Rurelec Regulatory News (RUR)

Rurelec PLC

("Rurelec" or "the Company")

Interim results for the six months ended 30 June 2016

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 2016.

Financial Highlights:

· Turnover £116k (2015: £620k)

· Gross Profit £110k (2015: £487k)

· Post tax profit / (loss) £2.0 million profit (2015: £14.1 million loss)

· Profit / (Loss) per share 0.36 pence (2015: 2.52 pence loss)

· Net asset value per share 7.2 pence (2015: 7.7 pence)

Operational and Post Half-Year Highlights:

· Revenues in the six months came from engineering and shared service fees.

· £2.0 million profit for the period is primarily due to foreign exchange gains associated with loans to Argentine operations.

· Finance expense was £0.2 million compared to £0.6 million for the same six months of 2015, the reduction is due to the sale of Canchayllo inclusive of its project debt.

· Revenues in Argentina still performing well locally with Argentine Pesos Arg $204 million (2015: Arg $120 million). In US$ revenues were $14.0 million (2015: $13.5 million)

· Peru - continues to explore the sale of its developments and receipt of US $1 million deferred consideration on the sale of its Canchayllo assets.

· Chile - one project (255 MW) still under development.

· Administrative expenses decreased from £2.8 million to £1.2 million.

Commenting on the results, Simon Morris, Rurelec's Executive Director, said:

"The Company continues to pursue measures to 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."

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Executive Director's Statement

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 before impairments of £37.5m due to the Group. The company is operating well at the local level however it has been subject to increases in its working capital requirements which restricted its ability to make repayments of outstanding loans to the UK. Within the last month the working capital requirements in Argentina have begun to ease. The Board is also expecting to appoint a consultant in the near future to help improve our dealings with the Argentine operation.

In Peru, the projects owned by the Group are still being actively marketed. Interest has been shown by a number of potential purchasers.

In Chile, the Illapa project is making progress.

A very tight rein continues to be maintained on overheads in the UK, leading to a reduction of over 50% in the six months compared to the same period last year.

As previously announced, the Group has arranged for extended facilities from BPAC, totalling £1.6 million. The funding position of the Group remains very tight, but stable. The funding position remains dependent upon the continued forbearance of certain creditors.

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 strategy of the Group continues to be focussed on stabilising the financial position, keeping costs under tight control, whilst certain assets are sold. The underlying strategy is to preserve the value of the Group assets, which will in turn enable all creditors to be repaid and maximise returns to shareholders.

Simon Morris

Executive Director

RURELEC PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

for the half year ended 30 June 2016

(expressed in thousands of pounds)

________

RURELEC PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)

at 30 June 2016

(expressed in thousands of pounds)

RURELEC PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

for the half year ended 30 June 2016

(expressed in thousands of pounds)

RURELEC PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

for the half year ended 30 June 2016

(expressed in thousands of pounds)

RURELEC PLC

Notes to the Interim Statement

for the six months ended 30 June 2016

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 2015 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 2016 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 2015.

4. Assets held for Sale

As reported in the December 2015 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 outstanding amounts due to the sale of 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 2015. In July 2015, 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. The amount of US $1 million has not yet been collected.

At 30th June 2016, the Group has been in discussions with a number of potential buyers for the rest of the Group's Peruvian assets. No further provision has been made against the carrying value of these assets since the latest annual financial statements.

5. Other Reserve

The Capital Reduction that took place during December 2014 resulted in the creation of a non-distributable reserve. The condition for this reserve to become distributable is for the outstanding creditors in December 2014 to be settled. At the date of approval of these accounts there are some £1.6 million of these creditors outstanding. The Board of Directors consider that these amounts will be settled in the short term and therefore the £45 million remains within the Other Reserve, which is non-distributable until these settlements have occurred.

6. The Board of Directors approved this interim statement on 29th September 2016. This interim statement has not been audited.

7. Copies of this statement are available at the Company's website www.rurelec.com