Interim Results

RNS Number : 2702N

Rurelec PLC

27 September 2012

 



	27 September 2012
	AIM: RUR

 

Rurelec PLC

("Rurelec" or "the Company")

Interim results for the six months ended 30 June 2012

Rurelec PLC (AIM: RUR), the electricity utility focused on the development of power generation capacity and rural electrification projects in Latin America, announces its unaudited interim results for the six months ended 30 June 2012.

Financial Highlights:

·      Turnover	£6.9 million (2011: £7.2 million)
·      Gross Profit	£2.7 million (2011: £3.3 million)
·      Post Tax Loss	£0.1 million (2011: £0.6 million loss)
·      Earnings per share	0.03 pence (2011: 0.18 pence loss)
·      Net asset value per share	20 pence (2011: 20 pence)

Operational Highlights:

·      Assets in Argentina performing well and trading profitably before non-operational unrealised foreign exchange adjustments.

· Progress being made towards arbitration process for compensation on assets nationalised in Bolivia.

· Post period, the contract for the construction of a 40MW plant in Arica, Northern Chile has been agreed with construction due to commence before year end, subject to financing.

Commenting on the results, Peter Earl, Rurelec's Chief Executive, said:

"I am pleased to report that 2012 has seen a major change in the fortunes of Rurelec. Our Comodoro Rivadavia power plant in Argentina is trading profitably and paying Rurelec back some of the project loans  it used  for the conversion to combined cycle.   In spite of the difficulties of the European debt markets, we have also managed to complete a US$15.5 million financing, the proceeds of which has allowed us to proceed with our first Chilean thermal project in Arica and our first Peruvian hydro project at Canchayllo. 

"I believe that this is the start of a turnaround for Rurelec after four tough years when the Board was focused purely on survival. We now operate in Chile and Peru as well as in Argentina and await the final stages of the arbitration process with Bolivia which we expect to come to a satisfactory outcome in 2013."

For further information please contact:

Rurelec PLC	Daniel Stewart	Xcap Securities
Peter Earl, CEO Ana Ribeiro, Head of Communications / Investor Relations	Paul Shackleton	John Grant/Jon Belliss
[phone]	[phone]	[phone]

Chairman's Statement

Revenues in local currency terms were up 1per cent as compared to the same period last year, though once converted into sterling, the weakness of the AR$ resulted in a decline, when measured in sterling, of 4per cent to £6.9 million (2011: £7.2 million).  The gross margin has declined following the cancellation of the spot market capacity price increase discussed below.  The reduction in revenue was partly offset by a reduction in administrative expenses.  None-the-less, operating profit fell from £1.4 million to £1.0 million.  However, the increased net finance income resulted in a reduction in the loss after tax, from £0.6 million loss in the first half of 2011 to £0.1 million loss in the current period.

Net assets are reported as 20 pence per share, based on the 421 million shares in issue.

Demand for power in Argentina continues to increase, with the estimated annual increase in consumption being a little over 4 per cent.  In March 2012 the spot market capacity price increase implemented early in 2011 and then withheld from March of the same year was formally abolished.  The cancellation of the increase only affects our gas turbine capacity revenues.   Electricity generators have been lobbying the Ministry of Energy for new proposals that will allow them to receive an adequate return on their assets.  The Ministry is in the process of analysing the power sector and we expect to hear further news during the last quarter of 2012.

Given the anticipated changes in the sector, which include government ownership of the wholesale electricity market, CAMMESA, it has not, so far, been possible to arrange the long awaited AR$ denominated financing of EdS that we have been hoping for.  In the meantime, although cash releases to Rurelec are lower than planned (US$1.5 million remitted so far this year, and about the same anticipated by year end), the balance sheet is showing that trade creditors are being reduced to a more normal level and thus more surplus cash will be available to Rurelec next year.

In accordance with the procedural schedule agreed with the arbitration tribunal, the complete statement of claim in connection with the nationalisation of the Group's interest in Empresa Guaracachi S.A. ("Guaracachi") was submitted to the Permanent Court of Arbitration in The Hague on 1 March 2012.  As expected, the independent valuation of Guaracachi is significantly in excess of the value at which it is currently carried in our books.  According to the timetable agreed with the Government of Bolivia, Bolivia's Statement of Defence was due to be submitted on 1 August 2012. However, following two consecutive requests by Bolivia for an extension to the deadline to submit their Defence, made on the basis that their newly appointed legal advisers required more time to prepare their submissions, the revised date for Bolivia to lodge its defence is now 5 October 2012. No further extensions to this deadline are expected. Despite these extensions, the date for the final hearing, early April 2013, remains the same.

Towards the end of June the Group announced that it had agreed terms to borrow US$15.5 million to invest in a thermal power in Chile and Hydro power in Peru.  The interest rate on the loan, which was drawn down in July 2012, is 12per cent and it is secured principally on the arbitration claim.  The lender will also receive a portion of any proceeds recovered in relation to any final settlement of, or award, in connection with the Arbitration.

Disbursement of the funds has started in Peru as we assist Cascade Hydropower Limited to fund its development activities and prepare for construction of its first 5.3 MW plant.  Term sheets from local lenders and from multilateral lending agencies have been received for the debt portion of the first development and final selection is expected shortly.

In Chile the construction contract for the 40 MW gas turbine plant in Arica, Northern Chile, has been agreed and construction is expected to commence before year end, once the financing of the project company has been finalised with our partners.  With a 42 week construction period, we are expecting the plant, which will initially operate on diesel fuel, to enter service in the third quarter of 2013.  Rurelec has a 50 per cent. interest in the Arica project, which has a total planned funding requirement of US$16.0 milion.

Finally, I am pleased to report that Rurelec has now built up just under £3 million of distributable reserves in the holding company. Although we are not yet in a position to pay a dividend, we are certainly heading in the right direction and look forward to a time in the not so distant future, when we will be able to return to paying a dividend to shareholders.

A. Morris

Chairman

RURELEC PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

for the half year ended 30 June 2012

(expressed in thousands of pounds)

                                                                                                ________

	Notes	6 months to	6 months to	12 months to
		30/06/12 £'000	30/06/11 £'000	31/12/11 £'000
Revenue		6,923	7,213	13,522
Cost of sales		(4,361)	(3,917)	(7,903)
Gross profit		2,562	3,296	5,619
Administrative expenses		(1,603)	(1,911)	(3,981)
Operating profit		959	1,385	1,638
Foreign exchange losses)		(1,054)	(1,216)	(902)
Finance income		755	220	1,661
Finance expense		(197)	(352)	(500)
Profit before tax		463	37	1,897
Tax expense		(586)	(615)	(141)
(Loss) / profit for		(123)	(578)	1,756
the period
Basic (loss) / profit per share	4	(0.03)p	(0.18)p	0.47p
Other comprehensive income
Exchange differences on translation of foreign operations		(205)	(295)	(440)
Revaluation of CERs		-	-	(142)
Total other comprehensive income		(205)	(295)	(582)
Total comprehensive (loss) / profit for period		(328)	(873)	1,174

RURELEC PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)

at 30 June 2012

(expressed in thousands of pounds)

	Notes	30/6/12 £'000	30/6/11 £'000	31/12/11 £'000
Assets
Non-current assets
Property, plant and equipment		18,028	19,518	18,777
Intangible assets		3,241	3,759	3,393
Trade and other receivables		15,450	13,111	15,109
Deferred tax assets		417	-	520
		37,136	36,388	37,799
Current assets
Inventories		345	369	365
Trade and other receivables		4,445	4,496	5,514
Compensation claim	4	48,835	47,000	47,997
Current tax assets		-	356	-
Cash and cash equivalents		733	2,052	1,793
		54,358	54,273	55,669
Total assets		91,494	90,661	93,468
Equity and liabilities
Shareholders' equity
Share capital		8,413	8,413	8,413
Share premium account		53,012	53,012	53,012
Foreign currency reserve		640	990	845
Other reserves		1,050	1,192	1,050
Profit and loss reserve		22,410	20,199	22,533
Total equity attributable to		85,525	83,806	85,853
shareholders of Rurelec PLC
Non-current liabilities
Trade and other payables Future tax liabilities		111 273	374 335	231 306
Deferred tax liabilities		656	862	762
Borrowings		1,604	851	1,653
		2,644	2,422	2,952
Current liabilities
Trade and other payables		2,948	3,919	4,532
Current tax liabilities		210	-	131
Borrowings		167	514	-
		3,325	4,433	4,663
Total liabilities		5,969	6,855	7,615
Total equity and liabilities		91,494	90,661	93,468

RURELEC PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

for the half year ended 30 June 2012

(expressed in thousands of pounds)

	Share	Share	Foreign	Retained	Other	Total
	capital	premium	currency	earnings	reserves
			reserve
Balance at 1.1.11	4,413	39,329	1,285	20,777	1,192	66,996
Transactions with owners:
Allotment of shares	4,000	14,000	-	-	-	18,000
Share issue costs	-	(317)	-	-	-	(317)
Total transactions with owners	4,000	13,683	-	-	-	17,683
Loss for period	-	-	-	(578)	-	(578)
Exchange differences	-	-	(295)	-	-	(295)
Total comprehensive income / (loss)	-	-	(295)	(578)	-	(873)
Balance at 30.6.11	8,413	53,012	990	20,199	1,192	83,806
Profit for period	-	-	-	2,334	-	2,334
Revaluation of CERs	-	-	-	-	(142)	(142)
Exchange differences	-	-	(145)	-	-	(145)
Total comprehensive income / (loss)	-	-	(145)	2,334	(142)	2,047
Balance at 31.12.11	8,413	53,012	845	22,533	1,050	85,853
Loss for period	-	-	-	(123)	-	(123)
Exchange differences	-	-	(205)	-	-	(205)
Total comprehensive income / (loss)	-	-	(205)	(123)	-	(328)
Balance at 30.6.12	8,413	53,012	640	22,410	1,050	85,525

 

RURELEC PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

for the half year ended 30 June 2012

(expressed in thousands of pounds)

	Notes	6 months to	6 months to	12 months to
		30/06/12	30/06/11	31/12/11
Result for the period before tax		463	37	1,897
from continuing operations
Net finance (income) / costs		(558)	132	(1,161)
Adjustments for:
Depreciation		376	391	786
Unrealised exchange loss in joint venture companies		872	1,266	790
Change in trade and other receivables		570	(430)	(1,028)
Change in trade and other payables		(1,299)	(670)	(355)
Cash generated from operations		424	726	929
Taxation paid		(236)	(382)	(468)
Interest paid		(55)	(358)	(500)
Net cash generated from / (used in)		133	(14)	(39)
Operations
Cash flows from investing activities
Purchase of plant and equipment		(675)	(179)	(230)
Bolivian arbitration costs		(838)	-	(997)
Sale of plant and equipment		-	-	177
Repayments from / (loans to) joint venture company		320	(3,287)	(3,022)
Net cash used in investing activities		(1,193)	(3,466)	(4,072)
Net cash outflow before		(1,060)	(3,480)	(4,111)
financing activities
Cash flows from financing activities
Issue of shares (net of costs)		-	17,683	17,683
Loan drawdowns		-	-	654
Repayment of loans		-	(12,308)	(12,590)
Net cash generated from		-	5,375	5,747
financing activities
(Decrease) / increase in cash		(1,060)	1,895	1,636
and cash equivalents
Cash and cash equivalents at		1,793	157	157
start of period
Cash and cash equivalents at		733	2,052	1,793

RURELEC PLC

Notes to the Interim Statement

for the six months ended 30 June 2012

1. Basis of preparation

These condensed consolidated interim financial statements do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the year ended 31 December 2011 were derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. Those accounts, which contained a qualified audit report with respect to the limitations placed on the scope of the audit work on the financial results of Guaracachi following the nationalisation of Guaracachi, did not contain statements under sections 489 (2) or (3) of the Companies Act 2006. The financial information contained in this interim statement has been prepared in accordance with all relevant International Financial Reporting Standards ('IFRS') in force and expected to apply to the Group's results for the year ending 31 December 2012 and on interpretations of those Standards released to date.

2. Accounting policies

These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies set out in the Group's financial statements for the year ended 31 December 2011.

3. Earnings per share	6 months to	6 months to	12 months to
	30/6/12	30/6/11	31/12/11
Basic and diluted
Average number of shares	421m	321m	371m
in issue during the period
(Loss) / profit attributable to equity holders of the parent	£(0.1m)	£(0.6)m	£1.8m
from continuing operations
Basic and diluted (loss) / profit per share on continuing operations	(0.03p)	(0.18)p	0.47p
4. Compensation claim

As detailed in the 2010 Report and Accounts, on 1 May 2010 the Bolivian Government nationalised by force Rurelec's controlling interest in Guaracachi. The Bolivian book value of the net assets of Guaracachi, together with the declared but unpaid dividend for 2009, is not less than £47 million and has been used for accounting purposes only and does not represent the fair market value of the investment being claimed under the Bilateral Investment Treaties. The actual amount claimed, as submitted to the Permanent Court of Arbitration in the Hague, is $142.4 million. The increase in the carrying value of the claim above the £47 million is represented by the costs incurred in preparing and submitting the claim for compensation to the Permanent Court in the Hague.

5. The Board of Directors approved this interim statement on 26 September 2012. This interim statement has not been audited.

6. Copies of this statement are being sent to all shareholders. Copies may be obtained from the Company's registered office, 5^th Floor, Prince Consort House, 27-29 Albert Embankment, London SE1 7TJ.

 

END

 

 

IR BRGDCDSDBGDL