China Hydroelectric Corporation Announces Results for the Second Quarter 2013

China Hydroelectric Corporation Announces Results for the Second Quarter 2013

- Continuing Ops Electricity sold down 7.6% YOY

- Continuing Ops Net revenue down 6.3% YOY

- Continuing Ops Non-GAAP net income up 18.2% YOY

- Continuing Ops Non-GAAP net income per ADS up 33% YOY

- Cash up $8.3 million (excluding restricted cash) and bank loans down $6.6
million from Q1 2013

PR Newswire

BEIJING, Aug. 15, 2013

BEIJING, Aug. 15, 2013 /PRNewswire/ -- China Hydroelectric Corporation (NYSE:
CHC, CHCWS) ("China Hydroelectric" or "the Company"), an owner, developer and
operator of small hydroelectric power projects in the People's Republic of
China, today announced its unaudited financial results for the second quarter
ended June 30, 2013.

For the second quarter of 2013, revenues from continuing operations (net of
value-added tax) declined 6.3% year over year to $29.8 million, due to a 7.6%
decline in electricity sold. Despite the revenue decline, non-GAAP net income
from continuing operations increased 18.2% year over year to $6.5 million.
Non-GAAP net income from continuing operations per diluted ADS increased 33.3%
year over year to $0.12. Precipitation during the quarter was 13% below the
long-term average for the company, due to lower rainfall in the three main
provinces in which the Company operates.

"Results this quarter again confirm the effectiveness of the Company's
strategy to mitigate precipitation fluctuations through tight control of
operating expenses," stated Mr. Amit Gupta, Chairman of China Hydroelectric.
"In the second quarter of 2013, the Company increased its bottom line despite
lower revenues, which are dependent on weather and beyond the Company's
control. The strong Q2 results are a reflection of management's focus on
operational efficiency, cost control, and debt reduction."

Dr. You Su-Lin, interim Chief Executive Officer added, "This quarter
represented a tough comparison with Q2 2012, due to the high rainfall last
year and dryer conditions this year. Precipitation was 13% below the long-term
average, versus being 10% above the long-term average last year. Nonetheless,
non-GAAP net income increased by 18.2%. Our stronger balance sheet, which has
more cash and lower debt, is noteworthy. We will continue to focus on
operational excellence and improve profitability and our balance sheet."

Operating Highlights

Precipitation in Q2 2013 was approximately 13% below the long-term average,
due to dryer conditions in the three main provinces in which the Company
operates. In contrast, Q2 2012 precipitation was 10% above the long-term
average. Due to less precipitation, electricity sold in Q2 2013 declined
approximately 7.6% when compared to Q2 2012. The reduced rainfall resulted in
a utilization rate of 49.8% in Q2 2013, compared to 54.3% in Q2 2012.

The following table presents precipitation levels for the Company's three main
operating regions as a percentage of historical long term average for the
periods indicated.

Precipitation – Percentage of Long-Term Average *+

Province       Q2 2013 Q2 2012  YTD 2013 YTD 2012
Zhejiang       91%     131%     95%      140%
Fujian         89%     114%     85%      122%
Yunnan         80%     90%      72%      86%
Total Company  87%     110%     85%      117%

Province       Fiscal 2012 Fiscal 2011 Fiscal 2010
Zhejiang       134%        70%         130%
Fujian         128%        62%         114%
Yunnan         87%         86%          N/M
Total Company  121%        84%         120%

*Source: Data collected by the Company and by provincial and national
meteorological recording stations
+The Company refined collection of precipitation data in 2013 and believes
refined collections are more representative of actual historical experience.
N/M - Not material.

The following table presents some key comparative financial and other
information (in US$ millions, except for electricity sold, effective tariff,
average effective utilization rate, per ADS data and percentages):

Summary Data                   Q2    Q2    %      FirstHalf  FirstHalf  %
                               2013   2012   Change  2013        2012       Change
Continuing Operations
Electricity sold (millions     563.2  609.7  -7.6%   892.4       1,012.4     -11.9%
kWh)
Effective tariff (RMB/kWh)     0.35   0.35   -       0.36        0.35        2.9%
Average effective utilization  49.8%  54.3%  -8.3%   39.7%       45.5%       -12.7%
rate
Revenues                       29.8   31.8   -6.3%   48.1        52.9        -9.1%
Gross profit                   20.6   22.6   -8.8%   30.8        35.6        -13.5%
Adjusted EBITDA (1)            23.0   23.8   -3.4%   36.2        38.2        -5.2%
GAAP net income                7.5    6.8    10.3%   5.9         5.7         3.5%
GAAP net income per ADS (3)    0.15   0.11   36.4%   0.12        0.10        20.0%
Non-GAAP net income (2)        6.5    5.5    18.2%   6.8         5.5         23.6%
Non-GAAP net income per ADS    0.12   0.09   33.3%   0.12        0.09        33.3%
(2,3)
Netincomefromdiscontinued  -      0.9    -100%   -           2.7         -100%
 operations
 (1) See "Net income to adjusted EBITDA reconciliation" below

 (2) See "GAAP net income to non-GAAP net income reconciliation" below

 (3) Per ADS data is representative of basic and diluted ADS

Precipitation levels are one of the principal factors affecting the Company's
revenues, profitability and cash generated by operations. Other important
factors include, but are not limited to: consistency of precipitation;
upstream reservoir conditions; the cascading effects of multiple hydroelectric
power projects on a single waterway; and upstream precipitation levels in the
Company's river basins. The various provinces in which the Company operates
are subject to different weather patterns or systems and precipitation
fluctuates from region to region and quarter to quarter.

Second Quarter 2013 Financial Highlights

Revenues

Revenues, net of value added taxes, from continuing operations for the second
quarter of 2013 were $29.8 million, a decrease of 6.3%, or $2.0 million, from
$31.8 million for the second quarter of 2012. As previously noted, the
decrease was principally due to reduced electricity sales. The lower
electricity sales resulted from lower precipitation levels in all of the
Company's three main operating regions.

The Company sold 563.2 million kWh from continuing operations in the second
quarter of 2013, a decrease of 46.5 million kWh, or 7.6%, from the 609.7
million kWh sold in the second quarter of 2012. The effective tariff for the
second quarter of 2013 was RMB 0.35/kWh, unchanged from Q2 2012.

Cost of Revenues

Cost of revenues from continuing operations, for the second quarter of 2013
was $9.1 million, unchanged from the second quarter of 2012. Cost of revenues
in the second quarter of 2013 primarily included (i) repairs and maintenance
costs of $0.4 million, compared to $0.7 million for the second quarter of
2012; (ii) depreciation and amortization (non-cash expenses included in cost
of revenues from continuing operations) of $5.8 million, compared to $5.7
million for the second quarter of 2012 and (iii) labor cost of $1.0 million,
compared to $0.8 million for the second quarter of 2012.

Gross Profit and Margin

Gross profit from continuing operations for the second quarter of 2013
decreased by 8.8% to $20.6 million, from $22.6 million in the prior-year
period. Gross margin for the second quarter of 2013 decreased to 69.1%
compared to 71.1% in the same period of 2012 primarily due to decreased
revenues and the fixed nature of certain expenditures included in cost of
revenues.

Operating Expenses

General and administrative expenses for the second quarter of 2013 decreased
17.8% to $3.7 million, from $4.5 million for the second quarter of 2012. The
decrease was primarily due to the closure of the U.S. office and reduction of
professional service expenses.

Adjusted EBITDA and EBITDA Margin

Adjusted EBITDA decreased by 10.5% to $23.0 million in the second quarter of
2013 compared to $25.7 million in the same period of 2012. Adjusted EBITDA
margin increased to 77% for the second quarter of 2013 compared to 76% in the
same period of 2012.

As previously announced, the Company sold the Yuheng project in Q4 2012.
Accordingly, the Q2 2012 results include the effect of that project.
Management believes removing the financial impact of Yuheng from Q2 2012
results provides a more useful comparison of the change in continuing
operations. On this continuing basis, Adjusted EBITDA decreased by 3.4%, or
$0.8 million, to $23.0 million in the second quarter of 2013 from $23.8
million in the same period of 2012, and Adjusted EBITDA margin increased from
75% to 77%.

Interest Expenses, net

Net interest expense was $5.5 million in the second quarter of 2013, compared
to $6.8 million in the same period of 2012. The decrease was primarily due to
reduced interest accrual on loans owed to third party individuals. The reduced
interest accrual was a result of a decrease in the balance of these third
party loans, when compared to the Q2 2012 balance.

GAAP and Non-GAAP Net Income

Net income attributable to China Hydroelectric shareholders was $7.5 million
in the second quarter of 2013 compared to net income attributable to China
Hydroelectric shareholders from continuing operations of $6.8 million in the
same period of 2012, which excluded $0.9 million net income attributable to
China Hydroelectric shareholders from discontinued operations.

Non-GAAP net income attributable to China Hydroelectric shareholders was $6.5
million, or $0.12 per diluted ADS, for the second quarter of 2013, compared to
Non-GAAP net income attributable to China Hydroelectric shareholders from
continuing operations of $5.5 million, or $0.09 per diluted ADS in the prior
year period. For reconciliation between GAAP and non-GAAP earnings, see the
table below entitled "GAAP Net Income to Non-GAAP Net Income Reconciliation."

Weighted average American depository shares ("ADSs") used in the second
quarter of 2013 and 2012 per share calculations were 54.0 million and 54.0
million ADSs, representing 162.1 million and 162.0 million ordinary shares,
respectively.

Six Months Ended June 30, 2013 Financial Highlights

Revenues

Revenues, net of value added taxes, from continuing operations for the first
half of 2013 were $48.1 million, a decrease of 9.1%, or $4.8 million, from
$52.9 million for the first half of 2012. The decrease was principally due to
lower precipitation levels in all of the Company's three main operating
regions compared to the first half of 2012. The Company sold 892.4 million kWh
from continuing operations in the first half of 2013, a decrease of 120.0
million kWh, or 11.9%, from 1,012.4 million kWh sold in the first half of
2012. The effective tariff for the first half of 2013 was RMB 0.36/kWh,
compared to RMB 0.35/kWh in the same period of 2012.

Cost of Revenues

Cost of revenues from continuing operations for the first half of 2013 was
$17.4 million, as compared to $17.3 million for the first half of 2012. Cost
of revenues in the first half of 2013 primarily included (i) repairs and
maintenance costs of $0.7 million, compared to $1.0 million for the first half
of 2012; (ii) depreciation and amortization (non-cash expenses included in
cost of revenues from continuing operations) of $11.5 million, compared to
$11.4 million for the first half of 2012 and (iii) labor cost of $1.9 million,
compared to $1.7 million for the first half of 2012.

Gross Profit and Margin

Gross profit from continuing operations for the first half of 2013 decreased
by 13.5% to $30.8 million, from $35.6 million in the prior-year period. Gross
margin for the first half of 2013 decreased to 64.0% compared to 67.3% in the
same period of 2012 primarily due to decreased revenues and the fixed nature
of certain expenses included in cost of revenues.

Operating Expenses

General and administrative expenses for the first half of 2013 decreased by
26.4% to $6.4 million, from $8.7 million for the first half of 2012. The
decrease was primarily due to the closure of the U.S. office and reduction of
professional service expenses.

Adjusted EBITDA and EBITDA Margin

Adjusted EBITDA decreased by 15.6% to $36.2 million in the first half of 2013
compared to $42.9 million in the same period of 2012. Adjusted EBITDA margin
decreased to 75% for the second half of 2013, compared to 76% in the same
period of 2012. On a continuing basis, Adjusted EBITDA decreased by 5.2%, or
$2.0 million, to $36.2 million in the first half of 2013 from $38.2 million in
the same period of 2012. On a continuing basis, Adjusted EBITDA margin
increased from 72% to 75% year over year.

Interest Expenses, net

Net interest expense was $12.0 million in the first half of 2013, compared to
$14.3 million in the same period of 2012. The decrease was primarily due to a
decrease in interest accrual on loans owed to third party individuals due to a
decrease in the balance of third party loans from the first half of 2012.

GAAP and Non-GAAP Net Income

Net income attributable to China Hydroelectric shareholders was $5.9 million
in the first half of 2013 compared to net income attributable to China
Hydroelectric shareholders from continuing operations of $5.7 million in the
first half of 2012, which excluded $2.7 million net income attributable to
China Hydroelectric shareholders from discontinued operations.

Non-GAAP net income attributable to China Hydroelectric shareholders  was $6.8
million, or $0.12 per diluted ADS, for the first half of 2013, compared to
Non-GAAP net income attributable to China Hydroelectric shareholders from
continuing operations of $5.5 million, or $0.09 per diluted ADS, for the first
half of 2012. For reconciliation between GAAP and non-GAAP earnings, see the
table below entitled "GAAP Net Income to Non-GAAP Net Income Reconciliation."

Weighted average ADSs used in the first half of 2013 and 2012 per share
calculations were 54.0 million ADSs, representing 162.0 million ordinary
shares, respectively.

Balance Sheet

The Company's cash flow in the quarter resulted in a strengthened balance
sheet. Cash and cash equivalents (excluding restricted cash) were $17.5
million as of June 30, 2013, compared to $9.2 million as of March 31, 2013.
Long-term bank loans were $251.7 million (including the current portion of
long-term loans of $41.2 million) as of June 30, 2013, a slight increase from
$247.9 million (including current portion of long-term loans of $36.4 million)
as of March 31, 2013. Short-term loans as of June 30, 2013 were $11.3 million,
a decrease of $10.4 million from $21.7 million as of March 31, 2013.

As of June 30, 2013, the Company's working capital deficiency was $70.0
million. Up to the date of this release, the Company raised $8.8 million
through borrowings from banks and other institutions. Investors should expect
the Company to have a working capital deficit in the foreseeable future, due
to the use of leverage to finance the construction and acquisition of
hydroelectric projects, as well as the nature of hydroelectric power projects
to utilize a low level of working capital assets. The Company regularly raises
funds through various means, such as new borrowings from banks and other
non-financial institutions. New borrowings are used for multiple purposes,
such as daily operating liquidity, to fund new projects, and to refinance
existing short-term loans into longer-term debt.

Legal Proceeding

In 2009, the Company entered into a capital injection agreement with Henan
Lantian Group ("Lantian") to acquire a certain equity interest in Henan Wuyue
Storage Power Generation Co., Ltd. ("Wuyue"). The Company completed the first
capital injection of RMB 32.5 million (US$ 4.8 million) in 2010. Thereafter,
the project has been largely at a standstill and the investment in Wuyue was
written off as of December 31, 2011. In 2012, the Company initiated the
negotiation with Lantian to terminate the original agreement. In May 2013,
Lantian filed an arbitration claim against the Company at China International
Economic and Trade Arbitration Commission for the penalty of late capital
injection in Wuyue, in a total amount of RMB25.74 million (US$4.2 million),
and the bearing of arbitration fees. No hearing date has been set as of the
date of this press release.

Business Outlook

As of the date of this release, rainfall in the third quarter of 2013 has been
lower than that of the same period in 2012. Fujian and Zhejiang, regions in
which the Company receives higher tariffs, continue to experience average to
slightly below average levels of precipitation. Please note that all
precipitation updates are offered as of the date of this release, and may be
materially different when actual precipitation results are reported.

A severe flood in Sichuan province on July 18, 2013 damaged our tailrace
concrete apron, spillway gates, power generation plant, auxiliary equipment
and the 35KV substation of our Liyuan hydroelectric power project. All of the
Company's staff and personnel were safely evacuated. The cost to repair
damages is undetermined as of the date of this release. As such, the Company
does not know if its existing insurance coverage will adequately cover both
the cost to repair damages and economic losses. As of the date of this
release, the Company does not expect the Liyuan hydroelectric power project to
generate electricity for the remainder of the year.

Conference Call

China Hydroelectric will host a conference call at 6:00 am (Pacific Time)
/9:00 am (Eastern Time) / 9:00 pm (Beijing/Hong Kong Time) on Friday, August
16, 2013 to discuss its second quarter financial results and recent business
activities. To access the live teleconference, please dial (U.S.)
+1-888-505-4375 or (International) +1-719-325-2177, and enter pass code
1788005. This call is being webcast by ViaVid Communications and can be
accessed by clicking on this link:
http://public.viavid.com/index.php?id=105698, or at ViaVid's website at
http://www.viavid.com.

A playback will be available through August 30, 2013, by dialing (U.S.)
+1-877-870-5176 or (International) +1-858-384-5517 and entering the pass code
1788005.

About China Hydroelectric Corporation

China Hydroelectric Corporation (NYSE: CHC, CHCWS) ("China Hydroelectric" or
"the Company") is an owner, developer and operator of small hydroelectric
power projects in the People's Republic of China. Through its geographically
diverse portfolio of operating assets, the Company generates and sells
electric power to local power grids. The Company's primary business is to
identify, evaluate, acquire, develop, construct and finance hydroelectric
power projects. The Company currently owns 25 operating hydropower stations in
China with total installed capacity of 517.8 MW, of which it acquired 21
operating stations and constructed four. These hydroelectric power projects
are located in four provinces: Zhejiang, Fujian, Yunnan and Sichuan.
Hydropower is an important factor in meeting China's electric power needs,
accounting for approximately 22% of total nation-wide capacity.

For further information about China Hydroelectric Corporation, please visit
the Company's website at: http://www.chinahydroelectric.com.

Cautionary Statements Regarding Liquidity

Historically, the Company relied on the ready availability of credit in China
to fund its operations and expansion. Commencing in the second quarter of
2013, the Company's ability to obtain financing from its principal lenders in
China was constrained by restrictions on bank lending imposed by the central
government in an effort to end the funding of speculative investments. The
Company started exploring wider forms of financing and is currently in various
stages of negotiations with a number of financial institutions that may
provide refinancing packages to extend the duration of the Company's debt
obligations. Of the short-term loans and current portion of long-term loans
outstanding as of June 30, 2013, $39.8 million will become due in the next six
months.

The management remains confident in the Company's ability to secure capital in
order to fund its liquidity needs, debt obligations and growth plans, but
obtaining financing cannot be guaranteed. In the event that the Company fails
to raise funds sufficient to meet its liquidity needs, the Company may be
forced to substantially curtail its operations or otherwise take measures that
would materially and adversely affect its current operations and business
prospects.

Cautionary Note Regarding Forward-looking Statements and Weather Data

Statements contained herein that address operating results, performance,
events or developments that we expect or anticipate will occur in the future
are forward-looking statements. The forward-looking statements include, among
other things, statements relating to the Company's business strategies and
plan of operations, the Company's ability to acquire hydroelectric assets, the
Company's capital expenditure and funding plans, the Company's operations and
business prospects, projects under development, construction or planning, the
Company's ability to meet its liquidity needs, the availability of
restructuring measure or of lending by financing sources, including banks in
China, the regulatory environment, and the business outlook. The
forward-looking statements are based on the Company's current expectations and
involve a number of risks, uncertainties and contingencies, many of which are
beyond the Company's control, which may cause actual results, performance or
achievements to differ materially from those anticipated. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated or projected. Among the factors that could cause actual results to
materially differ include: supply and demand changes in the electric markets,
changes in electricity tariffs, hydrological conditions, the Company's
relationship with and other conditions affecting the power grids we service,
the Company's production and transmission capabilities, availability of
sufficient and reliable transmission resources, our plans and objectives for
future operations and expansion or consolidation, interest rate and exchange
rate changes, the effectiveness of the Company's cost-control measures, the
Company's liquidity and financial condition, environmental laws and changes in
political, economic, legal and social conditions in China, the availability of
financing from lenders in China due to bank restrictions or otherwise, and
other factors affecting the Company's operations that are set forth in the
Company's Annual Report on Form 20-F for the year ended December 31, 2012
filed with the Securities and Exchange Commission (the "SEC") on April 18,
2013 and in the Company's future filings with the SEC. Unless required by law,
the Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

This release also contains statistical data and estimates that we obtained
from provincial and national meteorological recording stations. Although we
believe that this data is reliable and consistent with our experience, we have
not independently verified it.

About Non-GAAP Financial Measures

To supplement China Hydroelectric consolidated financial results presented in
accordance with GAAP, China Hydroelectric uses non-GAAP net income
attributable to China Hydroelectric shareholders and adjusted EBITDA, which
are non-GAAP financial measures. Non-GAAP net income attributable to China
Hydroelectric shareholders for the second quarter and the first half of 2013
and 2012 excludes the following non-cash charges: stock-based compensation
expenses, exchange gains or losses and the change in fair value of warrant
liabilities. A reconciliation of GAAP and non-GAAP items is provided in the
table entitled "GAAP Net Income to Non-GAAP Net Income Reconciliation."
Adjusted EBITDA is defined by the Company as earnings before interest, taxes,
depreciation and amortization and excluding certain non-cash charges,
including: stock-based compensation expenses, exchange losses, and change in
fair value of warrant liabilities. For further details, see the table entitled
"Net income to adjusted EBITDA reconciliation." The presentation of these
non-GAAP financial measures is not intended to be considered in isolation or
as a substitute for the financial information prepared and presented in
accordance with GAAP. For more information on these non-GAAP financial
measures, please see the tables captioned "Net Income to Adjusted EBITDA
Reconciliation" and "GAAP Net Income to Non-GAAP Net Income Reconciliation"
below.

China Hydroelectric believes that these non-GAAP financial measures provide
meaningful supplemental information regarding its performance and liquidity by
excluding certain expenses that may not be indicative of its operating
performance and financial condition from a cash perspective. We believe that
both management and investors benefit from referring to these non-GAAP
financial measures in assessing the Company's performance and when planning
and forecasting future periods. These non-GAAP financial measures also
facilitate management's internal comparisons to China Hydroelectric historical
performance and liquidity. China Hydroelectric has computed its non-GAAP
financial measures using methods consistent with the Company's annual report
on Form 20-F. We believe these non-GAAP financial measures are useful for
investors because they permit greater transparency with respect to
supplemental information used by management in its financial and operational
decision making. A limitation of using these non-GAAP financial measures is
that they exclude certain charges that have been and may continue for the
foreseeable future to be significant expenses in the Company's results of
operations.

Statement Regarding Unaudited Financial Information

The financial information set forth in this press release is unaudited and
subject to adjustments. Adjustments to the financial statements may be
identified when our annual financial statements are prepared and audit work is
performed for the year end audit, which could result in significant
differences from this unaudited financial information.

For further information, please contact:
China Hydroelectric Corporation



Scott Powell

Investor Relations and Corporate
Communications
                                    
Phone (U.S.): +1 (646) 650-1351
                                    
Email: ir@china-hydro.com 
                                    James Hull

                                    Financial Analyst
ICR, LLC
                                    Phone (China): +86-10-6408-2341

                                    Email: james.hull@chinahydroelectric.com 
Gary Dvorchak, CFA

Senior Vice President

Phone (U.S.): +1 (310) 954-1123

Phone (China): +86-10-6583-7500

Email: gary.dvorchak@icrinc.com





CHINA HYDROELECTRIC CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In US$ 000's, except for share and per share data)


                                                 Three Months Ended        Six Months Ended
                                                 June30,    June30,    June30,    June30,
                                                 2013         2012         2013         2012
Continuing Operations:
Revenues                                         29,772       31,750       48,109       52,884
Cost of revenues                                 (9,149)      (9,133)      (17,358)     (17,302)
Gross profit                                     20,623       22,617       30,751       35,582
Operating expenses
General and administrative expenses (including
a
 share-based compensation expensesof
$216 and $154
 for the six months ended June 30, 2013  (3,729)      (4,512)      (6,447)      (8,662)
and 2012, $128
 and $154 for three months ended June
30, 2013

and2012,respectively)
Total operating expenses                         (3,729)      (4,512)      (6,447)      (8,662)
Operating income                                 16,894       18,105       24,304       26,920
Interest income                                  155          5            191          13
Interest expense                                 (5,682)      (6,847)      (12,161)     (14,297)
Changes in fair value of warrant liabilities     1,059        1,361        (716)        352
Exchange gain                                    76           57           63           46
Other income/(loss), net                         (14)         (240)        10           (383)
Income before income tax expenses                12,488       12,441       11,691       12,651
Income tax expense                               (4,768)      (5,467)      (5,656)      (6,773)
Net income from continuing operations            7,720        6,974        6,035        5,878
Net income from discontinued operations          -            929          -            2,737
Net income                                       7,720        7,903        6,035        8,615
Less:
Net loss attributable to non-controlling         (194)        (209)        (150)        (136)
interests
Net income attributable to China Hydroelectric   7,526        7,694        5,885        8,479
Corporation shareholders
- Continuing operations                          7,526        6,765        5,885        5,742
- Discontinued operations                        -            929          -            2,737
Other Comprehensive income, net of taxes
 Foreign currency translation adjustments      5,856        (1,988)      6,897        (2,377)
Comprehensive income                             13,576       5,915        12,932       6,238
 Less: comprehensive loss attributable to
non-controlling                                  (162)        (220)        (112)        (133)
 interest
Comprehensive income attributable to CHC         13,414       5,695        12,820       6,105
shareholders
GAAP net income per ADS- basic and diluted      0.15         0.14         0.12         0.16
From continuing operation                        0.15         0.11         0.12         0.10
From discontinued operation                      -            0.03         -            0.06
GAAP net income per share- basic and diluted    0.05         0.05         0.04         0.05
From continuing operation                        0.05         0.04         0.04         0.03
From discontinued operation                      -            0.01         -            0.02
Weighted average American Depository Shares-    54,025,127   53,996,366   54,014,374   53,996,366
basic
Weighted average ordinary shares- basic         162,075,380  161,989,097  162,043,122  161,989,097
Weighted average American Depository Shares-    54,174,152   53,996,366   54,110,443   53,996,366
diluted
Weighted average ordinary shares- diluted       162,522,456  161,989,097  162,331,329  161,989,097



CHINA HYDROELECTRIC CORPORATION

GAAP NET INCOME TO NON-GAAP NET INCOME RECONCILIATION

(In US$ 000's)
                      Three Months Ended             Six Months Ended
                      June 30,       June 30,        June 30,     June 30,
                      2013           2012            2013         2012
Net income
attributable to CHC   7,526          7,694           5,885        8,479
shareholders
Non-GAAP
adjustments:
Exchange gain         (76)           (57)            (63)         (46)
Stock based
compensation          128            154             216          154
expense(1)
Change in fair        (1,059)        (1,361)
value of warrant                                     716          (352)
liabilities(2)                      
Non-GAAP net income
attributable to CHC   6,519          6,430           6,754        8,235
shareholders
Less:
Net income
attributable to CHC
shareholders from    -              (929)           -            (2,737)
discontinued
operations
Non-GAAP net income
attributable to CHC
shareholders          6,519          5,501           6,754        5,498
 from continuing
operations
Non-GAAP net income
attributable to CHC
shareholders          0.12           0.12            0.12         0.15
 per ADS- basic
and diluted (3)
From continuing       0.12           0.09            0.12         0.09
operation
From discontinued     -              0.03            -            0.06
operation
Non-GAAP net income
attributable to CHC
shareholders          0.04           0.04            0.04         0.05
per ordinary
share- basic and
diluted
From continuing       0.04           0.03
operation                                            0.04         0.03
                                    
From discontinued     -              0.01            -            0.02
operation
Weighted average
American depository   54,025,127     53,996,366      54,014,374   53,996,366
shares- basic
Weighted average
ordinary shares-     162,075,380    161,989,097     162,043,122  161,989,097
basic
Weighted average
American Depository   54,174,152     53,996,366      54,110,443   53,996,366
Shares- diluted
Weighted average
ordinary shares-     162,522,456    161,989,097     162,331,329  161,989,097
diluted
(1) Stock-Based Compensation Related Items: We provide non-GAAP information
relative to our expense for stock-based compensation. We include stock-based
compensation expense in our GAAP financial measures in accordance with
Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") Topic 718, Compensation – Stock Compensation ("FASB ASC
Topic 718"). Because of varying available valuation methodologies, subjective
assumptions and the variety of award types, which affect the calculations of
stock-based compensation, we believe that the exclusion of stock-based
compensation allows for more accurate comparisons of our operating results to
our peer companies. Stock-based compensation is very different from other
forms of compensation. The expense associated with granting an employee a
stock option is spread over multiple years unlike other compensation expenses
which are more proximate to the time of award or payment. For example, we may
recognize expense on a stock option in a year in which the stock option is
significantly underwater and typically would not be exercised or would not
generate any compensation for the employee. The expense associated with an
award of a stock option for 1,000 shares of stock by us in one quarter, for
example may have a very different expense than an award of an identical
number of shares in a different quarter. Further, the expense recognized by
us for such an option may be very different than the expense recognized by
other companies for the award of a comparable option. This makes it difficult
to assess our operating performance relative to our competitors. Because of
these unique characteristics of stock-based compensation, management excludes
these expenses when analyzing the organization's business performance. We
also believe that presentation of such non-GAAP information is important to
enable readers of our financial statements to compare current period results
with future periods.
(2) Warrant liabilities Related Items: We provide non-GAAP information
relative to the change in fair value of warrant liabilities. We include the
change in fair value of warrant liabilities in our GAAP financial measures in
accordance with Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") Topic 815, Derivatives and Hedging ("FASB ASC
Topic 815"). Because of varying available valuation methodologies, and
subjective assumptions, which affect the calculations of the change in fair
value of warrant liabilities, we believe that the exclusion of the change in
fair value of warrant liabilities allows for more accurate comparisons of our
operating results to our peer companies. Because of the characteristics of
warrant liabilities, management excludes the change in fair value when
analyzing the organization's business performance. We also believe that
presentation of such non-GAAP information is important to enable readers of
our financial statements to compare current period results with future
periods.
(3) The Company's American depository shares ("ADS") convert to ordinary
shares at a rate of one ADS to three ordinary shares.
(4) All the reconciliation items are attributed to China Hydroelectric
Corporation Shareholders.



CHINA HYDROELECTRIC CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In US$ 000's)
                                          AsofJune30,  AsofDecember31,
                                          2013             2012
ASSETS
Current assets:
Cash and cash equivalents                 17,464           7,967
Restricted cash                           -                5,171
Accounts receivable (net of allowance for
doubtful accounts of nil as of June 30,   13,679           5,772
2013
 and December 31, 2012)
Notes receivable                          -                1,877
Deferred tax assets                       1,843            1,659
Amounts due from related parties          87               86
Prepayments and other current assets      9,166            14,150
Total current assets                      42,239           36,682
Non-current assets:
Property, plant and equipment, net        547,107          548,511
Land use right, net                       48,897           48,640
Intangible assets, net                    4,657            4,660
Goodwill                                  114,425          112,481
Deferred tax assets                       1,465            1,329
Other non-current assets                  1,894            2,013
Total non-current assets                  718,445          717,634
TOTAL ASSETS                              760,684          754,316
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                          1,976            3,124
Short-term loans                          11,266           21,676
Current portion of long-term loans        41,233           35,537
Amounts due to related parties            13,144           12,705
Accrued expenses and other current        42,983           43,825
liabilities
Warrant liabilities                       1,556            839
Total current liabilities                 112,158          117,706
Non-current liabilities:
Long term loans                           210,438          212,970
Deferred tax liabilities                  25,165           24,345
Other non-current liabilities             7,234            6,780
Total non-current liabilities             242,837          244,095
TOTAL LIABILITIES                         354,995          361,801
Shareholders' equity
Ordinary shares (par value US$0.001 per
share, 400,000,000 shares authorized as
of
June 30, 2013 and December 31, 2012;      162              162
162,099,665 and 161,989,097 shares issued
and outstanding as of June 30, 2013 and
December 31, 2012, respectively)
Additional paid in capital                509,907          509,665
Accumulated other comprehensive income    48,532           41,597
Accumulated deficit                       (153,587)        (159,472)
Total China Hydroelectric Corporation     405,014          391,952
shareholders' equity
Non-controlling interests                 675              563
TOTAL SHAREHOLDER'S EQUITY                405,689          392,515
TOTAL LIABILITIES AND SHAREHOLDERS'       760,684          754,316
EQUITY



CHINA HYDROELECTRIC CORPORATION

NET INCOME TO ADJUSTED EBITDA RECONCILIATION


                                                                                                                     Three Months Ended    Six Months Ended
                                                                                                                     June30,  June30,  June30,  June30,
                                                                                                                     2013       2012       2013       2012
Net income                                                                                                           7,720      7,903      6,035      8,615
Interest expenses, net                                                                                               5,527      6,842      11,970     14,284
Other non-cash charges, including exchange loss,
 change in fair value of warrant liabilities, and                                                                  (1,007)    (1,264)    869        (244)
 stock-based compensation expense
Income tax expenses                                                                                                  4,768      5,467      5,656      6,773
Interest expenses, income tax expenses, depreciation                                                                 -          955        -          1,969
 and amortization related to discontinued operations
Depreciation of property, plant and equipment and
 amortization of land use rights and intangible                                                                    5,957      5,798      11,679     11,497
assets
EBITDA, as adjusted                                                                                                  22,965     25,701     36,209     42,894
                                                                                                                     77%        76%        75%        76%
Less:
Income from discontinued operations                                                                                  -          (929)      -          (2,737)
Interest expenses, income tax expense, depreciation and                                                              -          (955)      -          (1,969)
 amortization related to discontinued operations
EBITDA, on a continuing basis, as adjusted                                                                           22,965     23,817     36,209     38,188
                                                                                                                     77%        75%        75%        72%
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization and certain non-cash charges including exchange loss, change in
fair value of warrant liability, stock-based compensation. We believe that EBITDA is widely used by other companies in the power industry and may be useful to
investors as a measure of the Company's financial performance. Given the significant investments that we have made in net property, plant and equipment,
depreciation and amortization expense comprises a meaningful portion of the Company's cost structure. We believe that EBITDA will provide a useful tool for
comparability between periods because it eliminates depreciation and amortization expenses attributable to capital expenditures and business acquisitions. The
presentation of EBITDA should not be construed as an indication that the Company's future results will be unaffected by other charges and gains we consider to
be outside the ordinary course of our business.



EBITDA margin, as adjusted, is calculated by dividing the period's EBITDA by net revenue including discontinued operations.



CHINA HYDROELECTRIC CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In US$ 000's)
                                                 Six Months Ended
                                                 June30,2013  June30,2012
Cash flows from operating activities:
Net income                                       6,035          8,615
Adjustments to reconcile net (loss) income to
net cash generated from
 operating activities:
 Depreciation of property, plant and
equipment and amortizationof                    11,689         11,863
 land use rights and intangible assets
 Deferred income taxes                      44             997
 Changes in fair value of warrant           716            (352)
liabilities
 Amortization of debt issuance costs        60             23
 Authorization of government grant          (2)            (2)
 Stock-based compensation expense           216            154
 Loss from disposal of property, plant      26             297
and equipment
 Exchange gain                              (63)           (46)
 Gain from disposal of discontinued         -              (1,376)
operation
 Changes in operating assets and
liabilities
 Accounts receivable                    (7,741)        (11,347)
 Notes receivable                       1,893          -
 Accounts due from related parties      -              (85)
 Prepayments and other current assets   76             (800)
 Other non-current assets               141            157
 Accounts payable                       (387)          (519)
 Amounts due to related parties         217            (4)
 Other non-current liabilities          457            (6)
 Accrued expenses and other current     (777)          (9,037)
liabilities
Net cash provided by/(used in) operating         12,600         (1,468)
activities
Cash flows from investing activities:
Acquisition of subsidiaries, net of       -              (4,704)
cash acquired
 Proceeds from the disposal of             4,605          10,843
subsidiaries, net of tax
 Acquisition of property, plant and        (858)          (4,699)
equipment
 Proceeds from disposal of property,       13             34
plant and equipment
 Payment to contractors for construction   (65)           (1,257)
projects
Net cash provided by investing activities        3,695          217
Cash flows from financing activities:
 Proceeds from short-term loans            2,028          11,479
 Proceeds from long-term loans             6,430          3,200
 Proceeds from loans from related          -              158
parties
 Proceeds from loans from third parties    382            16,098
 Repayment of loans from third parties     (602)          (14,364)
 Repayment of short-term loans             (13,831)       (7,833)
 Repayment of long-term loans              (6,440)        (7,650)
 Restricted cash                           5,171          -
Net cash (used in)/provided by financing         (6,862)        1,088
activities
Net increase (decrease) in cash and cash         9,433          (163)
equivalents
Effect of changes in exchange rate on cash and   64             (33)
cash equivalents
Cash and cash equivalents at the beginning of    7,967          8,402
the period
Cash and cash equivalents at the end of the      17,464         8,206
period

SOURCE China Hydroelectric Corporation

Website: http://www.chinahydroelectric.com
Website: http://www.viavid.com
Website: http://public.viavid.com/index.php?id=105698