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Landsvirkjun’s financial performance in 2003

March 11, 2004

In general, Landsvirkjun’s annual accounts were compiled in a similar way to those of the previous year. Price adjustments, however, are no longer carried out, in accordance with an act passed by Parliament at the close of 2001. To allow for conformity, the financial sums involved in comparison have not been altered. Furthermore, consolidated financial statements were compiled for the first time covering Landsvirkjun and two of the company’s subsidiaries, Fjarski ehf. and Icelandic Power Insurance Ltd.


Parent Company

  2003 2003 2002
Operating income 13.009 12.967 13.577
Operating expenses:      
     Operating and 
4.498  4.544 4.431
     Depreciation 5.275 5.226 5.181
     Net capital cost 1.685 1.646 -1.764
Profit (loss) 1.551 1.551  5.729
Total assets 134.528 133.997 121.240
Liabilities 93.348 92.817 81.261
Equity  41.180 41.180  39.979
Net cash provided
by operations
5.601 5.541 6.432
Investments 16.743 16.690 5.175
EBITDA  8.512  8.424 9.146
Equity ratio 30,60% 30,70% 33,00%
Return on equity 3,8% 3,8% 14,7%

Operating income fell by a total of ISK 568 m compared to the previous year. This is because income from power sales to heavy industry was calculated in foreign currencies and connected with product prices. These changes were in accordance with Landsvirkjun’s forecasts respecting trends in currency exchange values and aluminium prices. Power sales to public electric utilities increased by 2%, whereas sales to heavy industry remained unchanged from the previous year. Average energy prices to public electric utilities rose by 1.45% from the average of the previous year. As a result of modified accounting practices, net capital cost is not comparable between years. Remaining unchanged from the year before, the average nominal interest rates of long-term loans were around 3.5% in 2003. At year's end, 2003, nearly 94% of the long-term loans were in foreign currencies.

The construction of Kárahnjúkar Power Plant was begun during the year, subsequent to the energy sales contract concluded with Alcoa’s subsidiary, Fjarðaál. A 690-MW power station will be constructed and transmission lines laid to Reyðarfjörður. It is anticipated that the first generator of six in the power plant will start up on 1 April 2007. A more detailed description of the construction project may be found on the website of the hydropower project, at At the end of 2003, the cost of hydropower development at Kárahnjúkar lay just under ISK 16.3 billion.

Other new construction projects during the year related to completing Vatnsfell Power Plant and rebuilding the diversion structures at Þórisós. Work was for instance also in progress on expanding the power stations at Krafla and Búrfell and renewing the stations on the Sog river, in addition to preparations and research on other power stations still being planned.

Landsvirkjun’s annual accounts will be presented to the company’s general meeting on next 2 April.

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