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Alterra Power Announces HS Orka's 2013 Annual Financial Results


VANCOUVER, Feb. 25, 2014 /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, 2013. 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, 2013 include (all amounts in US$):

  • Electricity production from the Reykjanes and Svartsengi geothermal power plants increased by 7% to 1,280,394 MWh (2012: 1,193,584 MWh); the additional generation was used to meet new sales contracts entered into in late 2012 and early 2013.

  • Revenue increased 5% to $57.7 million (2012: $55.0 million) due to the increase in generation coupled with the strengthening ISK during the year. These increases were partially offset by a reduction in revenue from sales contracts linked to the price of aluminum resulting from an 8% decline in aluminum prices in the current year against 2012.

  • HS Orka generated $21.3 million of EBITDA and $14.1 million of gross profit in 2013 (down 11% and 27% respectively from 2012), reflecting increased maintenance at the power plants in the year as a result of planned cleaning and repair of two boreholes in the period, in addition to increased transmission expenses resulting from an increase in transmission rates of 20% during the period. This transmission rate increase has since been rolled back, which will be reflected in future periods.

  • A net loss of $2.9 million was recorded in 2013 as compared to net income of $5.2 million in 2012. In addition to the operating results described above, this decrease was primarily due to a $32.3 million non-cash negative change in the fair value of embedded derivatives in power sales contracts, offset in part by a positive movement in net finance income of $20.8 million related to foreign exchange gains, reduced interest and indexation expense.

  • HS Orka's share of income from associates increased 129% to $3.2 million (2012: $1.4 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 $1.8 million in the year from the Blue Lagoon (2012: $1.3 million). During 2013, HS Orka passed through the majority of the prior year dividend from the Blue Lagoon to its existing shareholders and issued a cash dividend of $1.2 million, with Alterra's share being 66.6% ($0.8 million).

  • HS Orka commenced a fluid reinjection program at the Reykjanes field by drilling a new large diameter well to enhance future field stability, whereby a portion of geothermal fluids extracted from current operations will be reinjected into the field to maintain or increase subsurface pressure and optimize the resulting electrical output.

  • HS Orka continues to use cash from operating activities to pay down loans and borrowings, with repayments of $18.6 million in 2013 (2012: $17.2 million) and a balance outstanding at year-end of $126.3 million. Total debt repayments in the last three years have been $53.6 million, with scheduled loan repayments set to decline substantially from 2017 onwards.

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   For the twelve months ended
  December 31, 2013   December 31, 2012
  at an average rate of 122 ISK per USD   at an average rate of 125 ISK per USD
Total revenue  $ 57.7    $ 55.0
Cost of energy production   (43.6)     (36.2)
Gross profit   14.1     18.8
Other operating expenses   (3.6)     (3.5)
Operating income   10.5     15.3
Other income (expenses)   (18.2)     (10.5)
Equity income    3.2     1.4
Income tax recovery (expense)   1.6     (1.0)
Income (loss) for the year   (2.9)     5.2
EBITDA (1)   21.3     23.4
   ISK (millions) 2,603.05     ISK (millions) 2,923.25 
  As at December 31, 2013   As at December 31, 2012
  at a rate of 115 ISK per USD   at a rate of 128 ISK per USD
Total assets  $ 390.2   $ 389.2
Total liabilities   163.9     181.4
Cash and cash equivalents (2)   38.4     40.8
Working capital    20.9     29.1


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 27, 2014.

About HS Orka

HS Orka is the largest privately owned energy company in Iceland, producing 9% of the country's power needs and 10% of the country's heating needs. Installed geothermal power capacity is 172 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 six power plants totaling 566 MW of generation capacity, including British Columbia's largest run-of-river hydro facility and largest wind farm, two geothermal facilities in Iceland, and a geothermal plant in Nevada. Alterra owns a 260 MW share of this capacity, generating approximately 1,300 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 Alterra 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, required consents and third party approvals. This news release also contains statements with respect to our plans to expand our operations, management's expectations regarding our growth, business prospects and opportunities and energy generation capacities. Such forward-looking information reflects management's current beliefs and is based on information currently available to management. 


SOURCE Alterra Power Corp.

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