REG - Rurelec PLC - Interim Results
28/09/2023 07:00
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RNS Number : 8994N Rurelec PLC 28 September 2023
28 September 2023
AIM: RUR
Rurelec PLC
("Rurelec" or "the Company"
And with its subsidiaries the "Group")
Interim results for the six months ended 30 June 2023
Rurelec PLC (AIM: RUR), the AIM rule cash shell and owner of Turbines, today
announces its unaudited interim results for the six months ended 30 June 2023.
Financial Highlights:
· Operating
loss:
£0.38 million (2022 £0.50 million)
· Post tax (loss) /
profit:
(£0.45 million) (2022: profit £0.70 million
· (Loss) / profit per share:
(0.08) pence
(2022: profit 0.12 pence)
· Net asset value per share:
1.7 pence (2022: 2.2 pence)
· Net cash
balance:
£2.26 million (2022: £0.88 million)
Operational and Post Half-Year Highlights:
· Post-Tax loss of £0.45 million, from a profit of £0.70 million last
period, this was due to 2023 exchange rate losses of £0.06 million compared
to prior period exchange rate gains of £1.19 million.
· Administration expenses were 15 per cent. lower at £0.42 million
(2022: £0.50 million).
· Other income, 2023: £2.54 million (2022: £nil) comprises £2.43
million Patagonia Energy Limited "PEL" sale receipt and £0.11 million from
the sale of scrap. Other expense £2.48 million (2022: £nil) related to the
sale of PEL.
· Discontinued operations, from 31 December 2022 operations in Chile and
Argentina are treated as discontinued operations no longer included in
Financial Statements. From which direct costs, of £0.02 million are expensed
in Rurelec PLC (the "Parent").
· Cash increased from £0.88 million last period to £2.26 million at
the end of the period under review, which is the result of the initial
consideration receipt from the sale PEL. This balance is prior to the £1.12
million dividend payment made in July 2023.
· The Board continues to explore options for the disposal of its Chilean
interests.
· Discussions remain ongoing with regard to the disposal of two Siemens
Westinghouse 701 128 MW gas turbine generators ("701s").
Strategy update
Having reduced costs, stabilised the Company's financial condition and
disposed of the Argentinian interests, the Board's main focus continues to be
on maximising returns for shareholders from the sale of the two Siemens 701
turbines. While we are involved in a number of credible discussions, the
timing of any potential sale remains highly uncertain owing to the limited
demand and infrequent occurrence of projects into which the turbines could be
injected. Other initiatives are underway to simplify the Group including the
potential disposal of the assets in Chile.
In addition, following the sale of the Argentinian Assets on 9(th) June 2023,
which was a fundamental change of business pursuant to the AIM Rules, the
Company was deemed to be an AIM Rule 15 Cash Shell. Accordingly the Company
must make an acquisition or acquisitions that constitutes a reverse takeover
under AIM Rule 14 within 6 months of becoming an AIM Rule 15 Cash Shell. If
this is not achieved the Company's shares will be suspended from trading on
AIM on 11 December 2023 and ultimately delisted on 12 June 2024 if a suitable
acquisition constituting a Reverse Take-over has not occurred. The Directors
ideally wish to retain the listing as a mechanism to maximise shareholder
value, by making the Company attractive to potential high-quality
acquisitions. The priority is, however, to maintain the resource necessary to
preserve and realise the value of the Turbines which are the Company's largest
asset. The directors will only pursue acquisition opportunities that are both
deliverable in the time frame available and which have a compelling investment
case.
One option under consideration is to ring fence the value of the turbines for
shareholders whilst at the same time making the Company attractive for new
business opportunities through which to can create shareholder value. The
Directors are reviewing potential acquisition opportunities as they arise and
assessing the cost and benefit of Ringfencing the Turbines as part of those
initiatives. We have had held discussions with parties concerning potential
fundraisings and acquisition opportunities. It is likely that any acquisition
would need to be accompanied by a fundraising. There can be no guarantee that
any acquisition or fundraise will occur. In addition, the speculative costs
associated with an acquisition, while maintaining the listing of Rurelec's
ordinary shares on AIM will deplete cash at a significant rate. The
alternative is to delist the business in order to maximise the resource
available for the disposal of the Turbines. With the passage of time, this
latter route becomes more likely.
Given the Group is debt-free, a sale of the turbines should enable Rurelec to
maximise returns to its shareholders though, as reported in the Audited
Accounts for the year ended 31 December 2022, the ability of Rurelec to build
up sufficient cash reserves to fund further dividend payments will not be
possible unless the disposal of the turbines is achieved.
Commenting on the results, Andy Coveney, Rurelec's Executive Director, said:
"I am pleased to report the disposal of the Group's Argentinian investment,
bringing cash into the Group and creating a position whereby the Company was
able in July 2023 to make a distribution of £1.12 million to our shareholders
who have waited many years for such a dividend.
It is hoped that by concentrating resources on the disposal of the turbines,
Rurelec may be in a position to realise those assets whilst reducing costs,
although there can be no guarantee.
The Board is examining the optimal way in which the potential value of these
turbines can be realised and is considering all options to reduce costs and
simplify the Group.
In parallel the Directors have had held discussions with parties concerning
potential fundraisings and acquisition opportunities to optimise the value of
the cash shell for shareholders. These are currently not progressing, and
there can be no guarantee that any transaction will occur but the Directors
are continuing to keep all options under review. Further update will be
provided as appropriate.
For further information please contact:
Rurelec PLC WH Ireland
Andrew Coveney Katy Mitchell
Executive Director James Bavister
+44 (0)7710 836312 +44 (0)20 7220 1666
Executive Directors' Statement
Review of Operations
701 Turbines
Rurelec continues to focus upon the sale of the 701 DU 125MW Turbines. A
number of separate discussions are ongoing with credible third parties with a
view to selling the Turbines to power projects into power projects in Europe,
Africa and the Middle East. While these are encouraging, they remain at an
early stage and owing to the complex nature of power projects it is difficult
to predict whether these potential counterparties will be able to secure the
necessary finance such that a deposit can be paid.
Chile
As disclosed in the 2022 Financial Statements Chilean activities are
considered as 'Discontinued Operations' from 31 December 2022. Consequently,
they are no longer included in these Group Accounts. Direct expenditure in
Chile totalled £18k (2022: £87k), this has been expensed in the Parent's
accounts. Since the period end discussions for the disposal of these companies
have continued. There can be no certainty that this will be successful, and it
is likely that the consideration will not be material, however there will be
direct and indirect cost savings for the simplified Group.
Asset disposals
As previously announced the Group's interests in Argentina were disposed of on
12 June 2023, on receipt of the initial consideration of US$3.0 million. An
additional US$2.0 million becomes due should defined conditions be met. The
economic outlook In Argentina continues to be uncertain and it is by no means
certain that the conditions will be met within the defined timeframes so there
can be no guarantee that no additional consideration will be paid.
AIM Rule 15
As previously announced the disposal of the Argentinean Interests was a
fundamental disposal pursuant to Rule 15 of the AIM Rules for Companies. As
such, Rurelec is now therefore regarded as an AIM Rule 15 cash shell.
Accordingly, before 11 December 2023, being six months after Rurelec became an
AIM Rule 15 cash, Rurelec must make an acquisition or acquisitions which
constitutes a reverse takeover under Rule 14 of the AIM Rules for Companies
otherwise Rurelec's Ordinary Shares will be suspended from trading on AIM.
Furthermore, if a qualifying acquisition is not completed by Rurelec by 12
June 2024, the admission of the Company's ordinary shares to trading on AIM
will be cancelled.
The Directors are keen, where possible, to retain the listing as a mechanism
to maximise shareholder value, by making the Company attractive to potential
high-quality acquisitions. The priority is, however, to maintain the resource
necessary to preserve and realise the value of the Turbines which are the
Company's largest asset.
Head office
Tight controls continued to be maintained on overheads in the UK and
administration costs for the period were flat at £420k (2022: £409k).
Cash flow
Rurelec remained free of any secured debt and was consequently in the position
of not having to pay any interest.
The period-end cash balance was £2.26 million (2022: £0.88 million) before
the payment of a £1.12 million dividend in July 2023.
With the PEL receipt and continued focus on cost control, the liquidity for
the Group's short to medium term is secure. This should allow a reasonable
time frame to dispose of the Turbines.
Given the cash balances held by the Group, the Directors believe that there is
currently sufficient headroom in existing working capital resources to avoid
the need to seek further sources of working capital and accordingly continue
to adopt the going concern basis of accounting.
Board of Directors
There were no changes to the Board of Directors during the period covered by
these condensed financial statements.
Andy Coveney
Executive Director
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)
for the half year ended 30 June 2023
(expressed in thousands of pounds)
________
Audited
Notes 6 months to 6 months to 12 months to
30/06/23 30/06/22 31/12/22
£'000 £'000 £'000
Administrative expenses (420) (496) (998)
Other income 2,518 - 25
Other expense (2,479) - (1,924)
Operating loss (380) (496) (2,897)
Foreign exchange (losses) / gains (56) 1,194 661
Loss on discontinued operations (18) - =
Finance income 1 - -
Finance expense - - -
(Loss) / profit before tax (454) 697 (2,236)
Tax expense - - -
(Loss) / profit for the period (454) 697 (2,236)
(Loss) / profit per share 3 (0.08p) 0.12p (0.39p)
Other comprehensive income
Items that will be subsequently reclassified to Profit & Loss:
Exchange differences on translation of foreign operations - 269 (122)
Total other comprehensive income / (expense) - 269 (122)
Total comprehensive (loss) / profit for the period (454) 965 (2,368)
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)
at 30 June 2023
(expressed in thousands of pounds)
__
Audited
30/6/23 30/6/22 31/12/22
Notes £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment - 7,766 -
Investment in Joint Venture - 312 -
Trade and Other Receivables - 3,650 -
- 11,728 -
Assets Held for Sale 7,773 - 10,108
Current assets
Trade and other receivables 133 269 91
Cash and cash equivalents 2,257 879 449
2,389 1,148 540
Total assets 10,162 12,876 10,648
Equity and liabilities
Shareholders' equity
Share capital 5,614 5,614 5,614
Share premium account - - -
Foreign currency reserve 956 1,347 956
Profit and loss reserve 3,128 5,711 3,582
Total equity 9,698 12,672 10,152
Current liabilities
Trade and other payables 460 200 496
Current tax liabilities 4 4 -
464 204 496
Total liabilities 464 204 496
Total equity and liabilities 10,162 12,876 10,648
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)
for the half year ended 30 June 2023
(expressed in thousands of pounds)
Share capital £'000 Share premium £'000 Foreign currency reserve £'000 Retained earnings £'000 Other reserve £'000 Total equity £'000
Balance at 01.01.22 - as restated 5,614 - 1,078 5,014 - 11,706
Profit for the first 6 months - - - 697 - 697
Exchange differences on translation - - 269 - - 269
Total comprehensive profit - - 269 697 - 966
Balance at 30.06.22 5,614 - 1,347 6,515 - 13,476
Loss for the Period - - - (2,933) - (2,933)
Exchange differences on translation - - (391) - - (391)
Total comprehensive loss - - (391) (2,933) - (3,324)
Balance at 31.12.22 5,614 - 956 3,582 - 10,152
Loss for the first 6 months - - - (454) - (454)
Exchange differences on translation - - - - - -
Total comprehensive loss - - - (454) - (454)
Balance at 30.06.23 5,614 - 956 3,128 - 9,698
RURELEC PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
for the half year ended 30 June 2023
(expressed in thousands of pounds)
Audited
6 months to 6 months to 12 months to
30/06/23 30/06/22 31/12/22
Result for the period before tax (454) 697 (2,147)
from operations
Net finance expense - - -
Adjustments for:
Unrealised exchange losses / (gains) 56 (1,194) (160)
Write down on loans/investments - - 1,679
Discontinued operations 18 - -
Change in trade and other receivables (90) 189 (309)
Change in trade and other payables 32 (232) 25
Cash used in operating activities (438) (540) (912)
Taxation paid - - -
Net cash used in operating activities (438) (540) (912)
Cash flows from investing activities
Repayments from joint venture company - 674 599
Net proceeds from sale of Joint Venture 2,246 - -
Net cash generated from investing activities 2,246 674 599
Net cash inflow before
financing activities 1,808 134 (313)
Cash flows from financing activities
Loan Principal Repayments - - -
Loan Interest Repayments - - -
Net cash used in financing activities - - -
Increase / (decrease) in cash
and cash equivalents 1,808 134 (313)
Cash and cash equivalents at start of period 432 745 745
Cash and cash equivalents at end of period 2,257 879 432
RURELEC PLC
Notes to the Interim Statement
for the six months ended 30 June 2023
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 2022 were derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The financial information contained in this interim
statement has been prepared in compliance with International Financial
Reporting Standards ("IFRSs") and in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and
expected to apply to the Group's results for the year ending 31 December 2023
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 2022.
3. Earnings per share
6 months to 6 months to 12 months to
30/6/23 30/6/22 31/12/22
Basic and diluted
Average number of shares 561m 561m 561m
in issue during the period
(Loss) / Profit attributable to equity holders of the parent from continuing (£0.45m) £0.70m (£2.24m)
operations
Basic and diluted (loss) / profit per share on continuing operations
(0.08p) 0.12p (0.39p)
There are no financial instruments in issue (2022: none) that could be settled
by the delivery of shares.
4. The Board of Directors approved this interim statement on 27 September
2023. This interim statement has not been audited.
5. Copies of this statement are available at the Company's website
www.rurelec.com (http://www.rurelec.com)
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