Rurelec Regulatory News (RUR)

7 June 2013

Rurelec PLC

("Rurelec" or "the Company")

Audited results for the year ended

31st December 2012

Rurelec PLC (AIM: RUR), the electricity utility focused on ownership and operation of power generation plants in Latin America, announces its audited results for the year ended 31 December 2012. The annual report will be posted to shareholders today 7 June 2013.

Highlights

·; Focus of Rurelec on replacing lost capacity with 295 MW of thermal plants under development in Chile, and 255 MW under development in Peru of which 5 MW of Peruvian run of river hydro capacity already under construction and due to reach commercial operation in January 2014.

·; Loss before tax of £2.5 million (2011: profit £1.9 million)

·; Revenues steady at £13.4 million (2011: £13.5 million)

·; Group borrowings of £13.6 million (2011: £1.7 million)

·; Loss per share 0.75p (2011: earnings 0.47p)

·; Net Asset Value per share 19.33p (2011: 20.41p)

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

"Our operations in Argentina continue to show strong cash flow and good operating performance. They have maintained revenue levels and held administrative expenses steady over the past year. Our Group loss is mainly attributable to balance sheet foreign exchange adjustments and provisions for the loss of carbon credit income following the collapse of the CER market.

"While the legal process to recover value for our expropriated assets continued in 2012, we have now laid the foundations of the Group's future growth through the acquisition of development projects in Chile and Peru. We completed the hearings in connection with the Bolivian Claim in April 2013. I am pleased that we will be able to concentrate on delivering new power capacity while we await the final outcome of the arbitration.

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chairman's statement

Chairman's statement

I am pleased to present the results of Rurelec PLC ("Rurelec") for the year ended 31 December 2012. During 2012 Rurelec has refocused itself from purely a power generation ownership company to a power plant developer with the aim of adding new generation capacity over the next 12 months in Chile and Peru to replace the power plants in Bolivia which were nationalised in 2010.

The financial year just ended has seen the Group continue to make steady progress in the operation of its combined cycle power plant in Argentina with revenues at Energia del Sur S.A. ("EdS") increasing and with strong cash flow from operations. The Resolution 220 contract has continued to provide good margin capacity payments determined in US dollars, and this has helped Rurelec protect itself from the overall devaluation of the Argentine peso against the US dollar. However EdS has been adversely affected by the fact that the bulk of its borrowings are denominated in US dollars. This has meant that, in spite of EdS's improved performance including paying down some of the project debt provided by Rurelec in London, we have nonetheless been required to make a provision of £2.4 million against unrealised foreign exchange losses in the Group accounts to reflect this balance sheet mismatch of currencies.

Group Results

Revenue, which currently reflects our 50 per cent. equity interest in EdS, fell slightly in sterling terms to £13.4 million (2011: £13.5 million). However in US dollar terms it rose from US$20.9 million to US$21.5 million.

Operating profit in Argentina, before exchange adjustments fell to £1.9 million (2011: £2.4 million profit) decreasing Group operating profit, after head office costs, to £1.0 million (2011: £1.6 million).

The Group loss after tax for the financial year under review is £3.1 million (2011: £1.8 million profit). Whilst the bulk of the loss can be attributed to the unrealised foreign exchange losses referred to above, the Group figures also include a charge of £0.7 million against the value of carbon credit income which Rurelec had expected EdS to receive from the sale of CERs contracted to multilateral buyers under its emissions reduction purchase agreements ("ERPA") with CAF and KfW. The Group results also include loan arrangement expenses of £0.8 million arising on the US $15.45 million Birdsong loan raised in July 2012 to develop assets in Peru and Chile.

It is therefore a priority for Rurelec in 2013 to restructure the balance sheet of EdS and of its intermediate holding company, Patagonia Energy Limited, in order to reduce the exposure to foreign exchange movements in Argentina as well as to take advantage of the strong EdS cash flow to accelerate the repayment of amounts owed to Rurelec.

EdS Results

At the operating level in Argentina, and therefore based on 100 per cent. of EdS's activities, EdS's revenues decreased in sterling terms to £26.5 million this year (2011: £27.0 million). However, in local currency terms, there was an increase of 6%, with EdS reporting turnover of AR$191 million (2011: AR$180 million). Fuel costs are denominated in US dollars, and as a result gross margin fell slightly from 42% in 2011 to 37% in 2012.

Gross operating profit fell slightly, to £9.7 million (AR$70 million) (2011: £11.2 million/AR$76 million). Exchange losses of £4.2 million (2011: loss of £2.6 million) due to weakness of the Argentine Peso together with a £1.3 million provision against the ERPA with CAF and KfW resulted in a pre-tax loss of £0.7 million (2011: £0.9 million). However, a tax charge, which includes a tax on turnover, of £1.4m (£0.6m) increased the loss to £2.1 million (2011: £1.5 million).

With respect to the exchange losses arising from weakness in the Peso, one factor which should mitigate future losses is the fact that one third of the EdS generating capacity, which currently provides approximately 50 per cent. of its turnover, is based on a US$ denominated contract.

Update on Bolivian Arbitration

Work on the Bolivian arbitration with our legal advisers, Freshfields Bruckhaus Deringer, and with our independent valuation experts, Compass Lexecon, has continued at varying levels throughout the year. Following the lodging of our statement of claim, including the independent expert's valuation of US$142.3 million on 1 March 2012, both the Government of Bolivia and the Company have delivered further statements and rejoinders in the arbitration process. Final papers prior to the court hearing were lodged by the Government of Bolivia in March 2013. The case was heard under the auspices of the Permanent Court of Arbitration in Paris in early April 2013, some two years and eleven months after the nationalisation took place. The Directors are confident that the Company has prepared an excellent case, with the assistance of its advisors, demonstrating a significant loss of value to shareholders as a result of the Government of Bolivia's failure to make a realistic offer of compensation following their actions in 2010. While the Directors are confident that Rurelec will receive a satisfactory level of compensation, the outcome of the case is not a foregone conclusion and so shareholders are advised to follow the case via the PCA website.

Outlook

Rurelec has pursued a number of initiatives over the last year to add new generation capacity for the Group, based on the anticipated monetisation of our expropriated assets in Bolivia. Timing of the receipt of proceeds is uncertain, but the Directors are expecting judgement before the year end. Proceeds will be used to repay the Birdsong loan (due in December 2013) and to expand the business.

Whilst we currently own 100 per cent of the Termonor project at Arica in northern Chile, our intention long term is to hold 50 per cent of this and other Chilean power assets. In Peru, Rurelec currently owns a 70 per cent interest in Cascade Hydropower, a run of river hydro-electric company which is in the process of expanding its portfolio of generating assets under development. As part of its expansion process, Cascade is negotiating a funding deal with a private equity group which will take control of Cascade and provide up to US$60 million of new capital to build out the hydro-electric portfolio over the next four years.

Without increasing our shareholder base, our ability to expand our activities is dependent on securing partners or on receiving the proceeds from the Arbitration Claim. However, we are also considering initiating plans to secure a secondary listing on the Chilean stock market at which time we may also consider a further capital increase to support more aggressive expansion.

Andrew Morris

Chairman

7 June 2013

Chief Executive's Review of Operations

Argentina

The Energia del Sur plant in Comodoro Rivadavia continues to trade as expected. The key areas for concern are inflation and foreign exchange rates in Argentina.

The power plant itself is performing well at the operating level, generating 928 GWh over the year (2011: 827 GWh), an increase in output of just over 12 per cent. This increase in generation was offset in revenue terms by the cancellation by the Ministry of Energy of the generators agreement which was in force between 2008 and 2011and this action has reduced capacity payments from AR$35 per MWh to AR$12 per MWh, as forewarned in last year's report. The impact of this change can be seen clearly in the fall of the average price of electricity in Peso terms from AR$210.2 in 2011 to AR$206.4 this year, in spite of the increase in Res 220 revenues in Peso terms. Gross margin this year is now 37 per cent. against last year's figure of 42 per cent. In spite of the reduction in spot sales margin, overall, operating margin (which excludes unrealised foreign exchange losses) fell only slightly, to 15 per cent. (2011: 17 per cent.) as the Peso devaluation and the increased output mitigated the reduction in Peso revenues. Although inflation in Argentina remains high, EdS saw only a small increase in administrative expenses in Peso terms, which on translation into sterling show up as a reduction due to currency depreciation.

Although the majority of output is sold in the Spot market, which caps prices to enable the company to recover the actual cost of generation (including US$ denominated regulated fuel expense), approximately one third of our output earns 50 per cent. of revenues under a US$ contract. Even so, EdS suffers foreign exchange losses based on its US$ borrowings and the apparent drop in value of its local assets as they are carried in Pesos, which this year amounted to a charge of a little over £4m (£2m in the Group accounts). In fact, as explained above, the Res 220 contract effectively matches our US$ borrowings with our US$ revenues.

CERs

In December 2009 EdS executed two emissions reductions purchase agreements one with CAF and the other with KfW, agreeing to sell all the CERs generated by the company at an average price of approximately €11 per CER. EdS delivered a total of 166,757 CERs by the end of 2012. A further 126,057 are due for delivery prior to expiry of the ERPA contract. The resulting shortfall of 182,186 CERs against the contract has been provided against in the current year. The complex arrangements for accrediting and delivering CERs delayed the verification process and it was only in 2012 that the magnitude of the shortfall became clear.

The failure of successive international climate change summits to agree a replacement for the Kyoto Protocol, together with the recent actions by MEPs in voting down the proposed modifications to the EU Trading Arrangements, has decimated the CER market. As a result, EdS does not expect to make significant revenue from post 2012 CER sales.

2013

On 15 March the Secretary of Energy of Argentina announced increases in payments to generators participating in the spot market which are to be subsidised by the National Government, effective February 2013. The aggregate increase applicable to EdS's spot energy rates is AR$32 per MWh due to start flowing in May. At the time of the announcement it was noted that certain implementation issues needed to be resolved and, although there has been a delay in receiving the incremental cashflow arising from the announced increases, it is now expected to start through in June.

Chile

Arica

As announced on 4th October 2012, Rurelec's Termonor subsidiary received the final government land zoning authorisations in Arica, a port town in the north of Chile that handles the bulk of Bolivia's maritime trade as well as exporting minerals mined in the vicinity. These permits are the final precursor to construction of the 40 MW Parinacota gas turbine plant, which is expected to dispatch peaking power into the northern transmission system in Chile. Termonor, currently wholly-owned by Rurelec's Chilean intermediate holding company, has signed an Engineering, Procurement and Construction ("EPC") contract with Energy Contact of Canada, its prime contractor, for the refurbishment and installation of a General Electric 6B gas turbine. The capital cost of the plant is US$16.5 million, with an initial commitment of US$6 million pending initiation of the civil works. The turbine was delivered to the Port of Arica in April, and the instruction to commence construction will be issued once the balance of funding is in place. Construction will take approximately10 months.

It remains Rurelec's intention to own, in partnership with Chilean investors, an eventual fifty per cent interest in Termonor. Northern Chile is regarded by the Rurelec Board as the most attractive power market in Latin America, and the Arica project's economics have improved considerably over the last year. As a result of a sharp increase in forecast electricity demand in the very north of Chile, the Arica power plant capacity is expected to be increased in due course from the initial configuration of 40 MW, rising to between 80 and 120 MW in a design similar to Rurelec's Comodoro Rivadavia plant in Argentina which uses the same 6B gas turbine as Arica.

Central Illapa

Following the acquisition of a 50 per cent interest in Central Illapa SA, a Chilean project company developing a 250 MW open cycle gas fired peaking plant in Mejillones, one of the key power hubs on the SING system of the Chilean power grid from Independent Power Corporation PLC ("IPC"), Rurelec's Chilean intermediate holding company acquired the balance of shares from former development partner Invener S.A.. Prior to Rurelec acquiring Illapa, a substantial amount of work had been undertaken by IPC and Invener to prepare a bankable project financing, but they were unable to conclude the process due to delays in the permitting process. The environmental approval for the plant, based on two Fiat Avio TG50 DS units, was announced on 9 May 2013. Through its interest in Central Illapa, Rurelec was able to participate in a tender to supply 500 MW of power, based on a new, high efficiency liquefied natural gas ("LNG") fired combined cycle gas turbine ("CCGT") plant, to the operations of a large international mining group in northern Chile. Whilst the bid was not selected, the tender has yet to be awarded and Rurelec is in discussions with substantial industry partners to construct, own and operate this plant in tandem with the Illapa peaking plant.

Rurelec and IPC have together been short-listed for a further 500 MW CCGT project to be constructed in northern Chile also to run on LNG with capacity to be contracted to another mining group. The PPA proposals are scheduled to be adjudicated in the second or third quarters of 2013.

Rurelec acquired the shares in Central Illapa for zero premium and will reimburse a portion of IPC's third party project costs to the date of acquisition. IPC will continue to provide services to augment Rurelec's development efforts for which it will be reimbursed at cost. In addition, at financial close of each project, Rurelec will pay IPC development fees. The level of fee for each of the projects was agreed following an external appraisal of relevant fee scales commissioned by the Independent Directors of Rurelec.

It remains Rurelec's target to own 50 per cent of over 1,250 MW of new Clean Tech generation capacity in Chile in the coming years and to obtain a quotation on the Santiago Stock Exchange.

Peru

In 2012 Rurelec acquired its first projects in hydro-electric power generation in Peru with the acquisition of the 255 MW run-of-river Santa Rita project and the portfolio of small hydro projects which is owned by Rurelec's subsidiary, Cascade Hydro Limited ("Cascade"). Canchayllo, the first Cascade project, has secured a US$7.2 million financing agreement with IIC, a financing arm of the Inter-American Development Bank. Construction of the project has now begun and the plant size has been increased to just over 5 MW at a total cost of US$11 million. Mechanical completion is now expected at the end of 2013 with an in service date of early 2014.

The financing of the Canchayllo project has acted as the catalyst for a substantial private equity capital raising effort for Cascade. The increase in capital will dilute Rurelec's shareholding below the current 70 per cent interest in Cascade, a company with a strong management team that is expected to build up a substantial portfolio of hydro plants in Peru.

Bolivia

The Guaracachi arbitration process remains on course and the hearing under the auspices of the Permanent Court of Arbitration ("the PCA") took place at the International Chamber of Commerce Paris in April of this year. Final submissions will be made shortly. The parties' filings may be viewed at the PCA website http://www.pca-cpa.org/, in accordance with the agreement on full transparency reached with Bolivia's Attorney General. We must now await the conclusions of the Tribunal.

Bangladesh

While Rurelec is focused on Latin America, the Company has nonetheless sought to capitalise on its track record of building and owning CCGT power plants at a time when other companies put their expansion plans on hold as a result of the difficulties arising from the global banking crisis. Rurelec has successfully used its experience and skills in operating thermal plants in Argentina and Bolivia to sponsor projects outside of the Americas. As a result, a Rurelec sponsored project of 108 MW in Chittagong in partnership with Energypac Confidence Power Ventures ("ECVP") has recently achieved financial close with a group of prominent local Bangladeshi banks supported by regional multilaterals. The plant is now under construction and is expected to achieve mechanical completion in August.

Rurelec is hoping to develop a follow-on CCGT project of some 400 to 500 MW in Bangladesh operating on LNG as a clone of the two LNG projects which it is now pursuing in Chile based on the original engineering and feasibility work completed by IPC.

Peter R S Earl

Chief Executive

7 June 2013

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2012

CONSOLIDATED STATEMENT OFCOMPREHENSIVE INCOME

for the year ended 31 December 2012

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

for the year ended 31 December 2012

The financial statements were approved by the Board of Directors on 7 June, 2013 and were signed on its behalf by P. Earl (Chief Executive) and E. Shaw (Finance Director).

PARENT COMPANY STATEMENT OF FINANCIAL POSITION

for the year ended 31 December 2012

The financial statements were approved by the Board of Directors on 7 June, 2013 and were signed on its behalf by P. Earl (Chief Executive) and E. Shaw (Finance Director).

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2012

COMPANY STATEMENT OF CASH FLOWS

for the year ended 31 December 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2012

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2012

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 December 2012

1 General information, basis of preparation and new accounting standards

1a General information

Rurelec PLC is the Group's ultimate parent company. It is incorporated and domiciled in England and Wales. The address of Rurelec's registered office is given on the information page. Rurelec's shares are traded on the AIM market of the London Stock Exchange PLC.

The nature of the Group's operations and its principal activities are the generation of electricity in South America.

1b Basis of preparation, including going concern

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2012 or 2011 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report except for an emphasis of matter in relation to the uncertain outcome of the parent company's ability to recover the compensation of £51.5m for the nationalisation of Guaracachi as further discussed in note 19 and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006

As set out in the Chairman's statement, the Company is expecting to receive a significant level of compensation from the Bolivian Government under the claim in respect of the nationalisation of Guaracachi, The directors have been advised by their lawyers that a decision by the Permanent Court of Arbitration is expected to be given before the end of October which will mean that even if actual settlement of the award is not made until after 31 December 2013, being the date that the loan of $15.45 million plus interest (see note 25) falls due for repayment, the Company will none-the-less be in a strong position to either extend the loan or obtain replacement funding. The Company is also considering alternative funding options, including listing on the Chilean Stock market and raising of equity capital in South America. Accordingly, the directors have concluded that the Company will be able to meet the repayment terms of the $15.45 million loan and for this reason continue to adopt the going concern basis for the preparation of these financial statements

1c New accounting standards

At the date of authorisation of these financial statements certain new standards, amendments and interpretations to existing standards have been published but are not yet effective. The Group has not early adopted any of these pronouncements. The new Standards, amendments and Interpretations that are expected to be relevant to the Group's financial statements are as follows:

Applicable for financial

Standard/interpretation Content years beginning on/after

IFRS 9 Financial instruments: Classification and measurement 1 January, 2015

IFRS 10 Consolidated Financial Statements 1 January, 2014

IFRS 11 Joint Arrangements 1 January, 2014

IFRS 12* Disclosure of Interests in Other Entities 1 January, 2014

IFRS 13* Fair Value Measurement 1 January, 2013

IAS 19 (Revised June 2011)* Employee Benefits 1 January, 2013

IAS 28 (Revised)* Investments in Associates and Joint Ventures 1 January, 2014

Amendments to IFRS 7* Disclosures - Transfers of Financial Assets and Offsetting Financial

Assets and Financial Liabilities - 1 July, 2011

Amendments to IAS 12* Deferred Tax: Recovery of Underlying Assets 1 January, 2012

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income 1 July, 2012

Amendments to IAS 32* Offsetting Financial Assets and Financial Liabilities - 1 January, 2014

*Not expected to have a material impact on the Group.

IFRS 9, 'Financial instruments: Classification and measurement'

In November 2009, the Board issued the first part of IFRS 9 relating to the classification and measurement of financial assets. IFRS 9 will ultimately replace IAS 39. The standard requires an entity to classify its financial assets on the basis of the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, and subsequently measures the financial assets as either at amortised cost or fair value. The new standard is mandatory for annual periods beginning on or after 1 January, 2015.

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the portion of IAS 27 'Consolidated and Separate Financial Statements' that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 'Consolidation - Special Purpose Entities'. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in IAS 27. This standard becomes effective for annual periods beginning on or after 1 January, 2014.

IFRS 11 Joint Arrangements

IFRS 11 supersedes IAS 31 'Interests in Joint Ventures' (IAS 31). It aligns more closely the accounting by the investors with their rights and obligations relating to the joint arrangement. In addition, IAS 31's option of using proportionate consolidation for joint ventures has been eliminated. IFRS 11 now requires the use of the equity accounting method, which is currently used for investments in associates. As at 31 December 2012 the Group's only joint arrangement within the scope of IFRS 11 is its 50% investment in Patagonia Energy Ltd which owns Energia del Sur S.A. in Argentina (see note 26). The Group currently accounts for this investment using the proportionate consolidation method. From next year it is expected that this investment will instead be accounted for using the equity method. The investment and share of the joint venture's profit or loss will then be presented as single line items (equity accounted investments) with a consequent reduction in other line items currently affected by proportionate consolidation. Management does not anticipate any material impact on the Group's net assets or results.

Amendments to IAS 1 Presentation of Financial Statements (IAS 1 Amendments)

The IAS 1 Amendments require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will not be reclassified subsequently to profit or loss and (b) will be reclassified subsequently to profit or loss when specific conditions are met. It is applicable for annual periods beginning on or after 1 July, 2012. The Group's management expects this will change the current presentation of items in other comprehensive income; however, it will not affect the measurement or recognition of such items.

The Directors do not anticipate that the adoption of these standards and interpretations in future periods will have any material impact on the financial statements of the Group.

2 Summary of significant accounting policies

2.1 Basis of consolidation

The Group financial statements consolidate the results of the Company, its 50 per cent. interest in EdS, its 100% interest of entities in Chile and its 70% interest of entities in Peru.

Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Joint ventures are arrangements in which the Group has a long-term interest and shares control under a written contractual agreement. The Group reports its interests in jointly controlled entities using proportionate consolidation such that the Group's share of the assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line by line basis.

Goodwill, or the excess of interest in acquired assets, liabilities and contingent liabilities over cost, arising on the acquisition of the Group's interest in subsidiary or jointly controlled entities is accounted for in accordance with the Group's accounting policy for goodwill arising on the acquisition of a subsidiary.

Unrealised gains on transactions between the Group and subsidiary and joint venture entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiary and joint venture entities have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries and joint venture entities are dealt with by the acquisition method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the acquired company, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the entity prior to acquisition. On initial recognition, the assets and liabilities of the acquired entity are included in the consolidated statement of financial position at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group's accounting policies. Investments in subsidiaries and joint ventures are stated at cost in the balance sheet of the Company.

2.2 Goodwill

Goodwill representing the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is capitalised and reviewed annually for impairment. Goodwill is stated after separating out identifiable assets and liabilities. Goodwill is carried at cost less accumulated impairment losses. Any excess of interest in acquired assets, liabilities and contingent liabilities over cost ("negative goodwill") is recognised immediately after acquisition through the income statement.

2.3 Foreign currency translation

The financial information is presented in pounds sterling, which is also the functional currency of the parent company.

In the separate financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions ("spot exchange rate"). Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of remaining balances at year-end exchange rates are recognised in the income statement within 'other expense'.

In the consolidated financial statements, all separate financial statements of subsidiary and jointly controlled entities, originally presented in a currency different from the Group's presentation currency, have been converted into sterling. Assets and liabilities have been translated into sterling at the closing rate at the balance sheet date. Income and expenses have been converted into sterling at the average rates over the reporting period. Any differences arising from this procedure have been recognised in other comprehensive income and accumulated in the Foreign Currency Reserve.

2.4 Income and expense recognition

Revenue represents amounts receivable for goods or services provided in the normal course of business, net of trade discounts, VAT and other sales-related taxes, and excluding transactions with or between Group companies. Revenues from the sale of electricity are recorded based upon output delivered at rates specified under contract terms or prevailing market rates as applicable. Revenue is recognised on the supply of electricity when a contract exists and supply has taken place. Revenue received for keeping power plants operating and available for despatch into the grid as required is recognised on a straight-line basis over the contractual period. During the year under review and the prior year, no revenues were derived from the sale of equipment purchased with a view to subsequent resale

Operating expenses are recognised in the income statement upon utilisation of the service or at the date of their origin. All other income and expenses are reported on an accrual basis.

2.5 Dividends

Dividends paid/receivable are recognised on a cash paid/cash received basis. No dividends were paid or received during the year (2011: nil).

2.6 Borrowing costs

All borrowing costs are expensed as incurred except where the costs are directly attributable to specific construction projects, in which case the interest cost is capitalised as part of those assets.

2.7 Property, plant and equipment

Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment. No depreciation is charged during the period of construction.

All operational buildings and plant and equipment in the course of construction are recorded as plant under construction until such time as they are brought into use by the Group. Plant under construction includes all direct expenditure and may include capitalised interest in accordance with the accounting policy on that subject. On completion, such assets are transferred to the appropriate asset category.

Repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The cost of major renovations and overhauls is included in the carrying amount of the assets where it is probable that the economic life of the asset is significantly enhanced as a consequence of the work. Major renovations and overhauls are depreciated over the expected remaining useful life of the work.

Depreciation is calculated to write down the cost less estimated residual value of all property, plant and equipment other than freehold land by equal annual instalments over their estimated useful economic lives. The periods generally applicable are:

Buildings 25 to 50 years

Plant and equipment 3 to 15 years

Material residual values are updated as required, but at least annually. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

2.8 Impairment of tangible and intangible assets

At each reporting date, the Group reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the income statement.

2.9 Taxation

Current income tax assets and liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the period. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement or through the statement of changes in equity.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, in accordance with the rules set out in IAS 12, no deferred taxes are recognised in respect of non-tax deductible goodwill. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided for in full with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided that they are enacted or substantially enacted at the reporting date.

Deferred tax is provided on differences between the fair value of assets and liabilities acquired in an acquisition and the carrying value of the assets and liabilities of the acquired entity and on the differences relating to investments in subsidiary and joint venture companies if the difference is a temporary difference and is expected to reverse in the foreseeable future.

Changes in deferred tax assets and liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

2.10 Financial assets

The Group's financial assets include cash and cash equivalents, loans and receivables.

Cash and cash equivalents include cash at bank and in hand as well as short term highly liquid investments such as bank deposits.

Loans and receivables are non-derivative financial assets with fixed or determinable payment dates that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. Receivables are measured initially at fair value and subsequently re-measured at amortised cost using the effective interest method, less provision for impairment. Any impairment is recognised in the income statement.

Trade receivables are provided against when objective evidence is received that the Group will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated cash flows.

2.11 Financial liabilities

Financial liabilities are obligations to pay cash or other financial instruments and are recognised when the Group becomes a party to the contractual provisions of the instrument. All transaction costs are recognised immediately in the income statement.

A financial liability is derecognised only when the obligation is extinguished, that is when the obligation is discharged, cancelled or expires.

Bank and other loans are raised for support of long-term funding of the Group's operations. They are recognised initially at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method. Finance charges, including premiums payable on settlement or redemption, and direct issue costs are charged to the income statement on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

2.12 Inventories

Inventories comprise spare parts and similar items for use in the Group's plant and equipment. Inventories are valued at the lower of cost and net realisable value on a first in, first out basis.

2.13 CERs

CERs (Carbon Emission Reduction credits) are recognised at fair value on acquisition of a subsidiary, associate or joint venture company and are revalued by reference to an active market at each balance sheet date. A liability is recognised in respect of any payments received for CERs in advance of their generation. CERs arising subsequent to an acquisition are credited to the revenue in the period that they are generated.

2.14 Shareholders' equity

Equity attributable to the shareholders of the parent company comprises the following:

"Share capital" represents the nominal value of equity shares.

"Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of

expenses of the share issue.

"Foreign currency reserve" represents the differences arising from translation of investments in overseas subsidiaries.

"Share option reserve" represents the fair value of options granted and outstanding at the year-end.

"Retained earnings" represents retained profits.

"Other reserves" comprises unrealised revaluations of plant and machinery.

2.15 Pensions

During the year under review, the Group did not operate or contribute to any pension schemes (2011: nil).

2.16 Segment reporting

In identifying its operating segments, management follows the Group's geographic locations. The activities undertaken by segments are the generation of electricity in their country of incorporation within South America.

Each of the operating segments is managed separately as the rules and regulations vary from country to country.

The measurement policies used by the Group for segment reporting under IFRS 8 are the same as those used in the financial statements.

3 Key assumptions and estimates

When preparing the financial statement, management make a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities income and expenses. The actual results may differ from the judgements, estimates and assumptions made and will seldom equal the estimated results. The areas which management consider are likely to be most affected by the significant judgements, estimates and assumptions on recognition and measurement of assets, liabilities, income and expenses are:

a) Useful lives of depreciable assets - management review, with the assistance of external expert valuers, the useful lives of depreciable assets at each reporting date. This review includes consideration of the book value of plant under construction which at the year-end amounted to £3.1 million. Actual results, however, may vary due to changes in technology and industry practices.

b) Impairment - management review tangible and intangible assets at each balance sheet date to determine whether there is any indication that those assets have suffered an impairment loss. This review process includes making assumptions about future events, circumstances and operating results. The actual results may vary from those expected and could therefore cause significant adjustments to the carrying value of the Group's assets. Details of the assumptions underlying management's forecasts for the Group's main Cash Generating Unit ("CGU") are set out in note 15.

c) Deferred tax assets and liabilities - there exists an element of uncertainty regarding both the timing of the reversing of timing differences and the tax rate which will be applicable when the reversing of the asset or liability occurs.

d) Asset acquisitions - where the Group acquires assets or a company which is not considered to be a business as defined by IFRS 3, the transaction is accounted for as an asset acquisition and not a business combination.

e) The compensation claim is judged to be an asset due to the fact that an inflow of future economic benefit is virtually certain in accordance with the Bilateral Investment Treaties. The compensation asset is measured at cost (plus legal fees and interest) because, although a successful claim is virtually certain, management cannot reliably determine the fair value of these cash flows as there is a significant variability in the range of possible outcomes. Accordingly, and by analogous reference to IAS 39, the asset is recorded at cost.

4 Segment analysis

Management currently identifies the Group's four geographic operating segments; Argentina, Chile, Peru and the head office in the UK, as operating segments as further described in the accounting policy note. These operating segments are monitored and strategic decisions are made on the basis of segment operating results.

The following tables provide an analysis of the operating results, total assets and liabilities, capital expenditure and depreciation for 2012 and 2011 for each geographic segment. The main customer (accounting for over 90 per cent. of revenues) in Argentina is a body which is subject to supervision by the Government electricity regulator. The table also includes the book value of the net assets of Guaracachi in Bolivia (see note 19).

5 Exchange rate sensitivity analysis

The key exchange rates applicable to the results were as follows:

If the exchange rate of sterling at 31 December 2012 had been stronger or weaker by 10 per cent. with all other variables held constant, shareholder equity at 31 December 2012 would have been £1.5 million (2011: £2.0 million) lower or higher than reported.

If the average exchange rate of sterling during 2012 had been stronger or weaker by 10 per cent. with all other variables held constant, the profit for the year, would have been £0.2 million (2011: £0.2 million) higher or lower than reported.

6 Cost of sales

7 Administrative expenses

1 Audit and non-audit services include £34,000 paid to the auditors for the audit of the Company and the Group financial statements and £6,000 paid to the Company's auditors for non-audit professional services provided to the Company in connection with the review of overseas activities. Fees paid to other auditors, in respect of the audit of joint venture companies, amounted to £20,000 (2011: £20,000).

8 Employee costs

c) Directors' remuneration, including social security costs

The total remuneration paid to the Directors was £292,000 (2011: £322,000). The total remuneration of the highest paid Director was £107,000 (2011: £99,000).

9 OTHER EXPENSE

1 In 2009, EdS contracted to sell Carbon Emission Reduction (CER) credits over a 4 year period 2009 to 2012. The number of CERs actually generated was less than the original forecast and the £670,000 charge in the current year represents the adjustment arising from this reduction.

2 Loan arrangement fees relate to the arrangement fees charged in connection with the US$15.45m set out in note 25.

3 Foreign exchange losses have arisen in Argentina on US$ denominated loans and in the UK on US$ denominated receivables.

10 Finance income and (expense)

1 Inter-group interest arises on loans by the Company to its 50 per cent. owned joint venture companies (PEL and EdS). The loans by the Company to PEL and EdS exceed the loans of the other 50 per cent. shareholder by £14.4 million (2011: £14.2 million). Interest on inter-group loans has been charged at rates of between 8 per cent. and 12 per cent.

2 The settlement of the Bolivian claim will include interest on the settlement from 1st May 2010, being the date that the assets were nationalised, up to the payment date. The treaties under which the claim has been brought do not specify the applicable rate of interest. The expert valuation report included interest at the rate of 10.634 per cent. from the date on Nationalisation. However, for the purpose of these financial statements, a rate of 1.43 per cent. has been applied, backdated to 1st May 2010, which represents a conservative rate derived from the rates available on US Government Treasury Bonds and Bolivian Bonds.

3 Interest paid/payable includes £578,000 accrued on the $15.45 million loan referred to in note 25 at a rate of 12 per cent. per annum, plus a sum of £1.86 million which has been accrued as an estimate of the portion of the proceeds from the Bolivian claim to which the provider of the loan will be entitled. This figure of £1.86 million represents 10 per cent. of the book carrying value of the claim (£51.5 million). Both are based on estimated future cash flows and discounted using the loan's original effective interest rate, being the effective interest method.

Sensitivity analysis arising from changes in borrowing costs is set out in note 25.

11 Tax expense

The relationship between the expected tax expense at the basic rate of 24 per cent. (31 December 2011: 26 per cent.) and the tax expense actually recognised in the income statement can be reconciled as follows:

12 Earnings per share

Basic loss per share is calculated by dividing the loss for the period attributable to shareholders by the weighted average number of shares in issue during the period.

There is no difference between the Basic and Diluted loss per share as there was a loss in the year and therefore the outstanding options were anti-dilutive.

13 Holding company's result for the year

As permitted by Section 408 of the Companies Act 2006, the holding company's income statement is not shown separately in the financial statements. The loss for the year was £0.6 million (2011: profit £3.4 million).

14 Property, plant and equipment

Operating property, plant and equipment is located in Argentina. The value of property, plant and equipment recognised upon the initial acquisition of 50 per cent. of EdS in Argentina in 2005 was £4.2 million. This amount included a negative fair value adjustment of £0.5 million resulting from a professional valuation carried out at the date of the acquisition. The value of property, plant and equipment recognised upon the acquisition of the remaining 50 per cent. of EdS in June 2008 was £19.7 million. This included a positive fair value adjustment of £5.0 million based on the Directors' estimate of the fair value of the plant under construction. Following the sale of 50 per cent. of EdS in June 2009, the fair value adjustment of £5.0 million was been reduced to £2.5 million.

Plant under construction comprises plant in Chile (£2.2 million) and Peru (£0.9 million).

b) Company - The Company had no property, plant and equipment.

15 Intangible assets

Goodwill represents the difference between the Group's share of the fair value of the net identifiable assets acquired and the consideration transferred on the acquisition of 50 per cent. of PEL in June 2008.

The Group tests goodwill and other intangible assets annually or more frequently if there are indications that the intangible asset might be impaired. The recoverable amounts are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the future cash flows (for a period of 5 years) which are based on the most recent financial projections prepared for each Cash Generating Unit ("CGU"). The projections incorporate management's assumptions regarding revenue volumes, revenue prices, operating costs, including gas and forecast growth and are based on historical experience and current information. A long term discount rate, derived from market data on comparable interest rates in the local markets in which the Group operates, is then applied to the projected future cash flows. The equity discount rate applied is 14 per cent (2011 - 15 per cent).

The following specific assumptions in respect of the Group's main CGU in Argentina include:

a) Resolution by no later than 2018 of the current foreign currency issues in Argentina which presently restrict the outflow of certain types of debt

b) No adverse change in the gas price relative to the Government's set price tariff

c) Existing contracts run their expected life and are renewed on terms no less favourable than the existing terms

d) Operating costs remain stable

e) No major plant disruptions occur

f) Maintenance expenditure remains in line with past experience

g) Any period over and above the forecast period of 5 years assumes nil growth other than that applicable to inflation.

16 Trade and other receivables

1 Non-current trade receivables includes £211,000 (2011: £37,000) of retentions by the Electricity Regulator in Argentina (which is expected to be either released or contributed towards ongoing capital projects) and £345,000 (2011: £337,000) of trade receivables which are not expected to be received within the next 12 months.

2 Amounts due from joint venture companies represent the excess of the amounts lent by the Company, in excess of the amounts lent by the other 50 per cent. shareholder, to PEL and EdS, including credit support provided to suppliers of EdS. Interest on these amounts has been accrued at rates of between 8 per cent. and 12 per cent. per annum.

3 Other receivables comprise £379,000 (2011: £553,000) of income tax paid by EdS which is expected to be recovered as an offset against future profits.

Other receivables and prepayments includes £894,000 of VAT recoverable in Peru.

The amounts owed by subsidiary companies include:

1 Loan of £0.3 million (2011 - £20.9 million) which is supported by the Group's investment in Bolivia and which the Directors consider will be recovered in full as part of the compensation claim against the Bolivian Government. This loan is non-interest bearing, unsecured and payable on demand and although the Directors expect the compensation to be settled within the next 12 months, this loan continues to be shown as 'non-current'. At 31 December 2011, amounts due by subsidiary companies included £20.6 million due from Birdsong Overseas Ltd which owned, through intermediate holding companies, the Group's 50.00125% investment in Guaracachi. This loan was converted into share capital in Birdsong Overseas Limited during 2012.

2 Loans to subsidiaries in Chile (£1.7 million) and Peru (£3.2 million) are repayable on demand. The loans to Chile are currently non-interest bearing. The loans to Peru bear interest at rates of between 5 per cent and 12 per cent.

3The amounts owed by joint venture companies are interest bearing at rates of between 8 per cent. and 12 per cent. and are repayable on demand but are not expected to be fully received within the next twelve months. £10.7 million (2011 - £11.2 million) is secured by a first charge against the assets of EdS.

4The Bolivian arbitration costs represent legal and professional expenses incurred in preparing and submitting the claim for compensation to the Permanent Court of Arbitration in The Hague.

All trade and other receivables are unsecured, with the exception of the £10.7 million referred to in 16c above, and are not past their due by dates. The fair values of receivables are not materially different to the carrying values shown above.

17 Deferred tax

The Group deferred tax asset arises principally from tax losses carried forward in Argentina.

The Group deferred tax liability arises from deferred tax provisions on the fair value adjustments arising on the acquisition of 50 per cent. of PEL.

18 Inventories

Spare parts and consumables are valued at cost.

19 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 declared but unpaid dividend for 2009, is not less than £47.0 million and has been used for accounting purposes only and does not represent fair market value of the investment to be claimed under Bilateral Investment Treaties. The actual amount claimed, as submitted to the Permanent Court of Arbitration in The Hague, is $142.3 million. The increase in the year from £48.0 million to £51.5 million represents a) legal and professional fees of £1.7 million incurred during the year in preparing and submitting the claim for compensation to the Permanent Court of Arbitration in The Hague and b) an accrual of £1.8 million for interest which is expected to be received on the settlement (see note 102).

20 Cash and cash equivalents

Cash and short-term bank deposits are held, where the balance is material, in interest bearing bank accounts, accessible at between 1 and 30 days' notice. The effective average interest rate is less than 1 per cent. The Group holds cash balances to meet its day-to-day requirements. Included within the Group and the Company's balance at 31 December 2012 is $2.15 million of cash held in a blocked account pending payment of a deposit on plant being shipped to Chile.

21 Share capital

Reconciliation of movement in share capital

The allotment in March 2011 was at 9 pence per share. The difference between the total consideration arising from shares issued and the nominal value of the shares issued has been credited to the share premium account. Costs associated with allotments are debited to the share premium account.

22 SHARE OPTION RESERVE

In March 2012, the Company introduced a share option plan and granted options over 19,525,000 shares at 9.5p per share. Of these options, 3,875,000 were exercisable from the date of grant. The remaining 15,650,000 shares vest in three equal tranches in March 2013, March 2014 and March 2015 and are subject to performance targets.

The Black-Scholes option pricing model has been used to calculate the fair value of options granted during the year. Expected volatility in the share price has been based on 20 per cent.

All of the options granted to directors vest in the three equal tranches and are subject to performance criteria, as referred to above.

Options granted to the directors which were outstanding at the year-end:

No options were exercised during the year and the total number of options outstanding at the year-end was 19,525,000.

23 Trade and other payables

24 Tax liabilities

This liability for tax due in Argentina relates to an agreement reached with the tax authorities in 2009 in respect of a claim for tax on the capitalisation of a loan in earlier years before the Group had an interest in EdS which has been deemed taxable by the tax authorities. The tax is payable in equal quarterly instalments with the final instalment due in August 2019. The total liability outstanding at 31 December 2012 was £263,000 (2011: £360,000). In 2011, the current portion of the liability (£54,000) was included within note 23.

25 Borrowings

1 CAMMESA, the Argentine wholesale market administrator, has advanced funds to EdS to support capital expenditure. The loan bears interest at 7 per cent. per annum. The loan is repayable in instalments with the final repayment due in July 2016.

2 Other loans comprise a loan of $15.45 million, plus accrued interest, to Birdsong Overseas Limited, a wholly owned subsidiary of Rurelec PLC and, through intermediary holding companies, owner of the shares in Empresa Electrica Guaracachi S.A. The loan was arranged in July 2012 in order to provide additional working capital for the Group's expansion in Chile and Peru and the costs of the Bolivian litigation. The loan is repayable by 31 December 2013 and is secured by a first charge on the proceeds from the Bolivian Arbitration claim and the assets of Birdsong Overseas Limited. Under the terms of the loan, the loan provider is entitled to a portion of the proceeds recovered in relation to the final settlement of, or award, in connection with the Bolivian arbitration. The portion of the proceeds payable to the loan provider is dependent upon a number of variables, including the length of time to recover such proceeds and the quantum of the proceeds. The minimum amount payable is 10 per cent. of the proceeds recovered and based on the carrying value of the claim (see note 19), the portion of the proceeds which the lender will be entitled to receive amounts £5.1 million and accordingly a sum of £1.86 million has been accrued at 31 December 2012, representing amortisation of the sum of £5.1m over the expected life of the loan. Interest on the loan is payable at 12 per cent. per annum.

Sensitivity analysis to changes in interest rates:

If interest rates on the Group's borrowings during the year had been 0.5 per cent. higher or lower with all other variables held constant, the interest expense and pre-tax profits would have been £68,000 lower or higher than reported.

Sensitivity analysis to changes in exchange rates:

The Group's external borrowings are denominated in AR$ and US$. As a result, the liability to the Group's lenders will change as exchange rates change. The Group's borrowings are substantially related to specific electricity generating assets and therefore the effect on the net equity of the Group is limited. The overall effect on the Group's net equity which would arise from changes in exchange rates is set out in note 5 above.

The effect on borrowings alone if exchange rates weakened or strengthened by 10 per cent. with all other variables held constant would be to reduce or increase the value of the Group's borrowings and equity by £1.2 million (2011: £0.2 million).

26 Investments

At the year-end, the Company held the following investments:

·; 50 per cent. (2011: 50 per cent.) of the issued share capital of Patagonia Energy Limited ("PEL"), a company registered in the British Virgin Islands under registration number 620522. PEL owns 100 per cent. of the issued share capital of Energia del Sur S.A. ("EdS"), a company registered in Argentina. EdS is a generator and supplier of electricity to the national grid in Argentina.

·; 100 per cent. (2011: 100 per cent.) of the issued share capital of Birdsong Overseas Ltd ("BOL"), a company registered in the British Virgin Islands, under registration number 688032. BOL owns 100 per cent. of Bolivia Integrated Energy Limited ("BIE"), a company registered in the British Virgin Islands, under registration number 510247. Until 1 May 2010, BIE owned, through an intermediary holding company, 50.00125 per cent. of the issued share capital of Empresa Electrica Guaracachi S.A. ("Guaracachi"), a company registered in Bolivia. During 2012 an amount of £10.5 million, which had previously been loaned by the Company to BOL, was capitalised and converted into share capital.

·; 70 per cent. (2011 - nil) of the issued share capital of Cascade Hydro Limited, a company registered in England and Wales under registration number 7640689. Cascade Hydro Limited owns, through intermediate holding companies, 100 per cent. interest in Electricidad Andina S.A. and 88 per cent. of Empresa de Generacion Electrica Canchayllo S.A.C., both being companies registered Peru.

·; 100 per cent. (2011 - nil) of Cochrane Power Limited, a company registered in England and Wales under registration number 8220905. Cochrane Power Limited owned at the year-end, through intermediate holding companies, 50 per cent. interest in Central Illapa S.A. and 100 per cent. interest in Termoelectrica del Norte S.A., both being companies registered in Chile.

27 JOINT VENTURE

The following table sets out the Group's share of its interest in its joint venture operation in Argentina.

Non-current liabilities includes £14.4 million (2011 - £14.1 million) of loans advanced by the Company (see note 16).

28 Reconciliation of profit before tax to cash generated from operations