2017-03-07 15:45:14 CET
2017-03-07 15:45:14 CET
REGLERAD INFORMATION
Orkuveita Reykjavíkur - Financial Statement Release
A Successful Plan Completed - OR Annual Financial Statements 2016
Reykjavík, 2017-03-07 15:44 CET (GLOBE NEWSWIRE) -- The results of a series of
measures undertaken by Orkuveita Reykjavíkur (OR; Reykjavík Energy) since early
2011, known as The Plan, exceeded expectations. The goal was to improve the
cash flow of OR by approximately ISK 50 billion. According to the attached
final progress report, cash flow improved by ISK 60 billion through year-end
2016.
OR‘s Board of Directors today approved the consolidated annual financial
statements for year 2016. Profits from operations are in line with previous
years but in 2016 the appreciation of the Icelandic krona also contributed to
profits which were ISK 13.4 billion for the year, or 12.0% return on equity.
The Plan‘s final progress report
Since OR‘s owners–where The City of Reykjavík is predominant–and OR‘s BoD
agreed on the Plan in March 2011, the company has published a progress report
on a quarterly basis. According to the final results, issued today, the Plan‘s
measures improved OR‘s cash flow by ISK 60.2 billion. The original target was
set at ISK 51.3 billion. The success of The Plan was first and foremost due to
internal actions which exceeded targets by 20%. The Plan’s external measures –a
subordinated loan from owners and increased tariffs–exceeded targets by 13%. Of
the Plan’s total returns, the tariffs were responsible for 18%.
Reductions in operating cost for the Plan’s duration returned ISK 8.0 billion,
surpassing original targets by 60%.
Lower real-term expenses than in 2010
The consolidated annual financial statements, released today, reveal stable and
good operational results. EBIT amounted to ISK 15 billion, an increase of 3.7%
from previous year. Revenues increased by ISK 1.1 billion between years 2015
and 2016 and expenditures by ISK 880 million. Wages increased considerably in
accordance with collective bargaining agreements. Furthermore, utility-related
undertakings have increased in line with mounting activities in the
construction industry and changes in operations, as previously outsourced
utility metering services have been taken in-house, resulted in increased
revenues and expenses.
However, when OR’s operating cost is measured at year 2016 price levels, it
materializes that real-term operating cost in year 2016 were lower than in year
2010. This is due to the rationalization of operations introduced through The
Plan and good control of expenses since. For the foreseeable future, OR and the
subsidiaries will benefit from the culture of cost-awareness and practicality
implemented with The Plan. The group’s customers benefitted directly from the
success of The Plan as tariffs were lowered in the beginning of year 2017.
Effects of exchange rates on bottom-line results
OR’s financial items of the year 2016 were positive for the first time for
several years mostly due to the appreciation of the Icelandic currency as it
decreased the fair value of loans denominated in foreign currencies. Exchange
rate differences amounted to ISK 8.5 billion in the income statements.
OR has gradually serviced its loans and net debt has decreased by almost ISK
100 billion since year 2009. Simultaneously, equity ratio has almost tripled.
Bjarni Bjarnason, CEO
It is important that The Plan worked out and that we managed to utilize it for
improvements in multiple other aspects of our operations than finances alone.
The solidarity between OR’s owners, BoD, and staff during the years of The Plan
has also been gratifying.
Foresight, efficiency, and integrity are the core values of OR and the
subsidiaries. I think that the final report on The Plan’s progress published
today clearly shows the company’s operational efficiency and we are determined
to keep it that way. We are faced by continuous changes and our foresight will
continue to be tested when we aspire to seize the opportunities these changes
bring. Among them are the introduction of e-mobility in Iceland and the
implementation of cost effective smart-technologies for the power grid and
district heating services. In accordance with the track record of The Plan, we
will continue to focus on taking long term operational decisions based on
scrutinized analysis and be prepared to implement them in a timely manner. As
before, we will be transparent by informing the public on OR’s operations and
the challenges we are facing.
Managers’ overview
All amounts are at each years 2012 2013 2014 2015 2016
price level
Revenues 37,905 39,209 38,526 40,357 41,423
Expenses (12,861) (13,126) (13,681) (15,183) (16,062)
thereof energy purchase and (4,866) (5,402) (5,335) (6,400) (6,205)
transmission
EBITDA 25,044 26,084 24,845 25,174 25,361
Depreciation (10,371) (8,927) (9,152) (10,747) (10,392)
EBIT 14,673 17,157 15,693 14,428 14,968
Result of the period (2,295) 3,350 8,871 4,176 13,352
Cash flow statement:
Received interest income 138 210 742 677 461
Paid interest expense (5,411) (4,967) (4,293) (3,948) (4,146)
Net cash from operating 18,935 20,033 22,084 21,815 21,324
activities
Working capital from operation 19,880 19,675 18,881 22,563 20,240
Note: In corresponding tables in recent releases accompanying OR’s financial
statements, the values for interest income and interest expense for years 2012
and 2013 have been misstated as they have represented income and expenses from
income statements instead of cash-flow.
Contact:
Bjarni Bjarnason
CEO
+354 516 7707
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