ALTERRA POWER CORP VANCOUVER, Feb. 27, 2017 /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 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 For the
twelve twelve
months months
ended ended
December 31, December 31,
2016 2015
at an at an
average average
rate of 121 rate of 132
ISK per USD 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 As at
December December
31, 2016 31, 2015
at a rate of at a rate of
114 ISK per 130 ISK per
USD 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.
