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Statement of Cash Flow

The Group’s cash and cash equivalents decreased by USD 81 million during 2014 and was USD 207 million at year end. This trend is shown in the graph below. The Group’s cash flow from operating activities amounted to USD 234 million. Investing activities decreased between years and amounted to USD 88 million with the bulk of investments due to the completion of construction of Budarhals power plant. Amortisation of long-term debt in excess of new loans amounted to USD 207 million and paid dividend amounted to USD 13 million for the year 2013.

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As previously stated, investing activities amounted to USD 88 million but only USD 18 million were due to maintenance of the Company’s power plants and transmission systems. Free cash flow thus amounted to USD 216 million. The Company can for example use free cash flow for new investments, which amounted to USD 78 million, reduce debt or pay dividend to owners. The last few years, the focus has been on reducing the Company’s debt. Cash flow before financing activities thus amounted to USD 146 million.

Landsvirkjun will over the coming years place continued emphasis on reducing the Company’s debt. The vast majority of the Company’s cash flow from operating activites will thus continue, as in previous years, to be used to reduce debt. Net debt has decreased by USD 633 million since year end 2009, but in spite of that the leverage of Landsvirkjun continues to be relatively high, with net debt amounting to 6.6x EBITDA. Landsvirkjun’s goal is to reduce this ratio to below 5 within a few years. If successful there will be more opportunities to pay dividends to owners and refinance foreign liabilities for longer periods at favourable interest rates.

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Cash flow from operating activities for the last few years has been sufficient to fund Company investments. This means that after taking into account investing activities, there has been a surplus of cash flow from operating activities. This has been the precondition for Landsvirkjun’s ability to reduce its debt the last few years.

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Appendix

Here you can download Landsvirkjun’s financial statements for the year 2014. This includes Landsvirkjun’s entire Financial Statement in Acrobat (pdf) and key figures in Excel (xls).