Landsvirkjun

Landsvirkjun’s performance for the first six months of 2007

24. August 2007

Landsvirkjun’s Condensed Interim Financial Statement is now prepared in accordance with the International Financial Reporting Standards (last year it conformed to Icelandic accounting practices).

The following comparison is made as though International Financial Reporting Standards had been applied from the start of 2006.

The main figures in the Financial Statement are (ISK 000,000)

Group

        

Jan.-June

    

Jan.-June

   

2007

 

2006

Operating revenue  

10,753

 

10,013

Operating expenses  

(5,284)

 

(5,237)

Profit from operations  

5,469

 

4,776

Financial income (financial expenses)  

20,547

 

13,741

Profit /(loss) before taxes  

26,016

 

(8,965)

Income tax  

(6,884)

 

11,534

Profit  

19,132

 

2,569

         
    30.6. 2007   31.12.2006
Total assets  

293,523

 

276,191

Equity  

101,239

 

82,649

Liabilities  

192,284

 

193,542

         
Liquidities from operations  

4,026

 

5,588

EBITDA  

7,771

 

7,024

Equity ratio  

34.5%

 

29.9%


As before, Landsvirkjun’s revenues are for the most part governed by fluctuations in the exchange rate of the Icelandic krona, as a large portion of the company’s debt is in foreign currencies. Foreign exchange gains for the period amounted to ISK 18.6m. The exchange rate index was 129.2 at the end of last year, and 114.0 at the end of June 2007. In view of recent fluctuations in the currency markets, attention is drawn to the fact that a change in the value of the Icelandic krona compared to the major currencies of around 10% from the level at the end of June would have changed the company’s revenue by around ISK 13bn without taking tax into consideration. From the start of next year, the US dollar will be Landsvirkjun’s operational currency.

The adoption of International Financial Reporting Standards has resulted in changes to the Interim Financial Statement. The overall effect of the changes on the Group’s equity is that the equity entered at the start of 2007 increases by ISK 19.9bn, i.e. from ISK 62.7bn to ISK 82.6bn. The explanation for this is mainly that derivative effects are now entered in the company’s financial statements. Landsvirkjun has assessed the fair value of built-in derivatives in the company’s electricity supply contracts to heavy industry. The positive fair value of derivatives that was capitalised at the end of June 2007 amounted to ISK 45.4bn, largely because the price of aluminium on world markets is very high at the moment. The negative fair value of the derivative contracts that the company has made for hedging purposes amounts to ISK 9.5bn at the end of June, which is deducted from equity. The change in the fair value of the derivatives contracts, after hedge deductions, was positive at ISK 4.1bn for the period January–June 2007, explained particularly by the rise in price of aluminium futures on world markets.

Work on the Kárahnjúkar generating installation began in 2003 as a result of an energy supply contract with Fjardaál, a subsidiary of Alcoa. A 690 MW power station has been built on the site, and at the same time, transmission lines have been laid to Reydarfjördur. A detailed description of the project can be found on the power station’s website, http://www.karahnjukar.is/. Most new work in the first half of the year was in connection with the Kárahnjúkar installation.

At the end of June, the company’s total assets were ISK 293.5bn and the equity ratio was 34.5%.

The outlook for Landsvirkjun operations in 2007 is good. Fljótsdalsstöd will become operational this year and income from energy sales to heavy industry will augment the company’s total revenue.  However, fluctuations in foreign exchange and aluminium prices will largely determine performance this year.

Landsvirkjun’s Interim Financial Statement was approved at a meeting of the Board on 23 August 2007.

Landsvirkjun´s Interim Financial Statement >>

 

News archive Print page