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The year 2019 was a year of considerable investments for the OR Group. They amounted to ISK 19.4 billion, increasing by ISK 3 billion from the previous year. The main reason are increased activities in the construction of housing in the company's main operating area. The company’s solid finances enabled it to meet this growth and finance it in a favourable manner.

In 2019, Reykjavik Energy began issuing green bonds to partially finance these large investments following an independent rating agency's assessment of the issuance. The bonds received the highest grade, dark green, both for the relevant projects’ sustainability and governance of the issuance. OR's bonds, first green bonds from Icelandic companies, were offered in open tendering and subsequently listed on the Nasdaq Iceland Sustainable Bonds Market.

Efficiency is one of Reykjavik Energy’s values, and one that is particularly applicable to the company's finances. Financial objectives are pursued to ensure that Reykjavik Energy and its subsidiaries:

  • have sound finances,
  • operate with an acceptable level of risk,
  • offer fair prices for services,
  • pay owners dividends from their assets.

Reykjavík Energy, which is entirely owned by municipalities, considers that sound finances promote the UN's sustainable development goal 11 for sustainable cities and communities.

Revenue, Expenses, EBITDA and EBIT

Stability characterises main metrics in Reykjavik Energy's finances over the past few years. The rise in revenues is primarily due to an increase in sales and the principle reason for decrease in EBIT and EBITDA in 2019 are the considerable investments.

EBITDA stands for earnings before interest, taxes, depreciation and amortization. EBIT stands for earnings before interest and taxes.

Revenue, Expenses, EBITDA og EBIT

My carbon footprint

6.59 tons CO2 equivalents per year An Icelander’s carbon footprint is about 12 tons per year

Jóna Sigurlína Pálmadóttir

Geothermal Energy Exhibition staff member, ON Power

I spend very little on myself and mainly spend my money on food and staples and only buy things when I need them. This result therefore comes as a real surprise to me. I think the main reason for my high consumption is the loan on my car. Then there is meat eating which also has a deep impact on the carbon footprint. My carbon footprint is somewhat below average, but I still need to improve. Eating less meat is the next step.


Reykjavik Energy Group's operational margin has been stable and sound over the past years. The operational margin must, among other things, support the investments of the companies in the Group. Operations require substantial investments to be able to maintain the utility systems and power plants, tend to new customers and meet increased demands placed on operations. Here is the margin as a percentage of total revenue.

EBITDA margin

Interest Coverage

This performance indicator demonstrates how capable the company is of honouring its interest expense obligations. The company's owners have put forward conditions to pay out dividend which stipulates that cash from operations plus interest expenses shall be at least 3.5 times higher than interest expenses. Reykjavik Energy fell short of that target in the immediate aftermath of the financial crisis, but exceeded it from 2010 onwards.

Interest coverage

Net Debt

The heaviest debt load was at the end of 2009. At that time, net debt amounted to ISK 226.4 billion, thus net debt has been reduced by ISK 90 billion at the end of 2019.

Net debt is interest-bearing debt excluding interest-bearing assets.

Net debt

My carbon footprint

8.62 tons CO2 equivalents per year An Icelander’s carbon footprint is about 12 tons per year

Einar Sigurðsson

Energy distribution electrician, ON Power

I probably need to start thinking about getting an electric vehicle and reducing my air travel as much as possible. The fact that I am a gadget addict and always have to have the latest increases consumption and consequently has a negative impact on my carbon footprint. But I eat a lot of vegetables. But it is not good for ON Power if everyone reduces their energy consumption.

Net Debt / Net Cash from Operating Activities

This performance indicator shows the ratio between net debt and cash at the end of the year. The indicator shows how many years it would take for the company to pay net debt with cash if it were only used to pay down debt.

Net debt / Net cash from operating activities


Reykjavik Energy’s Ownership Policy provides for the implementation of a yardstick that shows returns on the capital employed by the owners in operations. It should, at the very least, exceed the company’s financing costs in addition to a reasonable risk premium.

In October 2018, the board of directors of Reykjavik Energy approved a dividend policy and it was endorsed at an owners’ meeting in November 2018.


Current Ratio

Reykjavik Energy's objective is to have a current ratio that is no lower than 1, which is one of the conditions for paying out dividends to the owners. This means that the company must have a sufficient cash flow to meet obligations for the next 12 months.

Current ratio

My carbon footprint

11.73 tons CO2 equivalents per year An Icelander’s carbon footprint is about 12 tons per year

Þórunn Ása Þórisdóttir

Project manager of technical services and delivery department, Reykjavik Fibre Network

Using the carbon calculator gives one an overview and ideas on improvements that can be made. I had never thought of, for example, turning the radiators down more often or switching from regular light bulbs to LED lights. Bad ways of thinking need to be corrected so that behaviour can change. Why, for example, do I automatically think of driving to work when I could cycle? Or go to the store several times a week when one trip would be enough? And why doesn’t the family do a better job at using leftovers, when other meals can be made from them. This all matters.

Equity Ratio

The equity ratio indicates how much debt a company has compared to its assets. The total assets of Reykjavik Energy were estimated at ISK 340.1 billion at the end of 2019. OR's objective is to ensure that the equity ratio does not go below 35% - 40% in the long-term.

Equity ratio

Cash Flow

In the profit and loss account and balance sheet of each company are many calculated figures that should give a clear picture of operations during a specific period and position at the end of it. However, the cash flow overview provides a clearer view of the real cash flow and which factors have an impact on the company's cash position in the period. Furthest to the left one can see the cash position at the beginning of 2019 and, to the right, cash and cash equivalents, marketable securities and deposits at the end of the year.

Cash flow

Credit Rating

Credit ratings are important for companies that do business with international financial institutions. The purpose of the rating is to give creditors an objective assessment of a company's financial standing and future prospects. The credit ratings of Reykjavik Energy and other Icelandic companies can never surpass the sovereign rating of Iceland. The owners' guarantee on OR's loans have a positive impact on the company's rating. Reykjavik Energy is currently rated by three agencies: Moody's, Fitch Ratings and Reitun Rating Iceland.

Moody's Fitch Reitun
Long term Ba1 BB+ i.AA3
Outlook Positive Stable Positive
Date March 2018 Apríl 2019 August 2018

My carbon footprint

7.18 tons CO2 equivalents per year An Icelander’s carbon footprint is about 12 tons per year

Jón Pétur Skúlason

Specialist in tendering and making contracts, Reykjavik Energy

I don’t know whether this is a big carbon footprint when compared to other Icelanders, but the greatest impact probably comes from the fact that I always walk to work without exception. The best way for me to reduce my footprint is probably to shift my eating more towards the plant kingdom, although I can’t really see that happening in the near future.

Risk Management

Currency Risk

Reykjavik Energy‘s currency risk is mainly due to borrowing in foreign currencies and foreign revenues from Reykjavik Energy‘s subsidiary ON Power due to electric sales in USD. Reykjavik Energy‘s risk policy includes limits on possible currency imbalance in operations and on the balance sheet. Forward contracts are entered into with the aim of reducing the risk of unfavorable exchange rate fluctuations. The graph shows the estimated cash flows of foreign currencies for the next few years.

Estimated currency flow

Interest Rate Risk

Higher interest rates pose a risk for Reykjavik Energy‘s operations and balance sheet. This risk has been mitigated in the past few years by fixing interest rates with interest rate swaps. The columns show to what degree the overall liabilities for each year have fixed rates. Reykjavik Energy‘s risk of higher interest is now insubstantial.

Interest Rate Risk

Aluminum Price Risk

Reykjavik Energy executes aluminum hedge contracts to hedge aluminum linked revenues against sharp declines in aluminium prices. Hedges are executed for a few years ahead and the graph shows to what extent revenues have been hedged. The board of directors decides the upper and lower limit of the aluminium hedge ratio.

Aluminum Price Risk

Currency Risk on Balance Sheet

Reykjavik Energy‘s foreign assets exceeded the company‘s foreign debt at year end 2019. The reason is that the operational currency of Reykjavik Energy subsidiary, ON Power, is in USD. ON Power assets are greater than all Reykjavik Energy’s liabilities in foreign currency.

Currency Risk on Balance Sheet