TIDMRUR
RNS Number : 6333A
Rurelec PLC
30 September 2015
30 September 2015
AIM: RUR
Rurelec PLC
("Rurelec" or "the Company")
Interim results for the six months ended 30 June 2015
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
2015.
Financial Highlights:
-- Turnover GBP620k (2014: GBP252k)
-- Gross Profit GBP487k (2014: GBP145k)
-- Post tax loss GBP14.1 million (2014: GBP1.8 million loss)
-- Loss per share 2.52 pence loss (2014: 0.32 pence loss)
-- Net asset value per share 7.7 pence (2014: 10.4 pence)
Operational and Post Half-Year Highlights:
-- Revenues in the six months came from the running of the newly
commissioned Canchayllo run-of-river hydro plant as well as from
providing engineering services from IPC.
-- GBP14.1 million loss for the period is largely due to
o Provisional write off in Peru of GBP3.8 million
o Write down of investment and Goodwill in IPC of GBP2.7
million
o Impairment of the loans to Argentina of GBP3.9 million
o foreign exchange losses of GBP1.6 million made on the fall in
the value of the Peruvian Nuevo Soles and our recently built
Canchayllo plant as well as the reduction in the value of the
Argentine Peso on our asset in Comodoro Rivadavia
-- Revenues in Argentina still performing well locally with
Argentine Pesos Arg $118 million (2014: Arg $110 million).
-- Two new members of the Board of Directors, Mark Keegan and Simon Morris
-- Peru - Canchayllo plant sale completed in July 2015 for $6.8
million plus $1 million deferred.
-- Chile - two projects (295 MW) still under development.
-- IPC spun out reducing overheads and concentrating the Group business in South America.
Commenting on the results, Colin Emson, Rurelec's Chairman,
said:
"This has not been a satisfactory period for the Company and
after changing the Board of Directors we are looking forward to a
period where we can restore value to the Company and its
shareholders through developments in Argentina and Chile, whilst
pursuing cost savings at the head office in London and the sale of
the Peruvian assets."
For further information please contact:
Rurelec PLC WH Ireland
Colin Emson Paul Shackleton
Chairman and James Bavister
+44 (0)20 7793 +44(0) 20 7220
5610 1666
Chairman's Statement
During the first half of this year, the company has undergone
some material changes including the departure of the CEO and two
other executive directors, with the newly appointed executive board
of directors being Simon Morris FCA and Mark Keegan. Simon Morris
is a chartered accountant and former Chief Operating Officer of
Grant Thornton UK LLP. Mark Keegan was formerly chief executive of
New Hibernia Investments Ltd, and has considerable experience
working in the Republic of Argentina, the location of the Company's
principal asset.
The new executive board is undertaking a comprehensive review of
the Company's history and assets to determine a strategy to
preserve and restore shareholder value, following the long sequence
of unsatisfactory strategies and projects, the culmination of which
was the disastrous settlement following the nationalisation of the
company's plant in Bolivia.
During this time the share price collapsed as a result of the
Bolivian settlement, the inability to raise debt or equity capital,
and the absence of profit; this has created uncertainties which
need to be addressed.
Review of Operations:
In Argentina our 50% owned operating entity, Energia del Sur
S.A., and its parent company, Patagonia Energy Limited, have
outstanding borrowings and interest of GBP30.7m due to the Group.
The company is operating well at the local level however management
costs have been allowed to inflate unnecessarily.
In Peru the Company embarked on a project of high capital
commitment with low returns. The total commitment to date has been
GBP12.6m of which GBP4.2m was recovered from the sale of the first
completed part, leaving GBP8.4m of continued exposure to the Peru
project. Having disposed of the Canchayllo income producing base,
the group now faces a loss on the balance of the project estimated
at GBP3.8m.
In Chile the ongoing project development is being managed by two
executives based in the UK, who, have brought the project to a
point of readiness for financing displaying considerable expertise,
which may enable to Company to recover some value.
In the absence of any qualified industry engineers employed
within the Company has had to rely heavily on outside consultants.
Despite ongoing payments to professionals within the industry and
local management, overheads in London to manage the three remaining
projects remained disproportionately high.
Following the departure of the former executive board in July
measures have been taken to reduce overheads, to revise internal
procedures and to place the remaining assets in a position where
they can be used to recover shareholder value.
Given the progress on the sale of the Group's assets and the
fact that the Directors are pursuing alternative sources of
finance, the directors continue to adopt the going concern basis of
accounting.
Review of future strategy
The future strategy and operations of the Company and the
application of its assets are currently being considered by the
board, which will depend to a degree on the level of realisations
and sources of capital being identified in the coming months.
While the medium term prospects for the Group are reasonable,
the Company is acutely short of cash resources; the board is
confident that the Company will secure short term funding, however
there can be no guarantee of success.
Summary:
This is an extremely difficult time for the Company for the
reasons outlined above. The Relationship Agreement between the
Company, the major shareholder and the former NOMAD prevented
intervention in the Company's operations. It was only at the AGM in
July when shareholders were able to reject the resolutions for the
reappointment of the board without infringing the Relationship
Agreement.
The Directors consider that the coming months will be
challenging but they are determined to repair shareholder value.
They look forward to working closely with employees, advisers,
shareholders, and other stakeholders for a positive and
constructive outcome.
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)
________
Restated
Notes 6 months 6 months 12 months
to to to
30/06/15 30/06/14 31/12/14
GBP'000 GBP'000 GBP'000
--------------------------- ------ --------- --------- ----------
Revenue 620 252 302
Cost of sales (133) (107) (231)
--------------------------- ------ --------- --------- ----------
Gross profit 487 145 72
Administrative
expenses (2,779) (2,235) (4,349)
--------------------------- ------ --------- --------- ----------
Operating (loss) (2,292) (2,090) (4,277)
Foreign exchange
(losses)/gains (1.599) (1,447) 2,180
Other (expense)
/ income 5,6 (10,982) 267 (3,094)
Finance income 1,308 1,948 2,568
Finance expense (563) (481) (312)
--------------------------- ------ --------- --------- ----------
(Loss) before
tax (14,128) (1,804) (2,936)
Tax expense (3) (5) (8)
--------------------------- ------ --------- --------- ----------
(Loss) for the
period (14,131) (1,809) (2,944)
(Loss) per share 3 (2.52)p (0.32)p (0.52)p
--------------------------- ------ --------- --------- ----------
Other comprehensive
income
Items that will
be subsequently
reclassified to
Profit & Loss
Exchange differences
on translation
of foreign operations 831 145 (2,249)
Total other comprehensive
income 831 145 (2,249)
Total comprehensive
(loss) for the
period (13,300) (1,664) (5,193)
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited)
at 30 June 2015
(MORE TO FOLLOW) Dow Jones Newswires
September 30, 2015 02:02 ET (06:02 GMT)
(expressed in thousands of pounds)
Restated
30/6/15 30/6/14 31/12/14
Notes GBP'000 GBP'000 GBP'000
--------------------------- -------- --------- --------- ---------
Assets
Non-current assets
Property, plant
and equipment 21,978 28,149 22,169
Intangible assets 400 1,818 1,321
Trade and other
receivables 22,299 20,734 23,213
Deferred tax assets 0 0 0
--------------------------- -------- --------- --------- ---------
44,677 50,701 46,702
--------------------------- -------- --------- --------- ---------
Current assets
Trade and other
receivables 4,382 17,972 9,601
Cash and cash equivalents 304 4,166 283
--------------------------- -------- --------- --------- ---------
4,686 22,138 9,883
--------------------------- -------- --------- --------- ---------
Assets Classified
as held for sale 4 13,266 0 17,895
--------------------------- -------- --------- --------- ---------
Total assets 62,629 72,839 74,480
--------------------------- -------- --------- --------- ---------
Equity and liabilities
Shareholders' equity
Share capital 11,228 11,228 11,228
Share premium account 22,754 67,836 22,754
Foreign currency
reserve (2,380) (1,849) (3,211)
Share option reserve 147 107 147
Plant reserves 1,050 1,050 1,050
Other reserve 7 45,000 0 45,000
Profit and loss
reserve (34,547) (20,082) (20,426)
--------------------------- -------- --------- --------- ---------
Total equity attributable
to 43,252 58,290 56,541
shareholders of
Rurelec PLC
--------------------------- -------- --------- --------- ---------
Non-controlling
interest 0 127 0
Total equity 43,252 58,417 56,541
Non-current liabilities
Future tax liabilities 0 18 0
Deferred tax liabilities 0 0 0
Borrowings 0 6121 0
--------------------------- -------- --------- --------- ---------
0 6,139 0
--------------------------- -------- --------- --------- ---------
Current liabilities
Trade and other
payables 4,446 5,392 4,423
Current tax liabilities 85 192 70
Borrowings 4,253 2,698 3,164
--------------------------- -------- --------- --------- ---------
8,784 8,282 7,657
--------------------------- -------- --------- --------- ---------
Liabilities Classified
as held for sale 10,593 0 10,282
--------------------------- -------- --------- --------- ---------
Total liabilities 19,377 14,421 17,939
--------------------------- -------- --------- --------- ---------
Total equity and
liabilities 62,629 72,839 74,480
--------------------------- -------- --------- --------- ---------
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)
for the half year ended 30 June 2015
(expressed in thousands of pounds)
Share Share Foreign Share Retained Other Plant Total Non-controlling Total
capital premium currency option earnings reserve reserve GBP'000 interest equity
GBP'000 GBP'000 reserve reserve GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Balance at
01.01.14 11,145 67,369 (962) 107 (17,199) - 1,050 61,510 142 61,652
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Issue of share 83 467 - - - - - 550 - 550
----------------- ----------- ------------ ------------ ----------- ---------- ------------ ---------------- ------------
Non-controlling - - - - - - - - - -
interest
----------------- ------------ ----------- ---------- ------------ ---------------- ------------
Total
transactions
with owners 83 467 - - - - - 550 - 550
----------- ----------- ------------ ----------
Loss for year - - - - (2,282) - - (2,282) - (2,282)
----------------- ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Exchange
differences - - (2,394) - - - - (2,394) - (2,394)
----------- ----------- ---------- ------------ ---------------- ------------
Total
comprehensive
Loss - - (2,394) - (2,282) - - (4,676) - (4,676)
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Original Balance
at 30.06.14 11,228 67,836 (3,356) 107 (19,481) - 1,050 57,384 142 57,526
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Issue of share - - - - - - - - - -
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Share issue
costs - (82) - - - - - (82) - (82)
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Charge for share
options - - 40 - - - 40 - 40
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Transfer to
Other reserve - (45,000) - - - 45,000 - - - -
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Non-controlling
interest
transfer
to Assets for
Sale - - - - 283 - - 283 (142) 141
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Total
transactions
with owners - (45,082) - 40 283 45,000 - 241 (142) 99
----------- ----------- ------------ ----------
Loss for the
Period - - - - (945) - - (945) - (945)
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Exchange
differences 145 145 145
Total
comprehensive
Loss - - 145 - (945) - - (800) - (800)
(MORE TO FOLLOW) Dow Jones Newswires
September 30, 2015 02:02 ET (06:02 GMT)
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Balance at
31.12.14 11,228 22,754 (3,211) 147 (20,143) 45,000 1,050 56,825 - 56,825
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Loss for year - - - - (14,404) - - (14,404) - (14,404)
----------------- ----------- ---------- ------------ ------------ ---------------- ------------
Exchange
differences - - 831 - - - - 831 - 831
---------- ------------ ---------------- ------------
Total
comprehensive
Loss - - 831 - (14,404) - - (13,573) - (13,573)
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
Balance at
30.06.15 11,228 22,754 (2,380) 147 (34,547) 45,000 1,050 43,252 - 43,252
----------------- ----------- ------------ ----------- ---------- ------------ ----------- ---------- ------------ ---------------- ------------
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
for the half year ended 30 June 2015
(expressed in thousands of pounds)
Restated
Notes 6 months 6 months 12 months
to to to
30/06/15 30/06/14 31/12/14
---------------------------- ------- --------- --------- ----------
Result for the period
before tax (14,128) (1,804) (2,936)
from continuing operations
Net finance (income)
/ costs (745) (1,466) (2,255)
Adjustments for:
Depreciation 245 4 12
Unrealised exchange
(gains) / losses 1,599 1,447 (2,180)
Movement in share
option reserve - - 40
Impairment of Goodwill 921 - 691
Impairment Assets 4,940 - -
held for sale
Change in trade and
other receivables 6,131 (465) 5,426
Change in trade and
other payables (24) 2,659 (3,687)
------------------------------------- --------- --------- ----------
Cash generated from
/ (used in) operations (1,062) 375 (4,890)
------------------------------------- --------- --------- ----------
Taxation paid (3) (5) (8)
Interest paid (560) (481) (312)
Net cash generated
from / (used in)
operations (1,625) (112) (5,210)
Cash flows from investing
activities
Purchase of plant
and equipment - (3,030) (5,135)
Settlement of expropriated
assets - 18,863 18,863
Repayments from /
(loans to) joint
venture companies 904 1,441 3,381
Net cash used in
investing activities 904 17,274 17,109
------------------------------------- --------- --------- ----------
Net cash outflow
before (721) 17,162 11,899
financing activities
---------------------------- ------- --------- --------- ----------
Cash flows from financing
activities
Issue of shares - 550 468
Deferred Consideration - - (125)
Loan drawdowns 926 1,583 3,170
Repayment of loans (184) (18,859) (18,859)
Net cash generated
from 742 (16,726) (15,346)
financing activities
---------------------------- ------- --------- --------- ----------
(Decrease) / increase
in cash 21 436 (3,447)
and cash equivalents
---------------------------- ------- --------- --------- ----------
Cash and cash equivalents
at 283 3,730 3,730
start of period
---------------------------- ------- --------- --------- ----------
Cash and cash equivalents
at end of period 304 4,166 283
RURELEC PLC
Notes to the Interim Statement
for the six months ended 30 June 2015
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 2014 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 Reporting Standards as adopted by the
European Union and expected to apply to the Group's results for the
year ending 31 December 2015 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
2014.
3. Earnings per share 6 months Restated 12 months
to 6 months to
to
30/6/15 30/6/14 31/12/14
----------- ---------- ----------
Basic and diluted
Average number of shares 561m 561m 561m
in issue during the
period
Loss attributable to GBP(14.1m) GBP(1.8m) GBP(2.9m)
equity holders of the
parent
from continuing operations
Basic and diluted loss
per share on continuing
operations (2.52p) (0.32p) (0.52p)
----------- ---------- ----------
4. Assets held for Sale
As reported in the December 2014, financial statements the
assets held for sale relate to entities within Peru, which have
been held for sale following the commitment of the Group to
restructure the business. Two disposals have been identified one of
which is the Canchayllo run-of-river hydro plant with the rest of
the assets included within the second group.
The Company completed the construction of the 5.3MW Canchayllo
run-of-river hydro-electric project in Peru during December 2014
and the plant entered commission during January this year. In July
the Company completed the sale of the plant to Energias Renovables
de los Andes SAC for US $6.8 million. In addition a further US $1
million is due to be received by way of reimbursement of amounts
advanced towards the completion of the plant.
At 30(th) June the Group has been in discussions with a number
of potential buyers for the rest of the Group's Peruvian assets and
based on this a provision has been made of GBP3.8 million against
the carrying value of these assets.
5. Spin out of Independent Power Corporation PLC
In June the subsidiary Independent Power Corporation PLC ("IPC")
was spun out from the rest of the Group in an agreement with Peter
Earl the former CEO of Rurelec. The principal assets and
liabilities of IPC have been transferred to Rurelec in addition
GBP500,000 of annual overheads were transferred with this agreement
to IPC. This transaction has caused an impairment of the assets of
the Group to reflect the write off of the investment in IPC of
GBP1.3 million and the balance of GBP1.1 million of goodwill that
arose on the original purchase of the business. This is countered
by the transfer of GBP1.4 million of assets to Rurelec.
6. Impairment of the Loans to Patagonia Energy Limited ("PEL")
and Energia del Sur SA ("EdS")
The Board of Directors have considered the value of the
investment and loans in PEL and EdS which total GBP38.9 million and
have undertaken an impairment review to assess their carrying
value. This exercise has resulted in a GBP3.9 million write down of
the value of the assets due to the deteriorating ability to receive
repayment and servicing of the loans, which has led to a reduction
in the valuation parameters. These parameters are considered by the
Board of Directors at the balance sheet date to have deteriorated
from the assumptions of the Board as at the end of 2014. The
underlying power generating asset in Comodoro Rivadavia is
profitable with US $3.8m EBITDA to 30(th) June 2015, however the
Group's ability to realise value from this asset is severely
restricted with little ability to receive repayment of principal
and interest on the outstanding loans.
7. Other Reserve
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