Orkuveita Reykjavíkur - Financial Statement Release

Improved financial results at Orkuveita Reykjavikur (Reykjavik Energy)

In spite of ISK 2.1 billion loss in the second quarter, the operations returned
a ISK 5.1 billion profit for the first half of the year 2010.This improvement
is mainly due to the strengthening of the Icelandic krona and decreasing in
financial costs. The interim financial statements of Orkuveita Reykjavikur (OR)
were authorised at a board meeting today. 

The Icelandic krona  strengthened by 8.3% in the first half of 2010 and has
strengthened by another 2.5% to date. OR paid ISK 1.1 billion interest for the
first six months of 2010. The corresponding amount in 2009 amounted to ISK 3.3
billion. Interest expense decreases by more than two thirds between the
periods, or ISK 2.2 billion. The reason for this is that OR had to finance
itself partly in the Icelandic market in the year 2009, where interest rates
are more than tenfold that of the average foreign interest rates of OR loans,
which are 0.99%. 

OR´s EBITDA for the first half of 2010 amounted to ISK 7.1 billion. Profit
before income tax amounted to ISK 6.1 billion. Calculated income taxes amount
to ISK 1.0 billion resulting in a profit of ISK 5.1 billion. 
Orkuveita Reykjavikur's interim financial statements are in accordance with
international financial reporting standards as adopted by the EU. 
Main highlights of the first half of 2010

Orkuveita Reykjavikur´s operations returned a profit of ISK 5.118 million for
the first half of 2010. Operations in the first half of 2009 resulted in a loss
of ISK 10.615 million. 
Operating revenues for the first half of the year amounted to ISK 13.561
million. 

Operating revenues for the first half of 2009 amounted to ISK 11.925 million. 

EBITDA of the Company for the first half of 2010 was ISK 7.056 million and ISK
5.692 million for the first half of 2009. 

Financial income and expenses were positive for the first half of 2010 and
amounted to ISK 2.913 million. The amount for the first half 2009 was negative
by ISK 14.132 million. 
Total assets 30 June 2010 were ISK 277.703 million and were ISK 281.526 million
at year-end 2009. 
Equity of the Company 30 June 2010 was ISK 44.924 million and was ISK 40.657
million at year-end 2009. 
Total liabilities of the Company 30 June 2010 were ISK 232.779 million compared
to ISK 240.868 million at year-end 2009. 
The equity ratio was 16.2% as at 30 June 2010 compared to 14.4% at year-end
2009. 


Other issues and prospects
As of August 17th 2010 Dr. Helgi Þór Ingason serves as Orkuveita Reykjavikur's
CEO. 

The Board of Directors at Orkuveita Reykjavíkur have secured the income stream
of the Company by a strategic charge setting and curtailing in OR´s operations.
The results will become apparent during 2010 through better cash flow and
improved ability to meet obligations. 

The Company continues to work on the enlargement of the power plant at
Hellisheiði. The Company intends to commission the plant's 4th phase, 
hot-water production, later this year, and the 5th phase, production of 90 MW
electricity, in the latter half of 2011. OR signed a loan agreement with the
European Investment Bank for financing half of the 5th phase cost of the power
plant at Hellisheiði. Discussions for more financing for OR are ongoing. 

For further information contact Helgi Þór Ingason, CEO Orkuveita Reykjavikur,
tel.: +354 516 6000

Attachments:

orkuveita reykjavíkur - interim financial statements_2q 2010.xls.pdf