TIDMRUR
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: GBP0.38 million (2022 GBP0.50 million)
-- Post tax (loss) / profit: (GBP0.45 million) (2022: profit
GBP0.70 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: GBP2.26 million (2022: GBP0.88 million)
Operational and Post Half-Year Highlights:
-- Post-Tax loss of GBP0.45 million, from a profit of GBP0.70
million last period, this was due to 2023 exchange rate losses of
GBP0.06 million compared to prior period exchange rate gains of
GBP1.19 million.
-- Administration expenses were 15 per cent. lower at GBP0.42 million (2022: GBP0.50 million).
-- Other income, 2023: GBP2.54 million (2022: GBPnil) comprises
GBP2.43 million Patagonia Energy Limited "PEL" sale receipt and
GBP0.11 million from the sale of scrap. Other expense GBP2.48
million (2022: GBPnil) 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 GBP0.02 million are expensed in Rurelec PLC (the "Parent").
-- Cash increased from GBP0.88 million last period to GBP2.26
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 GBP1.12 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
GBP1.12 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 GBP18k (2022: GBP87k), 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 GBP420k (2022:
GBP409k).
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 GBP2.26 million (2022: GBP0.88
million) before the payment of a GBP1.12 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 6 months 12 months
to to to
30/06/23 30/06/22 31/12/22
GBP'000 GBP'000 GBP'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 GBP'000 GBP'000 GBP'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 Share Foreign Retained Other Total
capital premium currency earnings reserve equity
GBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000
GBP'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 6 months 12 months
to to 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 2,246 - -
Joint Venture
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 6 months 12 months
to to 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 (GBP0.45m) GBP0.70m (GBP2.24m)
to equity holders of the parent
from continuing 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
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