VANCOUVER, Feb. 27, 2017 /CNW/ - 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 year ended December 31, 2016. HS Orka's financial statements
are prepared in accordance with International Financial Reporting
Standards (as adopted by the European Union), are reported in
Icelandic krónur (ISK), and can be found at
http://www.hsorka.is.
Highlights for the year ended December
31, 2016 include (all amounts in US$):
- Generation: HS Orka fleet generation decreased 9% to
1,122,418 MWh primarily due to the previously announced generation
decrease at the Reykjanes field, which is being mitigated through a
field re-injection program and other means. Generation has
stabilized over the last quarter of the year.
- EBITDA: $19.8 million of
Adjusted EBITDA (and $9.4 million of
gross profit) in 2016 (2015: $22.3
million and $15.0 million,
respectively), with the decline primarily related to an increased
cost of sales per power purchases undertaken in light of the lower
output at Reykjanes.
- Revenue: Increased by 6% to $58.9
million due to strong retail sales and favorable exchange
rates, partially offset by lower aluminum based contract sales and
lower sales of geothermal water due to unusually warm weather in
2016.
- Net income: Increased to $25.7
million (2015: net loss of $1.9
million) primarily due to an increase in aluminum futures
price which drove a non-cash gain of $20.2
million in the fair value of the embedded derivative in
power purchase agreements (2015: non-cash loss of $24.7 million).
- Research and development expense: $2.1 million of costs were associated with the
deep drilling program at Reykjanes. Drilling was completed in
January 2017 reaching a depth of
4,650 meters, making it the deepest well drilled in Iceland. Initial well readings (427ºC
temperature, 340 bars pressure) indicate supercritical conditions
at the base of the well, comprising significantly higher energy
content versus conventional high-temperature geothermal steam. The
well will undergo further temperature, pressure and other tests for
approximately 12 to 24 months.
- Dividends received: HS Orka received a dividend of
$3.3 million in the year from Blue
Lagoon ehf. (2015: $2.7 million).
- Blue Lagoon: HS Orka's share of income from associates
(primarily related to Blue Lagoon ehf.) decreased to $7.8 million (2015 - $8.9
million) due to the recognition of a $2.0 million dilution gain in 2015. Excluding the
dilution gain, equity income increased by 13% from the prior
year.
- Debt paydown: HS Orka continues to use cash from
operating activities to pay down loans and borrowings, with
repayments of $18.2 million in 2016
(2015: $17.5 million) and a loan
balance outstanding at year-end of $59.3
million. HS Orka is currently in late stage negotiations
with potential lenders for a loan to more fully accommodate working
capital needs plus provide expansion capital.
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,
2016
|
December 31,
2015
|
|
at an average rate of
121 ISK per USD
|
at an average rate of
132 ISK per USD
|
Total
revenue
|
$
|
58.9
|
$
|
55.8
|
Cost of energy
production
|
(49.5)
|
(40.8)
|
Gross
profit
|
9.4
|
15.0
|
Other operating
expenses
|
(6.6)
|
(4.7)
|
Operating
income
|
2.8
|
10.3
|
Other income
(expenses)
|
19.6
|
(23.8)
|
Equity
income
|
7.8
|
8.9
|
Income tax (expense)
recovery
|
(4.5)
|
2.7
|
Income (loss) for the
year
|
25.7
|
(1.9)
|
Adjusted EBITDA
(1)
|
19.8
|
22.3
|
|
|
|
|
As at December 31,
2016
|
As at December 31,
2015
|
|
at a rate of 114 ISK
per USD
|
at a rate of 130 ISK
per USD
|
Total
assets
|
$
|
412.6
|
$
|
379.0
|
Total
liabilities
|
137.5
|
156.8
|
Cash and cash
equivalents (2)
|
4.8
|
16.6
|
Working
capital
|
(15.6)
|
(4.0)
|
|
|
1
|
Adjusted EBITDA is
defined by HS Orka and Alterra as earnings before interest, taxes,
foreign exchange, depreciation and amortization, as well as
adjustments for changes in the fair value of derivatives,
write-offs of development costs, other income (expense) except
business interruption insurance proceeds, amortization of below
market contracts, value assigned to options granted, research and
development costs for deep drilling program and non-recurring items
(insurance deductibles, litigation and arbitration costs). HS Orka
and Alterra disclose Adjusted EBITDA as it is a measure used by
analysts and by management to evaluate company performance. As
Adjusted EBITDA is a non-GAAP measure, it may not be comparable to
Adjusted EBITDA calculated by others. In addition, as Adjusted
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 (2015: $10.2 million).
|
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 15, 2017.
About HS Orka
Alterra owns 66.6% of HS Orka, the largest privately owned
energy company in Iceland. HS Orka
supplies 7% of the country's power needs and approximately 11% of
the country's heating needs. Installed geothermal power capacity is
174 MW from the Svartsengi and Reykjanes power plants. In addition,
HS Orka generates 190 MW of thermal energy for district heating. HS
Orka also owns a 30% interest in the Blue Lagoon, a tourist resort
that adjoins our Svartsengi power plant in Iceland.
About Alterra Power Corp.
Alterra Power Corp. is a leading global renewable energy
company, operating eight power plants totaling 825 MW of generation
capacity including British
Columbia's largest run-of-river hydro facility, a wind farm
in Northern British Columbia, the
recently completed Shannon and Jimmie
Creek projects, two geothermal facilities in Iceland and a solar facility in Indiana. Alterra owns a 385 MW share of this
capacity, generating over 1,700 GWh of clean power annually.
Alterra also has an extensive portfolio of exploration and
development projects and a skilled team of developers, builders and
operators to support its growth plans.
Alterra trades on the Toronto Stock Exchange under the symbol
AXY.
Cautionary Note regarding Forward-Looking Statements and
Information
Certain statements and information included in this news release
are "forward-looking information" within the meaning of applicable
securities laws that involve risks and uncertainties.
Forward-looking information relates to future events or future
performance and reflects management's expectations and beliefs
regarding future events as of the date hereof. Examples of
forward-looking information in this news release include the
success of the field re-injection program, fluctuations in retail
sales and exchange rates, results of the deep drilling program, HS
Orka's successful closing on a working and expansion capital loan,
HS Orka's business prospects and growth opportunities and the
annual generation of our projects. Forward-looking information is
based on factors or assumptions that were applied in drawing a
conclusion or making a forecast or projection. Since
forward-looking information relates to future events and
conditions, by its very nature it requires making assumptions and
involves inherent risks and
uncertainties. Alterra cautions that although it is
believed that the assumptions are reasonable in the circumstances,
these risks and uncertainties give rise to the possibility that
actual results may differ materially from the expectations set out
in the forward-looking information. Material risk factors and
assumptions include the expected timing for realizing favourable
results of the re-injection and deep drilling programs, the
imprecise nature of estimation of renewable power resources or
power generation output and recoveries, including the difficulty in
assessment until a geothermal resource is actually accessed and
tested by production wells, assumptions concerning and fluctuations
related to, temperature and composition of underground fluids,
risks and assumptions related to fluctuations in commodity and
exchange rates, risks related to additional financing to achieve
growth and development, in addition to those set out in the
management's discussion and analysis section
of Alterra's most recent annual and quarterly reports and
in Alterra's Annual Information Form for the year
ended December 31, 2015. Although Alterra has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from
forward-looking information, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking
information will prove to be accurate and undue reliance should not
be placed on forward-looking information. Except as required by
law, Alterra undertakes no obligation to update any
forward-looking information to reflect new information,
subsequently or otherwise.
SOURCE Alterra Power Corp.