TIDMRUR
RNS Number : 9368S
Rurelec PLC
30 September 2014
30 September 2014
AIM: RUR
Rurelec PLC
("Rurelec" or "the Company")
Interim results for the six months ended 30 June 2014
Rurelec PLC (AIM: RUR), the owner, operator and developer of
power generation capacity internationally, today announces its
unaudited interim results for the six months ended 30 June
2014.
Financial Highlights:
-- Turnover GBP4.3 million (2013: GBP6.1 million)
-- Gross Profit GBP1.8 million (2013: GBP2.7 million)
-- Post tax loss GBP2.3 million (2013: GBP0.2 million loss)
-- Loss per share 0.41 pence loss (2013: 0.05 pence loss)
-- Net asset value per share 9.6 pence (2013: 17 pence)
Operational and Post Half-Year Highlights:
-- Full settlement with Government of Bolivia for US$31.5
million of compensation received on 3(rd) June 2014 along with
US$25.5 million repayment of Birdsong loan and accrued
interest.
-- Performance of the Energia del Sur plant in Patagonia,
Argentina is up year on year in Argentine Pesos, while the
translation into sterling is down due to the Peso devaluation
during 2014.
-- GBP2.3 million loss for the period is largely due to foreign
exchange losses in Argentina of GBP2.8 million on devaluation of
the Argentine Peso on our asset in Comodoro Rivadavia
-- Revenues in Argentina still performing well locally with
Argentine Pesos Arg $110 million ( 2013: Arg $100 million).
-- Peru - Canchayllo run-of-river hydroelectric plant (5.3MW)
reaches final stages of construction.
-- Peru - second hydro plant to start construction in Q4 of 2014.
-- Chile - two projects (295 MW) approaching completion of
development and financial close in the first quarter of 2015.
-- West African project for IPC providing engineering and
development services showing continued value of IPC's
experience.
Commenting on the results, Peter Earl, Rurelec's Chief
Executive, said:
"A great deal of effort during the first half of the year was
spent ensuring that we reached a final settlement with the Bolivian
Government. The low level of the settlement was a highly
unsatisfactory result for the Company. Nonetheless, we have been
busy during this time to develop our two projects in Chile, whilst
we have largely completed the construction of our first
run-of-river hydro plant in Peru with another three under
development. We are now finalising our partnership arrangements in
Latin America to permit a more rapid roll-out of new generation
capacity with large co-investors.
"Operationally we have had a good year in Argentina only spoilt
by the currency devaluation in January. We continue to believe that
the prospects for Argentina are excellent."
For further information please contact:
Rurelec PLC Daniel Stewart & W H Ireland
Company PLC
-------------------- -------------------- --------------------
Peter Earl, CEO Paul Shackleton James Joyce
Ana Ribeiro, Head and Alex Brearley and James Bavister
of Communications
-------------------- -------------------- --------------------
+44 (0)20 7220
+44 (0)20 7793 5610 +44(0) 20 7776 6550 1666
-------------------- -------------------- --------------------
Chairman's Statement
I have pleasure in reporting the interim results for the Rurelec
Group at 30 June 2014.
Energia del Sur, S.A. ("EdS"), our 50 per cent subsidiary with
the combined cycle plant in Patagonia, Argentina provided the
majority of the revenues for the first half of 2014 which were
GBP4.3 million, some 29.5 per cent. down on the same period last
year (2013: GBP6.1 million). The revenue streams in Argentine Pesos
were Arg $110 million compared to Arg $100 million in June 2013 but
due to the devaluation of the Peso the GBP revenues were reduced by
GBP1.8 million. The cost of sales in the period was reduced because
fuel supplies are now contracted and paid directly by CAMMESA, the
national organisation which manages the electricity network in
recompense for the low spot prices locally saving GBP1.1
million.
Administrative expenses have been held under control throughout
the business at GBP2.3 million (2013: GBP2.4million) resulting in
an operating loss of GBP0.5 million (2013 profit: GBP0.3 million).
The overall loss, after finance expense, has increased to GBP2.3
million from a loss of GBP0.2 million for the same period in 2013.
The Birdsong loan was repaid in full in June 2014.
The construction work undertaken in Peru has resulted in an
increase in fixed assets. However the carrying value of the EdS
plant in GBP has reduced due to the devaluation of the Argentine
Peso. Rurelec issued 4.15 million new shares in January and
February, adding GBP550,000 in aggregate to share capital and share
premium, to assist with working capital requirements during the
period of delay in receiving the settlement of the arbitration
award. During the period EdS was able to repay US$2.4 million of
the loans to Rurelec. Borrowings have reduced over the previous
periods as the Birdsong loan has been repaid but we have completed
the drawdown of finance arranged for Cascade Hydro Limited's
("Cascade Hydro") Canchayllo project under construction in Peru as
well as other loans to finance completion bonds for new projects in
Peru.
The first half of 2014 for Rurelec was significantly influenced
by the delayed arbitration settlement with Bolivia, which was
announced in the early hours of February 1(st) for an amount of
US$28.9 million plus interest. The full value of the award was
US$35.5 million, roughly the same price as Rurelec paid for the
controlling interest in Guaracachi before it added over 170 MW of
new, high efficiency gas fired generation capacity and before
Rurelec had successfully doubled the EBITDA of the Bolivian
enterprise. No costs were awarded to us and therefore we have had
to write off approximately GBP4 million of costs actually incurred
and paid. This was a massive and unjustified blow to the Company
given that Rurelec was given no alternative but to go to
international arbitration. As reported in the audited annual
financial statements earlier this year, one of the three panellists
on the tribunal issued a minority report stressing the inequity of
this decision regarding the award of costs.
I can report that, in spite of the drama of the arbitration,
Rurelec has not been standing still. Rurelec's Peruvian run of
river hydro subsidiary, Cascade Hydro, has completed construction
of its Canchayllo project, which is expected to enter service in
November. Its successful construction is a milestone for Rurelec
since it constitutes both the first hydro development to be built
by Rurelec as well as the first new generation capacity following
the May 2010 nationalisation of Rurelec's Bolivian assets.
Cascade Hydro has agreed terms for the sale of a substantial
share stake in the Canchayllo project which will allow Cascade to
repay third party loans and release funds to Rurelec. Completion of
that share sale is expected to occur in early November. Cascade has
identified more opportunities to build up its small hydro
development portfolio up to 200 MW over the next five years.
Rurelec is currently negotiating partnership arrangements
covering both small and large hydros in Peru. This is significant
since Rurelec has recently been informed by the government of Peru
that the long anticipated Proinversion tender process for large
hydro power purchase agreements (PPAs) will finally be announced at
the start of October. Rurelec owns the 255 MW run-of-river Santa
Rita project in Ancash Province which is expected to be one of the
leading contenders for a large hydro PPA.
In Chile, Rurelec's Termonor subsidiary has given notice to the
relevant authorities for the start of works on its Parinacota
project in Arica and expects to start preliminary works in
mid-October.
Rurelec is considering offers for a 50 per cent stake in
Termonor and expects to complete a sale at a premium to book value.
In the meantime the debt required to complete the plant is expected
to be secured early in 2015 and the equity of the Parinacota
project has been fully paid up by Rurelec.
Rurelec is also considering offers for 50 per cent of its
Central Illapa project, where it also expects to complete a sale at
a premium to book value. Rurelec intends to complete financing and
commence construction early in 2015, subject to finalising
arrangements with a partner.
Pending the completion of the sale of the share stakes in the
Parinacota and Illapa projects, Rurelec has put on hold the planned
trading in its shares on the Santiago Stock Exchange.
Rurelec is exploring one or more major alliances in Latin
America to allow the Company to accelerate its growth without the
need to ask existing shareholders for further capital. This is part
of a wider Rurelec strategy to return to paying dividends. That
strategy can only be achieved when Rurelec has more operating power
plants under ownership or management. By teaming up with large,
regional players in Latin America, the Company expects to be able
to trade off its Independent Power Corporation subsidiary's
nineteen year track record in developing, constructing and
operating gas fired combined cycle power plants for equity stakes
in thermal projects funded by larger partners wishing to switch to
gas fired capacity.
Colin Emson
Chairman
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
for the half year ended 30 June 2014
(expressed in thousands of pounds)
________
Notes 6 months 6 months to 12 months to
to
30/06/14 30/06/13 31/12/13
GBP'000 GBP'000 GBP'000
---------------------------- ------ --------- ------------ -------------
Revenue 4,274 6,067 15,093
Cost of sales (2,436) (3,320) (5,805)
---------------------------- ------ --------- ------------ -------------
Gross profit 1,838 2,747 9,288
Administrative expenses (2,334) (2,409) (8,019)
---------------------------- ------ --------- ------------ -------------
Operating profit /
(loss) (496) 338 1,269
Foreign exchange gains
(losses) (2,598) 1,042 (3,268)
Other expense (38,313)
Finance income 1,715 1,194 2,200
Finance expense (698) (2,614) (1,272)
---------------------------- ------ --------- ------------ -------------
(Loss) / profit before
tax (2,077) (40) (39,384)
Tax expense (205) (193) 189
---------------------------- ------ --------- ------------ -------------
(Loss) for the period (2,282) (233) (39,195)
Basic (loss) per share 3 (0.41)p (0.05)p (7.92)p
---------------------------- ------ --------- ------------ -------------
Other comprehensive
income
Items that will be
subsequently reclassified
to Profit & Loss
Exchange differences
on translation of foreign
operations (2,395) (881) (934)
Total other comprehensive
income (2,395) (881) (934)
Total comprehensive
(loss) for the period (4,677) (1,114) (40,129)
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited)
at 30 June 2014
(expressed in thousands of pounds)
30/6/14 30/6/13 31/12/13
Notes GBP'000 GBP'000 GBP'000
------------------------------- -------- --------- --------- ---------
Assets
Non-current assets
Property, plant and equipment 4 37,471 41,177 39,158
Intangible assets 4,986 3,168 4,959
Trade and other receivables 16,366 16,036 16,809
Deferred tax assets 435 341
------------------------------- -------- --------- --------- ---------
58,823 60,816 61,267
------------------------------- -------- --------- --------- ---------
Current assets
Inventories 184 1,589 227
Trade and other receivables 11,356 8,597 9,831
Compensation claim 5 53,735 19,126
Cash and cash equivalents 4,172 3,017 3,750
------------------------------- -------- --------- --------- ---------
15,712 66,938 32,935
------------------------------- -------- --------- --------- ---------
Total assets 74,535 127,754 94,202
------------------------------- -------- --------- --------- ---------
Equity and liabilities
Shareholders' equity
Share capital 6 11,228 11,063 11,145
Share premium account 6 67,836 66,757 67,369
Foreign currency reserve (3,926) (1,479) (1,532)
Share option reserve 107 46 107
Other reserves 1,050 1,050 1,050
Profit and loss reserve (22,358) 19,156 (19,949)
------------------------------- -------- --------- --------- ---------
Total equity attributable
to 53,937 96,593 58,190
shareholders of Rurelec
PLC
------------------------------- -------- --------- --------- ---------
Non-controlling interest 127 52 142
Total equity 54,064 96,645 58,332
Non-current liabilities
Future tax liabilities 18 207 18
Deferred tax liabilities 546 552 420
Borrowings 3,618 1,110 1,499
------------------------------- -------- --------- --------- ---------
4,182 1,869 1,938
------------------------------- -------- --------- --------- ---------
Current liabilities
Trade and other payables 6,209 11,075 8,883
Current tax liabilities 624 71 466
Borrowings 9,456 18,094 24,583
------------------------------- -------- --------- --------- ---------
16,289 29,240 33,932
------------------------------- -------- --------- --------- ---------
Total liabilities 20,471 31,109 35,870
------------------------------- -------- --------- --------- ---------
Total equity and liabilities 74,535 127,754 94,202
------------------------------- -------- --------- --------- ---------
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)
for the half year ended 31 December 2013
(expressed in thousands of pounds)
Foreign Share
Share Share currency option Retained Other Non-controlling Total
capital premium reserve reserve earnings reserves Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================= ======== ======== ======== ======== ========= ========= ========= =============== =========
Balance at
31.1.13 8,413 53,012 (598) 46 19,389 1,050 81,312 224 81,536
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Issue of shares 2,650 13,911 - - - - 16,561 - 16,561
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Share issue
costs - (166) - - - - (166) - (166)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Non-controlling
interest - - - - - - - (172) (172)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Total
transactions
with owners 2,650 13,745 - - - - 16,395 (172) 16,223
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Loss for period - - - - (233) - (233) - (233)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Exchange
differences - - (881) - - - (881) - (881)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Total
comprehensive
loss - - (881) - (233) - (1,114) - (1,114)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Balance at
30.6.13 11,063 66,757 (1,479) 46 19,156 1,050 96,593 52 96,645
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Issue of shares 82 612 - - - - 694 - 694
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Non-controlling
interest - - - - - - - 90 90
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Issue of Share
Options - - - 61 - - 61 - 61
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Total
transactions
with owners 82 612 - 61 - - 755 90 845
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Loss for period - - - - (39,104) - (39,104) - (39,104)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Exchange
differences - - (53) - - - (53) - (53)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Total
comprehensive
loss - - (53) - (39,104) - (39,157) - (39,157)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Balance at
31.12.13 11,145 67,369 (1,532) 107 (19,949) 1,050 58,191 142 58,332
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Issue of shares 83 467 - - - - 550 550
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Non-controlling
interest - - - - (127) - (127) (15) (142)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Total
transactions
with owners 83 467 - (127) - 423 (15) 408
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Loss for period - - - - (2,282) - (2,282) - (2,282)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Exchange
differences - - (2,395) - - - (2,395) - (2,395)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Total
comprehensive
loss - - (2,395) - (2,409) - (4,254) (15) (4,269)
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
Balance at
30.06.14 11,228 67,836 (3,926) 107 (22,358) 1,050 53,937 127 54,064
----------------- -------- -------- -------- -------- --------- --------- --------- --------------- ---------
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
for the half year ended 30 June 2013
(expressed in thousands of pounds)
Notes 6 months 6 months 12 months
to to to
30/06/14 30/06/13 31/12/13
--------------------------------- ------- --------- --------- ----------
Result for the period before
tax (2,077) (40) (5,000)
from continuing operations
Net finance (income) /
costs (1,017) 1,420 928
Adjustments for:
Depreciation 145 351 444
Unrealised exchange (gains)
/ losses 2,598 (671) 3,267
Movement in share option
reserve - - 61
Change in inventories 43 - 267
Change in trade and other
receivables (1,082) (2,596) (6,467)
Change in trade and other
payables 2,674 6,261 4,558
------------------------------------------ --------- --------- ----------
Cash generated from / (used
in) operations 1,284 4,725 (1,942)
------------------------------------------ --------- --------- ----------
Taxation paid (205) (381) 189
Interest paid (217) (141) (1,271)
Net cash generated from
/ (used in) operations 862 4,203 (3,024)
Cash flows from investing
activities
Purchase of plant and equipment (272) (23,226) (7,944)
Acquisition of subsidiary - (3,976) -
Repayments from / (loans
to) joint venture companies
and subsidiaries (2,728) 972 3,840
Net cash used in investing
activities (3,000) (26,230) (4,104)
------------------------------------------ --------- --------- ----------
Net cash outflow before (2,138) (22,027) (7,128)
financing activities
--------------------------------- ------- --------- --------- ----------
Cash flows from financing
activities
Issue of shares 550 16,560 -
Share issue costs - (166) -
Loan drawdowns 2,010 2,528 4,756
Repayment of loans - - -
Net cash generated from 2,560 18,922 4,756
financing activities
--------------------------------- ------- --------- --------- ----------
(Decrease) / increase in
cash 422 (3,105) (2,372)
and cash equivalents
--------------------------------- ------- --------- --------- ----------
Cash and cash equivalents
at 3,750 6,122 6,122
start of period
--------------------------------- ------- --------- --------- ----------
Cash and cash equivalents
at end of period 4,172 3,017 3,750
RURELEC PLC
Notes to the Interim Statement
for the six months ended 30 June 2013
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 2013 were derived from the statutory accounts for that
year which have been delivered to the Registrar of Companies. Those
accounts were unqualified. 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 2014 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
2013.
3. Earnings per share 6 months 6 months 12 months
to to to
30/6/14 30/6/13 31/12/13
---------- ---------- -----------
Basic and diluted
Average number of shares 561m 451m 495m
in issue during the period
Loss attributable to equity GBP(2.3m) GBP(0.2m) GBP(39.2m)
holders of the parent
from continuing operations
Basic and diluted loss per
share on continuing operations (0.41p) (0.05p) (7.92p)
---------- ---------- -----------
4. Fixed Assets
During the year the Company has continued the construction of
the 5.3MW Canchayllo run-of-river hydro-electric project in Peru
during the first six months of the year. At the time of these
results the construction is nearing completion and the plant will
enter service during the first weeks of the final quarter of the
year.
5. Compensation claim
As detailed in the Annual 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, was not less than GBP47 million and was used for accounting
purposes only and did 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, was $142.3 million and the Arbitration
proceedings were held in April 2013. The increase in the carrying
value of the claim above the GBP47 million was represented by the
costs incurred in preparing and submitting the claim for
compensation to the Permanent Court in The Hague and an accrual for
interest.
On 1(st) February 2014 the Permanent Court of Arbitration
announced the outcome of their deliberations of the Arbitration and
awarded Rurelec US$28.9 million plus interest. On the 2(nd) June
2014 the Group received US$31.5 million from the Government of
Bolivia in full settlement of the arbitration.
6. Birdsong Loan
The loan of US$15.45 million was arranged in July 2012 to
provide additional working capital for the Group's expansion into
Chile and Peru as well as the costs of the Bolivian Arbitration.
The loan plus interest and penalties of US$25.5 million was repaid
from the settlement receipts from the Bolivian Government.
6. Share capital and share premium account
On 15(th) January 2014, the company issued 2,151,094 ordinary
shares at 13.25p per share to assist with the payment for the
transformer to be installed in the Arica plant in northern Chile.
On 3(rd) February 2014, the Company issued 2 million shares at
13.25p per share to assist with the working capital requirements at
that time.
7. The Board of Directors approved this interim statement on
29(th) September 2013. This interim statement has not been
audited.
8. Copies of this statement are being sent to all shareholders.
Copies may be obtained from the Company's registered office, 17(th)
Floor, Millbank Tower, 21 - 24 Millbank, London SW1P 4QP.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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