Alterra Power announces HS Orka's 2012 Annual Financial Results
VANCOUVER, Feb. 27, 2013 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) ("Alterra") announces that its 66.6% owned Icelandic subsidiary, HS Orka ("the Company"), today released audited financial and operating results for the twelve month period ended December 31, 2012. HS Orka's financial statements are prepared in accordance with International Financial Reporting Standards and reported in Icelandic Krona (ISK), and can be found at http://www.hsorka.is.
Financial summary for the year ended December 31, 2012 includes:
- EBITDA increased by 6.7% to ISK 2,857 million (2011: ISK 2,678 million) primarily due to a reduction of non-recurring expenses in 2012 related to the Nordural contract arbitration. In US dollars ("$"), EBITDA decreased by 0.9% to $22.9 million (2011: $23.1 million) as the Icelandic Krona weakened in 2012 against the US dollar with the average exchange rate for 2012 being 7.8% weaker than in 2011.
- Revenue decreased by 14.1% to $55.0 million (2011: $64.0 million), primarily due to the expiration of a 35 MW contract in October 2011 coupled with a weakening of the ISK against the US Dollar, and a decline in aluminum prices that were on average 15.2% lower in 2012 than in 2011. In 2012 approximately 34% of HS Orka's revenue was indexed to the price of aluminum (2011: 44%).
- Gross profit decreased by 13.2% to $18.3 million (2011: $21.1 million), primarily as a result of the weakening ISK and the decline in revenue, which was partially offset by lower operating costs as a result of lower transmission and power purchase costs.
- Electricity production from the Reykjanes and Svartsengi geothermal power plants decreased by 5.2% to 1,193,584 MWh (2011: 1,258,697 MWh), due to an excess supply in the market which resulted in HS Orka scaling back on production. New contracts have been entered into in 2013 which will require an increase in generation going forwards.
- Net income of $4.8 million was recorded in 2012 as compared to a net loss of $8.1 million in 2011. This increase was primarily due to fair value changes of embedded derivatives in power sales contracts, which resulted in a $1.6 million expense in 2012 compared to a $12.6 million expense in 2011.
- During 2012, Icelandic minority shareholder Jarðvarmi slhf increased its shareholding interest in HS Orka from 25% to 33.4% (reducing Alterra's shareholding from 75% to 66.6%) by exercising an option to acquire new share capital. This increased the cash position of HS Orka by $37.5 million. Jarðvarmi slhf represents a consortium of Icelandic pension funds.
Summary financial information with respect to the operations of HS Orka is as follows:
HS Orka Financial Results
(expressed in millions of US dollars)
| For the twelve months ended | For the twelve months ended | |
| December 31, 2012 | December 31, 2011 | |
| at an average rate of 125 ISK per USD | at an average rate of 116 ISK per USD | |
| Total revenue | $ 55.0 | $ 64.0 |
| Cost of energy production | (36.7) | (42.9) |
| Gross profit | 18.3 | 21.1 |
| Other operating expenses | (3.5) | (6.5) |
| Operating income | 14.8 | 14.6 |
| Other income (expenses) | (10.5) | (24.3) |
| Equity income (loss) | 1.4 | (0.3) |
| Income tax | (0.9) | 1.9 |
| Income (loss) for the year | 4.8 | (8.1) |
| EBITDA (1) | 22.9 | 23.1 |
| As at December 31, 2012 | As at December 31, 2011 | |
| at a rate of 128 ISK per USD | at a rate of 122 ISK per USD | |
| Total assets | $ 389.2 | $ 326.3 |
| Total liabilities | 181.4 | 192.2 |
| Cash and cash equivalents (2) | 40.8 | 10.7 |
| Working capital (3) | 47.7 | 11.8 |
HS Orka Financial Results to be included in Alterra's Consolidated Financial Statements
(expressed in millions of US dollars - unaudited)
Alterra expects to include the following amounts in its consolidated financial statements for the twelve month period ended December 31, 2012, including fair value and other adjustments applied as a result of its acquisition of control of HS Orka in August 2010:
| For the year ended | For the six months ended | |
| December 31, 2012 | December 31, 2011 | |
| at an average rate of 125 ISK per USD | at an average rate of 117 ISK per USD | |
| Total revenue | $ 56.7 | $ 32.4 |
| Cost of energy production | (39.3) | (23.0) |
| Gross profit | 17.4 | 9.4 |
| Other operating expenses | (3.4) | (3.4) |
| Operating income | 14.0 | 6.0 |
| Other income (expenses) | (12.5) | (23.1) |
| Equity income (loss) | 1.4 | (1.3) |
| Income tax | (0.2) | 3.6 |
| Income (loss) for the year | 2.7 | (14.8) |
| EBITDA (1) | 22.9 | 12.3 |
| As at December 31, 2012 | As at December 31, 2011 | |
| at a rate of 128 ISK per USD | at a rate of 122 ISK per USD | |
| Total assets | $ 480.0 | $ 463.9 |
| Total liabilities | 225.5 | 233.2 |
| Cash and cash equivalents (2) | 40.8 | 10.7 |
| Working capital (3) | 44.3 | 7.9 |
| 1 | The Company's EBITDA is defined by the Company as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as before deductions for other gains and losses, amortization of below market contracts, and value assigned to options granted. The Company discloses EBITDA as it is a measure used by analysts and by management to evaluate the Company's performance. As EBITDA is a non-GAAP measure, it may not be comparable to EBITDA calculated by others. In addition, as EBITDA is not a substitute for net earnings, readers should consider net earnings in evaluating the Company's performance. |
| 2 | Includes $4.5 million of restricted cash |
| 3 | Working Capital = current assets - current liabilities (net of current portion of long-term debt) |
About HS Orka
HS Orka is the largest privately owned energy company in Iceland, producing 9% of the country's power needs and 10% of the country's heating needs. Installed geothermal power capacity is 172 MW from the Svartsengi and Reykjanes power plants. In addition, HS Orka generates 150 MW of thermal energy for district heating. Expansions are planned that could increase HS Orka's annual geothermal power production capacity from 172 MW to 252 MW by 2016.
About Alterra Power Corp.
Alterra Power Corp. is a leading global renewable energy company. Alterra operates six power plants totaling 566 MW of capacity, including two geothermal facilities in Iceland, a geothermal plant in Nevada, British Columbia's largest run-of-river hydro facility and the province's largest wind farm. Alterra's 297 MW share of production capacity generates approximately 1,400 GWh of clean power annually. Alterra also has an extensive portfolio of exploration and development projects, a skilled international team of developers, explorers, builders and operators to support its growth plans.
The Alterra trades on the Toronto Stock Exchange under the symbol AXY and OTC in the United States as MGMXF.
Cautionary Note regarding Forward-Looking Statements and Information
This news release contains certain "forward-looking information" within the meaning of Canadian securities laws, which may include, but is not limited to, statements with respect to future events or future performance, the fulfillment of all conditions precedent to the obligation of the parties under the agreements, required consents and third party approvals. This news release also contains statements with respect to our plans to expand our operations, management's expectations regarding our growth, business prospects and opportunities and energy generation capacities. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.
SOURCE Alterra Power Corp.
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