Alterra Power Announces HS Orka's 2014 Annual Financial Results

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Feb 26, 2015, 11:00 ET

VANCOUVER, Feb. 26, 2015 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) ("Alterra") announces that its 66.6% owned Icelandic subsidiary, HS Orka hf, today released audited financial and operating results for the twelve month period ended December 31, 2014. HS Orka's financial statements are prepared in accordance with International Financial Reporting Standards (as adopted by the European Union), are reported in Icelandic Krona (ISK), and can be found at http://www.hsorka.is.

Highlights for the year ended December 31, 2014 include (all amounts in US$):

Revenue increased 11% to $64.1 million (2013: $57.7 million) due to an increase in retail sales coupled with a strengthening ISK during the year.

HS Orka generated $23.5 million of EBITDA and $15.9 million of gross profit in 2014 (an increase of 10% and 13% respectively from 2013), reflecting increased revenue discussed above and a decrease in plant operating and transmission costs partially offset by higher power purchases during the year. Other operating costs increased in 2014 primarily due to the cost of legal proceedings and the cost of preparing for the arbitration hearings connected to the power sales contract with Norðurál Helguvík. The hearings are expected to take place in spring 2016.

Net income of $6.3 million was recorded in 2014 versus a net loss of $2.9 million in 2013. In addition to the operating results described above, this increase was primarily due to a year on year change in the fair value of the embedded derivative in power purchase agreements (linked to the aluminum price) which resulted in a positive movement of $13.3 million.

HS Orka's share of income from associates increased 57% to $5.0 million (2013: $3.2 million) primarily due to results from the Blue Lagoon, which continues to outperform expectations due to increased visitor attendance.

HS Orka received a dividend of $2.8 million in the year from the Blue Lagoon (2013: $1.8 million) and consistent with previous years HS Orka is expecting to pass this dividend to its shareholders in 2015 (2014 HS Orka cash dividend paid to shareholders of $2.0 million, with Alterra's share being $1.3 million).

HS Orka continues to use cash from operating activities to pay down loans and borrowings, with repayments of $19.1 million in 2014 (2013: $18.6 million) and a loan balance outstanding at year-end of $97.2 million. Loan repayments are set to decline substantially from 2017 onwards.

As part of the ongoing field maintenance program at the Reykjanes field, HS Orka has completed the drilling of a new large diameter reinjection well and commenced drilling of a second well in 2014. A pipeline to carry fluid to the wells is being built and reinjection is expected to commence in early 2015.

Summary financial information with respect to the operations of HS Orka is as follows:

HS Orka Financial Results Summary
(expressed in millions of US dollars)

	For the twelve months ended December 31, 2014		For the twelve months ended December 31, 2013
	at an average rate of 117 ISK per USD		at an average rate of 122 ISK per USD
Total Revenue	$	64.1	$	57.7
Cost of energy production		(48.2)		(43.6)
Gross profit		15.9		14.1
Other operating expenses		(4.2)		(3.6)
Operating income		11.7		10.5
Other income (expenses)		(10.2)		(18.2)
Equity income		5.0		3.2
Income tax (expense) recovery		(0.3)		1.6
Income (loss) for the year		6.3		(2.9)
EBITDA ⁽¹⁾		23.5		21.3

		As at December 31, 2014		As at December 31, 2013
		at a rate of 128 ISK per USD		at a rate of 115 ISK per USD
Total assets	$	348.0	$	390.2
Total liabilities		140.4		163.9
Cash and cash equivalents ⁽²⁾		29.6		38.4
Working capital		15.7		20.9

¹	EBITDA is defined by HS Orka and Alterra 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. HS Orka and Alterra disclose EBITDA as it is a measure used by analysts and by management to evaluate company 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 HS Orka's performance.

²	Includes $4.5 million of restricted cash

Alterra will include the results of HS Orka together with all applicable fair value adjustments applied as a result of its acquisition of control of HS Orka in August 2010, in its consolidated results to be released on March 24, 2015.

About HS Orka

HS Orka is the largest privately owned energy company in Iceland, producing 7% of the country's power needs and 11% of the country's heating needs. Installed geothermal power capacity is 174 MW from the Svartsengi and Reykjanes power plants. In addition, HS Orka generates 150 MW of thermal energy for district heating.

About Alterra Power Corp.

Alterra Power Corp. is a leading global renewable energy company, operating five power plants totaling 553 MW of generation capacity, including British Columbia's largest run-of-river hydro facility and largest wind farm, and two geothermal facilities in Iceland. Alterra owns a 247 MW share of this capacity, generating over 1,250 GWh of clean power annually. Alterra has an extensive portfolio of exploration and development projects and a skilled international team of developers, explorers, builders and operators to support its growth plans.

The company 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, the completion and timing of our reinjection program, required consents and third party approvals. Such forward-looking information reflects management's current beliefs and is based on information currently available to management. Alterra cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking information. Material risk factors and assumptions include those set out in the management's discussion and analysis section of Alterra's most recent annual and quarterly reports and in Alterra's Annual Information Form for the year ended December 31, 2013. Although Alterra has attempted to identify important factors that could cause actual actions, events or results to differ materially from forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate and undue reliance should not be placed on forward-looking information. Except as required by law, Alterra undertakes no obligation to update any forward-looking information to reflect new information, subsequent or otherwise.

SOURCE Alterra Power Corp.