Reykjavik, 2013-03-22 15:28 CET (GLOBE NEWSWIRE) --  

- Consolidated financial statements 2012 approved today
- The Plan returns cash flow ISK 1.8 billion above set target
- Debt is still heavy and  equity too low

Operations of Reykjavik Energy (RE - Orkuveita Reykjavikur) returned EBIT of ISK 14.7 billion in year 2012 compared to ISK 12.4 billion in 2011. Since year 2010, operating revenues have increased by 36% while operating expenses have decreased by 8%. Continuous cost containment, increased electricity sales and CPI-linked revenues from utilities are the principal reasons for these good results.

EBITDA was ISK 25 billion, an increase of 18% from previous year.

RE’s Board of Directors confirmed the Company´s consolidated financial statements today. They are prepared in accordance with International Financial Reporting Standards as adopted by the EU.

“The Plan” on Schedule

RE’s financial action plan – “The Plan” – was approved in the spring of 2011 by the Company and its owners. The Plan’s objective is to improve the company´s cash position by ISK 50 billion from initiation through 2016. At year end 2012 all aspects of the Plan were on schedule, though sales of assets have taken longer than expected. With actions taken by the Board of Directors and the company’s owners in recent weeks, these are back on track. Today the Board of Directors confirmed the sale of the Reykjavik landmark Perlan for ISK 950 million and the company´s CEO is authorised to finalise the sale of the Company´s headquarters for ISK 5.1 billion. Various other assets are currently in the process of being sold. Despite delays in sale of assets, the total result of The Plan exceeds targets by ISK 1.8 billion. 

Unfavourable External Variables

The impact of external variables, such as aluminium price and currency exchange rates, was unfavourable during the year 2012. These external factors impact the value of electricity sales contracts with the metal industry and debts in foreign currencies increase. Aggregated impact of these and other unrealised amounts in RE’s income statements is negative by ISK 13.4 billion. Consequently, the income statement resulted in a bottom-line loss of ISK 2.3 billion. Considerable effort has been made to mitigate risks relating to unfavourable trends in aluminium prices, interest rates and foreign exchange rates with to some success.

Today, the Board of Directors approved the terms of foreign currency loans from foreign and domestic banks as well as significant risk mitigation agreements regarding interest rates and exchange rates.

Bjarni Bjarnason, CEO:

The good result of our operations is due to pooled efforts of many; the Board of Directors, the owners, each and every employee and last but not least our customers. The effective strategy in The Plan has enabled us to stay on the same track and the operating results show that we are heading the right way. Furthermore, they have improved the Company´s credibility on financial markets and made it possible for us to strengthen our finances.

Evidently, 2013 is the most challenging year of the Plan. Agreements have been reached with foreign banks on rescheduling of payments, and the measures that the Board of directors approved today is the result of our hard work. Now we are confident that we will get through the difficult hurdle of the 2013 debt servicing. Nevertheless, debt is still heavy and equity too low and therefore it is of utmost importance to keep focus on efficient operations of Reykjavik Energy.

Managers’ Overview

All amounts are in ISK millions and on each year´s price level
 

         Contact:
         Mr. Bjarni Bjarnason, CEO
         + 354 516 7707