China Hydroelectric Corporation Announces Results for the Third Quarter 2013

 China Hydroelectric Corporation Announces Results for the Third Quarter 2013

PR Newswire

BEIJING, Nov. 25, 2013

BEIJING, Nov. 25, 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 quarter ended
September 30, 2013.

For the third quarter of 2013, revenues from continuing operations (net of
value-added tax) declined by 18.4% year over year to $16.4 million, due to a
14.1% decline in electricity sold. We recorded a net loss attributable to
China Hydroelectric shareholders from continuing operations of $3.0 million
for the third quarter of 2013, compared to $1.7 million for the same period of
2012, partially attributable to a $3.5 million asset impairment loss related
to flood damage at the Liyuan project in Sichuan province.

"The management team has continued to execute its strategy in controlling
operating expenses and reducing third party borrowings, thus lowering the
impact of less favorable rainfall," stated Mr. Amit Gupta, Chairman of China
Hydroelectric.

"We experienced dryer weather conditions in two of our three main operating
regions this quarter. Precipitation in Zhejiang and Fujian provinces were 39%
and 17% below respective regional long-term averages. On the other hand,
precipitation in Yunnan has rebounded and experienced slightly above long-term
average rainfall," stated Dr. You Su-Lin, interim Chief Executive Officer of
China Hydroelectric. "Due to damage caused by flooding to our Liyuan project
located in Sichuan during Q3 2013, we have taken an asset impairment loss as a
prudent measure. In terms of revenue, Liyuan previously contributed less than
2% of our revenues in each of the last three years, hence had a minimal impact
on our revenues," concluded Dr. Lin.

Operating Highlights

Precipitation in the third quarter of 2013 was approximately 14% below the
long-term average, due to dryer conditions in two of the three main provinces
in which the Company operates. In contrast, precipitation in the third quarter
of 2012 was 5% below the long-term average. Due to less precipitation,
electricity sold in the third quarter of 2013 declined approximately 14.1%
when compared to the third quarter of 2012. The reduced rainfall resulted in a
utilization rate of 35.6% in the third quarter of 2013, compared to 44.6% in
the third quarter of 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 *+

                                YTD** YTD**
Province       Q3 2013 Q3 2012
                                2013  2012
Zhejiang       61%     116%     86%   136%
Fujian         83%     107%     85%   119%
Yunnan         106%    90%      88%   89%
Total Company  86%     95%      86%   107%

               Fiscal Fiscal Fiscal
Province
               2012   2011   2010
Zhejiang       134%   70%    130%
Fujian         128%   62%    114%
Yunnan         87%    86%    N/A
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.
** "YTD" refers to the nine months ended September 30.
N/A – Not available.



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):

                          Q3       Q3                 YTD(4)   YTD(4)   %
Summary Data              2013     2012     % Change                    Change
                                                      2013     2012
Continuing Operations
Electricity sold          406.7    473.5    -14.1%    1,299.1  1,485.9  -12.6%
(millions kWh)
Effective tariff          0.27     0.28     -3.6%     0.33     0.34     -2.9%
(RMB/kWh)
Average effective         35.6%    44.6%    -20.2%    38.3%    44.1%    -13.2%
utilization rate
Revenues                  16.4     20.1     -18.4%    64.5     73.0     -11.6%
Gross profit              8.1      11.3     -28.3%    38.8     46.9     -17.3%
Adjusted EBITDA (1)       10.7     12.1     -11.6%    47.0     50.3     -6.6%
GAAP net (loss)/income    (3.0)    (1.7)    -76.5%    2.9      4.1      -29.3%
GAAP net (loss)/income    ($0.06)  ($0.03)  -100.0%   $0.06    $0.07    -14.3%
per ADS (3)
Non-GAAP net              (0.5)    (1.1)    54.5%     6.2      4.4      40.9%
(loss)/income (2)
Non-GAAP net
(loss)/income per ADS     ($0.01)  ($0.02)  50%       $0.12    $0.07    71.4%
(2,3)
Net income from           -        -        -         -        2.8      -100%
discontinued operations


(1) See "Net (loss) /income to adjusted EBITDA reconciliation" below
(2) See "GAAP net (loss) /income to non-GAAP net income/(loss) reconciliation"
below
(3) Per ADS data is representative of basic and diluted ADS
(4) "YTD" refers to the nine months ended September 30.



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.

Third Quarter 2013 Financial Highlights

Revenues

Revenues, net of value added taxes, from continuing operations for the third
quarter of 2013 were $16.4 million, a decrease of 18.4%, or $3.7 million, from
$20.1 million for the third 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 two of the Company's three main
operating regions.

The Company sold 406.7 million kWh from continuing operations in the third
quarter of 2013, a decrease of 66.8 million kWh, or 14.1%, from the 473.5
million kWh sold in the third quarter of 2012. The effective tariff for the
third quarter of 2013 was RMB 0.27/kWh, a decrease of 3.6% from 0.28/kWh in
the third quarter of 2012.

Cost of Revenues

Cost of revenues from continuing operations for the third quarter of 2013 was
$8.3 million, a decrease of $0.5 million or 5.7% from the third quarter of
2012. Cost of revenues in the third quarter of 2013 primarily included (i)
depreciation and amortization (non-cash expenses included in cost of revenues
from continuing operations) of $5.6 million, unchanged from the third quarter
of 2012, (ii) labor cost of $1.0 million, compared to $1.3 million for the
third quarter of 2012 and (iii) repairs and maintenance costs of $0.4 million,
compared to $0.2 million for the third quarter of 2012.

Gross Profit and Margin

Gross profit from continuing operations for the third quarter of 2013
decreased by 28.3% to $8.1 million, from $11.3 million in the prior-year
period. Gross margin for the third quarter of 2013 decreased to 49% compared
to 56% 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 ("G&A expenses") for the third quarter of
2013 decreased 37.7% to $3.3 million from $5.3 million for the third quarter
of 2012. The decrease was primarily due to one-time expenses in the third
quarter of 2012 related to the proxy contest, the closure of our U.S. office
and reduction of professional service expenses. In the third quarter of 2013,
we incurred expenses related to a preliminary non-binding proposal from
NewQuest Capital Partners ("NewQuest") received on September 4, 2013 to
acquire all of the Company's outstanding ordinary shares not owned by the
buyer consortium.

Assets impairment loss

We recorded an asset impairment loss of $3.5 million in the third quarter of
2013, primarily reflecting the estimated asset damages resulting from a severe
flood in Sichuan province in July 2013 which damaged the tailrace concrete
apron, spillway gates, power generation plant, auxiliary equipment and the
35KV substation of our Liyuan hydroelectric power project. The net asset
impairment loss of $3.5 million also reflected the insurance recovery of $0.6
million we received so far. The company is still assessing the total asset
loss caused by such flood and is working with the insurance company to
determine how much of the total loss can be recovered.

Adjusted EBITDA and EBITDA Margin

Adjusted EBITDA decreased by 16.4% to $10.7 million in the third quarter of
2013 compared to $12.8 million in the same period of 2012. Adjusted EBITDA
margin increased to 66% for the third quarter of 2013 compared to 61% in the
same period of 2012.

On a continuing basis, Adjusted EBITDA decreased by 11.6%, or $1.4 million, to
$10.7 million in the third quarter of 2013 from $12.1 million in the same
period of 2012, and Adjusted EBITDA margin increased from 60% to 66%.

Interest Expenses, net

Net interest expenses were $6.0 million in the third quarter of 2013, compared
to $7.0 million in the prior year period. The decrease was primarily due to a
reduced balance on short term borrowings from third party individuals.

GAAP and Non-GAAP Net (loss)/Income

Net loss attributable to China Hydroelectric shareholders from continuing
operations was $3.0 million in the third quarter of 2013, compared to $1.7
million in the same period of 2012 which excluded $0.03 million of net income
attributable to China Hydroelectric shareholders from discontinued operations.
The increase of net loss was primarily due to less favorable hydrological
factors and the Liyuan assets impairment loss during the flood in Sichuan
province.

Non-GAAP net loss attributable to China Hydroelectric shareholders from
continuing operations was $0.5 million, or $0.01 per diluted ADS, for the
third quarter of 2013, compared to a net loss of $1.1 million, or $0.02 per
diluted ADS in the prior year period. For reconciliation between GAAP and
non-GAAP earnings, see the table below entitled "GAAP Net Income/ (loss) to
Non-GAAP Net Income/ (loss) Reconciliation."

Weighted average American depository shares ("ADSs") used in the third 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.

Nine Months Ended September 30, 2013 Financial Highlights

Revenues

Revenues, net of value added taxes, from continuing operations, for the nine
months ended September 30, 2013 were $64.5 million, a decrease of 11.6%, or
$8.5 million, from $73.0 million for the same period of the prior year. The
decrease in revenue for the nine months ended September 30, 2013 was
principally due to lower precipitation levels in two of the Company's three
main operating regions compared to the same period the prior year. The Company
sold 1,299.1 million kWh from continuing operations for the nine months ended
September 30, 2013, a decrease of 186.8 million kWh, or 12.6%, from 1,485.9
million kWh sold in the same period of the prior year. The effective tariff
decreased to RMB 0.33/kWh for the nine months ended September 30, 2013 from
RMB 0.34/kWh during the same period of 2012.

Cost of Revenues

Cost of revenues from continuing operations for the nine months ended
September 30, 2013 was $25.6 million, as compared to $26.1 million for the
same period of the prior year. Cost of revenues in the nine months ended
September 30, 2013 primarily included (i) depreciation and amortization
(non-cash expenses included in cost of revenues from continuing operations) of
$17.1 million, compared to $17.0 million of the prior year; (ii) labor cost of
$3.0 million, unchanged from the prior year; (iii) repairs and maintenance
costs of $1.1 million, compared to $1.2 million for the same period of the
prior year.

Gross Profit and Margin

Gross profit from continuing operations for the nine months ended September
30, 2013 decreased by 17.3% to $38.8 million, from $46.9 million in the
prior-year period. Gross margin for the nine months ended September 30, 2013
decreased to 60% compared to 64% 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

G&A expenses for the nine months ended September 30, 2013 decreased by 30.0%
to $9.8 million, from $14.0 million for the prior-year period. The decrease
was primarily due to the closure of the U.S. office, one-time expenses in the
third quarter of 2012 related to the proxy contest and reduction of
professional service expenses, offset by expenses related to the consideration
of a non-binding proposal from NewQuest received on September 4, 2013.

Assets impairment loss

We recorded an asset impairment loss of $3.5 million in the third quarter of
2013, primarily reflecting the estimated asset damages resulting from a severe
flood in Sichuan province in July 2013 which damaged the tailrace concrete
apron, spillway gates, power generation plant, auxiliary equipment and the
35KV substation of our Liyuan hydroelectric power project. The net asset
impairment loss of $3.5 million also reflected the insurance recovery of $0.6
million we received so far. The company is still assessing the total asset
loss caused by such flood and working with the insurance company to determine
how much of the total loss can be recovered.

Adjusted EBITDA and EBITDA Margin

Adjusted EBITDA decreased by 15.6% to $47.0 million in the nine months ended
September 30, 2013 compared to $55.7 million in the same period of 2012.
Adjusted EBITDA margin increased to 73% for the nine months ended September
30, 2013, compared to 72% in the same period of 2012. On a continuing basis,
Adjusted EBITDA decreased by 6.6%, or $3.3 million, to $47.0 million in the
nine months ended September 30, 2013 from $50.3 million in the same period of
2012. On a continuing basis, Adjusted EBITDA margin increased from 69% to 73%
year over year.

Interest Expenses, net

Net interest expenses were $17.9 million in the nine months ended September
30, 2013, compared to $21.3 million in the same period of 2012. The decrease
was primarily due to a decrease in the balance of third party borrowings from
the same period of the prior year.

GAAP and Non-GAAP Net Income

Net income attributable to China Hydroelectric shareholders was $2.9 million
in the nine months ended September 30, 2013 compared to $4.1 million in the
same period of the prior year, which excluded $2.8 million net income
attributable to China Hydroelectric shareholders from discontinued operations.

Non-GAAP net income attributable to China Hydroelectric shareholders  was $6.2
million, or $0.12 per diluted ADS, for the nine months ended September 30,
2013, compared to $4.4 million, or $0.07 per diluted ADS, for the same period
of 2012. For reconciliation between GAAP and non-GAAP earnings, see the table
below entitled "GAAP Net Income/ (loss) to Non-GAAP Net Income/ (loss)
Reconciliation."

Weighted average ADSs used in the nine months ended September 30, 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.

Balance Sheet

The Company's cash flow in the quarter resulted in a strengthened balance
sheet. Cash and cash equivalents (excluding restricted cash) were $17.6
million as of September 30, 2013, compared to $17.5 million as of June 30,
2013. Long-term bank loans were $238.5 million (including the current portion
of long-term loans of $37.2 million) as of September 30, 2013, a decrease from
$251.7 million (including current portion of long-term loans of $41.2 million)
as of June 30, 2013. Short-term loans as of September 30, 2013 were $14.4
million, an increase of $3.1 million from $11.3 million as of June 30, 2013.

As of September 30, 2013, the Company's working capital deficiency was $72.5
million. Up to the date of this release, the Company raised $40.6 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 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 a 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 ("CIETAC") for the penalty of late capital injection in
Wuyue, in a total amount of RMB25.74 million. The Company filed a counterclaim
against Lantian at CIETAC for termination of the agreements between Lantian
and the Company, no penalty of late capital injection and return of the
Company's capital injected in Wuyue. In September 2013, Lantian increased the
penalty claim amount from RMB 25.74 million to RMB 38.2 million. The hearing
was held on November 8, 2013. As of the date of this earning release, no
ruling or award has been granted in respect of the claim.

In October 2013, twenty-four employees of Wuyue filed an arbitration claim
against Wuyue. Lantian and the Company were named as joint respondents for
unpaid salary and social security payment of RMB6.6 million. The claim was
heard by the Henan Guangshan County Labour Arbitration Committee ("GCLAC") in
November 2013. As of the date of this earning release, no ruling or award has
been granted in respect of the claim.

Business Outlook

As of the date of this release, rainfall in the fourth quarter of 2013 has
been lower than that of the same period in 2012. Fujian and Zhejiang, which
are 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.

Conference Call

China Hydroelectric will host a conference call at 6:00 am (Pacific Time) /
9:00 am (Eastern Time) / 10:00 pm (Beijing/Hong Kong Time) on Tuesday,
November 26, 2013 to discuss its third quarter financial results and recent
business activities. To access the live teleconference, please dial (U.S.)
+1-888-337-8198 or (International) +1-719-785-1765, and enter pass code
7833520. This call is being webcast by ViaVid Communications and can be
accessed by clicking on this link:
http://public.viavid.com/index.php?id=106960, or at ViaVid's website at
http://www.viavid.com.

A playback will be available through December 10, 2013, by dialing (U.S.)
+1-877-870-5176 or (International) 1-858-384-5517 and entering the pass code
7833520.

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 hydropower stations in China
with total installed capacity of 517.8 MW, of which it acquired 21 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

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 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, the potential impact of
flood damages to Liyuan project, 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/ (loss)
attributable to China Hydroelectric shareholders and adjusted EBITDA, which
are non-GAAP financial measures. Non-GAAP net income/ (loss) attributable to
China Hydroelectric shareholders for the third quarter and the nine months
ended September 30, 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/ (loss) to Non-GAAP Net
Income/ (loss) 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/ (loss) 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/ (loss) to Adjusted EBITDA Reconciliation" and "GAAP Net
Income/ (loss) to Non-GAAP Net Income/ (loss) 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          Nine Months Ended
                          September 30,  September    September    September
                          2013           30, 2012     30, 2013     30, 2012
Continuing Operations:
Revenues                  16,356         20,129       64,465       73,013
Cost of revenues          (8,288)        (8,829)      (25,646)     (26,131)
Gross profit              8,068          11,300       38,819       46,882
Operating expenses
General and
administrative expenses
(including share-based

 compensation expenses
of $178 and $107 for the
nine months ended
                          (3,337)        (5,295)      (9,784)      (13,957)
 September 30, 2013
and 2012, expense of $38
and an income of $47

 for three months
ended September 30, 2013
and 2012, respectively)
Assets impairment loss    (3,535)        -            (3,535)      -
Total operating expenses  (6,872)        (5,295)      (13,319)     (13,957)
Operating income/(loss)   1,196          6,005        25,500       32,925
Interest income           (110)          7            81           20
Interest expense          (5,857)        (7,040)      (18,018)     (21,337)
Changes in fair value of  1,002          (708)        286          (356)
warrant liabilities
Exchange gain             24             22           87           68
Other income/(expenses),  156            415          166          32
net
Income before income tax  (3,589)        (1,299)      8,102        11,352
expenses
Income tax expense        441            (386)        (5,215)      (7,159)
Net (loss)/income from    (3,148)        (1,685)      2,887        4,193
continuing operations
Net income from           -              33           -            2,770
discontinued operations
Net (loss)/income         (3,148)        (1,652)      2,887        6,963
Less:
Net loss/(income)
attributable to           142            (6)          (8)          (142)
non-controlling
interests
Net (loss)/income
attributable to China
Hydroelectric             (3,006)        (1,658)      2,879        6,821
Corporation

shareholders
- Continuing operations   (3,006)        (1,691)      2,879        4,051
- Discontinued            -              33           -            2,770
operations
Other Comprehensive
income/(loss), net of
taxes
 Foreign currency       2,110          (1,040)      9,007        (3,417)
translation adjustments
Comprehensive income      (1,038)        (2,692)      11,894       3,546
 Less: comprehensive
loss/(income)
attributable to           149            (17)         37           (150)
non-controlling

 interest
Comprehensive
(loss)/income             (889)          (2,709)      11,931       3,396
attributable to CHC
shareholders
GAAP net income per ADS   (0.06)         (0.03)       0.06         0.13
– basic and diluted
From continuing           (0.06)         (0.03)       0.06         0.07
operation
From discontinued         -              -            -            0.06
operation
GAAP net income per
share – basic and         (0.02)         (0.01)       0.02         0.04
diluted
From continuing           (0.02)         (0.01)       0.02         0.02
operation
From discontinued         -              -            -            0.02
operation
Weighted average
American Depository       54,033,222     53,996,366   54,020,725   53,996,366
Shares – basic
Weighted average          162,099,665    161,989,097  162,062,176  161,989,097
ordinary shares – basic
Weighted average
American Depository       54,142,236     53,996,366   54,121,302   53,996,366
Shares – diluted
Weighted average
ordinary shares –         162,426,708    161,989,097  162,363,907  161,989,097
diluted





CHINA HYDROELECTRIC CORPORATION

GAAP NET (LOSS) /INCOME TO NON-GAAP NET (LOSS) /INCOME RECONCILIATION

(In US$ 000's)


                           Three Months Ended         Nine Months Ended
                           September    September     September    September
                           30, 2013     30, 2012      30, 2013     30, 2012
Net (loss)/income
attributable to CHC        (3,006)      (1,658)       2,879        6,821
shareholders
Non-GAAP adjustments:
Exchange gain              (24)         (22)          (87)         (68)
Stock based compensation   (38)         (47)          178          107
expense/(income)(1)
Change in fair value of    (1,002)      708           (286)        356
warrant liabilities(2)
Assets impairment loss     3,535        -             3,535        -
Non-GAAP net
(loss)/income              (535)        (1,019)       6,219        7,216
attributable to CHC
shareholders
Less:
Net income attributable
to CHC shareholders from
discontinued               -            (33)          -            (2,770)

 operations
Non-GAAP net
(loss)/income
attributable to CHC
shareholders               (535)        (1,052)       6,219        4,446

 from continuing
operations
Non-GAAP net
(loss)/income
attributable to CHC
shareholders               (0.01)       (0.02)        0.12         0.13

 per ADS – basic and
diluted (3)
From continuing operation  (0.01)       (0.02)        0.12         0.07
From discontinued          -            -             -            0.06
operation
Non-GAAP net
(loss)/income
attributable to CHC
                           (0.00)       (0.01)        0.04         0.04
 shareholders per
ordinary share – basic
and diluted
From continuing operation  (0.00)       (0.01)        0.04         0.02
From discontinued          -            -             -            0.02
operation
Weighted average American  54,033,222   53,996,366    54,020,725   53,996,366
depository shares – basic
Weighted average ordinary  162,099,665  161,989,097   162,062,176  161,989,097
shares – basic
Weighted average American
Depository Shares –        54,142,236   53,996,366    54,121,302   53,996,366
diluted
Weighted average ordinary  162,426,708  161,989,097   162,363,907  161,989,097
shares – 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)


                                         As of September  As of December 31,
                                         30,
                                         2013              2012
ASSETS
Current assets:
Cash and cash equivalents                17,644            7,967
Restricted cash                          33                5,171
Accounts receivable (net of allowance
for doubtful accounts of nil as of
September 30,                            6,272             5,772

 2013 and December 31, 2012)
Notes receivable                         488               1,877
Deferred tax assets                      1,780             1,659
Amounts due from related parties         87                86
Prepayments and other current assets     3,229             14,150
Total current assets                     29,533            36,682
Non-current assets:
Property, plant and equipment, net       539,675           548,511
Land use right, net                      48,848            48,640
Intangible assets, net                   4,722             4,660
Goodwill                                 114,997           112,481
Deferred tax assets                      1,474             1,329
Other non-current assets                 1,934             2,013
Total non-current assets                 711,650           717,634
TOTAL ASSETS                             741,183           754,316
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                         1,954             3,124
Short-term loans                         14,395            21,676
Current portion of long-term loans       37,226            35,537
Amounts due to related parties           14,369            12,705
Accrued expenses and other current       33,555            43,825
liabilities
Warrant liabilities                      553               839
Total current liabilities                102,052           117,706
Non-current liabilities:
Long term loans                          201,285           212,970
Deferred tax liabilities                 24,524            24,345
Other non-current liabilities            9,262             6,780
Total non-current liabilities            235,071           244,095
TOTAL LIABILITIES                        337,123           361,801
Shareholders' equity
Ordinary shares (par value US$0.001 per
share, 400,000,000 shares authorized as
of

September 30, 2013 and December 31,      162               162
2012; 162,099,665 and 161,989,097 shares

issued and outstanding as of September
30, 2013 and December 31, 2012,
respectively)
Additional paid in capital               509,869           509,665
Accumulated other comprehensive income   50,649            41,597
Accumulated deficit                      (157,146)         (159,472)
Total China Hydroelectric Corporation    403,534           391,952
shareholders' equity
Non-controlling interests                526               563
TOTAL SHAREHOLDER'S EQUITY               404,060           392,515
TOTAL LIABILITIES AND SHAREHOLDERS'      741,183           754,316
EQUITY



CHINA HYDROELECTRIC CORPORATION

NET (LOSS)/INCOME TO ADJUSTED EBITDA RECONCILIATION


                       Three Months Ended            Nine Months Ended
                       September      September      September      September

                       30, 2013       30, 2012       30, 2013       30, 2012
Net (loss)/income      (3,148)        (1,652)        2,887          6,963
Interest expenses,     5,967          7,033          17,937         21,317
net
Other non-cash
charges, including
exchange gain,

 change in fair
value of warrant       (1,064)        639            (195)          395
liabilities, and

 stock-based
compensation
expense
Income tax expenses    (441)          386            5,215          7,159
Interest expenses,
income tax
expenses,
depreciation
                       -              636            -              2,605
 and amortization
related to
discontinued
operations
Depreciation of
property, plant and
equipment and
                       5,896          5,729          17,575         17,226
 amortization of
land use rights and
intangible assets
Assets impairment      3,535          -              3,535          -
loss
EBITDA, as adjusted    10,745         12,771         46,954         55,665
                       66%            61%            73%            72%
Less:
Income from
discontinued           -              (33)           -              (2,770)
operations
Interest expenses,
income tax expense,
depreciation and
                       -              (636)          -              (2,605)
 amortization
related to
discontinued
operations
EBITDA, on a
continuing basis,      10,745         12,102         46,954         50,290
as adjusted
                       66%            60%            73%            69%


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)


                                                  Nine Months Ended
                                                  September 30,  September 30,

                                                  2013           2012
Cash flows from operating activities:
Net income                                        2,887          6,963
Adjustments to reconcile net income to net
cash generated from operating

 activities:
Depreciation of property, plant and equipment
and amortization of                               17,575         17,775

 land use rights and intangible assets
Deferred income taxes                             (386)          411
Changes in fair value of warrant liabilities      (286)          356
Amortization of debt issuance costs               90             158
Authorization of government grant                 (2)            (2)
Stock-based compensation expense                  178            107
Loss from disposal of property, plant and         24             355
equipment
Exchange gain                                     (87)           (68)
Asset impairment loss                             4,082          -
Gain from disposal of discontinued operation      -              (1,376)
Changes in operating assets and liabilities
Accounts receivable                               (368)          (2,787)
Notes receivable                                  792            -
Accounts due from related parties                 -              (85)
Prepayments and other current assets              (430)          (1,023)
Other non-current assets                          31             (72)
Accounts payable                                  (281)          (412)
Amounts due to related parties                    1,365          263
Other non-current liabilities                     2,485          84
Accrued expenses and other current liabilities    (3,112)        2,806
Net cash provided by operating activities         24,557         23,453
Cash flows from investing activities:
Acquisition of subsidiaries, net of cash          -              (8,994)
acquired
Proceeds from the disposal of subsidiaries,       11,051         10,843
net of tax
Acquisition of an intangible assets               (89)           -
Acquisition of property, plant and equipment      (1,484)        (7,110)
Proceeds from disposal of property, plant and     56             34
equipment
Payment to contractors for construction           (96)           (3,316)
projects
Net cash provided by/ (used in) investing         9,438          (8,543)
activities
Cash flows from financing activities:
Proceeds from short-term loans                    9,108          15,626
Proceeds from long-term loans                     7,408          26,494
Proceeds from loans from related parties          -              570
Proceeds from loans from third parties            1,490          17,181
Proceeds from sales and lease back                -              6,265
Payment of debt issuance cost                     -              (352)
Repayment of loans from third parties             (8,829)        (32,355)
Repayment of short-term loans                     (17,848)       (13,772)
Repayment of long-term loans                      (21,096)       (32,544)
Restricted cash                                   5,138          -
Repayment of principle under sales and lease      -              (180)
back
Net cash used in financing activities             (24,629)       (13,067)
Net increase in cash and cash equivalents         9,366          1,843
Effect of changes in exchange rate on cash and    311            (54)
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       17,644         10,191
period



SOURCE China Hydroelectric Corporation

Website: http://www.chinahydroelectric.com
 
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