. Long-term tariffs in the Far East 17.5

Strategic deals and JVs 11.3

Target fundamental value

(1) Effects estimate as at 2017. (2) Measures, aimed at improved energy efficiency and optimization of subsidiaries’ activity. 6 Overview of forward contract with VTB

RUB 55 bn 1 No mandatory buy-back of shares from VTB Bank by RusHydro (“put)  55 bn shares RusHydro Dividends paid to VTB will be netted against quarterly interest payments  5-year non-deliverable forward contract Potential additional income for RusHydro in case of further sale of the stake at a price above RUB 55 bn  2 Option of early settlement before expiration of the 5-year term Cash*  RusHydro Review of the forward rate along inline with CBR key rate  Cash Shares Requirement of Gov’t approval of sale of VTB Bank stake to strategic * Direction of the settlement depends on investor  the sale price and is calculated as the difference between forward and sale Strategic The fair value of forward capitalized at initial recognition is not a subject to  prices investor (s) change

Significant volume of RusHydro’s potential liabilities will be covered 5.66% -0.82 p.p. by third party investors via sale of RusHydro’s shares and dividend Current effective Reduction of average rate forward rate of RusHydro Group debt paid to VTB portfolio due to the forward contract (1) The transaction creates strong long-term incentives for the management to maximize company value in the interest if all shareholders Funds raised via the forward contract transaction were used for 702 >RUB 6.7 repayment of external debt of RAO ES East Subgroup companies, RUB mn allowing to significantly reduce consolidated debt of RusHydro Group. Effect from reduced bn Primarily short term bank loans were paid back, improving duration of payments to the Bank due Expected effect from to reduction of the CBR’s reduced payments to the the overall debt portfolio key rate in 2017 Bank due to reduction of the CBR’s key rate for 5 years(2)

(1) Not reflecting expected further reduction of the rate by the Central Bank (2) As of 23.03.2018 7 RusHydro Group 1H 2018 & FY 2017 operating results

. 67.4 TWh (+6.0% y-o-y) – total electricity production by power plants of RusHydro ↗ Volga-Kama cascade: increased water inflows Group in 1H 2018. to major reservoirs of the (1.2x); • 50.6 TWh (+5.5% y-o-y) – total production by hydropower plants (HPPs) and ↗ South of Russia and Siberia: water inflow to pumped storage hydropower plants (PSPs) major reservoirs at normal level; ↗ RAO ES East: growth of electricity generation • 16.5 TWh (+11.9%) – electricity production by fossil fuel plants in the Far East by thermal power plants due to lower hydro • 0.2 TWh (-1.8%) – electricity production by renewables volumes and increase in consumption; . 17,659 thousand GCal (+5.4%) – total heat output by fossil fuel plants. ↗ Far East: increase in electricity sales to China . 6.2 TWh (-8.6%) – electricity production of Boguchanskaya hydropower plant. and UES of Siberia by 5% y-o-y.

1H’17/1H’18 – European Russia and Siberia, hydro only - (price zones), GWh 1H’17/1H’18 – Far East (non-price and isolated zones), GWh

+7.1% +4.3%

12,832 12,333 Siberia 8,375 8,228 Hydro, RES 3,454 3,608 South Fossil fuel Center 23,808 25,985 15,349 16,525

1H 2017 1H 2018 1H 2017 1H 2018

For reference only: FY’16/17 – European part of Russia and Siberia (price zones), GWh FY’16/17 – Far East (non-price and isolated zones), GWh

+3.1% -0.6% Siberia 29,208 25,380 South 15,904 14,484 Hydro, RES 6,826 Center 8,239 Fossil fuel 31,672 32,824 39,372 46,985

2016 2017 2016 2017

8 1H 2018 financial results review

Key highlights . Key growth factors: ↗ solid operating results of hydropower plants in European Russia; ↗ increase in revenue from electricity sales of RAO ES East subgroup; 200.9 59.9 29.8% +1.4% ↗ growth of capacity sales following prices indexation. RUB bn RUB bn EBITDA margin manageable costs ↗ sound cost control. increase (excl. fuel revenue EBITDA in 1H 2018 cost) in 1H 2018 . Negative factors affecting results: in 1H 2018 In 1H 2018 ↘ Increase in fuel costs following significant increase in electricity and heat output as (+7.0%) (+16.3%) well as coal price growth.

Revenue, bn RUB Operating expenses, bn RUB Government grants 200.9 Operating revenue 187.7 6.8 20.0

92.2 84.3 154.1 2.2 9.6 180.9 180.9 147.7 82.1 82.6 68.9 70.4

2Q'2017 2Q'2018 1H'2017 1H'2018 2Q'2017 2Q'2018 1H'2017 1H'2018

EBITDA, bn RUB Net profit, bn RUB EBITDA 29.8% 30.6% Net profit (reported) EBITDA margin 27.5% Net profit (adj.) (1) 38.4 32.3 25.3%

59.9 17.5 51.5 11.9 36.7 22.3 28.2 21.3 13.7 3.5 2Q'2017 2Q'2018 1H'2017 1H'2018 2Q'2017 2Q'2018 1H'2017 1H'2018

(1) Net profit is adjusted for the effects of recognition of financial income/expense arising from the change in fair value of non-deliverable forward contract, impairment of fixed assets, impairment of accounts receivable, profit / loss on disposal of property, plant and equipment, as well as other operating income arising from the change in fair value of financial assets measured through profit or loss. 9 RusHydro Group debt profile (1)

Key highlights Debt repayment profile (2) (RUB bn) . Total financial debt as of July 31, 2018 – RUB 192.8 bn (almost flat compared to Dec 31, 2017); . Effective RUB interest rate of ca. 7.8% and comfortable weighted-average maturity of debt at 2.9 yrs; . Liquidity cushion (cash and cash equivalents, unused credit lines) amounts to RUB 209 bn and exceeds total repayment for the coming years; (3) . In July, PJSC RusHydro has repaid local bond in the amount of RUB 15 bn; 77 . In August 1st, 2018 Fitch Ratings has raised RusHydro’s credit rating to ‘BBB-’ 48.7 from ‘BB+’ with ‘Stable’ outlook making it the second rating agency after S&P 33.5 26.8 to upgrade the Group’s credit rating to investment grade. 14.9 21.6 21.4 4.4 Current RusHydro Group’s credit ratings S&P Moody’s Fitch АCRА Cash & Aug-Dec 2019 2020 2021 2022 2023 2024-2041 Deposits 2018 BBB- (stable) Ba1 (positive) BBB- (stable) AAA(RU) (stable)

Transparent debt composition (RUB bn) Transparent debt composition

Other 9.6 RAO ES East Liability under the Subgroup forward contract with 46.4 VTB Bank Interest 98% – fixed rate 21.5 (4)

RUB Currency 95% – RUB 192.8 bn

PJSC RusHydro Sources 42% – state banks 40% – bonds 18% – 115.2 other

(1) As of July 31, 2018 (2) Debt excluding lease payments and liability under forward contract with VTB. (3) Cash and cash equivalents (bank deposits with a period of less than 1 year) as of July 31, 2018 (4) Liability under the forward contract with VTB recorded as a long-term derivative financial instrument at fair value in RusHydro Group’s IFRS in the amount of RUB 21.5 bn as of June 30, 2018. 10 Dividends – 50% payout of net profit maintained

Dividends (RUB bn) . On May 25, 2018, Board of Directors recommended the Annual General 19.9 Meeting of Shareholders (to be held on June 27, 2018) to pay out 50% of 2017 IFRS net profit or 2.63 kopecks per share. Ex-dividend date – July 7, 2018. 15.0

. As of 2015, RusHydro dividend policy provides for dividend payment based on 11.2 consolidated IFRS net profit.

6.0 . RusHydro is still committed to long-term growth in dividend payments 5.2 3.7 following improvement in free cash flow generation and better regulatory 2.5 2.5 visibility of its business in the Far East.

. 2011 2012 2013 2014 2015 2016 2017 2018 Dividend payments reduce RusHydro liabilities (and effective interest rate) (25% of IFRS (50% of RAS (50% of IFRS (50% of IFRS under the forward contract with VTB. profit) profit) profit) profit)

Dividend yield of the Russian generating companies(1) Dividend per share

2011 2012 2013 2014 2015 2016 2017 2018 Federal Grid 0.7% 0.0% 0.0% 0.7% 1.1% 6.6% 9.5% 8.2% 4.66 Quadra 1.9% 2.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 3.88 (EOn Russia) 0.0% 2.6% 10.8% 16.2% 8.8% 7.2% 7.8% 4.0% RusHydro 0.6% 1.0% 1.3% 2.3% 2.5% 6.5% 5.6% 3.6% 2.63 Rosseti 0.0% 0.0% 0.0% 0.0% 0.0% 0.7% 0.8% 1.5% 1.56 0.6% 1.7% 2.2% 4.6% 1.0% 3.6% 3.6% 6.5% 1.36 0.96 InterRAO 0.0% 0.0% 0.0% 0.0% 0.1% 0.8% 3.6% 3.4% 0.86 0.79 Russia 0.0% 0.0% 0.0% 5.0% 9.0% 0.0% 6.8% 9.7% TGK-1 0.2% 0.5% 1.7% 2.6% 4.8% 4.9% 2.8% 4.5% 2011 2012 2013 2014 2015 2016 2017 2018 OGK-2 0.3% 0.1% 0.0% 0.0% 2.9% 2.1% 2.1% 3.8% (25% of IFRS (50% of RAS (50% of IFRS (50% of IFRS profit) profit) profit) profit)

(1) Calculated based on the date of announcement of recommendations on dividends by the Board of Directors. 11 Group’s investment plan 2018-2023

Group’s investment plan 2018-2023, RUB bn (incl. VAT) (1) . RusHydro will add >1.5 GW and 1 ths. Gcal/h of capacity through to 2023, incl.: • 120 MW / 18 Gcal/h – Sakhalinskaya GRES-2, coal (1st stage) 123.7 Other • 143 MW – Ust-Srednekanskaya HPP 5.3 Priority thermal projects in the Far East • 346 MW – Zaramagskaya HPP-1 (DPM contract) New construction 29.8 93.8 • 140 MW / 432 Gcal/h – Vostochnaya CHPP, gas Rehabilitation & modernization (hydro, thermal, grids) • 126 MW / 200 Gcal/h – Sovetskaya Gavan CHP, coal 4.1 • 320 MW – Nizhne-Bureyskaya HPP 16.6 72.6 • 300 Gcal/h – Peaking boiler plant at Yakutskaya TPP 4.0 56.2 • 261 MW – Capacity update /modernization 54.2 0.7 31.1 48.8 • 70.5 MW – Small HPPs (DPM for renewables contracts) 25.8 3.8 47.2 11.6 3.7 3.6 . Increase over prior projections driven by additional cost of Nizhne-Bureyskaya 6.1 6.3 HPP construction and greenfield construction of 5 small hydropower plants contracted under DPM agreement for alternative renewables; 34.4 41.9 42.1 40.8 39.0 37.4 . CAPEX forecast based on highest capped figures, and management will seek to optimize yearly outlays to ensure stable financial position of the Group. 2018 2019 2020 2021 2022 2023

RusHydro Group Boguchanskaya HPP +120 MW +140 MW +63 MW 39.9 GW 38.7 GW 38.9 GW 39.0 GW +342 MW +142 MW

Ust-Srednekanskaya HPP Vostochnaya CHPP

35.7 GW 35.9 GW 36.1 GW 36.9 GW

Zaramagskaya HPP-1 Sakhalinskaya GRES-2

2015 2016 2017 Zaramagskaya HPP-1 Ust'-Srednekanskaya Sakhalinskaya GRES-2 Vostochnaya CHPP Modernization 2018 HPP (1) CAPEX includes 18% VAT and excludes extra group outlays (Boguchanskaya HPP). The investment plan 2018, 2019-23 was reviewed by the Board of Directors on April 2, 2018. Current plan could be further reviewed by year-end or in early 2019. 12 2018 outlook and key drivers of 2018 financial performance

1 • The President of the Russian Federation and key ministries support the RusHydro’s proposals to introduce guaranteed ROI in the Far East which could help substitute retiring capacity of RusHydro’s facilities in the Far East Far East development • RusHydro seeks modernization of up to 1.3 GW of fossil fuel capacity in the Far East under the proposed DPM-2 mechanism, incl. 455 MW Artemovskaya CHP, 344 MW Khabarovskaya CHP-1 and 145 MW Yakutskaya GRES

2 • In the 6 months of 2018, RusHydro’s hydropower plants increased electricity production by ca. 6% y-o-y, hydropower plants operating in price zones – by 7.1% y-o-y Operations • RusHydro maintains solid operational outlook through 2018, expects total FY’18 electricity production at FY’17 level or higher.

3 • Commissioning of the Sakhalinskaya GRES-2 (120 MW), Zaramagskaya HPP-1 (342 MW), Ust’-Srednekanskaya HPP (142 Capacity additions MW), Vostochnaya CHPP (140 MW), modernization and increase in capacity of existing power plants (63 MW) • Increase in RusHydro group installed capacity in 2018 is expected at 807 MW

Key positive factors in 2018 Operational EBITDA (Rub bn) ↗ Solid operational results on the back of favorable Targeted investment component (Rub bn) hydrological conditions; ↗ Commissioning of new capacity and increased output from newly launched plants; ↗ Successful cost optimization and efficiency gains; ↗ Further debt refinancing with better terms

24 13 100 104 73 Negative factors/risks that could affect 2018 results 26 79 73 64 ↘ Risk of reduced inflows to main reservoirs; ↘ Flat or lower spot electricity prices due to low demand and 44 37 capacity oversupply; 26 ↘ Increase in fuel costs in case of increased utilization of thermal capacity and interruption in fuel supply; 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ↘ Increase in non-controllable costs.

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