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Net debt decreased by USD 205 million from previous year

Landsvirkjun performed well in 2015 despite the demanding business environment and low aluminium prices. The Company achieved sales of 13.9 TWh of electricity in 2015 which is a record high. Net debt has decreased by USD 838 million since year- end, 2009 and continues to decrease.

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Income Statement 2015

The Group's operating revenues decreased by USD 17 million from the previous year. The decrease mainly relates to a USD 17 million revenue recognition in the year 2014 relating to an agreement between Landsvirkjun and Rio Tinto Alcan á Íslandi hf., but aluminium prices also decreased during the year. Increased sales helped dampen the effects of decreasing aluminium prices. Aluminium prices affect around one third of the Company’s revenues, but efforts have been made to decrease the linkage between aluminium prices and the Company's revenues. In 2009, aluminium prices affected around two- thirds of the Company’s revenues.

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The average wholesale price (excluding transmission cost) was ISK 4.4 per kWh during the year. The average price for industrial users was USD 24.5 per MWh during 2015 and decreased from the previous year by 1.4 USD/MWh. The decrease between years can be linked to a decrease in aluminium prices but also to the depreciation of the Norwegian Kron. The average price to industrial users includes transmission costs where contractual.

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Profit before unrealised financial items is a benchmark Landsvirkjun uses to evaluate the core operations of the Company. The return of core operations has increased during the previous years. Profit before unrealised financial items amounted to USD 131 million in the year 2015 and has increased by 45% from the year 2010. Profit for the year amounted to USD 84 million compared to USD 78 million in the previous year.

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Nominal interest rates were on average 3.3% during the year 2015 taking into account the government guarantee fee. Low interest rates in the global markets and decreasing debt in the last years has had a positive impact on the Company’s performance.

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Operating outlook

Landsvirkjun's results will, as before, for the most part be subject to the development of aluminium prices, interest rates and foreign exchange rates. Landsvirkjun's income is partlylinked to aluminium prices and changes in world market aluminium prices will therefore continue to have an effect on Landsvirkjun's future income. The price of aluminium has lowered significantly and this will have a negative effect on Landsvirkjun's operating results. Half of the Company's loans have floating interest rates and continued low interest rates are therefore important for operations.

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Appendix

Here you can download Landsvirkjun’s financial statements for the year 2015. This includes Landsvirkjun’s entire Financial Statement in Acrobat (pdf) and key figures in Excel (xls).