Rurelec Regulatory News (RUR)

7 Nov 2005 07:00

Rurelec PLC07 November 2005 RURELEC PLC PRELIMINARY ANNOUNCEMENT RESULTS FOR THE YEAR ENDED 30 JUNE 2005 CHAIRMAN'S STATEMENT This is the first Chairman's Statement for Rurelec PLC and it follows thesuccessful admission of the Company's shares to the AIM market of the LondonStock Exchange in August 2004. I am pleased to report that in its first year asa quoted company Rurelec has produced a profit after tax of £132,350 from thesale of 6 Jenbacher machines and now announces a proposed dividend of 0.5 penceper share payable on 14 December 2005 to all shareholders on record as at 18November 2005. Rurelec began its life as a public company aiming to fulfil two principalfunctions in Latin America. The first was the management of public sector ruralelectrification projects and the second was the provision of new powergeneration installations for regional communities. Since flotation, your Companyhas made significant progress on new generation projects. Since August 2004 Rurelec has initiated projects in Trinidad and Yacuiba inBolivia using Worthington dual fuel motors and General Electric Jenbacher gasengines. At the time of writing, the Company's two Worthingtons are disassembledand ready for transportation to new Amazonian sites while the three Jenbachershave successfully been shipped from the Isle of Wight to Bolivia and are nowawaiting their generation licences for the new Yacuiba power plant, on theborder with Argentina. On 29 July 2005 the Company completed the acquisition of a 50% interest inEnergia del Sur S.A., the 76 MW gas fired open cycle power plant in ComodoroRivadavia which supplies much needed power to the south of Argentina. This planthas enjoyed a good season since re-starting power production at the beginning of2005 and is trading profitably. In recent weeks the authorities in Argentinahave indicated their approval for the expansion of the plant by the addition ofup to 50 MW of new combined cycle capacity for commissioning as soon as possibleto deal with power shortages in Patagonia. This expansion project is now due tobreak ground at the beginning of 2006. At present Rurelec is exploring new expansion opportunities in Argentina andBolivia with a view to becoming an important force in the regional powerindustry. Communities in Riberalta and Guayamerin on the Amazon Basin haverequested Rurelec's local power subsidiary, Energais, to install new capacity inthese isolated areas. Negotiations have begun for new power purchase agreementsin each city. The Company is also considering new isolated generation and ruralelectrification projects in Northern Argentina. At the same time the company intends to continue to take advantage of suitableopportunities to trade in portfolios of power generation equipment where themanagement's knowledge of the second hand equipment market can help source goodvalue motors and turbines for Rurelec projects while at the same time produce atrading profit from the onward sale of surplus machines. The Board is confident that the demand in Latin America which has led toRurelec's strong start as a generation company will be matched by a steady flowof new power projects. With this in mind, the Board is pleased to recommend toshareholders a first dividend of 0.5 pence per share from the Company's reportedprofits as a mark of our confidence in the future of Rurelec in Latin America. Jimmy WestChairmanDate: 7 November 2005 -1- RURELEC PLC CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2005 Unaudited 2005 2004 Notes £ £ Turnover 2 1,000,000 - Cost of sales (666,666) - Gross profit 333,334 - Administrative expenses (178,632) (22) Operating profit / (loss) 154,702 (22) Interest receivable 10,648 65 Profit on ordinary activities 165,350 43before taxation Taxation 3 (33,000) - Profit after taxation 132,350 43 Dividends 4 (106,750) - Retained profit 25,600 43 Earnings per share (basic) 5 1.09p - Earnings per share (diluted) 5 1.09p - All transactions arose from continuing operations. Statement of total recognised gains and losses Profit for the financial year 25,600 43 Exchange differences 1,198 - Total recognised gains and losses 26,798 43 The accompanying accounting policies and notes form an integral part of thesefinancial statements. -2- RURELEC PLC CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2005 Unaudited 2005 2004 Notes £ £ £ £ Fixed assetsIntangible assets 147,294 -Tangible assets 6 570,814 - 718,108 - Current assetsDebtors 239,412 -Cash at bank and in hand 463,348 200,043 702,760 200,043 Creditors: amounts fallingdue within one year (344,972) - Net current assets 357,788 200,043 Total assets less current liabilities 1,075,896 200,043 Provision for liabilities (33,000) -and charges 1,042,896 200,043 Capital and reservesCalled up share capital 7 252,000 200,000Share premium account 764,055 -Profit and loss account 26,841 43 Shareholders' funds- equity interests 8 1,042,896 200,043 The accompanying accounting policies and notes form an integral part of thesefinancial statements. -3- RURELEC PLC CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2005 Unaudited 2005 2004 Notes £ £ Net cash inflow / (outflow) from 143,304 (22)operating activities Returns on investmentsInterest received 10,648 65 Capital expenditureFixed assets (414,592) - Acquisitions and disposalsPurchase of subsidiary 9 (292,110) - Net cash (outflow) / inflow (552,750) 43before financing FinancingShares issued less issue expenses 816,055 200,000 Net cash inflow from financing 816,055 200,000 Increase in net cash 263,305 200,043 Reconciliation of operating profit to net cash outflow from operating activities 2005 2004 £ £ Group operating profit / (loss) 154,702 (22)Amortisation of goodwill 5,739 -Increase in debtors (239,412) -Increase in creditors 222,275 -Net cash inflow / (outflow) from operating activities 143,304 (22) Reconciliation of net cash flow to movement in net funds Increase in cash during year 263,305 200,043 Net funds at beginning of the year 200,043 - Net cash at end of year 463,348 200,043 Analysis of change in net funds 1.7.2004 Cash flow 30.6.2005 £ £ £Cash at bank and in hand 200,043 263,305 463,348 -4- RURELEC PLC NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2005 1 Accounting policies The financial statements have been prepared in accordance with applicableaccounting standards under the historical cost convention. The policies havebeen reviewed and have remained unchanged from the previous year. 1.1 Basis of consolidation The financial statements include the financial results of the company and itssubsidiary undertaking to 30 June 2005. The financial results of the subsidiary,which has a non-coterminous year end, are consolidated using interim accountsprepared to 30 June 2005. The results of subsidiaries acquired are included inthe consolidated profit and loss account from the date when control passes usingthe acquisition method of accounting. 1.2 Turnover and revenue recognition Turnover represents amounts receivable for goods and services provided,including the sale of power generation equipment, net of trade discounts, VATand other related taxes. Revenue is recognised when the risks and rewards of thegoods and services have been passed on to the customer. 1.3 Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation isprovided at rates calculated to write off the cost, less estimated residualvalue, of each asset over its expected useful economic life, as follows: Plant and equipment over 15 to 20 years 1.4 Goodwill Goodwill represents the difference between the fair values of assets andliabilities acquired and the consideration paid. Goodwill arising in respect ofacquisitions is capitalised and included in the group balance sheet underintangible assets. It is amortised on a straight line basis over 20 years whichis deemed to be its useful economic life. It is reviewed for impairment at theend of the first full year following the acquisition and in other periods ifevents or changes in circumstances indicate that the carrying value may not berecoverable. 1.5 Deferred taxation The charge for tax is based on the profit for the year and takes into accounttax deferred or accelerated because of timing differences between the treatmentof certain items for accounting and tax purposes. Full provision is made fordeferred tax resulting from timing differences between profits computed for taxpurposes and profits stated in the financial statements to the extent that thereis an obligation to pay more tax in the future as a result of the reversal ofthose timing differences. Deferred tax assets and liabilities are recognised tothe extent that they are expected to be recoverable and are measured on anon-discounted basis based on tax rates and laws substantially enacted at thebalance sheet date. 1.6 Financial instruments Financial assets are recognised in the balance sheet at the lower of cost andnet realisable value. Provision is made for diminution in value whereappropriate. Income and expenditure arising on financial instruments isrecognised on the accruals basis, and credited or charged to the profit and lossaccount in the financial period to which it relates. -5- RURELEC PLC NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2005 1 Accounting policies - continued 1.7 Foreign currency Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the balance sheetdate. The financial statements of foreign subsidiaries are translated at therate of exchange ruling at the balance sheet date. The exchange differencesarising on the retranslation of the opening net investment in subsidiaries aretaken directly to reserves. Any gain or loss arising from a change in exchangerates subsequent to the date of the transaction is included as an exchange gainor loss in the profit and loss account. 2 Turnover The total turnover of the group for the year has been derived from the disposalof 6 power generation machines which were originally acquired as a part of alarger set and which were surplus to the group's immediate requirements. 3 Taxation 2005 2004 £ £UK corporation tax - -Deferred tax 33,000 -Tax charge for the year 33,000 - Deferred tax at a rate of 19% has been fully provided for in relation toaccelerated capital allowances. 4 Dividends 2005 2004 £ £Proposed dividend at the rate of 0.5p per share 106,750 - 5 Earnings per share The calculation of earnings per share is based on the profit on ordinaryactivities after taxation, namely a profit of £132,350 (2004 - £43) and on12,121,096 (2004 - 10,000,000) ordinary shares, being the average weightednumber of ordinary shares in issue and ranking for dividend during the year. Thefully diluted calculation of earnings per share, which is based on the sameprofit figures and on 13,051,781 ordinary shares, is unchanged from the basiccalculation as the warrants are anti-dilutive. 2005 2004 Earnings per share (basic) 1.09p - Earnings per share (diluted) 1.09p - -6- RURELEC PLC NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2005 6 Tangible fixed assets Plant and equipment £Cost - at 1 July 2004 -Additions 414,592Additions (arising on acquisition of subsidiary) 156,222At 30 June 2005 570,814Net book value - 30 June 2005 570,814Net book value - 30 June 2004 - Fixed assets includes £67,300 of fees charged by Independent Power CorporationPLC (see note 10) and £7,585 of capitalised costs. No depreciation has beencharged in the year as the assets are in the course of construction. 7 Share Capital 2005 2004 £ £a) Authorised 30,000,000 ordinary shares of 2p each 600,000 250,000 (2004 - 12,500,000 ordinary shares of 2p each) b) Allotted, called up and fully paid 12,600,000 ordinary shares of 2p each 252,000 200,000 (2004 - 10,000,000 ordinary shares of 2p each) Reconciliation of movement in share capital during the year £At 1 July 2004 200,000Allotment of 2,000,000 shares on 18 August 2004 40,000Allotment of 600,000 shares on 5 November 2004 12,000At 30 June 2005 252,000 On 18 August 2004, the company issued as fully paid 2,000,000 ordinary 2p sharesfor cash at 40p per share on initial listing. The difference between the totalconsideration of £800,000 and the nominal value of £40,000 has been credited tothe share premium account (£760,000). On 5 November 2004, the company issued as fully paid 600,000 ordinary 2p sharesfor cash at 42.5p per share to provide additional capital for development ofequipment. The difference between the total consideration of £255,000 and thenominal value of £12,000 has been credited to the share premium account(£243,000). c) Warrants On 18 August 2004, the company issued: i) 75,000 warrants to subscribe for ordinary shares on a 1:1 basis at 40pper share. These warrants expire on 17 August 2006.ii) 1,000,000 warrants to subscribe for ordinary shares on a 1:1 basis at 60pper share (if exercised prior to 12 August 2005) or 80p per share if exercisedafter 12 August 2005 but before 17 August 2006. These warrants expire on 17August 2006. -7- RURELEC PLC NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2005 8 Reconciliation of movement in shareholders' funds £At 1 July 2004 200,043Profit for the year 25,600Foreign exchange movement 1,198New share capital 52,000Share premium account 764,055At 30 June 2005 1,042,896 9 Acquisition of subsidiary On 8 October 2004, the company acquired 100% of the equity of Energia ParaSistemas Aislados S.A., a company incorporated in Bolivia. Its principalactivity is the implementation of power generation projects in Bolivia. £Fixed assets acquired 156,222Current liabilities acquired:Creditors (17,145)Net assets acquired 139,077Purchased goodwill 153,033Cash consideration 292,110 The provisional fair values of the assets and liabilities acquired were equal totheir book values. 10 Related party transactions During the year, the company: i) paid £110,000 to Independent Power Corporation PLC under a "Shared ServicesAgreement". Of this sum, £67,300 has been capitalised in fixed assets as feesdirectly attributable to specific projects undertaken in relation to the group'splant and equipment and £42,700 has been expensed as fees relating to theprovision of serviced offices and other administrative overheads. P R Earl is ashareholder and director of Independent Power Corporation PLC and J G West and ER Shaw are directors. A sum of £11,750 was outstanding at the year end. ii) paid £7,750 to Jimmy West Associates Ltd, a company in which J G West is ashareholder and director, for management services. 11 Post balance sheet date events On 29 July 2005, the company issued 8,750,000 ordinary 2p shares for 40p eachfor cash by way of placing, raising £3m, net of expenses. Subsequent to the placing, on 29 July 2005 the company acquired a 50% interestin Patagonia Energy Limited, a company registered in the British Virgin Islandsfor a consideration of up to US$6m in cash. The first tranche of US $4.5m hasbeen paid. The balance payable, up to a maximum of US$1.5m, is dependent uponthe future profits of Energia del Sur S.A., a company incorporated in Argentina. Patagonia Energy Limited wholly owns directly (and indirectly through Electricadel Sur S.A.) Energia del Sur S.A., a company which is registered in Argentinaand which owns and operates a generating plant supplying electricity in SouthernPatagonia, Argentina. -8- RURELEC PLC NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2005 12 Financial information The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The preliminary announcement includes the consolidated profit and loss account,the consolidated balance sheet, the consolidated cash flow statement and otherprimary statements and associated notes that have been extracted from thegroup's financial statements for the year to 30 June 2005. Those financialstatements have not yet been delivered to the Registrar, nor have the auditorsreported on them. The comparative figures relating to the year to 30 June 2004are taken from the audited statutory accounts for that year. -9- END This information is provided by RNS The company news service from the London Stock Exchange