Non-cash gains boost 2016 results at Iceland's HS Orka

Icelandic geothermal company HS Orka hf swung to a net profit of ISK 3.1 billion (USD 29.1m/EUR 27.5m) in 2016 from a ISK-247-million loss in the previous year, mainly as a result of non-cash gains.

A rise in future aluminum prices during the year led to a gain in the fair value of embedded derivatives in power purchase agreements (PPAs), compared to a loss in 2015. The company, whose controlling shareholder is Canada's Alterra Power Corp (TSE:AXY), also recorded higher currency gains in 2016.

Operating revenue, however, declined to ISK 7.1 billion from ISK 7.34 billion, mainly due to a fall in aluminum-based sales resulting from a decline in aluminum prices in 2016, as well as lower geothermal water sales due to unusually warm weather in 2016.

Profit from operations dropped to ISK 335.5 million from ISK 1.36 billion, while the total comprehensive profit was ISK 2.76 billion, compared to ISK 2.63 billion in 2015.

In 2016, HS Orka also had higher research and development costs due to the deep drilling programme at Reykjanes, where drilling was completed at a depth of 4,650 meters (15,260 ft). Alterra earlier this month said that the programme has achieved "remarkable" early-stage results (https://renewablesnow.com/news/alterra-reports-remarkable-results-from-deep-drilling-in-iceland-557584/) .

(ISK 100 = USD 0.938/EUR 0.888)

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