2019 ANNUAL REPORT
Key performance indicators

Key performance indicators*

The system of key performance indicators (“KPI”) for RusHydro’s management team is based on national statutory requirements* and is designed to improve the Company’s performance and achieve the goals set by its shareholders. Since 2017, the management KPI system includes annual KPI of the Management Board and KPI under RusHydro’s Long-Term Incentive Plan (“LTIP”).

In 2016, based on recommendations of an independent advisor*, the Company developed a list of annual KPI for RusHydro’s Management Board along with relevant calculation and evaluation methodologies, while also coming up with KPI for the Long-Term Incentive Plan, both of which are aimed at motivating the Company’s management to achieve strategic goals and thus aligning the interests of the Company’s management and shareholders. In 2019, the independent advisor updated the list of the LTIP KPI by introducing “Earnings per share (EPS), RUB/share” as a KPI with a 15% weight. The Management Board’s KPI and the Company’s LTIP KPI are calculated and evaluated using the calculation and evaluation methodology (approved by the Board of Directors) for the Management Board’s KPI* and the calculation and evaluation methodology for the KPI of RusHydro’s Long-Term Incentive Plan*.

KPI of the Long-Term Incentive Plan

There are four KPI covering the first, second and third cycles of RusHydro’s LTIP: three financial indicators (including total shareholder return (TSR) as a mandatory indicator required by the Federal Agency for State Property Management) and an integrated innovative KPI*.

The achievement of target KPI for the Long-Term Incentive Plan is assessed upon expiry of the respective period.

Target KPI for the first LTIP cycle in 2017−2019*

KPI Target Actual Target KPI achievement Weight, % KPI achievement in 2019, %
Total shareholder return (TSR), % 100 0 Not achieved 15 0
Integrated innovative KPI, % 85 95 Achieved 25 100
Free cash flow (FCF), RUB mn -138,601 -69,093 Achieved 45 100
Earnings per share (EPS), RUB/share 0.85 0.95 Achieved 15 100

Target KPI of the Long-Term Incentive Plan

KPI Target
second LTIP cycle in 2018−2020* third LTIP cycle in 2019−2021*
Total shareholder return (TSR), % 100 100
Integrated innovative KPI, % 85 85
Free cash flow (FCF), RUB mn -117,064 -57,454
Earnings per share (EPS), RUB/share 0.84 0.80

KPI of the Long-Term Development Program

RusHydro’s Long-Term Development Program consists of KPI established for 2018−2022.

The target KPI were calculated in accordance with RusHydro Group’s draft Consolidated Business Plan for 2018−2022 (including the Consolidated Investment Program) and subject to the initiatives stipulated in the Group’s programs. The list of KPI for RusHydro’s Long-Term Development Program for 2018−2022 includes the list of annual KPI of the Management Board and the list of LTIP KPI.

Target and actual KPI of the Long-Term Development Program*

KPI 2019 2020 2021 2022
Target Actual Achievement Target
Total shareholder return (TSR), % 100 0 Not achieved 100 100 100
ROE, % 18.24 23.03 Achieved 16.12 16.70 16.03
EBITDA*, RUB mn 166,880 171,907 Achieved 193,795 209,894 207,698
Prevention of accidents exceeding the limit number of accidents: 0 0 Achieved 0 0 0
  • number of production-related accidents
≤ 5-year average* ≤ 5-year average* Achieved ≤ 5-year average ≤ 5-year average ≤ 5-year average
  • number of major accidents
 0 0 Achieved 0 0 0
Adherence to the capacity commissioning schedule, funding and spending plan, % 85 88 Achieved 85 85 85
Share of procurement from small and medium businesses, % 18 71 Achieved 18 18 18
  • including procurement from small and medium businesses only, %
15 49 15 15 15
Labor productivity, RUB ‘000/man-hour 5.62* 6.42 Achieved 5.31 5.60 5.75
Integrated innovative KPI, % 85 96 Achieved 85 85 85
Decrease in operating expenses (costs), % 2 2,02 Achieved 2 2 2
Free cash flow (FCF), RUB mn -51,302* -36,384 Achieved 25,498 54,277 56,424
Earnings per share (EPS) 0.25 0.31 Achieved 0.27 0.30 0.31

Annual KPI of RusHydro’s Management Board in 2019

The annual KPI of RusHydro’s Management Board for 2019 consist of five financial and two industry-specific indicators. Financial indicators of the annual KPI for RusHydro’s Management Board include a mandatory indicator required by the Federal Agency for State Property Management — return on equity (ROE). The Company’s financial indicators are calculated based on the Group’s financial statements prepared under the IFRS.

The target annual KPI of RusHydro’s Management Board for 2019 were approved by a resolution of the Board of Directors* .

Target and actual KPI of RusHydro’s Management Board members

KPI Period Target Actual Target KPI achievement Weight, % KPI achievement in 2019, %
EBITDA* , RUB mn 2018 170,932 181,526 Achieved 15 100
2019 166,880 171,907 Achieved
ROE, % 2018 15.86 23.88 Achieved 15 100
2019 18.24 23.03 Achieved
Share of procurement from small and medium businesses, % 2018 ≥18 76 Achieved 10 100
2019 ≥18 71 Achieved
  • including procurement from small and medium businesses only, %
2018 ≥15 46 Achieved
2019 ≥15 49 Achieved
Prevention of accidents exceeding the limit number of accidents: 2018 0 0 Achieved 20 100
2019 0 0 Achieved
  • number of production-related accidents
2018 ≤ 5-year average* 9 Achieved
2019 ≤ 5-year average* 10 Achieved
  • number of major accidents
2018 0 0 Achieved
2019 0 0 Achieved
Adherence to the capacity commissioning schedule, funding and spending plan, % 2018 85 92.8 Achieved 20 100
2019 85 88 Achieved
Labor productivity, RUB ‘000/man-hour 2018 5.30 6.12 Achieved 10 100
2019 5.62 6.42 Achieved
Decrease in operating expenses (costs), % 2018 2 2.69 Achieved (subject to factors beyond control of the management team*) 10 100
2019 2 2.02 Achieved

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