Interim Results

Rurelec PLC
28 September 2006



Rurelec PLC ('Rurelec')

27th September 2006


Interim results for the 6 months ended 30th June 2006


Chairman's Statement

Rurelec today announces its interim results for the six months ended 30th June
2006. These are the first results since Rurelec acquired a controlling stake in
Empresa Guaracachi SA ('Guaracachi') in Bolivia in January 2006 and I am pleased
to confirm that Rurelec's power generation businesses are performing well.
Operating results as a group are fully in line with market expectations. The
consolidated profit after tax attributable to the shareholders of the company of
£6.179m includes £5.572m of 'other income' which represents the excess of the
group's share of the provisional fair values of the assets and liabilities
acquired in the acquisition of Guaracachi over the cost of acquiring the 50.001
per cent. interest in Guaracachi. While Rurelec's Board is not proposing to pay
an interim dividend, the Directors expect to recommend a full year dividend
payable in the first half of 2007 based on income received from the Company's
Latin American businesses and subject to the distributable reserves available to
Rurelec at that time.

Most important of all, the markets in which Rurelec currently generates
electricity are experiencing considerable economic growth. Argentina's economy
continues to grow at 9 per cent. while Bolivia is enjoying GDP growth of almost
6 per cent. Demand for electricity in turn is exceeding all previous demand
forecasts. As a result, the governments of both Argentina and Bolivia have
requested Rurelec's local subsidiaries to accelerate and increase expansion
plans for new power capacity to match the needs of the power markets in the
south of Latin America. I am delighted to report that Rurelec is meeting the
challenge that such rapid demand growth represents.

Today Rurelec controls a group of four major operating power plants comprising
442 MW of installed capacity in Bolivia and Argentina with a further 131 MW
under construction and 200 MW in advanced development. Rurelec is now
accelerating its plans to build the 200 MW under development and is considering
further expansion for 2007 to meet the needs of the region.


Argentina

Rurelec announced last month that it had begun construction on the 60 MW
combined cycle expansion of its Energia del Sur ('EdS') power plant in
Patagonia.

EdS is the Argentine power generation company which owns and operates one of the
most southerly power plants in Argentina, serving the partially isolated power
grid based on Comodoro Rivadavia. Existing capacity is 76 MW and Rurelec owns an
effective 50 per cent. interest in EdS following its July 2005 purchase of a 50
per cent. stake in Patagonia Energy Limited ('PEL').

The shareholders in PEL have completed a study into the feasibility of
converting the plant to combined cycle gas turbine expansion ('CCGT') by adding
a steam turbine and heat recovery steam generator to the two open cycle General
Electric 6B gas-fired turbines of EdS. PEL has now acquired a suitable steam
turbine and air cooling system at very favourable prices to implement the
combined cycle conversion, which is expected to be eligible for carbon credits
under the Kyoto Protocol. The steam turbine and cooling system are currently
being transported to Patagonia from the United States. When completed in the
second half of 2007, the CCGT conversion will add some 60 MW of new capacity in
the south of Argentina where demand growth has out-stripped reserve capacity in
the southern power grid.

EdS has received initial approvals from the Credit Committee of Standard Bank,
London for a loan of US $18 million for the financing of the new CCGT capacity.
Financial close is expected to occur in the fourth quarter of 2006.


Bolivia

Guaracachi, Bolivia's largest power generation company, has now successfully
commissioned the new 8 MW addition to its Aranjuez power plant in Sucre, the
federal capital of Bolivia. The new plant was brought on line just in time for
Bolivia's Constituent Assembly meetings in Sucre.

Construction is also nearing completion on Guaracachi's 71 MW capacity expansion
in Santa Cruz in the east of Bolivia and remains on track for commissioning in
November of this year. Together, these two new power facilities represent some
10 per cent. of the peak demand of Bolivia. By the end of 2006, Guaracachi's
installed capacity in Bolivia will have increased by 22 per cent. from 360 MW to
440 MW.

At the same time as completing its current additions to plant capacity,
Guaracachi has been working on two further expansion projects.

The first consists of a 120 MW greenfield power plant to be based in Yacuiba in
Bolivia's Department of Tarija close to the border with Argentina. This new
plant is intended to stimulate economic growth to the south of Bolivia where the
national transmission grid has not yet been extended. The plant will also be
interconnected to the northern grid system of Argentina which currently suffers
from power shortages. Guaracachi is in negotiation with the Bolivian national
oil and gas company, YPFB, for a long term gas supply for the Yacuiba plant. A
preliminary agreement for the sale of electricity has already been signed with
CEMSA, the Argentine power trading subsidiary of Endesa of Spain.

The second project is the 80 MW CCGT expansion project which consists of the
conversion in Santa Cruz of two existing General Electric 6FA gas turbines to
combined cycle operation. This project has already been submitted for approval
as Bolivia's first carbon credit power generation project under the Kyoto
Protocol. The new capacity is due to be brought into service at the end of 2007
and will meet Bolivia's growing demand for new power capacity to match its 6 per
cent. growth in GDP, the highest level of economic growth that Bolivia has
experienced in a decade.


Future Developments

Guaracachi and EdS continue to trade well. Guaracachi, which is quoted on the La
Paz Stock Exchange, remains committed to a high level of dividend payout in
early 2007 based on its 2006 financial results, consistent with its policy of
distributing profits to shareholders. EdS also remains committed to maximizing
cash payments to its shareholders. Rurelec in turn intends to maximize the
payout to its own shareholders of dividends received from Rurelec subsidiaries.

Rurelec continues to explore expansion possibilities in line with its intention
to become the leading rural power company in Southern Cone of Latin America.
Rurelec is in dialogue with the energy ministers of both Argentina and Bolivia
to agree priorities for further power plant expansion that meet the national
plans of both countries.


Jimmy West
Chairman



RURELEC PLC

CONSOLIDATED INCOME STATEMENT (unaudited)
for the half year ended 30 June 2006

                                              6 months    6 months
                                            to 30/6/06  to 30/6/05
                                    Notes        £'000       £'000

Revenue                                          9,361       1,000

Cost of sales                                   (6,461)       (667)

Gross profit                                     2,900         333

Administrative expenses                         (1,397)       (148)

Other income                           3,7       5,572           -

Finance income                                     169           5
Finance expense                                   (238)          -

Profit before tax                                7,006         190

Tax expense                                        (78)        (33)

Profit for the period                            6,928         157

Attributable to minority interest                  749           -
Attributable to shareholders of                  
Rurelec PLC                                      6,179         157

Earnings per share (basic)               4        9.05p       1.25p
Earnings per share (diluted)             4        9.05p       1.25p




CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
(unaudited) for the half year ended 30 June 2006


Profit for the period attributable to            
shareholders of Rurelec plc                      6,179         157
Exchange differences on translation             
of overseas operations                          (1,791)          1

Total recognised income and expense      
for the period                           5       4,388         158



RURELEC PLC

CONSOLIDATED BALANCE SHEET (unaudited)
at 30 June 2006
                                               30/6/06   31/12/05  30/6/05
                                        Notes    £'000     £'000    £'000

Assets
Non-current assets
Property, plant and equipment                   58,950     4,853      724
Investments                                         18         -        -
Trade and other receivables                        535       412        -
Deferred tax assets                                311       328        5

                                                59,814     5,593      729
Current assets
Inventories                                      2,972       460        -
Trade and other receivables                      8,063     2,578      239
Cash and cash equivalents                        5,361       424      463

                                                16,396     3,462      702

Total assets                                    76,210     9,055    1,431

Equity and liabilities
Equity attributable to shareholders of
Rurelec PLC
Share capital                                    1,366       427      252
Share premium                                   21,299     3,568      764
Translation reserve                             (2,175)     (384)       1
Retained earnings                                8,263     2,084      138

                                         5,6    28,753     5,695    1,155
Minority interest                               23,437         -        -

Total equity                                    52,190     5,695    1,155

Non-current liabilities
Trade and other payables                           491       431        -
Deferred tax liabilities                             -         -       38
Borrowings                                      13,959         -        -

                                                14,450       431       38

Current liabilities
Trade and other payables                         9,360     2,478      238
Borrowings                                         210       451        -

                                                 9,570     2,929      238

Total liabilities                               24,020     3,360      276

Total equity and liabilities                    76,210     9,055    1,431



RURELEC PLC

STATEMENT OF CONSOLIDATED CASH FLOWS (unaudited)
for the half year ended 30 June 2006

                                                   6 months    6 months
                                                 to 30/6/06  to 30/6/05
                                           Notes      £'000       £'000

Operating activities
Result for the period before tax                      7,006         190
Adjustments                                          (4,620)        (10)
Change in inventories                                  (209)          -
Change in trade and other receivables                (2,604)       (239)
Change in trade and other payables                      718         118

                                                        291          59

Investing activities
Additions to plant, property 
and equipment                                        (2,781)       (415)
Deferred consideration paid                            (431)          -
Acquisition of 50.00125% of                          
Empresa Guaracachi S.A. (net of cash)                (7,913)          -
Interest received                                       169          10

                                                    (10,956)       (405)

Financing activities
Repayment of loans                                     (521)          -
Proceeds from share issue                            18,670           -
Interest paid                                          (238)          -
Dividend paid to minority                            
shareholders' of Empresa Guaracachi S.A.             (2,046)          -
Withholding tax on inter-group dividend                (263)          -
                                                     15,602           -

Increase / (decrease) in cash                         
and cash equivalents                                  4,937        (346)
Cash and cash equivalents at                            
beginning of period                                     424         809
Cash and cash equivalents at                          
end of period                                         5,361         463



RURELEC PLC

Notes to the Interim Statement
for the six months ended 30 June 2006


1. Basis of preparation

This interim statement is unaudited and does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985. Statutory accounts
for the period ended 31 December 2005 have been filed with the Registrar of
Companies. The auditors have made a report on those statutory accounts under
Section 235 of the Companies Act 1985. The auditors' reports were unqualified
and did not contain a statement under Section 237 (2) of the Companies Act 1985.

The financial information contained in this interim statement has been prepared
in accordance with the Listing Rules of the Financial Services Authority and all
International Reporting Standards ('IFRS') in force and expected to apply to the
Group's results for the year ended 31 December 2006 and on interpretations of
those standards released to date.

The term IFRS includes all International Accounting Standards ('IAS') as adopted
by the EU and International Financial Reporting Standards ('IFRS') issued by the
International Accounting Standards Board ('IASB') and the International
Financial Reporting Committee ('IFRIC') and interpretations issued by IFRIC.


2. Accounting policies

This interim statement has been prepared in accordance with the Group's IFRS
accounting policies. These policies were set out in the Group's Financial
Statements for the period ended 31 December 2005.


3. Other income

Other income represents the excess of the provisional fair values of the Group's
share of the assets less the liabilities acquired in the acquisition of the
50.00125% interest in Empresa Guaracachi S.A. over the cost of acquiring that
interest.


4. Earnings per share

Weighted average number of shares:        30/6/06      30/6/05
                                             '000         '000

Basic earnings                             68,289       12,600
Diluted earnings                           68,289       12,600


The profit figure of £6.179m used in the calculation of the basic and diluted
earnings per share for the half year to 30 June 2006 includes £5.572m of other
income as described in note 3 above.


RURELEC PLC

Notes to the Interim Statement
for the six months ended 30 June 2006 (continued)


5. Consolidated statement of changes in equity

                                          30/6/06      30/6/05
                                            £'000        £'000

Opening shareholders' funds                 5,695          997
Proceeds from issue of shares              18,670            -
Total recognised income and expense         4,388          158

Closing equity shareholders' funds         28,753        1,155


On 5 January 2006, the company issued 46,938,775 Ordinary 2p shares at 42p per
share, raising £18,670,000 net of expenses.


6. Net asset value

Based on the number of shares in issue at 30 June 2006 and the equity
attributable to the shareholders of the company, the net asset value per share
at 30 June 2006 was 42.10p.


7. Acquisition of subsidiary

On 5 January 2006, the company acquired 100% of Bolivia Integrated Energy
Limited, a BVI registered company. Bolivia Integrated Energy Limited owns,
through an intermediary holding company, 50.00125% of Empresa Guaracachi S.A., a
company incorporated in Bolivia.

The purchase price was $35m, of which $30m was paid on completion. $3m of the
deferred consideration was paid on 19 April 2006. The remaining $2m of deferred
consideration is due to be paid from the receipt of dividends from Empresa
Guaracachi S.A. and in any event, by 31 December 2010.

The provisional fair values of the assets and liabilities acquired are as
follows:

                                            £'000

Property, plant and equipment              55,632
Inventories                                 2,475
Trade and other receivables                 3,325
Cash and cash equivalents                  12,018
Non-current liabilities                   (15,410)
Trade and other payables                   (5,828)

Net assets                                 52,212
Less: Minority interest                   (26,237)

Group's share of net assets acquired       25,975

Purchase consideration                     20,403
Excess of net assets acquired over cost     5,572
('negative goodwill')
                                           25,975


RURELEC PLC


Notes to the Interim Statement
for the six months ended 30 June 2006 (continued)


8. The Board of Directors approved this interim statement on 27th September
2006. This interim statement has not been audited.


9. Copies of this statement are being sent to all shareholders. Copies may be
obtained from the company's registered office, 5th Floor, Prince Consort House,
Albert Embankment, London SE1 7TJ.


For further information, contact:

Peter Earl or Elizabeth Shaw
Tel: [phone]

Rurelec PLC is an AIM listed British company established to develop rural
electrification projects in South America. It is managed by a team with a strong
track record in developing power projects worldwide.

Since the company's flotation on AIM in August 2004, the company has acquired
power generation operations in Bolivia and Argentina.




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