Magma Energy announces HS Orka’s financial results for 1H 2010
Reykjanes geothermal power plant of HS Orka, Iceland (source: flickr/ ThinkGeoEnergy, creative commons)
Alexander Richter
31 Aug 2010
Magma Energy reports financial results for Icelandic HS Orka, in which the company holds a 84.21% share, reporting revenues of US$27.5m for the first 6 months of the year, with EBITDA figures of US$12.1m.
In a release today, “Magma Energy Corp. (TSX: MXY) reports that Icelandic geothermal company HS Orka hf (“HS Orka”), held 84.21% by Magma Energy, released its audited financial and operating results for the six months ended June 30, 2010. These results may be accessed at: http://ow.ly/2wY0h
HS Orka prepares its financial statements in accordance with International Financial Reporting Standards and are reported in Icelandic kroner. Summarized below are HS Orka’s financial results presented in US dollars and reconciled with Canadian GAAP. At June 30, 2010 Magma Energy owned a 46.18% interest in HS Orka and accounts for its investment using the equity method of accounting.
While HS Orka’s results from operating activities were 70% higher than the same period last year, HS Orka reported a net loss of$18.2 million for the six months ended June 30, 2010. This loss was primarily the result of a $31.8 million loss in the change in fair value of embedded derivatives in sales contracts. Approximately 50% of HS Orka’s power sales agreements are partially indexed to the price of aluminum resulting in embedded derivatives. Changes in the forward price of aluminum result in a fair value change of the derivative. At June 30, 2010 the forward price of aluminum on the London Metal Exchange was lower than the value at December 31, 2009. This resulted in a non-cash loss of $31.8 million in the change in fair value of embedded derivatives in sales contracts.
Some key highlights of HS Orka’s financial results for the 1H of 2010 and (financial year 2009):
- Total revenues: US$27.5m (US$49.8m)
- Gross profit: US$9.4m(US$14.3m)
- EBITDA: US$ 12.1m(US$19.1m)
- Cash/ cash equivalents: US$7.7m (US$1.2m)
- Working capital US$20.4m (US$1.2m)
Magma Energy’s year end results for the period ending June 30, 2010 will be announced after markets close on September 28, 2010.
About HS Orka: HS Orka is the largest privately owned energy company in Iceland producing 9% of the country’s power needs. Installed geothermal power capacity is 175 MW from the Svartsengi and Reykjanes power plants. In addition, HS Orka generates 150 MW of thermal energy for district heating. Expansions are planned that will increase HS Orka’s geothermal power production to 405 MW by 2016.
Source: Company release via PR Newswire
