Comment on Share Price

RNS Number : 6140W

Rurelec PLC

19 August 2020

 

Rurelec PLC

("Rurelec" or the "Company")

Comment on Share Price

The Directors of the Company note the recent movement in the Company's share price and confirm that they know of no reason for the share price movement.

General Update

By way of a general update, the Directors of the Company refer to the audited results of the Company for the year ended 31 December 2019, which were released to the market on 1 June 2020 ("Financial Results Announcement").

As set out in the Financial Results Announcement, the highlights for the twelve months ended 1 June 2020 were:

" Operating loss £3.1 million (2018: loss £2.9 million).

Loss before tax £4.4 million (2018: loss £0.6 million).

2019 had seen a marked improvement in the Group's liquidity position, current liabilities have fallen to £0.5 million (2018: £2.0 million).

The Group was able to settle the outstanding £1.2m repayment of BPAC secured debt principal during 2019 whilst limiting the decrease in net cash to £214k (2018: increase £188k).

The main drivers for the loss before tax of £4.4 million were a provision of £2.0 million (2018: £nil) against the 701 turbines, and foreign exchange losses of £1.3 million (2018: gains £1.7 million).

Write downs of assets by £2.0 million (2018: £Nil) to values the directors believe can be supported in current market conditions.

Administration expenses of £1.2 million (2018: £1.5 million) reduced due to further employment cost savings and a reduction in professional fees.

Total loss per share 0.79p (2018: 0.11p).

Net Asset Value per share 3.7p (2018: 4.4p)."

As also set out in the Financial Results Announcement:

"The Group has started to benefit from being on a more secure financial footing. December 2019 marked the first time since 2008 that the Group has received loan repayments due from the holding company of our joint venture operation of £0.5 million. This follows the completion of the major maintenance programme carried out at the Argentinian plant in late 2018 and early 2019. The total cash remittances by EdS to the Group and PEL described above amount to £2.2 million which compares to total debt repayments by EdS of £2.0 million in 2018.  In addition, EdS ended the year with cash reserves of £1.7 million (2018: £0.5 million).

To date, the COVID-19 pandemic has had little impact on the Group.  The Group's Head Office in London has operated on a remote basis and the EdS plant in Argentina is situated in a region which has to date had very little incidence of the virus.  EdS's power generation is considered part of an essential industry, and it has implemented procedures and protocols to allow as near to normal safe working practices in place.  Output and profitability to the end of April 2020 are in line with expectations, whilst cash remittances are above forecast for 2020 year to date and higher than for the same period in 2019.Notwithstanding the above, it is not considered possible to estimate the long-term financial impact of COVID-19 on the already-weak Argentinian economy at the present time, nor to anticipate the economic and fiscal measures that the Argentinian Government will impose.

As previously announced on 19 November 2019, the new Agreement reached with the Group's 50:50 joint venture partner in the Argentinian operation has established a framework regulating future cash repayments.  However, the Resolution 220/2007 Power Purchase Agreement ("PPA") expires in September 2020, and will be superseded by a new tariff or, at worst case, be sold on the energy spot market.  At the date of this report, the outcome remains uncertain.

The year 2019 has seen a marked improvement in the Group's liquidity position.  The improvements in the performance of the Argentinian asset, and the relationship with our joint venture partner, have been encouraging.  However, the effect of the current poor state of the Argentinian economy, and the uncertainty around the renegotiation of the Resolution 220 PPA later this year do cast a shadow over future performance".

Capital Reorganisation and Capital Reduction

As also set out in the Financial Results Announcement, the Company proposed to progress a Capital Reorganisation and Capital Reduction, subject to relevant approvals. This proposal was approved by shareholders at the AGM on 30 June 2020 and the reduction of capital was approved by the High Court of Justice on 14 August 2020 (as set out in the announcement of that date). A further update will be made when the Court Order has been successfully filed at Companies House and the Reduction of Capital becomes effective .

For further information please contact:

Rurelec PLC	W H Ireland (Nomad & Broker)
Simon Morris, Director Andy Coveney, Director	Katy Mitchell Lydia Zychowska
Tel: [phone]	Tel: [phone]

 

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