A strong position and continued stability in operations
Landsnet´s financial statements for 2018 were approved by the Board of Directors on the 15th of February, 2019.
Main points of the financial statement:
- Earnings Before Interest and Taxes (EBIT) was 61.1 million USD compared with 59.3 million USD in the previous year. EBIT has therefore remained stable between years.
- Profits were 37.1 million USD in 2018, compared with 28 million USD in 2017.
- Liquid assets of the company are strong. Net cash availability was 38.8 million USD at year end and net cash provided by operating activities amounted to 70.4 million USD.
Guðmundur Ingi Ásmundsson CEO says that 2018 has been a year of operational stability.
“The company’s performance met expectations this year and profits increased. The Financial Statement reflects the emphasis placed on securing a steady operational environment as well as streamlining processes and work procedures. The results of this ongoing work will become clear in the next few years.
Demand has increased markedly and last year we transmitted more electricity across the network than ever before. The total amount was approx. 19 TWh which is an increase of 3% between years. We expect further increases in the future and the company is in the process of planning extensive construction work next year to meet these demands. The company is expected to spend over 90 million USD on construction projects in 2019.
Meeting the increased demand for energy, security of supply and rapid network development, without increasing prices, will prove challenging. The government must also make efforts to simplify the regulatory framework and project licensing process.“
Income Statement
- Operating revenues were 154.1 million USD in 2018 compared with 147.3 million USD in the previous year. The company has three main revenue sources: Revenue from energy-intensive users, revenue from transmission to distribution system operators and revenue from the sale of transmission losses and ancillary services.
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- Revenue from energy-intensive users increased by 4.1 million USD between years which can mainly be attributed to increased transmission.
- Revenue from transmission to distribution system operators increased by 2.8 million USD this year. The main factor is the increased tariff for distributors in August, 2017 which became fully effective in 2018. Revenue from curtailable energy increased by 0.7 million USD.
- Revenue from transmission losses and ancillary services in the transmission system remained stable between years. The tariff for this service is based on costs + 1.5%. The tariff for energy losses in 2018 was based on tenders for each quarter and was altered according to any changes to those tenders.
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- Operating expenses increased by 5.1 million USD between years, of which electricity purchases due to transmission losses and ancillary services were approx. 1.7 million USD which can be attributed to higher purchase prices. Depreciation increased by 1.2 million USD, wages increased by 0.9 million USD and other operational costs increased by 1.3 million USD.
- The ISK weakened against the USD by 1.5% between years. The overall effect has not been significant for operating profits before financial items.
- Earnings Before Interest and Taxes (EBIT) was 61.1 million USD compared with 59.3 million USD in the previous year and increased by 1.8 million USD between years.
- Net financial expenses amounted to 15 million USD compared with 24.4 million USD in 2017 and decreased by 9.4 million USD between years. This can mostly be attributed to exchange rate gains (loan portfolio) which amounted to 3.3 million USD compared with exchange rate losses of 5.6 million USD in 2017.
- Landsnet’s profits were 37.1 million USD in 2018 according to the income statement compared with 28 million USD in profit in 2017. This change between years can mostly be attributed to financial items and the effects of the ISK.
- The EBITDA of the company was 90.7 million USD in 2018 compared with 87.8 million USD in the previous year.
Balance sheet
- The total assets of the company amounted to 846.3 million USD at year end compared with 851.3 million USD at year end, 2017.
- Total liabilities amounted to 476 million USD at year end compared with 514.3 million USD at year end, 2017.
- Liquid assets of the company are strong. Net cash availability was 38.8 million USD at year end and net cash provided by operating activities amounted to 70.4 million USD.
- Equity ratio was 43.8% at year-end, compared with 39.6% at year-end, 2017.
Operating outlook
The company budget for 2019 predicts a 34.6 million USD profit from company operations. The revenue plan is based on the amount and price changes that the company is aware of. The cost estimate is based on the actual cost of the operation of the company, taking into account the criteria for determining the revenue cap. The company's plans for construction during the year amount to approximately 86 million USD. There is still some uncertainty associated with some of the projects with regard to licensing and official complaints. We will continue to implement changes to the loan portfolio this coming year to reflect the Board‘s Policy and to finance upcoming construction projects, securing longer re-payment periods and more favouable terms.
About the financial statement
The financial statements for 2018 were prepared in accordance with the International Financial Reporting Standards (IFRS). These financial statements are presented in USD, which is the company's functional currency. The financial statements were approved by the Board of Directors on the 15th February, 2019.
About Landsnet
Landsnet was established in 2005 and is responsible for operating Iceland’s electricity transmission system, one of the most important parts of Iceland‘s infrastructure. Our role is to operate and develop Iceland’s electricity transmission system and administer its system operations.
More information can be provided by Guðlaug Sigurðardóttir, CFO of Landsnet.
More information can be accessed at: www.landsnet.is where the Financial Statement is also available.
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