Strong position despite currency exchange losses
Main points of the financial statement:
- Operating profits before financial items (EBIT) was 49.7 million USD compared with 56.8 million USD in the previous year and decreased by 7.1 million USD between years and is mostly explained by an increase in depreciation.
- The company incurred losses of 13 million USD, compared with a profit of 30.4 million USD in the previous year.
- Landsnet took steps to refinance the company in USD this year as Landsnet changed its functional currency to the USD at the beginning of the 2016. Unsecured bonds (the “Notes”) were issued in December of 2016 in the amount of 200 million USD and were sold to American institutional investors, via a private placement. An instalment was made on an indexed loan from the largest owner and the outstanding amount was changed over to USD. Approximately 80% of financing for the company was transferred over to USD in 2016, in line with the policy of the Board.
- Liquid assets of the company are strong. Net cash availability was 18.3 million USD at year end and net cash provided by operating activities amounted to 52.4 million USD
Landsnet changed its functional currency to the US dollar at the beginning of the 2016. The company was mostly financed using local currency rates (Icelandic Kroner:ISK) and Landsnet‘s financial results were unfavorable due to the strengthening of the currency.
Landsnet took steps to refinance the company this year and a large milestone was reached at the end of the year when a bond (the “Notes”) was issued in the amount of 200 million USD sold to American institutional investors, via a private placement.
Gudmundur Ingi Ásmundsson, CEO of Landsnet stated that these financing changes have resulted in a reduced currency risk and more favorable interest rates. The changes have significantly reduced the exchange rate risk and the company's capital costs, which will benefit consumers in the future.
"It is positive to see that operating income before financial items, depreciation and amortization is good and in line with expectations. Landsnet‘s operations are built on a solid foundation and losses can be almost entirely explained by the strengthening of the Icelandic Kroner and its impact on financial costs. Through out the year 2016 approximately 80% of interest-bearing long-term liabilities consisted of an indexed start-up loan in ISK from the largest owner, on which no payments were due until 2020. Discussions took place with our lenders and a major step was taken when an agreement was reached in December on payments on the start-up loan as well as the restructuring of the outstanding balance at the close of 2016. Changes in financing will result in more favorable terms as well as minimizing the currency risk. "
More information can be found on our website: www.landsnet.is where you can access the Annual Report.
More information can be provided by Guðlaug Sigurðardóttir, CFO of Landsnet, Tel. +354 563 9300 or e-mail: gudlaugs@landsnet.is
