Rurelec Regulatory News (RUR)

28 Sep 2006 07:02

Rurelec PLC28 September 2006 Rurelec PLC ("Rurelec") 27th September 2006 Interim results for the 6 months ended 30th June 2006 Chairman's Statement Rurelec today announces its interim results for the six months ended 30th June2006. These are the first results since Rurelec acquired a controlling stake inEmpresa Guaracachi SA ("Guaracachi") in Bolivia in January 2006 and I am pleasedto confirm that Rurelec's power generation businesses are performing well.Operating results as a group are fully in line with market expectations. Theconsolidated profit after tax attributable to the shareholders of the company of£6.179m includes £5.572m of 'other income' which represents the excess of thegroup's share of the provisional fair values of the assets and liabilitiesacquired in the acquisition of Guaracachi over the cost of acquiring the 50.001per cent. interest in Guaracachi. While Rurelec's Board is not proposing to payan interim dividend, the Directors expect to recommend a full year dividendpayable in the first half of 2007 based on income received from the Company'sLatin American businesses and subject to the distributable reserves available toRurelec at that time. Most important of all, the markets in which Rurelec currently generateselectricity are experiencing considerable economic growth. Argentina's economycontinues to grow at 9 per cent. while Bolivia is enjoying GDP growth of almost6 per cent. Demand for electricity in turn is exceeding all previous demandforecasts. As a result, the governments of both Argentina and Bolivia haverequested Rurelec's local subsidiaries to accelerate and increase expansionplans for new power capacity to match the needs of the power markets in thesouth of Latin America. I am delighted to report that Rurelec is meeting thechallenge that such rapid demand growth represents. Today Rurelec controls a group of four major operating power plants comprising442 MW of installed capacity in Bolivia and Argentina with a further 131 MWunder construction and 200 MW in advanced development. Rurelec is nowaccelerating its plans to build the 200 MW under development and is consideringfurther expansion for 2007 to meet the needs of the region. Argentina Rurelec announced last month that it had begun construction on the 60 MWcombined cycle expansion of its Energia del Sur ("EdS") power plant inPatagonia. EdS is the Argentine power generation company which owns and operates one of themost southerly power plants in Argentina, serving the partially isolated powergrid based on Comodoro Rivadavia. Existing capacity is 76 MW and Rurelec owns aneffective 50 per cent. interest in EdS following its July 2005 purchase of a 50per cent. stake in Patagonia Energy Limited ("PEL"). The shareholders in PEL have completed a study into the feasibility ofconverting the plant to combined cycle gas turbine expansion ("CCGT") by addinga steam turbine and heat recovery steam generator to the two open cycle GeneralElectric 6B gas-fired turbines of EdS. PEL has now acquired a suitable steamturbine and air cooling system at very favourable prices to implement thecombined cycle conversion, which is expected to be eligible for carbon creditsunder the Kyoto Protocol. The steam turbine and cooling system are currentlybeing transported to Patagonia from the United States. When completed in thesecond half of 2007, the CCGT conversion will add some 60 MW of new capacity inthe south of Argentina where demand growth has out-stripped reserve capacity inthe southern power grid. EdS has received initial approvals from the Credit Committee of Standard Bank,London for a loan of US $18 million for the financing of the new CCGT capacity.Financial close is expected to occur in the fourth quarter of 2006. Bolivia Guaracachi, Bolivia's largest power generation company, has now successfullycommissioned the new 8 MW addition to its Aranjuez power plant in Sucre, thefederal capital of Bolivia. The new plant was brought on line just in time forBolivia's Constituent Assembly meetings in Sucre. Construction is also nearing completion on Guaracachi's 71 MW capacity expansionin Santa Cruz in the east of Bolivia and remains on track for commissioning inNovember of this year. Together, these two new power facilities represent some10 per cent. of the peak demand of Bolivia. By the end of 2006, Guaracachi'sinstalled capacity in Bolivia will have increased by 22 per cent. from 360 MW to440 MW. At the same time as completing its current additions to plant capacity,Guaracachi has been working on two further expansion projects. The first consists of a 120 MW greenfield power plant to be based in Yacuiba inBolivia's Department of Tarija close to the border with Argentina. This newplant is intended to stimulate economic growth to the south of Bolivia where thenational transmission grid has not yet been extended. The plant will also beinterconnected to the northern grid system of Argentina which currently suffersfrom power shortages. Guaracachi is in negotiation with the Bolivian nationaloil and gas company, YPFB, for a long term gas supply for the Yacuiba plant. Apreliminary agreement for the sale of electricity has already been signed withCEMSA, the Argentine power trading subsidiary of Endesa of Spain. The second project is the 80 MW CCGT expansion project which consists of theconversion in Santa Cruz of two existing General Electric 6FA gas turbines tocombined cycle operation. This project has already been submitted for approvalas Bolivia's first carbon credit power generation project under the KyotoProtocol. The new capacity is due to be brought into service at the end of 2007and will meet Bolivia's growing demand for new power capacity to match its 6 percent. growth in GDP, the highest level of economic growth that Bolivia hasexperienced in a decade. Future Developments Guaracachi and EdS continue to trade well. Guaracachi, which is quoted on the LaPaz Stock Exchange, remains committed to a high level of dividend payout inearly 2007 based on its 2006 financial results, consistent with its policy ofdistributing profits to shareholders. EdS also remains committed to maximizingcash payments to its shareholders. Rurelec in turn intends to maximize thepayout to its own shareholders of dividends received from Rurelec subsidiaries. Rurelec continues to explore expansion possibilities in line with its intentionto become the leading rural power company in Southern Cone of Latin America.Rurelec is in dialogue with the energy ministers of both Argentina and Boliviato agree priorities for further power plant expansion that meet the nationalplans of both countries. Jimmy WestChairman RURELEC PLC CONSOLIDATED INCOME STATEMENT (unaudited)for the half year ended 30 June 2006 6 months 6 months to 30/6/06 to 30/6/05 Notes £'000 £'000 Revenue 9,361 1,000 Cost of sales (6,461) (667) Gross profit 2,900 333 Administrative expenses (1,397) (148) Other income 3,7 5,572 - Finance income 169 5Finance expense (238) - Profit before tax 7,006 190 Tax expense (78) (33) Profit for the period 6,928 157 Attributable to minority interest 749 -Attributable to shareholders of Rurelec PLC 6,179 157 Earnings per share (basic) 4 9.05p 1.25pEarnings per share (diluted) 4 9.05p 1.25p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE(unaudited) for the half year ended 30 June 2006 Profit for the period attributable to shareholders of Rurelec plc 6,179 157Exchange differences on translation of overseas operations (1,791) 1 Total recognised income and expense for the period 5 4,388 158 RURELEC PLC CONSOLIDATED BALANCE SHEET (unaudited)at 30 June 2006 30/6/06 31/12/05 30/6/05 Notes £'000 £'000 £'000 AssetsNon-current assetsProperty, plant and equipment 58,950 4,853 724Investments 18 - -Trade and other receivables 535 412 -Deferred tax assets 311 328 5 59,814 5,593 729Current assetsInventories 2,972 460 -Trade and other receivables 8,063 2,578 239Cash and cash equivalents 5,361 424 463 16,396 3,462 702 Total assets 76,210 9,055 1,431 Equity and liabilitiesEquity attributable to shareholders ofRurelec PLCShare capital 1,366 427 252Share premium 21,299 3,568 764Translation reserve (2,175) (384) 1Retained earnings 8,263 2,084 138 5,6 28,753 5,695 1,155Minority interest 23,437 - - Total equity 52,190 5,695 1,155 Non-current liabilitiesTrade and other payables 491 431 -Deferred tax liabilities - - 38Borrowings 13,959 - - 14,450 431 38 Current liabilitiesTrade and other payables 9,360 2,478 238Borrowings 210 451 - 9,570 2,929 238 Total liabilities 24,020 3,360 276 Total equity and liabilities 76,210 9,055 1,431 RURELEC PLC STATEMENT OF CONSOLIDATED CASH FLOWS (unaudited)for the half year ended 30 June 2006 6 months 6 months to 30/6/06 to 30/6/05 Notes £'000 £'000 Operating activitiesResult for the period before tax 7,006 190Adjustments (4,620) (10)Change in inventories (209) -Change in trade and other receivables (2,604) (239)Change in trade and other payables 718 118 291 59 Investing activitiesAdditions to plant, property and equipment (2,781) (415)Deferred consideration paid (431) -Acquisition of 50.00125% of Empresa Guaracachi S.A. (net of cash) (7,913) -Interest received 169 10 (10,956) (405) Financing activitiesRepayment of loans (521) -Proceeds from share issue 18,670 -Interest paid (238) -Dividend paid to minority shareholders' of Empresa Guaracachi S.A. (2,046) -Withholding tax on inter-group dividend (263) - 15,602 - Increase / (decrease) in cash and cash equivalents 4,937 (346)Cash and cash equivalents at beginning of period 424 809Cash and cash equivalents at end of period 5,361 463 RURELEC PLC Notes to the Interim Statementfor the six months ended 30 June 2006 1. Basis of preparation This interim statement is unaudited and does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985. Statutory accountsfor the period ended 31 December 2005 have been filed with the Registrar ofCompanies. The auditors have made a report on those statutory accounts underSection 235 of the Companies Act 1985. The auditors' reports were unqualifiedand did not contain a statement under Section 237 (2) of the Companies Act 1985. The financial information contained in this interim statement has been preparedin accordance with the Listing Rules of the Financial Services Authority and allInternational Reporting Standards ('IFRS') in force and expected to apply to theGroup's results for the year ended 31 December 2006 and on interpretations ofthose standards released to date. The term IFRS includes all International Accounting Standards ('IAS') as adoptedby the EU and International Financial Reporting Standards ('IFRS') issued by theInternational Accounting Standards Board ('IASB') and the InternationalFinancial Reporting Committee ('IFRIC') and interpretations issued by IFRIC. 2. Accounting policies This interim statement has been prepared in accordance with the Group's IFRSaccounting policies. These policies were set out in the Group's FinancialStatements for the period ended 31 December 2005. 3. Other income Other income represents the excess of the provisional fair values of the Group'sshare of the assets less the liabilities acquired in the acquisition of the50.00125% interest in Empresa Guaracachi S.A. over the cost of acquiring thatinterest. 4. Earnings per share Weighted average number of shares: 30/6/06 30/6/05 '000 '000 Basic earnings 68,289 12,600Diluted earnings 68,289 12,600 The profit figure of £6.179m used in the calculation of the basic and dilutedearnings per share for the half year to 30 June 2006 includes £5.572m of otherincome as described in note 3 above. RURELEC PLC Notes to the Interim Statementfor the six months ended 30 June 2006 (continued) 5. Consolidated statement of changes in equity 30/6/06 30/6/05 £'000 £'000 Opening shareholders' funds 5,695 997Proceeds from issue of shares 18,670 -Total recognised income and expense 4,388 158 Closing equity shareholders' funds 28,753 1,155 On 5 January 2006, the company issued 46,938,775 Ordinary 2p shares at 42p pershare, raising £18,670,000 net of expenses. 6. Net asset value Based on the number of shares in issue at 30 June 2006 and the equityattributable to the shareholders of the company, the net asset value per shareat 30 June 2006 was 42.10p. 7. Acquisition of subsidiary On 5 January 2006, the company acquired 100% of Bolivia Integrated EnergyLimited, a BVI registered company. Bolivia Integrated Energy Limited owns,through an intermediary holding company, 50.00125% of Empresa Guaracachi S.A., acompany incorporated in Bolivia. The purchase price was $35m, of which $30m was paid on completion. $3m of thedeferred consideration was paid on 19 April 2006. The remaining $2m of deferredconsideration is due to be paid from the receipt of dividends from EmpresaGuaracachi S.A. and in any event, by 31 December 2010. The provisional fair values of the assets and liabilities acquired are asfollows: £'000 Property, plant and equipment 55,632Inventories 2,475Trade and other receivables 3,325Cash and cash equivalents 12,018Non-current liabilities (15,410)Trade and other payables (5,828) Net assets 52,212Less: Minority interest (26,237) Group's share of net assets acquired 25,975 Purchase consideration 20,403Excess of net assets acquired over cost 5,572('negative goodwill') 25,975 RURELEC PLC Notes to the Interim Statementfor the six months ended 30 June 2006 (continued) 8. The Board of Directors approved this interim statement on 27th September2006. This interim statement has not been audited. 9. Copies of this statement are being sent to all shareholders. Copies may beobtained from the company's registered office, 5th Floor, Prince Consort House,Albert Embankment, London SE1 7TJ. For further information, contact: Peter Earl or Elizabeth ShawTel: +44 (0)20 7793 7676 Rurelec PLC is an AIM listed British company established to develop ruralelectrification projects in South America. It is managed by a team with a strongtrack record in developing power projects worldwide. Since the company's flotation on AIM in August 2004, the company has acquiredpower generation operations in Bolivia and Argentina. This information is provided by RNS The company news service from the London Stock Exchange