Yuri Trutnev
Chairman of the Board of Directors
PJSC RusHydro

Dear Shareholders!

June 2016 saw the approval of the new RusHydro Group’s strategy. This document determined the company’s activities in key areas for the period until 2020 with a prospect of up to 2025. The reliable and uninterrupted operation of power facilities, new facilities construction, primarily in the Far East, and increasing efficiency through production and management processes optimization were set as priorities for the companies activities in the forthcoming future.

While developing the Far Eastern Federal District power industry RusHydro takes part in creating infrastructure for the priority development territories and contributes to the investment projects implementation. The adopted law on equalizing electricity rates in the Far East to the average Russia-wide level promoted by the Company has become a landmark event for the region with mechanisms for its implementation being drawn up at the very moment.

Within 2016 Zelenchukskaya HPP-PSPP and the third stage of the Nizhne-Chereksky cascade – Zaragizhskaya HPP has been commissioned. The second stage of Blagoveshchenskaya CHPP construction was completed. Nizhne-Bureyskaya HPP and Yakutskaya TPP-2 are now at their last stages of development. They are planned to be commissioned in 2017. RusHydro also constructs thermal power plants in Sakhalin and Sovetskaya Gavan’ in accordance with the Decree of the Russian Federation President.

At the end of 2016, the Company’s net profit increased by 39% and amounted to nearly 40 billion rubles1, which is 12 billion more than the last year indicator. In 2016, RusHydro paid a record amount of dividends – 15 billion rubles. This means that as the key shareholder, the state received additional funds to launch its social programs.

In 2016, the number of measures were taken to improve the Company’s financial performance and optimize the system of its Far Eastern assets corporate governance. As evidenced by the balance sheet of the RusHydro Group, almost 100% of PJSC RAO ES East shares have been consolidated while a number of non-core assets have been sold.

In the 1st quarter of 2017, we managed to close the deal on refunding the loan portfolio of the RAO ES East Holding companies via equity financing raised from VTB Bank in the amount of 55 billion rubles. The funds are fully dedicated to reducing the debt load of Far Eastern energy companies.

I am confident that the Board of Directors, the Management Board and the PJSC RusHydro shareholders joint efforts will contribute to further development of the company, improving its financial performance and corporate management.