UNITING THE ENERGY 2018 Annual report ANNUAL REPORT 2018 OF PSJC FEDERAL HYDROGENERATING COMPANY – RUSHYDRO, INCLUDING INFORMATION ON SUSTAINABLE DEVELOPMENT This Annual Report is preliminary approved by the Board of Directors on May 24, 2019, approved by decision of the Annual General Meeting of Shareholders on June 28, 2019 //COMPANY PROFILE PJSC RusHydro | Annual report 2018 CONTENT 10 28 62 146 214 Company Strategic Our Corporate Appendices profile review performance governance 4 Responsibility statement 12 About Company 30 Markets served 64 Economics and finance 148 Corporate governance 216 Auditor’s opinion 4 Information on the report 12 RusHydro’s background 32 Strategy of RusHydro Group 74 Production and sales 153 Shareholders and investors 220 Opinion on Public Assurance 6 Message from the Chairman 17 Key awards and ratings 36 Key performance indicators 106 Innovations 160 Governing bodies 222 Defining materiality and creating of the Board of Directors a materiality matrix 18 Key figures 40 Investment activities 112 Procurement 180 Executive bodies 8 Message from the Chairman of 224 GRI content index 20 Structure of Rushydro Group 51 Sustainable development 117 HR and social policy 187 Audit and control the Management Board – General 229 Tables of compliance with Director 22 Geographical spread Environmental protection 199 Risk management 131 International Integrated 24 Business model 210 Report on remuneration Reporting Framework of the governing and control 230 Glossary bodies 232 List of abbreviations 232 Feedback questionnaire 233 Contacts 2 3 //COMPANY PROFILE PJSC RusHydro | Annual report 2018 Comparability with the ↗ RusHydro’s Information Policy information expanded from 48 to 60 RESPONSIBILITY previous annual reports Regulations; companies. Criteria for inclusion in the ↗ the International Integrated consolidation perimeter: STATEMENT In 2018, there were no significant changes Reporting Framework (<IR>); ↗ the Company’s share in total group in the scale of the Group’s operations, ↗ the GRI Standards: Core option; [102- revenues as of 2017 is at least 0.1%; wording, or fundamental changes in the 54] ↗ the headcount is at least 40 people Management’s responsibility Disclaimer: forward-looking calculation of indicators, which could ↗ the GRI Electric Utilities Sector as of December 31, 2017. statement in respect of the annual information affect the assessment of the Group’s key Supplement (GRI G4 – Electric report and consolidated financial performance indicators as compared to the Utilities (EU)); The Group’s subsidiaries not included in statements The report contains information on previous annual report. ↗ specific provisions of the AA1000 the boundaries of the disclosure are not RusHydro Group’s plans and intentions Institute of Social and Ethical material for the purposes of reporting. We hereby confirm that to the best of a description of the principal risks and in the medium and long term. These Additional comments to the calculation of Accountability Series of Standards our knowledge uncertainties affecting the operations plans and intentions are forward-looking indicators are provided in the footnotes. (AA1000AP and AA1000SES). (a) the consolidated financial statements of PJSC RusHydro and its subsidiaries. and their feasibility depends, among [102-48] Assurance of the report [102-56] of PJSC RusHydro and its subsidiaries other things, on a number of economic, (RusHydro Group), prepared in political and legal factors beyond the A representative of the senior Content and boundaries The accuracy of data provided in the accordance with the IFRS, give a true Chairman of the Management Board – Company’s control (the global financial, management responsible for the of the report annual report has been confirmed by the and fair view of the assets, liabilities, General Director economic and political situation, key preparation of the report and the Company’s Internal Audit Commission. financial position and profit or loss of N. Shulginov markets, changes in tax, customs and quality of its information is a Member of The content of this report has been The accuracy of the financial report RusHydro Group; environmental legislation, etc.). As such, the Management Board – First Deputy determined in accordance with has been confirmed by the Company’s (b) this annual report includes a fair actual future performance indicators General Director, who is also in charge the requirements of the applicable auditor opinion provided in Appendix 16. review of the development and may differ from the forward-looking of the Unit of financial and corporate law regulations and standards, with the performance of the business and the Chief Accountant statements published in this annual management. [102-32] Group’s stakeholders being engaged Reliability of qualitative and quantitative position of RusHydro Group, as well as Y. Medvedeva report. in the process. For more information information prepared in accordance on the content determination process with the GRI SRS (Selected Information) and the materiality matrix, see page has been verified in line with the 222. The report has been prepared in Assurance Engagements Other than accordance with the GRI SRS: Core Audits or Reviews of Historical Financial The appendices to this annual report are available in the option. [102-54] Information of International Standard Appendices Book at the Company’s for Assurance Engagements (ISAE) website: The operational results of RusHydro 3000 (revised). The auditor’s report http://www.rushydro.ru INFORMATION Group (including financial and on the independent audit results, production ones) have been disclosed in which provides limited assurance ON THE REPORT line with the IFRS reporting boundaries1, regarding the Selected Information, unless otherwise specified in the notes can be found on page 216. The to the disclosure. independent audit was performed by The annual report of Public Joint-Stock been prepared in an integrated format The Company issues reports annually to Compliance with standards АО PricewaterhouseCoopers Audit. Company Federal Hydro-Generating and contains comprehensive information inform stakeholders about its operations. and requirements The Group’s subsidiaries not included in Company RusHydro (“PJSC RusHydro” or on the financial, operational and [102-52] the boundaries of the disclosure are not The report has also taken into account the “Company”) for 2018 [102-5] [102-50] is sustainability performance of RusHydro The report was prepared in line with material for the purposes of reporting. feedback and recommendations from the 14th annual report prepared by the Group1 (the “Group”) in 2018, as well as Paper and electronic versions of the the principles and requirements of: the expert committees of the Moscow Company and addressed to a diverse plans and forecasts for the medium and 2017 annual report were published at ↗ the Russian laws; In 2018, the consolidation of reporting Exchange and Expert RA rating agency range of stakeholders. The report has long term. the Company’s website on July 2, 2018. ↗ Moscow Exchange; judging the annual report competitions, The full list of legal entities [102-51] ↗ London Stock Exchange; belonging to RusHydro Group is as well as the recommendations ↗ the Disclosure Guidance and available in the section “Structure of the RSPP Committee on Social Transparency Rules of the UK Listing of Rushydro Group” on page 20. Responsibility. Authority; ↗ the Corporate Governance Code The boundaries of GRI SRS See PJSC RusHydro’s annual reports for the See PJSC RusHydro’s corporate social recommended by the Bank of Russia; disclosure are indicated in the GRI previous years here: responsibility and sustainability reports for ↗ RusHydro’s Corporate Governance Index on page 224. http://www.eng.rushydro.eng the previous years here: Code; http://www.rushydro.ru 1 For the purpose of this report, RusHydro Group means a group of companies which include PJSC RusHydro and its subsidiaries. The control is determined in accordance with Article 2 of Federal Law No. 39-FZ On Securities Market dated April 22,1996. 1 The report also covers information on PJSC Boguchanskaya HPP, which is not a subsidiary or part of RusHydro Group, but a joint venture of RusHydro Group and UC RUSAL. 4 5 //COMPANY PROFILE PJSC RusHydro | Annual report 2018 MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS Dear shareholders, 2018 marked yet another year for RusHydro power grid expansion – this is the only way to As Russia’s leader in generating green energy, healthcare institutions, along with culture, Group’s ongoing growth and development. accelerate the improvement of quality of living RusHydro Group remains committed to the education, sports and environment projects. We commissioned new power plants in the Far East going forward. principles of sustainable development. In 2018, in the Far East and modernized existing the Company made strong progress in this Over the past year, the Board of Directors hydropower plants to increase our total The Long-Term Program for Replacement field, including targets approved to reduce held 18 meetings, both in person and in installed capacity to 39.4 GW, setting a new of Retiring Capacities developed in 2018 greenhouse gas emissions and the mechanisms absentia, and considered more than 100 key record for the fourth consecutive year. by RusHydro’s management and approved for their achievement, with the regulations matters related to RusHydro Group’s general by its Board of Directors is key to address