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Interim results for the 6 months ended 31st December 2004
Chairman's Statement
30th March 2005
Rurelec today announces its first results since joining the AIM Market in August 2004.
Since its flotation, Rurelec has moved to acquire power generation assets for installation in isolated areas of Latin America serving rural communities in Bolivia and Argentina. I am pleased to report that Rurelec now owns outright 12 MW of gas fired and dual fuel capacity in the form of two Worthington and three GE Jenbacher 616 gas engines. Rurelec also has the right to acquire a further 5MW of dual fuel machines and has made arrangements to lease a further 4 MW of GE Jenbacher capacity.
All of Rurelec's initial power generation projects are located in Bolivia. 6 MW of capacity is to be based in Trinidad in the country's lowland Amazonian territory using gas condensate as a fuel source. Rurelec intends to expand in Trinidad and is exploring the use of bio-diesel for its dual fuel reciprocating engines. 10 MW of gas-fired capacity using the high efficiency GE Jenbacher gas engines will be installed in the Department of Tarija to the south of Bolivia.
Rurelec is actively negotiating expansion opportunities in Argentina to the very north of the country, where the national grid is weak, and in Patagonia to the south where there are isolated systems. Argentina and Bolivia both suffer shortages of power generation capacity.
As well as developing new power plant capacity, Rurelec is pursuing public sector contracts to oversee and manage rural electrification projects in Bolivia which are being funded by multi-lateral organisations and European government funds.
Some US $190 million has been committed for public sector funded wires projects in rural areas. Rurelec hopes to be awarded contracts to supervise such projects.
As expected, Rurelec recorded a loss of £107,870 for the period ended 31 December, 2004. On 25 February, 2005 the Company announced that it had completed the purchase of nine GE Jenbacher 616 engines for £1 million and simultaneously sold six of those machines for £1 million, thereby recording a gross profit of £333,000.
Subsequently, the Company announced on 3rd March that it had successfully renegotiated the terms of its October 2004 purchase of two Worthington engines.
Instead of taking an assignment of US $1.2 million of long term debt associated with the machines, Rurelec has made a one time cash payment of US $500,000.
Rurelec has therefore made a headline saving of US $700,000 on the cost of the machines. As a result Rurelec as at today's date has no debt, ownership of 12 MW of plant capacity and over £600,000 of cash or near cash.
Rurelec appointed Carlos Garcia Agreda as General Manager of its Bolivian isolated power subsidiary, Energia para Sistemas Aislados SA ("ESA"). Carlos Garcia is an electrical and mechanical engineer who spent six years at Cooperativa Rural de Electrificación ("CRE"), a distribution co-operative that serves Bolivia's Santa Cruz department and which is also Bolivia's largest rural electrification co-operative, before taking responsibility for rural electrification projects at Bolivia's Vice-Ministry of Electricity. The provision of power for isolated generation has become an important political issue in Bolivia. ESA is in discussions, which may lead to new joint ventures with local partners in Bolivia and Argentina and with multi-lateral agencies for an accelerated roll-out of new power capacity.
In November 2004 funds managed by Gartmore subscribed £255,000 of new Rurelec shares for cash and now owns 4.7 per cent. of the issued share capital of the Company.
Rurelec continues to explore expansion possibilities in line with its intention to become the leading rural power company in Southern Cone of Latin America.
Daniel Stewart & Co. PLC has been appointed the Company's Nominated Adviser, with effect from 30th March 2005.
Jimmy West
Chairman
Interim Results
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