HS Orka hf.: HS Orka hf announces Condensed Interim Financial Statements for the three months ended 31 March 2014

Condensed Interim Financial Statements for the three months ended 31 March 2014 of HS Orka hf. were approved at a Board of Directors' meeting on 12th of May 2014. The Financial Statements of HS Orka hf. are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and are in ISK. The Financial Statement can be found on the company's website http://www.hsorka.is

Main Matters:

-- Operating revenue for the period 1 January - 31 March 2014 was ISK 1,899 million compared to ISK 1,947 million for the same period in 2013. Profit for the period amounted to ISK 90 million, with the comparable number for 2013 being a loss of ISK 910 million primarily related to currency and aluminium fluctuations described below. Total comprehensive profit amounted to ISK 75 million compared to a comprehensive loss of ISK 942 million in the first three months of 2013. -- Equity ratio is strong at 58,0%, same as it was at year end 2013. -- Net finance income and cost have a material impact on the result now as often before. Changes in the value of the embedded derivative in power purchase agreements (linked to aluminum price) was negative for the period of ISK 708 million in the first three months of 2014, compared to a negative change of ISK 2,755 million in the same period in 2013. This was partially offset by a currency gain of ISK 226 million, versus a foreign exchange gain of ISK 936 million in the first three months of 2013. -- Company operations are going well and the company's EBIDTA was ISK 828 million in the first quarter of 2014 which is a 6% increase compared to same period 2013 where the EBITDA was ISK 781. Revenue was ISK 1,899 million for the period compared to ISK 1,947 million for Q1 2013 which is a reduction of ISK 47 million. Operating cost decreased 6% or ISK 82 million between the periods. The decrease in revenue is mainly due to a decrease in aluminum prices, but increased sales to the retail market and more sale of geothermal water for heating weigh in the opposite direction. On the cost side, operational cost of the power plants and transmission cost are going down, but there was a small increase in power purchases. Other operating costs are also substantially lower than in same period 2013 mostly because cost of arbitration hearings connected to power sales contract to Norðurál Grundartangi that took place in Q1 2013.

Further information is provided by Ásgeir Margeirsson, Managing Director of HS Orka hf., tel. [phone]

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