Reykjavik Energy Consolidated Annual Financial Statements 2023

Establishment of license service fee structure

The financial position of Reykjavik Energy (RE, Orkveita Reykjavíkur) with its 2023 financial statements is a promising start for the transformation project facing the company and Icelandic society. This is due to his CEO Mr. Sævar FreyrÞráinsson, who is implementing a new overall strategy for the company and introducing a new organizational structure.

Profitable but high financial costs
Reykjavik Energy generated a profit of ISK 6.4 billion in 2023, and investments in the same year amounted to ISK 29.2 billion. RE's annual consolidated financial statements were approved by the Board of Directors today. In addition to its parent company, RE includes Veitur Utilities, ON Power, Reykjavík Fiber Network and Carbfix. Sales increased by 10.1% and EBITDA by 3.8% compared to the same period last year, but operating cash flow remained almost stagnant. Interest expense increased by 29.7% from 2022 to 2023, with most of the borrowed funds coming from the domestic market.

The Board of Directors proposes to pay a dividend of ISK 6 billion at the annual general meeting, with ISK 2 billion contingent on the planned sale of shares in Reykjavík Fiber Network and Carbifix.

Reykjavik Energy's consolidated annual financial statements have been prepared in accordance with IFRS standards and for the first time include accounting in accordance with the EU Classification Directive. Reykjavík Energy will also today publish its 2023 Green Finance Allocation and Impact Report with auditor assurance.

time to change
There were significant changes in Reykjavik Energy's leadership in 2023, with the Board of Directors approving a new overall strategy later that year. Sævar Freyr Þráinsson took over his CEO role almost a year ago and says the new strategy marks a turning point. He says the energy transition is one of the biggest and most important challenges in human history, and is at the same time complex and urgent. “The energy transition does not adequately account for the opportunities we have as a society,” Sarver-Freyer says. “It's about changing production methods, transportation and general lifestyles and finding new ways to lead society to greater success in harmony with nature. We are ready to take on the challenge.” Server Frey Rheinsson, CEO.

In addition to implementing the new strategy, Reykjavík Energy's branding has also been updated and staff have been introduced to the new organizational structure of RE's parent company.

Leading on climate issues
In 2023, Reykjavik Energy demonstrated corporate leadership on climate issues. RE currently has an A- rating from the international Carbon Disclosure Project. Additionally, the Science Based Targets initiative has confirmed that RE's climate goals are aligned with those of the Paris Agreement. Yesterday, Reykjavik Energy celebrated receiving international independent certification for its climate accounting, which is carried out according to the international standard ISO-14064-1. This is the first time that an Icelandic company has been so widely recognized for the effectiveness of its climate change accounting.

Still, most of RE's greenhouse gas emissions come from the steam used at the Hengill area power station, while carbon capture and sequestration began last year at Nesjavellir. By 2025, emissions from the Hellisheige power plant will be negligible. The aim is to reach net zero targets for our own operations by 2030 and for our supply chain by 2040.

License service price changes
The attached graph shows the evolution of the price structure for the licensed services of Reykjavík Energy operated by Veitur Utilities. In total, these have fallen significantly in real terms since the separation of energy businesses was mandated. The Consumer Price Index is represented by a flat line against which rate trends since the beginning of 2014 are measured.

Publication of integrated annual report
Reykjavik Energy's 2023 annual report will be published together with the financial statements. It provides a detailed description of RE's operations over the last year, including environmental aspects, social aspects, governance, and various key financial indicators. This report is audited by an independent party and signed by the CEO and Board of Directors.It can be found at Annual Report 2023.or.is.

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