245461 Rurelec Annual Report Cover v1 copy 2 27/06/2017 21:17 Page 1
RURELEC PLC
18 Soho Square, London W1H 3QL
Tel: +44 (0) 20 7025 8026
8/
Visit us online at
www.rurelec.com
ANNUAL REPORT
AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Stock code: RUR
245461 Rurelec Annual Report Cover v1 copy 2 27/06/2017 21:17 Page 2
RURELEC PLC IS AN OWNER, DEVELOPER AND
OPERATOR OF POWER GENERATION CAPACITY
INTERNATIONALLY.
Rurelec’s main business consists of the ownership and development of power generation
facilities on national and regional grids and in isolated areas, selling wholesale electricity as
a generator on commercial terms, through capacity payments or power purchase
agreements (“PPAs”).
COMPANY INFORMATION
Directors
S.C. Morris (Executive)
A.H. Coveney (Executive)
B. Rowbotham (Non-Executive)
Secretary
S.A. Laker
Company number
4812855
Auditor
Saffery Champness LLP
71 Queen Victoria Street
London
EC4V 4BE
Bankers
Coutts & Co
440 Strand
London
WC2R 0QS
Our current business is centred on our share of an operational plant in Argentina whilst
also seeking to sell the remainder of the small hydro portfolio in Peru and to complete the
development of our project in Chile.
Registered office and business address
18 Soho Square
London
W1D 3QL
CONTENTS
Strategic Report
Non-executive Director’s Statement
Review of Financial Performance
Review of Operations
Our Governance
Board of Directors
Director’s Report
Corporate Governance Statement
Our Financials
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Notes to the Financial Statements
Company Information
2
5
6
7
8
10
13
15
16
17
18
19
20
21
22
23
IBC
HIGHLIGHTS
01
01
Rurelec PLC is an owner, developer and operator of power
generation capacity internationally.
Rurelec’s main business consists of the ownership and
development of power generation facilities on national and
regional grids and in isolated areas, selling wholesale electricity as
a generator on commercial terms, through capacity payments or
power purchase agreements (“PPAs”).
Our current business is centred on our share of an operational
plant in Argentina whilst also seeking to sell the remainder of the
small hydro portfolio in Peru and to complete the development of
our larger project in Chile.
Rurelec PLC (AIM: RUR), the electricity utility focused on
ownership and operation of power generation plants in Latin
America, announces its audited results for the year ended
31 December 2016. The annual report will be posted to
shareholders on 2 8 June 2017.
Highlights
•
Focus of the Company has been to continue reducing costs,
to stabilise the Company, and to seek certain asset disposals
•
•
•
Overall loss before tax from continuing operations £ 9.3 million
(2015: £20.0 million)
Further write downs of assets to values directors believe can
be supported in market conditions
Repayment of a Radix loan plus interest of £621k in February
2016
• Group borrowings of £4.0 million (2015: £3.1 million)
• Loss per share 1.65p (2015: 3.57p)
• Net Asset Value per share 5.6p (2015: 6.7p )
•
Qualifi cation in respect of potential accrued interest of Joint
Venture partner loans
Commenting on the results Simon Morris, Rurelec’s Executive
Director, said:
“During 2016 the Company has actively pursued the sale
of certain Group assets. This has been carried out against
a background of continued cost reductions and cash fl ow
constraints. To date no asset disposals have been achieved.
Certain Group assets are currently being marketed.
For most of 2016 liquidity remained an issue, but eased towards
the end of the year when cash remittances from the Group’s
operations in Argentina resumed. This enabled the Company to
settle a number of long standing creditor positions. However,
liquidity remains an issue for the Group given the recent outage
suffered by the operations in Argentina.
The overall loss before tax for the year of £9.3 million refl ects
further write downs on a number of the Group’s assets to values
that the directors believe can be supported in current market
conditions and given the overall fi nancial position of the Group.
Liquidity remains a critical issue for the Group.
For further information please contact:
Rurelec PLC
W.H.Ireland
Simon Morris, Executive Director
Paul Shackleton &
James Bavister
www.rurelec.com
Tel: +44 (0)20 7025 8028
Tel: +44(0) 20 7220 1666
t
r
o
p
e
R
c
g
e
t
a
r
t
S
i
www.rurelec.com
245461 Rurelec Annual Report pp01-pp14.indd C01
245461 Rurelec Annual Report pp01-pp14.indd C01
27/06/2017 21:23
27/06/2017 21:23
0202
NON-EXECUTIVE DIRECTOR’S STATEMENT
During the year, the Company worked towards a sale of the
remaining hydro portfolio in Peru for which the prospective
purchaser paid for exclusivity for part of the period but the sale
unfortunately failed to close and the assets are once again held for
sale. As a result, the Company’s planned disposals of assets to
repay its borrowings are behind schedule.
Nevertheless, the plant in Argentina continues to perform well and
represents an attractive asset in a country where investment in
the power sector is buoyant. If the intended disposal of non-core
assets is achieved in the near future, the Company remains poised
to lever off its position as an incumbent generator in a market
which continues to expand.
Brian Rowbotham
Non-executive Director
2 8 June 2017
Dear Shareholder
It is my duty to present the results of Rurelec PLC (“Rurelec”)
for the fi nancial year ended 31 December 2016, which has
seen further stabilisation in the Company’s fi nancial situation
through additional cost cutting. During the course of the year,
the Company was offered an extension of its original bridging
facility from Bridge Properties (Arena Central) Limited (“BPAC”)
and entered into an additional small facility from the same lender
under the original security, which has provided additional support
against the threats that could arise in the event that receipts
from Argentina are not as forecast at any time due to operational
reasons. Since the year end these facilities have been further
extended to the end of June 2018.
Outlook
The Company is well placed in its joint venture of its Argentine
asset in a country which is making rapid progress in improving
its energy systems to contribute to economic development,
sustainability and energy security and where demand continues to
grow at around 6% per annum. During the year, CAMMESA, the
market administrator, issued tenders for 1.9 GW of new thermal
capacity and also launched the RenovAr project to procure 1 GW
o f renewables as part of Argentina’s programme to ensure that at
least twenty per cent. of its generation capacity will be provided
from renewables by 2025. Energia del Sur S.A. (“EdS”) has ready
potential to increase its site capacity through an expansion project
which is under continuous review and demand in the Chubut
region would support the initiative.
By contrast, there has been a downturn in demand in Chile,
due to a slowdown in the mining sector and saturation of the
transmission system in the north from new renewable projects.
Without improvement to the transmission system, and an upturn
in demand, it was not, in 2016, opportune to progress the Central
Illapa project in Mejillones although all consents to construct the
project are now in place. Recently there have been signs that
new investment in the mining sector is beginning to pick up and
an increase in demand for copper in particular could reverse the
recent decline. As a result, we are currently looking at ways in
which the project can be further progressed.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp01-pp14.indd C02
245461 Rurelec Annual Report pp01-pp14.indd C02
27/06/2017 21:23
27/06/2017 21:23
STRATEGIC REPORT
03
Strategy
The strategy for the Group continues to be determined by its
fi nancial position, the reasons for which are set out in more
detail below. The Group will dispose of assets, in particular the
hydro portfolio in Peru. The level of ongoing development work
continues to be severely restricted due to the Group’s fi nancial
position. On completion of certain asset sales, the Group can
return to a stable fi nancial footing. The Board will then decide
whether certain unfi nished development work, such as the Central
Illapa project in Chile, can be completed. Cost control will remain
a key element of the Group’s strategy.
The overall strategy is to stabilise the fi nancial position of the
Group, to enable the Board to realise as much value for the asset
portfolio (including further development work where appropriate),
and return that value to shareholders.
Liquidity
The liquidity issues facing the Group in early 2016, and the
reasons behind them, were fully set out in last year’s Strategic
Report.
During 2016, BPAC provided new facilities to the Group of
£1.6 million, of which £1.52 million has been drawn down. These
funds were used to repay the short-term facility and interest
thereon from Radix Investments UK Limited of £621,000, and to
meet on-going working capital requirements. The BPAC loan was
rescheduled on 8 June 2017 for repayment on 30 June 2018.
During the fi rst 8 months of 2016 the cash receipts from our plant
in Argentina in Comodoro Rivadavia were severely restricted.
In September 2016 the Group started to receive more regular
payments from Argentina in respect of the Group’s outstanding
loans to EdS. This enabled the Company to settle a number of
long outstanding creditors. In particular, the Company was able to
agree a debt restructuring involving both Ethos Energy Italia S.p.A.
and IPSA Group PLC (“IPSA”) during February 2017 in respect of
outstanding monies in relation to the two Siemens 701DU turbines
stored in Italy. The balance of this debt under the restructuring
continues to be paid by the Company.
On 31 March 2017, as announced, EdS ’s plant in Argentina, in
which the group has a 50% interest, suffered damage as a result
of severe weather conditions, resulting in the plant ceasing to
operate for the period until 23 May 2017. This outage caused
a short- term reduction in remittances from Ed S whilst they
re -assessed their fi nancial position. However, the cumulative 2017
receipts at the time of the outage were running ahead of 2016
and following EdS’s assess ment of their cash position since the
plant has recommenced generation they expect full year 2017
remittances to be greater than 2016. Notwithstanding this, and
in order to strengthen its position the Board is seeking alternative
sources of fi nance to bridge any potential funding gap, none of
which have been secured yet.
Management team
Following the signifi cant changes in the Board during 2015,
Brian Rowbotham (non-executive) and I have remained in offi ce
throughout 2016. The Board was further strengthened by the
appointment of Andy Coveney on 16 November 2016 as fi nance
director. The appointment of Andy has been a very welcome
addition to the Board.
I would like to again thank Brian for his continued support through
what has been another diffi cult year for your Company.
Financial results
The operating loss for the year of £1 2.8 million is an improvement
on that incurred last year (2015: £21.9 million). Strict control over
administration expenses of £2.4 million (2015: £4.4 million) has
given rise to a 45% reduction in this category. Further signifi cant
write-downs in the carrying value of certain Group assets totalling
£1 0.5 million (2015: £17.6 million) has led to a marked impact
on the results. These write downs refl ect the Board’s view of
the carrying values for the Group’s assets in current market
conditions. The overall loss before tax for the year was £ 9.3 million
(2015: £20.0 million).
The Group continues to actively market our Peruvian assets for
sale. At the time of this report there can be no guarantee that
these sales will conclude.
Until there is a disposal of assets, the Group is dependent upon
joint venture receipts from Argentina in order to comply with
payment arrangements made since the year-end with its creditors.
There exists uncertainty as to the timing and the quantum of the
receipts from its joint venture in Argentina and for this reason the
Directors are, in the meantime, pursuing alternative sources of
working capital until disposal receipts are assured, none of which
have been secured yet.
Key performance indicators
The Directors use a range of performance indicators to monitor
progress in the delivery of the Group’s strategic objectives,
to assess actual performance against targets and to aid
management of the businesses.
Rurelec’s key performance indicators (“KPIs”) include both
fi nancial and non-fi nancial targets which are set annually.
Financial KPIs
Financial KPIs address operating profi tability, net asset value and
earnings per share.
i) Operating profi tability
Operating loss excludes all non-operating costs, such as fi nancing
and tax expenses as well as one-off items and non-trading items
such as negative goodwill. The exclusion of these non-operating
items provides an indication of the performance of the underlying
businesses. The Group made a loss of £1 2.8 million in the year
(2015 £21.9 million loss).
www.rurelec.com
t
r
o
p
e
R
c
g
e
t
a
r
t
S
i
245461 Rurelec Annual Report pp01-pp14.indd C03
245461 Rurelec Annual Report pp01-pp14.indd C03
27/06/2017 21:23
27/06/2017 21:23
iii) Technical availability
Technical availability measures when a plant is available for
dispatch. The measurement method excludes time allowed for
planned maintenance activities which occur at regular intervals
during the life of the unit plus an allowance for unplanned outages.
Unplanned and forced outages in excess of the annual allowance
will cause a reduction in the technical availability factor. Average
availability through the year for our plant in Argentina was 92.6 per
cent. due to unplanned and forced outages and a schedule
maintenance outage (2015: 94.4 per cent.), making the plant one
of the most reliable in the Argentine interconnected system.
04
STRATEGIC REPORT
ii) Net asset value
Net asset value is calculated by dividing funds attributable to
Rurelec’s shareholders by the number of shares in issue. The net
assets of the Group reduced in the year to 5.6 pence per share
(2015 6. 7 pence per share).
iii) Earnings per share
Earnings per share provide a measure of the overall profi tability
of the Group. It is defi ned as the profi t or loss attributable to each
Ordinary Share based on the consolidated profi t or loss for the
year after deducting tax and minority interests. Growth in earnings
per share is indicative of the Group’s ability to identify and add
value. The Group made a loss of 1.65 pence per share in the year
(2015: loss of 3.57 pence per share) and hence there were no
positive earnings per share.
Non-Financial KPIs
Non-fi nancial KPIs address other important technical aspects of
the business, such as gross capacity, operating effi ciency and
availability.
i) Gross capacity
Gross capacity is the total generation capacity owned by
Group companies and is affected by acquisitions, expansion
programmes and disposals. The group continues to own three
turbines ready for deployment in projects, although it is expected
that local opposition to the Arica project in Chile is likely to lead to
the turbine being deployed elsewhere.
ii) Operating effi ciency
Operating effi ciency is the average operating effi ciency of the
generating plant owned by Group companies. It can be improved
through the installation of more thermally effi cient turbines,
refurbishment activities or through conversion to combined cycle
operation. No change was noted in the operating effi ciency of the
Group in the year.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp01-pp14.indd C04
245461 Rurelec Annual Report pp01-pp14.indd C04
27/06/2017 21:23
27/06/2017 21:23
REVIEW OF FINANCIAL PERFORMANCE
05
Rurelec Chile
The development operations in Chile have expensed limited direct
costs in the year of £68k (2015: £139k). Capitalised development
costs have accumulated to £ 0.4 million (2015: £1.1 million,
including Arica) on the Central Illapa project. In 2016 the Arica
project was impaired by £0.3 million (2015: £2.3 million). The
development costs associated with the Central Illapa project were
not impaired in 2016 or 2015.
Cascade Hydro Power (Peru)
Rurelec has, after IFRS impairments, outstanding loans of
£1.3 million (2015: £1.1 million) to the Cascade group at the
period end. The other assets of the Cascade group include
£2.4 million (2015: £2.1 million) of bonds held by the Ministry of
Minerals and Energy in connection with the Colca project.
Group Results
The Group loss after tax for the fi nancial year under review
is £ 9.3 million (2015: £20.0 million loss). Most of the losses
were associated with impairments and loss on disposals of
£10.5 million (2015: £17.6 million). The impairment losses were
£ nil (2015: £13.3 million) for Argentina operations, £1.3 million
(2015: £2.3 million), for Chilean operations, excluding the
701 turbine write -down of £6.4 million (2015: nil), £41k
(2015: £1.7 million) from the disposal of Independent Power
Corporation and £2.7 million (2015: £0.2 million) for Peruvian
operations.
The results for the operations in Argentina, Peru, and Chile are
shown below.
Group revenue was £0.1 million (2015: £0.2 million), Cost of Sales
w as £nil (2015: £22k) Operating and Administrative expenses
amounted to £2.4 million (2015: £4.4 million). Operating loss was
£1 2.8 million (2015: £21.9 million loss). The loss before tax is
£ 9.3 million (2015: £20.0 million loss). The basic loss per share is
1.65p (201 5: 3.57p loss). In 2016, the total assets of £ 3 9.1 million
(2015: £44.1 million) includes assets of £ 2. 2 million (201 5: £3.6
million), which are held for sale. Total equity stands at £ 31.4 million
(2015: £37.5 million), or a Net Asset Value 5.6 pence per share
(2015: 6. 7 pence per share).
A more detailed analysis of the business entities is given below.
Energia del Sur S.A. Results
At the operating level the plant in Comodoro Rivadavia and
therefore based on 100% of EdS’s activities the net operating
profi t for the year was AR$ 111.0 million (2015: AR$ 67.5 million)
on revenues of AR$ 375.3 million (2015: AR$ 261.6 million),
whilst the gross operating profi t was AR$ 333.5 million (2015:
AR$ 100.7 million). The net profi t for the year in EdS was AR$
27.6 million (2015: loss AR$ 49.6 million) which included foreign
exchange losses of AR$ 34.2 million (2015: AR$ 85.0 million).
As set out in note 26 the Directors have determined that
the Group is a joint venture operation and is therefore equity
accounted.
t
r
o
p
e
R
c
g
e
t
a
r
t
i
www.rurelec.com S
245461 Rurelec Annual Report pp01-pp14.indd C05
245461 Rurelec Annual Report pp01-pp14.indd C05
27/06/2017 21:23
27/06/2017 21:23
06
REVIEW OF OPERATIONS
Argentina
Operations at the power plant continue to allow EdS to show a
good availability record. Gross energy output was 3.8 per cent.
lower at approximately 871 GWh (2015: 905 GWh), this was due
to unplanned and forced outages and scheduled maintenance.
The average heat rate of the plant was 8.39 MMBTU/MWh
(2015: 8.37). The average heat rate for the plant includes fuel
consumption on both the gas turbines and auxiliary fi ring of the
steam turbine.
The following table sets out the Group’s share of its interest in the
joint venture in Argentina following the changes in the accounting
for joint ventures to the equity accounting method:
Year ended
31.12.16
£’000
Year ended
31.12.15
£’000
9,325
(9,198)
(895)
(768)
5,482
4,853
(19,236)
(7,989)
8,908
(9,109)
(2,930)
(3,131)
7,772
4,236
(15,757)
(9,339)
Revenue attributable to the Group
Expenses
Foreign Currency Ex change
Net loss
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Chile
Arica
Following the reassessment of the project the Board is considering
deploying the Frame 6B turbine acquired for the project
elsewhere. An application has therefore been made to the state
asset bureau for a refund of the purchase price for the land and a
buyer is to be sought for the turbine unless it can be redeployed.
Given the uncertainty of the future sale of the turbine and the
recoverability of the land cost an impairment charge of £1.3 million
(2015: £2.3 million) has been recorded in the year.
Central Illapa
The project has continued to make some progress in
development.
The Group carrying value for projects are assessed for possible
impairments. In light of current local market conditions, in order
for the project to be attractive to joint venture partners, the capital
value of the 701 Siemens Turbines going into the project has
been assessed at $12.0 million. The Directors also obtained an
independent valuation produced by a competent person. The
report stated that the price in the turbine market has fallen due to
an increase in stock levels resulting in the fair value of the turbines
being $12.0 million. This represents an impairment of $13.0 million
and, after exchange rate differences an impairment of £6.4 million
has been charged in 2016 (2015: nil).
Peru
The 5.3 MW Canchayllo plant was sold in May 2015 to Energías
Renovables de los Andes, S.A., a subsidiary of Union Group of
Uruguay. The Group has retained a reduced presence in Lima to
maintain the development rights and manage the sale of the 12.05
MW Colca project in the province of Huancayo on the Junin River
for which performance bonds have been lodged. Bonds in respect
of the other two development projects Chilcay and Huasicancha
have been forfeited because of the decision of the board not to
pursue marginal projects. Exclusive negotiations for the sale of
Colca, Chilcay and Huisicancha project companies commenced in
late 2015 and continued into 2017. Unfortunately, the prospective
buyer pulled out just prior to expected signing. Other alternative
prospective purchasers are currently in negotiation. However, at
this stage there can be no guarantee that the sales will close. If a
sale is completed, then it is expected that net proceeds from the
release of the performance bonds will be available to Rurelec.
The large Santa Rita 255 MW project rights are retained by Cascade
Hydro Power SAC but contrary to expectation, to date no tender
for large hydro PPA’s has been announced. When this occurs, there
would be an opportunity to work with or sell the project rights to a
strong partner active in the large-scale hydro sector.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group, are possible
changes in demand and pricing for electricity in the markets in
South America in which the Group operates, relate to political risk
and uncertainties in the fi nancial markets.
a) Political risk – there exists signifi cant political risks in areas
where the Group operates.
b) Financial markets – Whilst project fi nance may be available
in the markets in which the Group operates, the Group’s
plans remain dependent on raising project fi nance from a
combination of local partners and lending institutions. The
Group is seeking to broaden its base of potential partners and
lending institutions.
c) Exposure to foreign currency – The Group’s activities are
in South America and therefore the Group’s results will be
affected by exchange rate movements and local infl ation
rates. Furthermore, past experience has shown that exchange
controls restrictions can sometimes be applied and these may
have an impact on the Group’s ability to repatriate funds to
the parent company. The Group seeks to limit these risks by
raising funds in the currency of the operating units.
d) Effi cient operation – The Group has an effective maintenance
programme and has entered into long term service agreements
to reduce these risks as appropriate.
e) Liquidity – The Group needs to be in a position to meet its
short-term cash requirements. Please see Going Concern in
the Directors Report and note 1b for further details.
The Strategic Report was approved by the Board of Directors
on 28 June, 2017 and was signed on its behalf by Simon Morris
(Executive Director).
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp01-pp14.indd C06
245461 Rurelec Annual Report pp01-pp14.indd C06
27/06/2017 21:23
27/06/2017 21:23
BOARD OF DIRECTORS
07
07
BRIAN ROWBOTHAM
Non-Executive Director – appointed 16 October 2013
Brian is the Senior Independent Non-Executive Director and
Chairman of the Audit Committee. He worked as a Chartered
Accountant with Deloitte and Touche. He has extensive
experience working in the City of London, joined Teather and
Greenwood in 1997 and was involved as partner and then Finance
Director in the company’s fl otation on AIM and subsequent move
to the Offi cial List. He ran his own consultancy specialising in
turnarounds and start-ups until joining Hitchens, Harrison & Co
plc in January 2005. He left Hichens, Harrison & Co plc after its
acquisition by Religare in 2008. Brian is a Fellow of the Institute of
Chartered Accountants in England and Wales
SIMON MORRIS
Executive Director – appointed 19 July 2015
Fellow of the Institute of Chartered Accountants in England
and Wales, qualifi ed as a Chartered Accountant in 1980. After
obtaining a degree in Business Studies, spent his career with
Grant Thornton and became a partner in 1988. He specialised in
corporate fi nance and corporate recovery, principally restructuring
work. He was appointed Chief Operating Offi cer of Grant Thornton
UK in 2008, retiring in late 2011. Since then he has acted as a
business consultant. He is also an accredited mediator.
ANDY COVENEY
Finance Director– appointed 16 November 2016
Member of the institute of Chartered Accountants, qualifi ed
as Chartered Accountant in 1990. After obtaining a degree
in Geology from the University of Durham he joined Deloitte
Haskins & Sells, later moving into Corporate Finance advisory
work with Coopers & Lybrand. Left the profession in 1993,
embarking on a career as fi nance director/managing director
of several manufacturing & distribution businesses, specialising
in turn-arounds, cash fl ow management & profi t improvement,
including CP Pharmacuticals (Holdings) Ltd, Benders Holdings
Ltd & Bernstien Holdings Ltd. He established his own advisory &
consultancy business in 2011 to specialise in & invest in business
turn arounds & growth companies.
e
c
n
a
n
r
e
v
o
G
r
u
O
www.rurelec.com
245461 Rurelec Annual Report pp01-pp14.indd C07
245461 Rurelec Annual Report pp01-pp14.indd C07
27/06/2017 21:23
27/06/2017 21:23
08
DIRECTOR’S REPORT
THE DIRECTORS SUBMIT THEIR
ANNUAL REPORT TOGETHER
WITH THE AUDITED FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER, 2016.
Principal activities
The Company and the Group’s principal activity is the acquisition,
development and operation of power generation assets in markets
in Latin America.
Since the Company’s admission to AIM in August 2004, the
Company has acquired interests in power generation operations in
Bolivia (disposed of in 2010) and Argentina and, since 2012, has
commenced development of assets in Peru and Chile.
Results and dividends
The Group results for the year ended 31 December, 2016 are
set out in the Consolidated Statement of Total Comprehensive
Income.
No dividend was paid during the year to 31 December, 2016
(2015: nil).
Share capital
Details of the issued share capital are set out in Note 19.
Going concern
The Company has been in negotiations for prospective sales of
Group assets. There exists uncertainty as to the timing of the sales
of assets as well as the quantum of the corresponding proceeds.
During 2016 and since the year end the Company has reached
payment agreements with and settled certain creditors resulting
in an overall reduction in trade and other payables. Until there is
a disposal of assets, the Group is reliant on repayments of loans
from its joint venture Argentine operations. However, the quantum
and timing of such receipts may be subject to variation and are
not guaranteed as there is no formal agreement in place. Whilst
anticipated loan repayments from the joint venture are expected
to be suffi cient to meet the working capital requirements for the
Group, the Directors are considering raising additional facilities to
increase headroom.
The Group’s 100% subsidiary Cascade Hydro Ltd has outstanding
third party loans of £2.4 million (2015: £2.2 million). These loans
have not been repaid in accordance with their original payment
schedules. Further details are set out in Note 24.
On the basis that the Group receives the joint venture remittances
referred to above or the alternative sources of working capital,
the Directors have assessed that the Group would have suffi cient
working capital based on their review of cashfl ow forecasts for
a period of at least 12 months from the signing of the fi nancial
statements.
Directors
The following Directors served during the year:
Brian Rowbotham – Non-Executive Director
Simon Morris – Executive Director
Andy Coveney – Executive Director (appointed 16 November
2016)
Directors’ interests
The Directors’ benefi cial interests in the shares of the Company
were on the reference dates as stated below:
Brian Rowbotham
450,000
450,000
450,000
23 .06.201 7
31.12.2016
31.12.2015
Signifi cant shareholdings in the Company
In addition to the shareholdings shown above, the Company is
aware of the following interests of 3 per cent or more in the issued
ordinary share capital of the Company notifi able at 23 June 2017,
being the last practicable date for reporting this information.
Sterling Trust Ltd
YF Finance Ltd
Number of
shares % holding
303,092,303
96,565,166
53.989
17.201
HSBC Client Holdings Nominees
(UK) Limited
16,884,673
3.008
The percentages shown are based on 561,387,586 shares in
issue.
Risk management and objectives
The fi nancial risk management policies and objectives are set out
in Note 28.
Directors’ responsibilities
The Directors are responsible for preparing the Strategic Report,
the Directors’ Report, Annual Report and the fi nancial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare fi nancial
statements for each fi nancial year. Under that law the Directors
have to prepare the fi nancial statements in accordance with
International Financial Reporting Standards (“IFRSs”) as adopted
by the European Union. Under company law, the Directors must
not approve the fi nancial statements unless they are satisfi ed that
they give a true and fair view of the state of affairs and profi t or
loss of the Company and Group for that period. In preparing these
fi nancial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are reasonable
and prudent;
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp01-pp14.indd C08
245461 Rurelec Annual Report pp01-pp14.indd C08
27/06/2017 21:23
27/06/2017 21:23
09
09
• state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the fi nancial
statements;
• prepare the fi nancial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are suffi cient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the fi nancial position of the Company and enable them to ensure
that the fi nancial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors confi rm that:
•
•
•
there is no relevant audit information of which the Company’s
auditors are unaware; and
the Directors have taken all steps that they ought to have taken
to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that information.
the Directors are responsible for the maintenance and integrity
of the corporate and fi nancial information included on the
Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of fi nancial
statements may differ from legislation in other jurisdictions.
Auditor
Pursuant to Section 489 of the Companies Act of the Companies
Act 2006, the auditors are Saffery Champness LLP.
On behalf of the Board
Susan Laker
Company Secretary
2 8 June, 2017
e
c
n
a
n
r
e
v
o
G
r
u
O
www.rurelec.com
245461 Rurelec Annual Report pp01-pp14.indd C09
245461 Rurelec Annual Report pp01-pp14.indd C09
27/06/2017 21:23
27/06/2017 21:23
1010
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
Policy Statement
The Board is committed to applying high standards of corporate
governance and integrity to all our activities. As the Company
is listed on the AIM Market of London Stock Exchange PLC, it
is not required to comply with all aspects of the UK Corporate
Governance Code 201 4 (the “Code”). The Group does not
comply with the Code. However, the Board has been briefed on
the Code and is accountable to the Company’s shareholders for
good corporate governance and therefore seeks to draw on those
aspects of the Code that are considered to be relevant to the
Group.
Board of Directors
Subject to the Articles of Association, UK legislation and any
directions given by special resolution, the business of the Group
is managed by the Board. The Board is responsible for providing
leadership to the management of the Group, determining strategy
and ensuring that agreed strategy is implemented as well as
approving major capital expenditure items, disposals, annual
budgets and fi nancing matters.
The Board appoints its members and those of its principal
committees following the recommendations of the Nominations
and Remunerations Committees. The Board regularly reviews
the identifi cation, evaluation and management of the principal
risks faced by the Group and the effectiveness of the Board’s
internal controls. The Board considers the appropriateness of
its accounting policies on an annual basis. The Board believes
that the accounting policies, in particular in relation to income
recognition are appropriate. Financial results with comparison to
budget and forecast results are reported to the Board on a regular
basis, together with commercial reports on operational issues.
Signifi cant variances from budget or strategy are discussed at
Board meetings and actions set in place to address them.
The Board comprises one Non-Executive Director and two
Executive Directors: the Chief Executive Offi cer and the Finance
Director. All Directors are involved in signifi cant decisions.
Board and committee meetings are scheduled in line with the
fi nancial calendar of the Group. The timing of meetings ensures
that the latest operational detail is available and that appropriate
time and focus can be given to matters under consideration.
The Board met 18 times throughout the year to discuss a formal
schedule of business.
Roles of Non-Executive Director and CEO
The Code requires that there should be a clear division of
responsibilities between the running of the Board and the
executive responsible for the Group’s business so as to ensure
that no one person has unrestricted powers of decision.
The Non-Executive Director is responsible for leadership of the
Board ensuring its effectiveness and setting its agenda. Once
strategic and fi nancial objectives have been agreed by the Board,
it is the Chief Executive Offi cer’s responsibility to ensure that they
are delivered upon.
Composition of and Appointments to the Board
The Code requires that there should be a balance of Executive
and Non-Executive Directors and when appointing new directors
to the Board, there should be a formal, rigorous and transparent
process.
The Board comprises one Non-Executive Director, Brian
Rowbotham who is regarded by the Board as independent in
character and judgement and two Executive Directors. The sole
Executive Director and Chief Executive Offi cer for most of the year
was Simon Morris. On 16 November 2016, Andrew Coveney was
appointed as Finance Director to strengthen leadership in fi nancial
management and reporting. Simon Morris and Andrew Coveney
form the management team. Short biographies of the Directors
are given on page 6.
The Board is satisfi ed with the balance between executive and
non-executive directors. The Board considers that its composition
is appropriate in view of the size and requirements of the Group’s
business and the need to maintain a practical balance between
executive and non-executive directors.
Each member of the Board brings different experience to the
Board and the Board Committees. The Board is satisfi ed that
there is suffi cient diversity in the Board structure to bring a balance
of skills, experience, independence and knowledge to the Group.
It is noted that the non-executive director holds shares in the
Company but the Board consider that this does not impact his
independence.
The Code requires that the Board undertakes a formal and
rigorous annual evaluation of its own performance and that of its
Committees and Directors. The Board reviews its composition
annually to ensure there is adequate diversity to allow for its
proper functioning and that the Board works effectively as a unit.
When a new appointment is made to the Board, consideration
is given to the particular skills, knowledge and experience
that a potential new member could add to the existing Board
composition.
Re-election
Under the Code, the Directors should offer themselves for re-
election at regular intervals. Additionally, under the Company’s
Articles of Association, at least one third of the directors who are
subject to retirement by rotation are required to retire and may be
proposed for re-election at each annual general meeting (“AGM”).
New directors who were not appointed at the previous AGM,
automatically retire at their fi rst AGM and, if eligible, can seek re-
appointment.
Internal Controls
The Board takes responsibility for establishing and maintaining
reliable systems of control in all areas of operation. These systems
of control, especially fi nancial control, can only provide reasonable
but not absolute assurance against material misstatement or loss.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp01-pp14.indd C10
245461 Rurelec Annual Report pp01-pp14.indd C10
27/06/2017 21:23
27/06/2017 21:23
11
11
The key matters relating to the systems of internal control are set
out below:
•
the Company operates a comprehensive system for reporting
fi nancial and non-fi nancial information to the Board including
review of strategy and fi nancial budgets.
• fi nancial performance is reviewed against budget, forecast and
other performance indicators with action dictated according to
each meeting.
• suffi cient resource is focused to maintain and develop internal
control procedures and information systems especially in
fi nancial management.
The Board considers that there have been no substantial
weaknesses in internal fi nancial controls that have resulted in any
material losses, contingencies or uncertainties that have to be
disclosed in the accounts.
Information and Development
The Code requires that the Board should be supplied in a timely
fashion with information in a form and of a quality appropriate to
enable it to discharge its duties.
Updates dealing with changes in legislation and regulation relevant
to the Group’s business are provided to the Board by external
advisors, the Finance Director and legal counsel. Directors may
seek independent professional advice at the Company’s expense
in furtherance of their duties as Directors.
Investor Relations
The Group values the views of its shareholders and recognises
their interest in the Group’s strategy and performance, The
Directors hold meetings with institutional shareholders to discuss
and review the Group’s activities and objectives. Communication
with private shareholders is largely through the Annual General
Meeting (“AGM”), where participation is encouraged and where
the Board is available to answer questions.
The AGM is used to communicate with institutional and private
investors with whom dialogue is encouraged. Directors also
undertake consultation with major shareholders from time to time.
Feedback is reported to the Board so that all Directors develop
an understanding of the views of major shareholders. Trading
updates and press releases are issued as appropriate and are
available on the Company’s website, where up to date information
is maintained on the investor section at www.rurelec.com.
Every shareholder has access to a full annual report each year end
and an interim report at the half year end. Care is taken to ensure
that any price sensitive information is released to all shareholders
at the same time in accordance with London Stock Exchange
requirements.
AIM Rules Compliance Report
Rurelec is quoted on AIM, London Stock Exchange’s market for
small cap companies. Rurelec complies with the AIM Rules, in
particular AIM Rule 31 which requires the following:
•
•
•
•
•
to have in place suffi cient procedures, resources and controls
to enable compliance with the AIM Rules;
to seek advice form the Nominated Advis er (“Nomad”)
regarding its compliance with the AIM Rules whenever
appropriate and to take that advice into account;
to provide the Nomad with any information it reasonably
requests in order for the Nomad to carry out its responsibilities
under the AIM Rules for Nomads, including any proposed
changes to the Board and to provide draft RNS notifi cations in
advance;
to ensure that each of the Directors accepts full responsibility
collectively and individually for compliance with the AIM Rules;
to ensure that each Director discloses without delay all
information which the Company needs to disclose in order
to comply with AIM Rule 17 (Disclosure of Miscellaneous
Information) insofar as that information is known to the Director
or could with reasonable diligence be ascertained by the
Director.
Audit Committee
The Audit Committee comprises Brian Rowbotham as Chairman
of the Committee and Simon Morris. Mr Rowbotham and
Mr Morris are Chartered Accountants and have recent and
relevant fi nancial and commercial experience.
The Committee’s remit is to review fi nancial reporting practices,
internal fi nancial controls and internal and external audit policy
including the appointment of the Company’s Auditor. During the
year, the Audit Committee met three times to discuss previous
auditors partner extension, review the draft half year and annual
fi nancial statements.
The Audit Committee considered the appointment of new auditors
for the Company after the current auditors, Grant Thornton w as
coming to the end of an eleven year tenure and also since the
current senior auditor, Chris Smith, had been in place for six years,
an additional year to the maximum of fi ve years of representation.
A tender for new auditors for the Company and its group of
companies was carried out and under the recommendation of
the Audit Committee, Saffery Champness LLP was appointed as
external auditor of Rurelec PLC and its group of companies.
Remuneration Committee
The Remuneration Committee comprises Brian Rowbotham who
reviews the remuneration policy for the Executive Directors and for
key management personnel. The Executive Director determines
the remuneration arrangements for the Non-Executive Director.
No Director may participate in decisions regarding his or her own
remuneration. Details of the Directors’ remuneration can be found
in Note 8.
www.rurelec.com
e
c
n
a
n
r
e
v
o
G
r
u
O
245461 Rurelec Annual Report pp01-pp14.indd C11
245461 Rurelec Annual Report pp01-pp14.indd C11
27/06/2017 21:23
27/06/2017 21:23
12
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 31 DECEMBER 2016
Nomination Committee
The Nomination Committee presently comprises Brian
Rowbotham. The Committee is responsible for monitoring
the composition of the Board and makes recommendations
to the Board on all new Board appointments and succession
planning. The Board has not used external consultants in the
appointment of Directors. All Directors are subject to re-election
by shareholders in accordance with the Company’s Articles of
Association.
Health, Safety and Environmental Protection
Policy
The Group is committed to compliance with all relevant laws
and regulations and continues to assess its operations to ensure
protection of the environment, the community and the health
and safety of its employees. The Group maintains appropriate
procedures to ensure that all activities are carried out in
compliance with safety regulations, in a culture where the safety
of personnel is paramount and which recognises environmental
sustainability and respect for cultural and heritage issues.
Share Dealing Code
The Company has issued a new Share Dealing Code in
compliance with its obligations under the Market Abuse
Regulations which covers dealings by Persons Discharging
Managerial Responsibilities (“PDMRs”) and certain employees
of the Company and its subsidiaries. The Share Dealing Code
restricts dealings in shares during designated closed periods and
at any time when in possession of unpublished price sensitive
information.
Compliance Statement
The Board recognises that the Company is not obliged to and
does not comply with the Code. The board constantly monitors its
compliance and opportunities to improve.
Susan Laker
Company Secretary
2 8 June 2017
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp01-pp14.indd C12
245461 Rurelec Annual Report pp01-pp14.indd C12
27/06/2017 21:23
27/06/2017 21:23
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RURELEC PLC
13
13
accrued interest was payable and Basic Energy Limited have not
confi rmed the total accrued interest that is owed to them.
Opinion on fi nancial statements
In our opinion, except for the possible effects of the matter
described in the Basis for Qualifi ed Opinion paragraph:
•
•
•
the fi nancial statements give a true and fair view of the
state of affairs of the group and the parent company as at
31 December 2016 and of the group’s loss for the year then
ended; and
the group fi nancial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union;
and
the parent company fi nancial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the
provisions of the Companies Act 2006; and
•
the fi nancial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Emphasis of matter – Going Concern
In forming our opinion on the fi nancial statements, which is
qualifi ed, we considered the adequacy of disclosures made on
Page 23 of the fi nancial statements concerning the going concern
status of the Company. In order to meet trade payables and
borrowings falling due within one year, the Company is dependent
on the continuing receipt of loan repayments from Energia del Sur
SA. There is no formal agreement in place for the repayment of
the loan resulting in a material uncertainty that casts doubt on the
Company’s ability to continue as a going concern.
Emphasis of matter – Realisation of assets
In forming our opinion on the fi nancial statements, which is
qualifi ed, we considered the adequacy of disclosures made in
Note 9b and 16b to the fi nancial statements concerning loans to
Group undertakings and inventories.
The realisation of amounts due from Group undertakings of
£10.34m included within the Company Statement of Financial
Position are dependent on the realisation of assets held in those
Group undertakings which is uncertain.
The realisation of inventories of £9.7m included within the
Company Statement of Financial Position is dependent on
achieving either the sale of these assets or the successful
development of the Illapa project, which are uncertain.
Independent auditors’ report to the members
We have audited the fi nancial statements of Rurelec Plc for the
year ended 31 December 2016 set out on pages 15 to 48. The
fi nancial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as
regards the parent company fi nancial statements, as applied in
accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required
to state to them in an auditors’ report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of directors and
auditors
As explained more fully in the Directors’ Responsibilities
Statement, the directors are responsible for the preparation of
the fi nancial statements and for being satisfi ed that they give a
true and fair view. Our responsibility is to audit and express an
opinion on the fi nancial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
Scope of the audit of the fi nancial statements
An audit involves obtaining evidence about the amounts and
disclosures in the fi nancial statements suffi cient to give reasonable
assurance that the fi nancial statements are free from material
misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate
to the group’s and the parent company’s circumstances and
have been consistently applied and adequately disclosed; the
reasonableness of signifi cant accounting estimates made by the
directors; and the overall presentation of the fi nancial statements.
In addition, we read all the fi nancial and non-fi nancial information
in the Annual Report to identify material inconsistencies with the
audited fi nancial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Basis for Qualifi ed Opinion
The Annual Report discloses the Group’s share of assets and
liabilities of Patagonia Energy Limited, in which it holds a 50%
interest. Included within the joint venture’s liabilities of £54.5m,
as disclosed in Note 26, is US$6.31m payable to Basic Energy
Limited, the joint venture partner. No accrued interest has been
refl ected in these fi nancial statements and we were unable to
obtain suffi cient audit evidence in respect of potential accrued
interest. The Group did not have appropriate evidence that no
www.rurelec.com
l
i
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp01-pp14.indd C13
245461 Rurelec Annual Report pp01-pp14.indd C13
27/06/2017 21:23
27/06/2017 21:23
14
14
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RURELEC PLC
Other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of the
audit:
•
the information given in the Strategic Report and the Directors’
Report for the fi nancial year for which the fi nancial statements
are prepared is consistent with the fi nancial statements; and
•
the Strategic Report and the Directors Report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identifi ed material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
•
the parent company fi nancial statements are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specifi ed by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Jamie Cassell
(Senior Statutory Auditor)
For and on behalf of
Saffery Champness LLP
Chartered Accountants
Statutory Auditors
71 Queen Victoria Street
London
EC4V 4BE
2 8 June 2017
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp01-pp14.indd C14
245461 Rurelec Annual Report pp01-pp14.indd C14
27/06/2017 21:23
27/06/2017 21:23
CONSOLIDATED INCOME
STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2016
15
Revenue
Cost of Sales
Gross Profit
Administrative Expenses
Other Expense
Operating Loss
Share of Joint Venture Profit/(Loss)
Foreign Exchange Gains/(Losses)
Finance Income
Finance Expense
Loss before Tax
Tax Expense
Loss for the year attributable to owners of the Company
Earnings per Share
Basic Loss per Share
Diluted Loss per Share
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
NOTES
4
6
7
9B
26
9a
10
10
11
12
95
–
95
(2,420)
(10 ,5 00)
(1 2,825)
–
1,243
2,683
(355)
(9,254 )
(4)
(9,258 )
( 1.65)
( 1.65)
179
(22)
157
(4,435)
(17,572)
(21,850)
–
(106)
2,385
(458)
(20,029)
(3)
(20,032)
(3.57)
(3.57)
245461 Rurelec Annual Report pp15-pp22.indd C15
245461 Rurelec Annual Report pp15-pp22.indd C15
27/06/2017 21:23
27/06/2017 21:23
i
l
s
a
c
n
a
n
F
r
u
O
i
www.rurelec.com
16
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Loss for the year
Other Comprehensive Income/(Loss) for the year:
Items that will be subsequently Reclassified to Profit & Loss:
Exchange Differences on translation of Foreign Operations
Total Other Comprehensive Income/(Loss)
NOTES
YEAR ENDED
31.12.16
£’000
(9,258 )
YEAR ENDED
31.12.15
£’000
(20,032)
3,171
3,171
999
999
Total Comprehensive Loss for year attributable to owners of the Company
(6,087 )
(19,033)
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp15-pp22.indd C16
245461 Rurelec Annual Report pp15-pp22.indd C16
27/06/2017 21:23
27/06/2017 21:23
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2016
17
Assets
Non-current Assets
Property, Plant and Equipment
Intangible Assets
Investment in Joint Venture
Current Assets
Trade and Other Receivables
Cash and Cash Equivalents
Assets classified as held for sale
Total Assets
Equity and Liabilities
Shareholders’ Equity
Share Capital
Share Premium Account
Foreign Currency Reserve
Share Option Reserve
Other Reserves
Special Non-distributable Reserve
Retained Earnings
Total Equity attributable to owners of the Company
Non-controlling interests
Total Equity
Current Liabilities
Trade and Other Payables
Current Tax Liabilities
Borrowings
Liabilities classified as held for Sale
Total Liabilities
Total Equity and Liabilities
NOTES
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
14
15
26
16a
18
3 2
19
21
20
21
22a
23
24
32
11,176
29
–
19,217
23
–
11,205
19,240
24,76 1
960
25,721
20,866
386
21,252
2,207
3,644
39,133
44,136
11,228
22,754
958
–
–
45,000
(48,520)
31,420
11,228
22,754
(2,212)
–
–
45,000
(39,262)
37,508
–
–
31,420
37,508
2,434
12
4,037
6,483
1,230
7,713
2,856
–
3,054
5,910
718
6,628
39,133
44,136
The financial statements were approved by the Board of Directors on 2 8 June 2017 and were signed on its behalf by Andy Coveney
(Executive Director) and Brian Rowbotham (Non-executive Director).
www.rurelec.com
i
l
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp15-pp22.indd C17
245461 Rurelec Annual Report pp15-pp22.indd C17
27/06/2017 21:23
27/06/2017 21:23
18
COMPANY STATEMENT
OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2016
COMPANY NUMBER 4812855
Assets
Non-current Assets
Investments
Current Assets
Inventories
Trade and Other Receivables
Cash and Cash Equivalents
Total assets
Equity and liabilities
Shareholders’ equity
Share Capital
Share Premium Account
Share Option Reserve
Other Reserves
Retained Earnings
Total Equity
Current Liabilities
Trade and Other Payables
Current tax liabilities
Borrowings
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
NOTES
25
17
16b
18
19
21
20
21
22b
23
100
100
100
100
9,755
16,195
27,989
24,657
955
386
38,69 9
41,238
38,799
41,338
11,228
22,754
–
45,000
(43,921)
35,061
2,065
12
1,661
3,738
11,228
22,754
–
45,000
(41,146)
37,836
2,592
–
910
3,502
Total Equity and Liabilities
38,799
41,338
As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The
Company’s loss for the year was £2.8 million (2015: £33.8 million).
The financial statements were approved by the Board of Directors on 2 8 June, 2017 and were signed on its behalf by Andy Coveney
(Executive Director) and Brian Rowbotham (Non-executive Director).
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp15-pp22.indd C18
245461 Rurelec Annual Report pp15-pp22.indd C18
27/06/2017 21:23
27/06/2017 21:23
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
19
Cash Flows from Operating Activities
Cash used in Operations
Taxation Paid
Net Cash used in Operating Activities
Cash Flows from Investing Activities
Proceeds from Sale of subsidiary
Loan Repayments from Joint Venture company
Net Cash generated from Investing Activities
Net Cash Inflow before Financing Activities
Cash Flows from Financing Activities
Settlement of Deferred Consideration
Loan Drawdowns
Loan Principal Repayments
Loan Interest Repayments
Net Cash Generated from/(Used in) Financing Activities
Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at start of year
Cash and Cash Equivalents at end of year
NOTES
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
27
(2,066)
(5,545)
–
(2,066)
(3)
(5,548)
–
2,311
2,311
4,358
2,417
6,775
245
1,227
(321)
1,500
(830)
(20)
329
574
386
960
(1,237)
1,861
(1,707)
(41)
(1,124)
103
283
386
245461 Rurelec Annual Report pp15-pp22.indd C19
245461 Rurelec Annual Report pp15-pp22.indd C19
27/06/2017 21:23
27/06/2017 21:23
l
i
s
a
c
n
a
n
F
r
u
O
i
www.rurelec.com
20
COMPANY STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Cash Flows from Operating Activities
Cash Used in Operations
Net Cash Used in Operations
Cash Flows from Investing Activities
Investment in and Loans to subsidiaries
Loan Repayment from subsidiary
Net Cash Generated from Investing Activities
NOTES
27
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
(1,333)
(1,333)
(4,070)
(4,070)
(673)
2,311
1,638
(1,511)
5,407
3,896
Net Cash Inflow/(Outflow) before Financing Activities
305
(174)
Cash Flows from Financing Activities
Loan Drawdowns
Loan Principal Repayments
Loan Interest Repayments
Net Cash Generated from Financing Activities
Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at start of year
Cash and Cash Equivalents at end of year
1,500
1,861
(830)
(20)
650
569
386
955
(1,261)
(41)
559
385
1
386
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp15-pp22.indd C20
245461 Rurelec Annual Report pp15-pp22.indd C20
27/06/2017 21:23
27/06/2017 21:23
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
21
SHARE
CAPITAL
£’000
SHARE
PREMIUM
ACCOUNT
£’000
FOREIGN
CURRENCY
RESERVE
£’000
SHARE
OPTION
RESERVE
£’000
RETAINED
EARNINGS
£’000
SPECIAL
NON–
DISTRIB–
UTABLE
RESERVE
£’000
OTHER
RESERVE
£’000
NON–
CONTROLLING
INTEREST
£’000
TOTAL
£’000
TOTAL
EQUITY
£’000
Balance at 1.1.15
11,228 22,754
(3,211)
146
(20,426) 45,000
1,050
56,541
283 56,824
–
(1,050)
(1,050)
–
–
–
(283)
(283)
–
–
(283)
(283)
Non–controlling Interest Transfer
to Assets for Sale
Share option/Plant Reserve
Total Transactions with Owners
Loss for year including Minority
Loss
Exchange Differences
Total Comprehensive Loss
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(146)
1,196
(146)
1,196
–
999
999
–
–
(20,032)
–
–
(20,032)
–
–
–
–
–
–
– (20,032)
–
999
– (19,033)
Balance at 31.12.15
11,228 22,754
(2,212)
Total Transactions with Owners
Loss for year attributable to
owners of the parent
Exchange Differences
Total Comprehensive Loss
–
–
–
–
–
–
–
–
Balance at 31.12.16
11,228 22,754
Notes:
19
21
–
–
3,171
3,171
958
–
–
–
–
–
–
20
(39,262) 45,000
– 37,508
–
(9,258)
–
(9,258)
–
–
–
–
–
–
–
–
–
(9,258)
3,171
(6,087)
(48,520) 45,000
– 31,420
21
– (20,032)
–
999
– (19,033)
– 37,508
–
–
–
(9,258)
– 3,171
– (6,087)
– 31,420
www.rurelec.com
l
i
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp15-pp22.indd C21
245461 Rurelec Annual Report pp15-pp22.indd C21
27/06/2017 21:23
27/06/2017 21:23
22
COMPANY STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016 FOR THE YEAR ENDED 31 DECEMBER 2015
SHARE
CAPITAL
£’000
SHARE
PREMIUM
£’000
SHARE
OPTION
RESERVE
£’000
RETAINED
EARNINGS
£’000
SPECIAL
NON–
DISTRIB–
UTABLE
RESERVE
£’000
TOTAL
£’000
Balance at 1.1.15
11,228
22,754
146
(7,521)
45,000
71,607
Transactions with owners
Cancel charge for share options
Total transactions with owners
Loss for the year
Total Comprehensive Loss
–
–
–
–
–
–
–
–
(146)
(146)
146
146
–
–
(33,771)
(33,771)
–
–
–
–
–
–
(33,771)
(33,771)
Balance at 31.12.15
11,228
22,754
–
(41,146)
45,000
37,836
Loss for the year
Total Comprehensive Loss
Balance at 31.12.16
Notes:
–
–
–
–
11,228
22,754
19
21
–
–
–
20
(2,775)
(2,775)
–
–
(2,775)
(2,775)
(43,921)
45,000
35,061
21
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp15-pp22.indd C22
245461 Rurelec Annual Report pp15-pp22.indd C22
27/06/2017 21:23
27/06/2017 21:23
NOTES TO THE FINANCIAL STATEMENTS
23
FOR THE YEAR ENDED 31 DECEMBER 2016
1 GENERAL INFORMATION, BASIS OF PREPARATION AND NEW ACCOUNTING STANDARDS
1a General information
Rurelec PLC is the Group’s ultimate parent company. It is incorporated and domiciled in England and Wales. The address of Rurelec’s
registered office is given on the information page. Rurelec’s shares are traded on the AIM market of the London Stock Exchange PLC.
The nature of the Group’s operations and its principal activities are the generation of electricity in South America.
1b Basis of preparation
The Company and the consolidated financial statements have been prepared in compliance with International Financial Reporting
Standards (“IFRSs”) and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations as adopted by the
European Union and company law applicable to companies reporting year ended 31 December 2016.
Going Concern
The Directors have continued to adopt the going concern basis for the preparation of these financial statements. During 2016 the
Group continued to receive funds from its joint venture in Argentina, EdS, in service of the loans to the joint venture and a wholly owned
subsidiary Rurelec Project Finance Ltd.
The Company has been in negotiations for the prospective sales of Group assets. There exists uncertainty as to the timing of the sales
of assets as well as the quantum of the corresponding proceeds.
During 2016 and since the year end the Company has reached payment agreements with and settled certain creditors resulting in
an overall reduction in creditors. Until there is a disposal of assets, the Group is reliant on repayments of loans from its joint venture .
However, the quantum and timing of such receipts are subject to variation and are not guaranteed. Whilst anticipated loan repayments
from the joint venture are expected to be sufficient to meet the working capital requirements for the Group, the directors are considering
raising additional facilities to increase headroom.
The Group’s 100% subsidiary Cascade Hydro Ltd has outstanding third party loans of £2. 4 million (2015: £2.2 million). These loans have
not been paid in accordance with their original payment schedules. Further details are set out in Note 24.
On the basis that the Group receives these joint venture remittances or the alternative sources of working capital, the Directors have
assessed that the Group would have sufficient working capital based on their review of cashflow forecasts for a period of at least
12 months from the signing of the financial statements.
1 c New accounting standards
The Directors consider that no revisions to IFRS standards implemented in the year have had any significant effect on these statements.
At the date of authorisation of these financial statements certain new standards, amendments and interpretations to existing standards
have been published but are not yet effective. The Group has not early adopted any of these pronouncements. The new Standards,
amendments and Interpretations that are expected to be relevant to the Group’s financial statements are as follows:
Standard/interpretation
IFRS 9 (2014)
IFRS 15
IFRS 16
Revisions to IAS 7
Content
Financial instruments:
Revenue from contracts with customers
Leases
Statement of cash flows
Applicable for financial
years beginning on/after
01/01/2018
01/01/2018
01/01/2019
01/01/2017
IFRS 9, ‘Financial instruments: Classifi cation and Measurement’
The Directors do not anticipate that the adoption of these standards and interpretations in future periods will have any material impact
on the financial statements of the Group.
IFRS 15, 16 & IAS 7 ‘Revenue from contracts with customers’ , ‘Leases’ and ‘Statement of cash fl ows’
The Directors have not completed their assessment of the impact of the adoption of these standards.
www.rurelec.com
i
l
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 23
245461 Rurelec Annual Report pp23-end.indd 23
27/06/2017 21:25
27/06/2017 21:25
24
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2016.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. Generally, there is a presumption that a majority of voting rights result
in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the
Group considers all relevant facts and circumstances in assessing whether it has power over an investee.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group
are eliminated in full on consolidation.
The Group reports its interests in joint venture using the equity method of accounting, except when the investment is classified as held
for sale.
A joint venture is a joint arrangement whereby the Group and other parties that have joint control of the arrangement have rights to the
net assets of the arrangement (IFRS 11).
Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at cost as adjusted
for post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment in the value of individual
investments. Losses of a joint venture in excess of the Group’s investment in that joint venture are not recognised, unless the Group has
incurred legal or constructive obligations or made payments on behalf of the joint venture.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent
liabilities of the joint venture recognised at the date of acquisition is recognised as goodwill.
The goodwill, if any is included within the carrying amount of the investment and is assessed annually for impairment as part of the
investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the
cost of acquisition, after reassessment, is recognised immediately as a profit or loss.
Unrealised gains on transactions between the Group and its joint venture are eliminated to the extent of the Group’s interest in the
joint venture. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Unrealised gains on transactions between the Group and subsidiary entities are eliminated. Amounts reported in the financial statements
of subsidiary and joint venture entities have been adjusted where necessary to ensure consistency with the accounting policies adopted
by the Group.
Acquisitions of subsidiaries are dealt with by the acquisition method. This method involves the recognition at fair value of all identifiable
assets and liabilities, including contingent liabilities of the acquired company, at the acquisition date, regardless of whether or not
they were recorded in the financial statements of the entity prior to acquisition. On initial recognition, the assets and liabilities of the
acquired entity are included in the consolidated statement of financial position at their fair values, which are also used as the bases
for subsequent measurement in accordance with the Group’s accounting policies. Investments in subsidiaries are stated at cost in the
statement of financial position of the Company.
2.2 Goodwill
Goodwill representing the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired
is capitalised and reviewed annually for impairment. Goodwill is stated after separating out identifiable assets and liabilities. Goodwill is
carried at cost less accumulated impairment losses. Any excess of interest in acquired assets, liabilities and contingent liabilities over fair
value is recognised immediately after acquisition through the income statement.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 24
245461 Rurelec Annual Report pp23-end.indd 24
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
25
FOR THE YEAR ENDED 31 DECEMBER 2016
2.3 Foreign currency translation
The financial information is presented in pounds sterling, which is also the functional currency of the parent company.
In the separate financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency
of the individual entity using the exchange rates prevailing at the dates of the transactions (“spot exchange rate”). Foreign exchange
gains and losses resulting from the settlement of such transactions and from the translation of remaining balances at year-end exchange
rates are recognised in the income statement within ‘other expense’.
In the consolidated financial statements, all separate financial statements of subsidiaries and joint ventures, originally presented in a
currency different from the Group’s presentation currency, have been converted into sterling. Assets and liabilities have been translated
into sterling at the closing rate at the reporting date. Income and expenses have been converted into sterling at the average rates
over the reporting period. Any differences arising from this procedure have been recognised in other comprehensive income and
accumulated in the Foreign Currency Reserve.
2.4 Income and expense recognition
Revenue represents amounts receivable for goods or services provided in the normal course of business, net of trade discounts, VAT
and other sales-related taxes, and excluding transactions with or between Group companies. Revenues from the sale of electricity
are recorded based upon output delivered at rates specified under contract terms or prevailing market rates as applicable. Revenue is
recognised on the supply of electricity when a contract exists and supply has taken place. Revenue received for keeping power plants
operating and available for despatch into the grid as required is recognised on a straight-line basis over the contractual period. During
the year under review and the prior year, no revenues were derived from the sale of equipment purchased with a view to subsequent
resale.
Operating expenses are recognised in the income statement upon utilisation of the service or at the date of their origin. All other income
and expenses are reported on an accrual basis.
2.5 Dividends
Dividends, other than those from investments in associates and joint ventures, are recognised at the time the right to receive payment is
established. No dividends were paid or received during the year (2015: nil).
2.6 Borrowing Costs
All borrowing costs are expensed as incurred except where the costs are directly attributable to specific construction projects, in which
case the interest cost is capitalised as part of those assets.
2.7 Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment. No depreciation is charged
during the period of construction.
All operational buildings and plant and equipment in the course of construction are recorded as plant under construction until such time
as they are brought into use by the Group. Plant under construction includes all direct expenditure and may include capitalised interest
in accordance with the accounting policy on that subject. On completion, such assets are transferred to the appropriate asset category.
Repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The cost of major
renovations and overhauls is included in the carrying amount of the assets where it is probable that the economic life of the asset is
significantly enhanced as a consequence of the work. Major renovations and overhauls are depreciated over the expected remaining
useful life of the work.
Depreciation is calculated to write down the cost less estimated residual value of all property, plant and equipment other than freehold
land which is not depreciated by equal annual instalments over their estimated useful economic lives. The periods generally applicable
are:
Plant and equipment
3 to 15 years
Material residual values are updated as required, but at least annually. Where the carrying amount of an asset is greater than its
estimated recoverable amount, it is written down immediately to its recoverable amount.
www.rurelec.com
i
l
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 25
245461 Rurelec Annual Report pp23-end.indd 25
27/06/2017 21:25
27/06/2017 21:25
26
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
2.8 Impairment of tangible and intangible assets
At each reporting date, the Group reviews the carrying amount of its property, plant and equipment and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income
statement. The Group recognises a cash-generating unit by its ability to independently earn income. The Group carries each cash-
generating unit in an individual special purpose company so they are easily recognised.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the income statement.
2.9 Non-current Assets held for Sale and Discontinued Operations
In general IFRS 5 outlines how to account for non-current assets held for sale such that assets (or disposal groups) held for sale are
not depreciated, are measured at the lower of carrying amount and fair value less costs to sell, and are presented separately in the
statement of financial position.
The following conditions must be met for an asset (or ‘disposal group’) to be classified as held for sale: IFRS 5.6-8
• management is committed to a plan to sell
• the asset is available for immediate sale
• an active program to locate a buyer is initiated
• the sale is highly probable, within 12 months of classification as held for sale (subject to limited exceptions)
• the asset is being actively marketed for sale at a sales price reasonable in relation to its fair value
• actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or withdrawn
The carrying value of the assets need to be recovered principally through sale. When the Group is committed to a sale involving loss of
control of a subsidiary that qualifies for held-for-sale classification under IFRS 5 the Group classifies all of the assets and liabilities of that
subsidiary as held for sale, even if the entity will retain a non-controlling interest in its former subsidiary after the sale. Non-current assets
or disposal groups that are classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Assets classified as held for sale, and the assets and liabilities included within a disposal group classified as held for sale, are presented
separately on the face of the statement of financial position. The sum of the post-tax profit or loss of the discontinued operation and the
post-tax gain or loss recognised on the measurement to fair value less cost to sell or fair value adjustments on the disposal of the assets
(or disposal group) is presented as a single amount on the face of the statement of comprehensive income.
2.10 Taxation
Current income tax assets and liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior
reporting period, that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the
fiscal periods to which they relate, based on the taxable profit for the period. All changes to current tax assets or liabilities are recognised
as a component of tax expense in the income statement or through the statement of changes in equity.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying
amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, in accordance with
the rules set out in IAS 12, no deferred taxes are recognised in respect of non-tax -deductible goodwill. In addition, tax losses available
to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided for in full with no discounting. Deferred tax assets are recognised to the extent that it is probable
that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax
assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided that they are
enacted or substantially enacted at the reporting date.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 26
245461 Rurelec Annual Report pp23-end.indd 26
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
27
FOR THE YEAR ENDED 31 DECEMBER 2016
Deferred tax is provided on differences between the fair value of assets and liabilities acquired in an acquisition and the carrying value of
the assets and liabilities of the acquired entity and on the differences relating to investments in subsidiary and joint venture companies if
the difference is a temporary difference and is expected to reverse in the foreseeable future.
Changes in deferred tax assets and liabilities are recognised as a component of tax expense in the income statement, except where
they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited
directly to equity.
2.11 Financial assets
The Group’s financial assets include cash and cash equivalents, loans and receivables.
Cash and cash equivalents include cash at bank and in hand as well as short term highly liquid investments such as bank deposits.
Loans and receivables are non-derivative financial assets with fixed or determinable payment dates that are not quoted in an active
market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable.
Receivables are measured initially at fair value and subsequently re-measured at amortised cost using the effective interest method, less
provision for impairment. Any impairment is recognised in the income statement.
Trade receivables are provided against when objective evidence is received that the Group will not be able to collect all amounts due to
it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the
assets carrying amount and the present value of estimated cash flows.
2.12 Financial liabilities
Financial liabilities are obligations to pay cash or other financial instruments and are recognised when the Group becomes a party to the
contractual provisions of the instrument. All transaction costs are recognised immediately in the income statement.
A financial liability is derecognised only when the obligation is extinguished, that is when the obligation is discharged, cancelled or
expires.
Bank and other loans are raised for support of short-term funding of the Group’s operations. They are recognised initially at fair value,
net of transaction costs and are subsequently measured at amortised cost using the effective interest method. Finance charges,
including premiums payable on settlement or redemption, and direct issue costs are charged to the income statement on an accruals
basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled
in the period in which they arise.
2.13 Operating leases
Leases where substantially all the risks and rewards of ownership remain with the lessor are accounted for as operating leases and are
accounted for on a straight-line basis over the term of the lease and charged to the income statement.
2.14 Inventories
Inventories in the Company comprise turbines and associated spare parts and similar items for use in the Group’s plant and equipment.
Inventories are carried at the lower of cost and net realisable value.
2.15 Shareholders’ equity
Equity attributable to the shareholders of the parent company comprises the following:
“Share capital” represents the nominal value of equity shares.
“Share premium account” represents the excess over nominal value of the fair value of consideration received for equity shares, net of
expenses of the share issue.
“Foreign currency reserve” represents the differences arising from translation of investments in overseas subsidiaries.
“Share option reserve” represents the fair value of options granted and outstanding at the year-end.
“Retained earnings” represents retained profits.
“Special Non-distributable reserves” comprises the reduction of the share premium account.
“Other Reserves” represent plant revaluation reserves.
www.rurelec.com
l
i
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 27
245461 Rurelec Annual Report pp23-end.indd 27
27/06/2017 21:25
27/06/2017 21:25
28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
2.16 Pensions
During the year under review, the Group did not operate or contribute to any pension schemes (2015: Nil).
2.17 Segment reporting
In identifying its operating segments, management follows the Group’s geographic locations and are reported in a manner consistent
with the Chief Operating Decision Maker. The activities undertaken by segments are the generation of electricity in their country of
incorporation within South America.
Each of the operating segments is managed separately as the rules and regulations vary from country to country.
The measurement policies used by the Group for segment reporting under IFRS 8 are the same as those used in the financial
statements.
3. KEY ASSUMPTIONS AND ESTIMATES
When preparing the financial statement, management make a number of judgements, estimates and assumptions about the recognition
and measurement of assets, liabilities income and expenses. The actual results may differ from the judgements, estimates and
assumptions made and will seldom equal the estimated results. The areas which management consider are likely to be most affected by
the significant judgements, estimates and assumptions on recognition and measurement of assets, liabilities, income and expenses are:
a) Useful lives of depreciable assets – management review, with the assistance of external expert valuers, the useful lives of depreciable
assets at each reporting date. Actual results, however, may vary due to changes in technology and industry practices.
b) Impairment – management review tangible and intangible assets at each balance sheet date to determine whether there is any
indication that those assets have suffered an impairment loss. This review process includes making assumptions about future events,
circumstances and operating results. The actual results may vary from those expected and could therefore cause significant adjustments
to the carrying value of the Group’s assets. Details of the assumptions underlying management’s forecasts for the Group’s main Cash
Generating Unit (“CGU”) are set out in Note 15.
c) Management have assessed that we do not control the Argentine Joint Venture and therefore have treated the joint venture in
accordance with IAs 28 (see Note 26). This assessment is based on the lack of joint control over the investee and due to the exposure
to variable returns from its involvement with the investee.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 28
245461 Rurelec Annual Report pp23-end.indd 28
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
29
FOR THE YEAR ENDED 31 DECEMBER 2016
4. SEGMENT ANALYSIS
Management currently identifies the Group’s four geographic operating segments; Argentina, Chile, Peru and the head office in the
UK, as operating segments as further described in the accounting policy note. These operating segments are monitored and strategic
decisions are made on the basis of segment operating results. The Groups joint venture operations in Argentina have been excluded,
see note 26 for more detail.
The following tables provide an analysis of the operating results, total assets and liabilities, capital expenditure and depreciation for 2016
and 2015 for each geographic segment.
a) 12 months to 31.12.2016
Revenue
Cost of Sales
Gross Profit/(Loss)
Administrative Expenses
Profit/(Loss) from Operations
Other (Expense)/Income
Foreign Exchange (Losses)/Gains
Finance Income
Finance Expense
(Loss)/Profit before Tax
Tax Expense
(Loss)/Profit for the year
Total Assets
Total Liabilities
Depreciation
CHILE
£’000
PERU
£’000
UK
£’000
CONSOLIDATION
ADJUSTMENTS
£’000
–
–
–
(130)
(130)
(7,745)
374
–
(572)
–
–
–
(683)
(683)
(2,714)
(1,847)
–
(820)
(8,073)
(6,065)
(4)
–
95
–
95
(1,644)
(1,549)
–
2,718
3,845
(117)
4,897
–
(8,077)
(6,065)
4,897
TOTAL
£’000
95
–
95
(2,420)
(2,325)
(10,500)
1,24 3
2,683
(355)
–
–
–
37
37
(41)
( 2)
(1,162)
1,154
(13)
(9,254)
–
(4)
(13)
(9,258)
2,193
10,096
–
2,207
(3,619)
26
38,79 9
3,738
–
(4,06 6)
(2,502)
–
39,133
7,713
26
www.rurelec.com
l
i
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 29
245461 Rurelec Annual Report pp23-end.indd 29
27/06/2017 21:25
27/06/2017 21:25
30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
b) 12 months to 31.12.2015
Revenue
Cost of Sales
Gross Profit/(Loss)
Administrative Expenses
Profit/(Loss) from Operations
Other (Expense)/Income
Foreign Exchange (Losses)/Gains
Finance Income
Finance Expense
(Loss)/Profit before Tax
Tax Expense
(Loss)/Profit for the year
Total Assets
Total Liabilities
Capital Expenditure
Depreciation
CHILE
£’000
PERU
£’000
–
–
–
(139)
(139)
(2,345)
(165)
(802)
–
–
–
–
(1,760)
(1,760)
(245)
(1,828)
(508)
(361)
UK
£’000
179
(22)
157
(2,573)
(2,416)
(1,669)
1,887
3,695
(88)
CONSOLIDATION
ADJUSTMENTS
£’000
–
–
–
37
37
TOTAL
£’000
179
(22)
157
(4,435)
(4,278)
(13,313)
(17,572)
–
–
(9)
(106)
2,385
(458)
(3,451)
(4,702)
1,409
(13,285)
(20,029)
–
(3)
–
–
(3)
(3,451)
(4,705)
1,409
(13,285)
(20,032)
6,688
6,510
–
–
3,644
718
–
45
41,338
3,502
–
3
(7,534)
(4,102)
44,136
6,628
–
–
–
48
5 EXCHANGE RATE SENSITIVITY ANALYSIS
The key exchange rates applicable to the results were as follows:
i) Closing rate
AR $ (Argentine Peso) to £
US $ to £
CLP (Chilean Peso) to £
PEN (Peruvian Sol) to £
ii) Average rate
AR $ (Argentine Peso) to £
US $ to £
CLP (Chilean Peso) to £
PEN (Peruvian Sol) to £
YEAR ENDED
31.12.16
YEAR ENDED
31.12.15
19.71
1.2302
795.4
3.38
20.08
1.3448
902.1
3.38
19.25
1.4824
1,048.2
4.96
14.38
1.5256
1,005.2
4.82
If the exchange rate of sterling at 31 December 2016 had been stronger or weaker by 10 per cent. from the above. with all other
variables held constant, shareholder equity at 31 December 2016 would have been £0.1 million (2015: £2.5 million) lower or higher than
reported.
If the average exchange rate of sterling during 2016 had been stronger or weaker by 10 per cent. with all other variables held constant,
the profit for the year would have been £0.1 million (2015: £0.2 million) higher or lower than reported.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 30
245461 Rurelec Annual Report pp23-end.indd 30
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
31
FOR THE YEAR ENDED 31 DECEMBER 2016
6 COST OF SALES
Expenditure incurred in cost of sales is as follows:
Other
7 ADMINISTRATIVE EXPENSES
Expenditure incurred in administrative expenses is as follows:
Payroll and social security
Services, legal and professional
Office costs and general overheads
Audit services1
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
–
–
22
22
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
1,090
679
611
40
2,420
1,728
1,095
1,539
73
4,435
1
Audit services include £40.0k (2015: £72.5k) paid to the auditors for the audit of the Company and the Group financial statements. . Fees paid to other
auditors, in respect of the audit of joint venture companies, amounted to £21.5k (2015: £13.4k). The auditors also provided tax advice for the Group in
the year, the costs were £6.6k.
245461 Rurelec Annual Report pp23-end.indd 31
245461 Rurelec Annual Report pp23-end.indd 31
27/06/2017 21:25
27/06/2017 21:25
l
i
s
a
c
n
a
n
F
r
u
O
i
www.rurelec.com
32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
8 EMPLOYEE COSTS
a) Group
Aggregate remuneration of all employees and Directors, including social security costs
The average number of employees in the Group, including Directors, during the year was as follows:
Management
Development
Administration
Total
b) Company
Aggregate remuneration of all employees and Directors, including social security costs
The average number of employees in the Company, including Directors, during year was as follows:
Management
Administration
Total
YEAR ENDED
31.12.16
£’000
1,090
YEAR ENDED
31.12.15
£’000
1,728
NUMBER
NUMBER
4
4
6
14
4
16
11
31
YEAR ENDED
31.12.16
£’000
802
YEAR ENDED
31.12.15
£’000
1,405
NUMBER
NUMBER
2
5
7
4
5
9
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 32
245461 Rurelec Annual Report pp23-end.indd 32
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
33
FOR THE YEAR ENDED 31 DECEMBER 2016
c) Directors’ remuneration, including social security costs
The total remuneration paid to the Directors was £400k (2015: £859k). The total remuneration of the highest paid Director was £226k
(2015: £235k). Other emoluments paid in 2015 were health insurance costs £10k, there were no bonuses, pension costs or share
based payments paid during the year (2015: Nil)
P. Earl
E. Shaw
A. Morris
M. Blanco
C Emson
B Rowbotham
P Galante
M Keegan
S Morris
A Coveney
Total
YEAR ENDED
31.12.16
£’000
Base Salary/Fee
YEAR ENDED
31.12.16
£’000
Total
–
90
21
–
–
30
–
17
226
16
400
–
90
21
–
–
30
–
17
226
16
400
YEAR ENDED
31.12.15
£’000
Total
235
183
169
30
25
30
7
84
96
–
859
E. Shaw resigned 14 July 2015, she received payments in 2016 according to her contract. These payments ceased in July 2016.
A. Morris resigned 14 July 2015, he received payments in 2016 for consultancy services under a service agreement contract with Setley
Consultants Ltd.
B. Rowbotham provided services under a service agreement contract with Mountbeach Associates Ltd.
M. Keegan resigned 14 December 2015, he received payments in 2016 according to a service contract with Ashton Agricultural &
General Ltd. These payments ceased in January 2016.
S. Morris provided services under a service agreement contract with S.C.Morris Ltd.
A Coveney provided services under a service agreement contract with Coveney Associates Consulting Ltd.
9 (a) OTHER EXPENSE
Foreign exchange gains/(losses)
Total
YEAR ENDED
31.12.16
£’000
1,243
1,243
YEAR ENDED
31.12.15
£’000
(106)
(106)
www.rurelec.com
i
l
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 33
245461 Rurelec Annual Report pp23-end.indd 33
27/06/2017 21:25
27/06/2017 21:25
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(b) OTHER EXPENSE
Realised loss on disposal
IPC
Asset impairment
Turbines for Central Illapa
Impairment provisions
Argentina
Peru
Chile (Arica Project)
Total
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
41
1,669
6,440
–
2,714
1,305
10,500
–
13,313
245
2,345
17,572
During the year the directors tested all major assets for indication of impairment the results of these were:
TURBINES FOR CENTRAL ILLAPA (CHILE):
Carrying Value b/fwd
Recoverable amount
Impairment in year
Carrying value c/fwd
£16.2m
£9.8m
£6.4m
£9.8m
The impairment resulted from the deterioration of market conditions in Chile for the generation market. The carrying value of the turbines
is based on the higher of fair value less costs to sell and value in use. The Directors obtained an independent valuation to determine an
achievable market valuation, less costs to sell. As a result, the Directors determined a recoverable amount of £9.8 million ($12 million).
The realisation of the asset is dependent on a successful future sale or successful development of the Illapa Project, both of which are
uncertain.
The Illapa turbines are included within Property, Plant and Equipment.
HELD FOR SALE ASSET ( PERU)
Net assets held for sale b/fwd
Net assets h eld for sale c/fwd
Movement
represented by:
Increase in impairment provision
add back:
loss in year in Peru
Foreign exchange revaluation
Movement
£2.9m
£1.0m
£1.9m
£2.7m
£0.6m
£0.2m
£1.9m
The impairment was determined by expected net proceeds from asset sales. At present the assets are being marketed, however there
is currently no guarantee of a sale. The value is determined by historic offers. The carrying value is assessed as fair value less costs to
sell. The principal assets are the development rights in respect of three Hydro projects in Peru, one with a performance bond of
$3 million.
These assets are presented as a Held for Sale asset on the Statement of Financial Position.
TURBINE – ARICA (CHILE)
Carrying value of Arica turbine b/fwd
Foreign exchange revaluation
Impairment in year
Carrying value of Arica turbine b/fwd
£2.0m
£0.3m
£1.3m
£1.0m
The impairment was determined by the diminution of expected net realisable proceeds from sale of the turbine. The carrying value is
assessed as fair value less costs to sell, based on historic offers and an independent valuation report. The asset is included in Property,
Plant and Equipment.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 34
245461 Rurelec Annual Report pp23-end.indd 34
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
35
FOR THE YEAR ENDED 31 DECEMBER 2016
10 FINANCE INCOME & EXPENSE
Inter-group interest received/receivable1
Bank interest
Total interest income
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
2,676
7
2,683
2,376
9
2,385
Interest expense paid/payable on bank borrowings and loans2
(355)
(458)
1
2
Inter-group interest arises on loans by the Company to its 50 per cent. owned joint venture companies (PEL and EdS). Interest on inter-group loans has
been charged at rates of between 0 per cent. and 11.1 per cent. Interest is charged on gross loan values.
Interest paid/payable includes interest on bank borrowings and other loans in Peru. The details of the amounts due under the loans are shown in Note 24.
Sensitivity analysis arising from changes in borrowing costs is set out in Note 24.
11 TAX EXPENSE
The relationship between the expected tax expense at basic rate of 20 per cent. (2015: 20 per cent.) and the tax expense actually
recognised in the income statement can be reconciled as follows:
Result for the year before tax
Standard rate of corporation tax in UK
Expected tax credit
Permanent differences
Unrecognised loss carried forward
Actual tax expense
Comprising:
Current tax expense
Deferred tax/(net credit)
Total credit (expense)
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
(9,254)
20.00%
(1,851)
–
1,851
(4)
(4)
–
(4)
(20,029)
20.00%
(4,006)
(3)
4,006
(3)
(3)
–
(3)
A deferred tax asset credit for the year £ 1.9 million is not recognised as an asset due to the uncertainty and unknown timing of its
realisation against future profits. The estimated accumulated unrecognised deferred tax asset is £ 1.9 million .
245461 Rurelec Annual Report pp23-end.indd 35
245461 Rurelec Annual Report pp23-end.indd 35
27/06/2017 21:25
27/06/2017 21:25
i
l
s
a
c
n
a
n
F
r
u
O
i
www.rurelec.com
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
12 EARNINGS PER SHARE
Basic loss per share is calculated by dividing the loss for the period attributable to shareholders by the weighted average number of
shares in issue during the period.
Average number of shares in issue
Result for the year
Loss attributable to equity holders of the parent
Basic loss per share
Diluted loss per share
There is no difference between the Basic and Diluted loss per share.
YEAR ENDED
31.12.16
YEAR ENDED
31.12.15
561,387,586
561,387,586
£(9.3)m
(1.65p)
(1.65p)
£(20.0)m
(3.57p)
(3.57p)
13 HOLDING COMPANY’S RESULT FOR THE YEAR
As permitted by Section 408 of the Companies Act 2006, the holding company’s income statement is not shown separately in the
financial statements. The loss for the year was £ 2.8 million (2015: loss £33.8 million).
14 PROPERTY, PLANT AND EQUIPMENT
a) Group
Cost at 1.1.15
Exchange adjustments
Transfer of Assets Held for Sale
Impairments
Cost at 31.12.15
Exchange adjustments
Transfer of Assets Held for Sale
Impairments
Cost at 31.12.16
Accumulated Depreciation at 1.1.15
Exchange adjustments
Charge for the year
Accumulated Depreciation at 31.12.15
Exchange adjustments
Charge for the year
Transfer of Assets Held for Sale
Accumulated Depreciation at 31.12.16
Net book value – 31.12.16
Net book value – 31.12.15
LAND
£’000
72
–
–
(72)
–
–
–
–
–
–
–
–
–
–
–
–
–
PLANT AND
EQUIPMENT
£’000
PLANT UNDER
CONSTRUCTION
£’000
16,255
–
–
(60)
16,195
–
–
(6,440)
9,75 5
21
–
48
69
–
26
–
95
5,863
(1,408)
–
(1,364)
3,091
(606)
–
(969)
1,5 16
–
–
–
–
–
–
–
–
TOTAL
£’000
22,190
(1,408)
–
(1,496)
19,286
(606)
–
(7,409)
11,271
21
–
48
69
–
26
–
95
9,660
16,126
1,516
3,091
11,176
19,217
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 36
245461 Rurelec Annual Report pp23-end.indd 36
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
37
FOR THE YEAR ENDED 31 DECEMBER 2016
The Property, plant and equipment of £9.8 million relates to two Siemens turbines, stored in Venice for use in Central Illapa purchased
for $25.0 million , at the year -end deferred consideration of £1.5 million remains outstanding. Post year end £1.0 million has been repaid.
Please see note 9b for details of impairment charged in the year. The turbines are held as inventory in the Company.
Plant under construction comprises of a turbine plant in Chile £1.0 million and Central Illapa development costs of £0.5 million.
b) Company
The Company had no property, plant and equipment.
As set out in note 24 the Company has outstanding loans from BPAC . Security on these loans include a pledge over all assets of the
Group .
15 INTANGIBLE ASSETS
At 1 January 2016
Revaluation
At 31 December 2016
At 1 January 2015
Disposal of IPC
At 31 December 2015
GOODWILL
£’000
23
6
29
1,321
(1,298)
23
The Group tests goodwill annually or more frequently if there are indications that the intangible asset might be impaired. The recoverable
amounts are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the
future cash flows (for a period of 5 years) which are based on the most recent financial projections prepared for each Cash Generating
Unit (“CGU”). The projections incorporate management’s assumptions regarding revenue volumes, revenue prices, operating costs,
including gas and forecast growth and are based on historical experience and current information. A long-term discount rate, derived
from market data on comparable interest rates in the local markets in which the Group operates, is then applied to the projected future
cash flows. The equity discount rate applied is 13 per cent. (2015 – 13 per cent.).
Central Illapa SA is a wholly owned indirect subsidiary of Rurelec , the goodwill on acquisition was £23k.
16 TRADE AND OTHER RECEIVABLES
a) Group – current
Trade receivables
Amounts due from joint venture companies1
Other receivables and prepayments
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
119
24,34 5
297
24,76 1
607
20,103
156
20,866
1
Amounts due from joint venture companies represent the amounts lent by the Company, net of impairments, to PEL and EdS, including credit support
provided to suppliers of EdS. Interest on these amounts has been accrued at rates of between 11.1 per cent. and 0 per cent. per annum.
www.rurelec.com
l
i
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 37
245461 Rurelec Annual Report pp23-end.indd 37
27/06/2017 21:25
27/06/2017 21:25
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
b) Company – current
Loans to Joint Ventures2
Loans to Subsidiaries1
Other receivables and prepayments
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
17,551
10,343
95
27,989
20,103
4,149
405
24,657
The amounts owed by subsidiary companies include:
1
2
Loans to subsidiaries in Chile £8.5 million and Peru £12.9 million are repayable on demand. These loans have been impaired to £2.4 million in Chile and
by £1.3 million in Peru. The loans to Chile and Peru bear zero per cent. interest rates. The loans to Peru are expected to be recovered once the assets
have been sold, which management expect to occur during 2017.
The amounts owed by joint venture companies are interest bearing at rates of between 0 per cent. and 11 per cent. and are repayable on demand.
During the year the Group received US $3.0 million from EdS in service of the amounts due of £6.8 million (2015: £6.7 million) .
All trade and other receivables are unsecured and are not past their due by dates. The fair values of receivables are not materially
different to the carrying values shown above.
As set out in note 24 the Company has outstanding loans from BPAC . Security on these loans includes a pledge over all assets of the
Group.
17 INVENTORIES
Company – Inventories
Inventories
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
9,755
16,195
Inventories comprises of two Siemens 701DU Turbines acquired from IPSA in June 2013. Further details of which are set out in note 14.
An impairment was recognised in the year, see note 9b. No expense has been recognised in the income statement in respect of
inventories other than impairment (2015: nil).
As set out in note 24 the Company has outstanding loans from BPAC . Security on these loans includes a pledge over all the assets of
the Group .
18 CASH AND CASH EQUIVALENTS
a) Group
Cash and short-term bank deposits
b) Company
Cash and short-term bank deposits
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
960
955
386
386
Cash and short-term bank deposits are held, where the balance is material, in interest bearing bank accounts, accessible at between 1
and 30 days’ notice. The effective average interest rate is less than 1 per cent. The Group holds cash balances to meet its day-to-day
requirements.
As set out in note 24 the Company has outstanding loans from B PAC. Security on these loans includes a pledge over all the assets of
the Group.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 38
245461 Rurelec Annual Report pp23-end.indd 38
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
39
FOR THE YEAR ENDED 31 DECEMBER 2016
19 SHARE CAPITAL
In issue, called up and fully paid
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
561,387,586 ordinary shares of 2p each (201 5: 561,387,586)
11,228
11,228
20 SHARE OPTION RESERVE
Balance at 1 January 2016
Change for the Year
Cancellation of share option scheme
Balance at 31 December 2016
YEAR ENDED
31.12.16
£’000
–
YEAR ENDED
31.12.15
£’000
146
–
–
–
(146)
–
21 SPECIAL NON-DISTRIBUTABLE RESERVE
On 17 December 2014 The High Court approved the reduction in the share premium account of the company of £45,000,000 and
the creation of a special reserve in the accounts of the Group. The Group had accumulated losses on its profit and loss account of
£7,371,683. The existence of these losses prevents the Company from paying dividends to its shareholders out of future profits until
these losses have been eliminated. The Board considered that the accumulated losses represented a permanent loss and given the
size of the accumulated losses, there was in the opinion of the Board no reasonable prospect of the losses being eliminated in the short
term. It was proposed that the permanent loss should be recognised by eliminating the deficit on the profit and loss account. This would
be achieved by the reduction in the balance on the Share Premium Account of the Company.
The Company had built up a substantial Share Premium Account through the issue of shares for cash at values in excess of the nominal
value of those shares. At the time of the High Court hearing, the balance standing to the credit of the share premium account was
£67,835,921. A resolution was proposed and successfully passed at a General Meeting on 25 November 2014 to reduce the amount
standing to the credit of the share premium account of the Company by £45,000,000 from £67,835,921 to £22,835,921.
The resolution was subsequently confirmed by the High Court in the terms proposed at the time by your Board, the effect of the Capital
Reduction was to release part of the amount standing to the credit of the Share Premium Account of the Company so that £45,000,000
(i) may be used by the Company to eliminate the deficit on the profit and loss account and (ii) the balance credited to the distributable
reserves of the Company to allow the Company to pay dividends in due course.
Share issue costs of £82,233 have been offset against the Share Premium account, which is now shown at £22,753,689.
The implementation of the Capital Reduction is subject to a number of criteria which are explained further below.
Capital Reduction – Share Premium Account
Share premium is treated as part of the capital of the Company and arises on the issue by the Company of shares at a premium to their
nominal value. The premium element is credited to the Share Premium Account. The Company is generally precluded from the payment
of any dividends or other distributions or the redemption or buy back of its issued shares in the absence of sufficient distributable
reserves, and the Share Premium Account can be applied by the Company only for limited purposes.
In particular, the Share Premium Account is a non-distributable capital reserve and the Company’s ability to use any amount credited to
that reserve is limited by the Companies Act. However, with the confirmed approval of our shareholders by way of a special resolution
and subsequent confirmation by the High Court, the Company has reduced our Company’s share premium account and credited it to
the profit and loss account.
www.rurelec.com
l
i
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 39
245461 Rurelec Annual Report pp23-end.indd 39
27/06/2017 21:25
27/06/2017 21:25
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
To the extent that the release of such a sum from the Share Premium Account creates or increases a credit on the profit and loss
account, that sum represents distributable reserves of the Company subject to the restrictions set out below.
Capital Reduction – Procedure
In order to approve the Capital Reduction, the High Court was required to be satisfied that the interests of the Company’s creditors
will not be prejudiced by the Capital Reduction. The Company was not required to seek written consent to the Capital Reduction from
its creditors. However, for the benefit of those of its creditors from whom consent is not required, the Company will not be capable of
making a distribution to shareholders until any such outstanding obligations have been discharged, and the Company has given an
undertaking to that effect to the High Court. At the date of the audit report there are some £ 1.5 million of creditors to be settled. The
Board of Directors consider that these amounts will be settled in the short term and therefore the £45 million remains within a Special
Reserve which is non-distributable until these settlements have occurred.
The Capital Reduction does not affect the number of Shares in issue, the nominal value per Share or the voting or dividend rights of any
Shareholder.
22 TRADE AND OTHER PAYABLES
a) Group – current
Trade payables
Accruals
b) Company – current
Trade payables
Accruals
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
2,434
–
2,434
2,065
2,065
2,856
–
2,856
2,592
–
2,592
After the year end, the directors agreed formal settlement terms with IPSA . The directors note that IPSA reported the amount owed by
Rurelec as £1.5 million in the accounts for the year ended 30 September 2016. On this basis, the directors have deemed it appropriate
to recognise £1.5 million as owing to IPSA at the year-end.
23 TAX LIABILITIES
Group/Company – current
P.A.Y.E.
VAT
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
12
–
12
–
–
–
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 40
245461 Rurelec Annual Report pp23-end.indd 40
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
41
FOR THE YEAR ENDED 31 DECEMBER 2016
24 BORROWINGS
Group – Current
Other Loans
Group –Total Borrowings
The Group’s borrowings are repayable as follows:
Within 1 year
In more than 1 year, but less than 2 years
In more than 2 years, but less than 3 years
In more than 3 years
Company – Current
Other Loans
Company –Total Borrowings
The Group’s borrowings are repayable as follows:
Within 1 year
In more than 1 year, but less than 2 years
In more than 2 years, but less than 3 years
In more than 3 years
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
4,037
4,037
4,037
4,037
–
–
–
4,037
1,661
1,661
1,661
1,661
–
–
–
1,661
3,054
3,054
3,054
3,054
–
–
–
3,054
910
910
910
910
–
–
–
910
Group
Other loans of £4.0 million (2015: £3.1 million) including accrued interest are made up of £2.3 million (2015: £2.2 million) from
Technology Finance Ltd, these loans were past their due dates in prior years. The defaults have not been remedied nor the terms
renegotiated by the date of this report . The Directors consider that the existence of this liability does not implicate on the going concern
status of the Group as the parent company has not guaranteed the debts of its Peruvian subsidiaries.
£1.7 million (2015: £nil) from B PAC this loan is secured by a pledge against the Group’s assets, the loan becomes due on 30 June 2018
or upon any significant asset sales. £nil Radix Investments UK Ltd (2015: £611k) and Grange Capital Ltd £nil (2015: £225k).
Company
Other loans of £1.7 million (2015: nil) including accrued interest are from B PAC this loan is secured by a pledge against the Group’s
assets, the loan becomes due on 30 June 2018 or upon any significant asset sales (2015: £611k Radix Investments UK Ltd, £225k
Grange Capital Ltd and £75k Technology Finance Ltd).
Sensitivity analysis to changes in interest rates:
If interest rates on the Group’s borrowings during the year had been 0.5 per cent. higher or lower with all other variables held constant,
the interest expense and pre-tax profits would have had a nominal impact on earnings.
Sensitivity analysis to changes in exchange rates:
Only US $480k (2015: US $375k) of these loans are denominated in US $. These are included in liabilities held for sale. As a result, the
liability to the Group’s lenders will change as exchange rates change. The overall effect on the Group’s net equity which would arise from
changes in exchange rates is set out in Note 5 above.
www.rurelec.com
l
i
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 41
245461 Rurelec Annual Report pp23-end.indd 41
27/06/2017 21:25
27/06/2017 21:25
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
The effect on borrowings alone if exchange rates weakened or strengthened by 10 per cent. with all other variables held constant would
be to reduce or increase the value of the Group’s borrowings and equity by £20k (2015: £5k).
The Group’s Joint Venture borrowings are denominated in AR $ and US $ and are substantially related to specific electricity generating
assets and therefore the effect on the net equity of the Group is limited.
25 INVESTMENTS
Cost at 1 January 2015
Additions during the year:
impairment in Cascade Hydro Limited
Impairment in Patagonia Energy Ltd
Disposal of IPC
Balance at 31 December 2015
Cost at 1 January 2016
Additions during the year:
Balance at 31 December 2016
At the year-end the Company held the following investments:
Direct investments:
YEAR ENDED
31.12.15
£’000
9,755
(179)
(8,178)
(1,298)
100
YEAR ENDED
31.12.16
£’000
100
–
100
1. 50 per cent. (2015: 50 per cent) of the issued share capital of Patagonia Energy Limited (“PEL”), a company registered in the British
Virgin Islands under registration number 620522. PEL owns 100 per cent. of the issued share capital of EdS , a company registered
in Argentina. EdS is a generator and supplier of electricity to the national grid in Argentina.
2. 100 per cent. (2015: 100 per cent.) of the issued share capital of Birdsong Overseas Ltd (“BOL”), a company registered in the British
Virgin Islands, under registration number 688032.
3. 100 per cent. (2015: 100 per cent.) of the issued share capital of Cascade Hydro Limited (“CHL”), a company registered in England
and Wales under registration number 7640689. CHL owns, through intermediate holding companies, 100 per cent. interest in
Electricidad Andina, S.A. and 97 per cent. of Empresa de Generacion Electrica Colca, S.A.C., both being companies registered in
Peru.
4. 100 per cent. (2015: 100 per cent.) of the issued share capital of Cochrane Power Limited, a company registered in England
and Wales under registration number 8220905. Cochrane Power Limited owned at the year-end, through intermediate holding
companies, 100 per cent. interest in Central Illapa, S.A. and 100 per cent. interest in Termoelectrica del Norte, S.A., both being
companies registered in Chile.
5. 100 per cent. (2015: 100 per cent.) of the issued share capital of Rurelec Project Finance Limited a company registered in England
and Wales under registration number 7523554.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 42
245461 Rurelec Annual Report pp23-end.indd 42
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
43
FOR THE YEAR ENDED 31 DECEMBER 2016
Indirect investments:
NAME
Energia del Sur SA*
Electrica del Sur SA*
SEA Energy SA**
Bolivia Integrated Energy Limited***
Rurelec Chile SpA****
Rurelec Chile Limitata****
Termoelectrica del Norte SA****
Central Illapa SA****
TRADING ADDRESS/REGISTERED ADDRESS
INTEREST HELD
Arroyo 880, Piso 2
C1007AAB
Ciudad Autonoma de Buenos Aires
Argentina
Arroyo 880, Piso 2
C1007AAB
Ciudad Autonoma de Buenos Aires
Argentina
Arroyo 880, Piso 2
C1007AAB
Ciudad Autonoma de Buenos Aires
Argentina
C/O Nerine Trust Company Limited
Nerine House
PO Box 434
St George’s Place
St Peter Port
Guernsey
Channel Islands
GY1 3ZG
C/O Guerrero Olivos
Av Vitacura 2939
Piso 8
Las Condes
Santiago de Chile
Santiago
Chile
C/O Guerrero Olivos
Av Vitacura 2939
Piso 8
Las Condes
Santiago de Chile
Santiago
Chile
C/O Guerrero Olivos
Av Vitacura 2939
Piso 8
Las Condes
Santiago de Chile
Santiago
Chile
C/O Guerrero Olivos
Av Vitacura 2939
Piso 8
Las Condes
Santiago de Chile
Santiago
Chile
50%
50%
100%
100%
100%
99.99%
100%
100%
www.rurelec.com
i
l
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 43
245461 Rurelec Annual Report pp23-end.indd 43
27/06/2017 21:25
27/06/2017 21:25
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
NAME
TRADING ADDRESS/REGISTERED ADDRESS
Cascade Hydro Power SAC*****
CHP Construcciones SAC*****
Electricidad Andina SA*****
Empresa de Generacion Electrica Huasicancha
SAC*****
Empresa de Generacion Electrica Colca
SAC*****
Empresa de Generacion Electrica Chilcay
SAC*****
Av. Canaval y Moreyra 452
Pisos 15 – 17
Lima 27
Peru
Av. Canaval y Moreyra 452
Pisos 15 – 17
Lima 27
Peru
Av. Canaval y Moreyra 452
Pisos 15 – 17
Lima 27
Peru
Av. Canaval y Moreyra 452
Pisos 15 – 17
Lima 27
Peru
Av. Canaval y Moreyra 452
Pisos 15 – 17
Lima 27
Peru
Av. Canaval y Moreyra 452
Pisos 15 – 17
Lima 27
Peru
*Held via Patagonia Energy Limited and equity accounted as a joint venture, see Note 26
**Held via Rurelec Project Finance Limited
***Held via Birdsong Overseas Limited
****Held via Cochrane Power Limited
*****Held via Cascade Hydro Limited
INTEREST HELD
99.99%
99.99%
99.99%
99.99%
97%
99.99%
The results of all of the above directly and indirectly held subsidiaries have been included in the consolidated group accounts except
where joint ventures are equity accounted as indicated.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 44
245461 Rurelec Annual Report pp23-end.indd 44
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
45
FOR THE YEAR ENDED 31 DECEMBER 2016
26 JOINT VENTURE
The Group’s only joint arrangement within the scope of IFRS 11 is its 50 per cent. investment in Patagonia Energy Limited (“PEL”), which
owns 100% of EdS in Argentina. Management has reviewed the classification of PEL in accordance with IFRS 11 and has concluded
that it is a joint venture and therefore we have accounted for our interest in the PEL joint venture using the equity accounting method as
set out in IAS 28.
The Group does not participate in losses of the joint venture. In prior years the losses had exceeded the investment in the joint venture
and therefore the Group has not recognised its share of losses in the joint venture . During 2016 the joint venture made a loss. Total loss
position at the year-end was £38.3 million (2015: £29.8 million).
The following table sets out the results of the joint venture in Argentina of which the Group has a 50 per cent. share.
Revenue
Expenses
Non-current Assets
Current Assets
Non-current Liabilities
Current Liabilities
YEAR ENDED
31.12.16
£’000
18,650
(20,184)
10,963
9,705
(38,471)
(15,978)
YEAR ENDED
31.12.15
£’000
17,815
(24,075)
15,544
8,471
(31,514)
(18,678)
Revenue is derived from one principal customer, which the directors consider is of a high quality.
27 RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
a) Group
Loss for the year before tax
Net Finance Income
Adjustments for: Depreciation
Unrealised Exchange Gains
Write down of loans
Loss on disposal
Write down of Turbine
Impairment of Goodwill
Movement in Working Capital:
Change in Trade and Other Receivables
Change in Trade and Other Payables
Cash Used in Operations
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
(9,254)
(2,328)
26
(1,243)
2,662
–
6,44 0
(6)
1,09 6
541
(2,066)
(20,029)
(1,927)
48
106
15,903
1,669
–
–
(1,366)
51
(5,545)
www.rurelec.com
i
l
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 45
245461 Rurelec Annual Report pp23-end.indd 45
27/06/2017 21:25
27/06/2017 21:25
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
b) Company
(Loss)/Profit for the year Before Tax
Net Finance Income
Adjustments for:
Unrealised exchange (gains) on loans
Movement in share option reserve
Write down of investments
Write down of loans
Loss on disposal
Stock write down
Movement in working capital:
Change in trade and other receivables
Change in trade and other payables
Cash used in operations
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
(2,775 )
(3,737)
(4,137)
2,66 2
–
–
6,44 0
581
(367)
(1,333)
(33,771)
(3,482)
(1,819)
–
8,357
26,684
1,669
–
1,062
(2,770)
(4,070)
28 FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The Group’s risk
management is coordinated to secure the Group’s short to medium-term cash flows by minimising its exposure to financial markets. The
Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant
risks to which the Group is exposed are described below:
a) Foreign currency risk
The Group is exposed to translation and transaction foreign exchange risk. Foreign exchange differences on retranslation of these assets
and liabilities are taken to the income statement of the Group. The Group’s principal trading operations are based in South America and
as a result the Group has exposure to currency exchange rate fluctuations in the principal currencies used in South America. The Group
also has exposure to the US $ as a result of borrowings denominated in this currency.
b) Interest rate risk
Group funds are invested in short-term deposit accounts, with a maturity of less than three months, with the objective of maintaining a
balance between accessibility of funds and competitive rates of return.
c) Capital management policies and liquidity risk
The Group considers its capital to comprise its ordinary share capital, share premium, accumulated retained earnings and other
reserves.
The Group’s objective when maintaining capital is to safeguard the entity’s ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders.
The Company meets its capital needs primarily by equity financing. The Group sets the amount of capital it requires to fund the Group’s
project evaluation costs and administration expenses. The Group manages its capital structure and makes adjustments to it in the light
of changes in economic conditions and the risk characteristics of the underlying assets.
The Company and Group do not have any derivative instruments or hedging instruments. It has been determined that a sensitivity
analysis will not be representative of the Company’s and Group’s position in relation to market risk and therefore no such analysis has
been undertaken.
As set out in Note 24, the Group has £4.0 million of loans falling due within 12 months. The directors consider that the Group will be
able to raise sufficient funds from the sale of assets and from other sources to discharge the loans.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 46
245461 Rurelec Annual Report pp23-end.indd 46
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
47
FOR THE YEAR ENDED 31 DECEMBER 2016
The following table sets out when the Group’s financial obligations fall due:
Current – due within 1 year:
Trade payables
Tax liabilities
Borrowings
Total due within 1 year:
Non-current – due in more than 1 year but less than 5 years
Borrowings
YEAR ENDED
31.12.16
£’000
YEAR ENDED
31.12.15
£’000
2,434
12
4,037
6,483
Nil
2,856
4,493
3,054
5,910
Nil
d) Credit risk
Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the face of
the balance sheet (or in the detailed analysis provided in the notes to the financial statements). Credit risk, therefore, is only disclosed
in circumstances where the maximum potential loss differs significantly from the financial asset’s carrying value. The Group’s trade and
other receivables are actively monitored to avoid significant concentrations of credit risk.
e) Fair values
In the opinion of the Directors, there is no significant difference between the fair values of the Group’s and the Company’s assets and
liabilities and their carrying values and none of Group’s and the Company’s trade and other receivables are considered to be impaired.
The financial assets and liabilities of the Group and the Company are classified as follows:
31 December 2016
Trade and Other Receivables > 1 year
Trade and Other Receivables < 1 year
Cash and Cash Equivalents
Trade and Other Payables > 1 year
Trade and Other Payables < 1 year
Borrowings > 1 year
Borrowings < 1 year
Total
COMPANY LOANS
AND RECEIVABLES
£’000
COMPANY
BORROWINGS
AND PAYABLES AT
AMORTISED COST
£’000
GROUP LOANS AND
RECEIVABLES
£’000
GROUP
BORROWINGS
AND PAYABLES AT
AMORTISED COST
£’000
–
27,989
955
–
–
–
–
28,084
–
–
–
–
(2,077)
–
(1,661)
(3,738)
–
24,76 1
960
–
–
–
–
25,72 1
–
–
–
–
(2,446)
–
(4,037)
(6,483)
245461 Rurelec Annual Report pp23-end.indd 47
245461 Rurelec Annual Report pp23-end.indd 47
27/06/2017 21:25
27/06/2017 21:25
l
i
s
a
c
n
a
n
F
r
u
O
i
www.rurelec.com
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
31 December 2015
Trade and Other Receivables > 1 year
Trade and Other Receivables < 1 year
Cash and Cash Equivalents
Trade and Other Payables > 1 year
Trade and Other Payables < 1 year
Borrowings > 1 year
Borrowings < 1 year
Total
COMPANY LOANS
AND RECEIVABLES
£’000
COMPANY
BORROWINGS
AND PAYABLES AT
AMORTISED COST
£’000
GROUP LOANS AND
RECEIVABLES
£’000
GROUP
BORROWINGS
AND PAYABLES AT
AMORTISED COST
£’000
–
24,657
386
–
–
–
–
25,043
–
–
–
–
(2,592)
–
(910)
(3,502)
–
20,866
386
–
–
–
–
21,251
–
–
–
–
(2,856)
–
(3,054)
(5,910)
29 CAPITAL COMMITMENTS
The Group had outstanding capital commitments of £Nil (2015: Nil) in respect of plant ordered but not delivered at the year-end.
30 FINANCIAL LEASE COMMITMENTS
At the year end the Group had the following outstanding lease commitments :
Offi ce equipment
Up to 1 year
More than 1 year less than 5 years
2016
£’000
50
59
109
2015
£’000
50
107
157
Since the year-end the office equipment leases have been novated to Independent Power Corporation PLC, the Group has no
responsibility for the assets covered or liability for future repayments.
Offi ce premises
Less than one year £25,522 (2015: £nil).
Office premises relates to the Companies office.
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 48
245461 Rurelec Annual Report pp23-end.indd 48
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
49
FOR THE YEAR ENDED 31 DECEMBER 2016
31 RELATED PARTY TRANSACTIONS
During the year the Company and the Group entered into material transactions with related parties as follows:
a) Company
i) Paid salaries to directors and amounting to £0.4 million (2015: £0.9 million)
ii) Paid, to its former 100 per cent. subsidiary Independent Power Corporation PLC (“IPC”) £0.1 million under a Consultancy
Agreement. (2015: £0.1 million under a “Shared Service Agreement”).
Sales
Purchases
Y/E debtor
Y/E creditor
2016
£’000
40
125
–
160
2015
£’000
85
125
–
146
iii) Charged interest on loans to its 100% subsidiary Rurelec Project Finance Ltd (“RPFL”) totalling £1.4 million (2015: £528k). The loan
balance outstanding at the year-end was £6.7 million (2015: £6.8 million). In 2015 an impairment of £6.8 million was made this was
reversed in 2016.
Y/E debtor
Y/E creditor
2016
£’000
6,693
1,367
2015
£’000
–
528
iv) Charged interest on loans to its 50% owned joint venture company, Patagonia Energy Ltd (“PEL”) amounting to £2.8 million (2015:
£2.2 million). Received loan repayments of £1.2 million The loan balances at the year-end totalled £1 7.5 million (2015: £20.1 million).
Interest on these loans has been accrued at 11.1%. The total outstanding before impairment is £3 8.3 million (2015: £26.0 million).
These loans have been impaired to £1 7.5 million.
Y/E deb tor
Repayment
Interest charged
2016
£’000
17,551
1,238
2,820
2015
£’000
20,100
–
2,200
v) Received from its joint venture company Energia del Sur S.A. (“EdS”) repayments totalling £nil (2015: £nil) of support previously given
to creditors of EdS. £0.5 million (2015: £0.7 million) of credit support remains outstanding at the year end.
vi) a) Charged IPSA Group PLC (“IPSA”) £55k (2015: £ 93k) under a “Shared Service Agreement”. b) Repaid £0.1 million of deferred
consideration on the 2013 turbine purchase, £1.5 million remains outstanding at the year end. P.R.S. Earl and S Laker are Directors
of IPSA.
Sales
Purchases
Y/E debtor
Y/E creditor
2016
£’000
55
–
–
1,510
2015
£’000
93
–
118
1,831
www.rurelec.com
i
l
s
a
c
n
a
n
F
r
u
O
i
245461 Rurelec Annual Report pp23-end.indd 49
245461 Rurelec Annual Report pp23-end.indd 49
27/06/2017 21:25
27/06/2017 21:25
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
vii) Provided loans and charged interest of 0.5% per month to its 100 per cent. subsidiary Cochrane Power Ltd of £0.7 million (2015:
£1.2 million). The total outstanding at the year-end was £8.5 million (2015: £7.8 million). These loans have been impaired to £2.4
million.
Y/E debtor
Further loans made
Interest charged
2016
£’000
2,374
174
482
2015
£’000
3,022
399
801
viii) Provided loans to its 100 per cent. subsidiary Cascade Hydro Ltd (“CHL”) of £0.5 million (2015: net receipt £1.0 million) and charged
CHL interest of £0.6 million (2015: £560k). The interest rate was 0.5 per cent. per month. The total outstanding at the year-end was
£8.5 million. These loans have been impaired to £1.3 million.
Y/E debtor
Further loans made
Interest charged
2016
£’000
1,276
547
606
2015
£’000
1,127
1,000
560
b) Group
i)
Former director A.J.S. Morris loaned CHL £50k in prior years and was repaid £50k in the prior year. The total outstanding at the year-
end was £12.1k.
ii) E. R. Shaw loaned CHL £83.2k in prior years and was repaid £83.2k in the prior year. The total outstanding at the year-end was
£11.2k.
iii) RPFL received £1.2 million (2015: £2.4 million) in repayments from and accrued interest on amounts due from EdS of £nil (2015:
£0.2 million), the interest rate on the principal was 18.5 per cent. The interest rate on accrued interest was zero, the effective interest
rate (on principal and accrued interest) was zero (2015: 0.1 per cent.). The total outstanding at the year-end was £6.8 million.
32 ASSETS HELD FOR SALE
Assets held for sale relate to three project companies within Peru. These business segments were reclassified to assets held for sale
following the commitment of the Group’s management on 16 September 2014 to restructure its Peruvian operations by means of sale.
Two disposal groups were identified, one of which comprises the Canchayllo run of the river plant, sold in July 2015, with the rest of the
project companies included in the second group. At the end of the year the assets were being actively marketed and a sale is expected
by the end of 2017.
Assets Classified as Held for Sale
Trade and Other Receivables
Liabilities Classified as Held for Sale
Trade and Other Payables
YEAR ENDED
31.12.16
£’000
2,207
2,207
YEAR ENDED
31.12.16
£’000
1,230
1,230
YEAR ENDED
31.12.15
£’000
3,644
3,644
YEAR ENDED
31.12.15
£’000
718
718
RURELEC PLC Annual Report and Accounts for the year ended 31 December 2016
Stock code: RUR
245461 Rurelec Annual Report pp23-end.indd 50
245461 Rurelec Annual Report pp23-end.indd 50
27/06/2017 21:25
27/06/2017 21:25
NOTES TO THE FINANCIAL STATEMENTS
51
FOR THE YEAR ENDED 31 DECEMBER 2016
33 CONTROL
The Directors consider that the controlling party is Sterling Trust Limited on the basis of their 53% shareholding in the Company.
34 POST BALANCE SHEET DATE EVENTS
Since the year end:
–
–
In June 2017 the Company further extended its working capital facility arrangement with BPAC in the amount of £1. 6 million. The
repayment date is now 30 June 2018.
On 31 March the plant owned by Energia del Sur S.A., in which Rurelec has a 50% interest, suffered damage from severe weather.
The plant recommenced production on 2 2 May. The outage is not expected to have a material impact on total 2017 remittances to
Rurelec.
The Chairman’s statement and the Strategic Report with a review of operations contains further details.
245461 Rurelec Annual Report pp23-end.indd 51
245461 Rurelec Annual Report pp23-end.indd 51
27/06/2017 21:25
27/06/2017 21:25
l
i
s
a
c
n
a
n
F
r
u
O
i
www.rurelec.com
Perivan Financial Print 245461
245461 Rurelec Annual Report pp23-end.indd 52
245461 Rurelec Annual Report pp23-end.indd 52
27/06/2017 21:25
27/06/2017 21:25
245461 Rurelec Annual Report Cover v1 copy 2 27/06/2017 21:17 Page 2
RURELEC PLC IS AN OWNER, DEVELOPER AND
OPERATOR OF POWER GENERATION CAPACITY
INTERNATIONALLY.
Rurelec’s main business consists of the ownership and development of power generation
facilities on national and regional grids and in isolated areas, selling wholesale electricity as
a generator on commercial terms, through capacity payments or power purchase
agreements (“PPAs”).
COMPANY INFORMATION
Directors
S.C. Morris (Executive)
A.H. Coveney (Executive)
B. Rowbotham (Non-Executive)
Secretary
S.A. Laker
Company number
4812855
Auditor
Saffery Champness LLP
71 Queen Victoria Street
London
EC4V 4BE
Bankers
Coutts & Co
440 Strand
London
WC2R 0QS
Our current business is centred on our share of an operational plant in Argentina whilst
also seeking to sell the remainder of the small hydro portfolio in Peru and to complete the
development of our project in Chile.
Registered office and business address
18 Soho Square
London
W1D 3QL
CONTENTS
Strategic Report
Non-executive Director’s Statement
Review of Financial Performance
Review of Operations
Our Governance
Board of Directors
Director’s Report
Corporate Governance Statement
Our Financials
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Notes to the Financial Statements
Company Information
2
5
6
7
8
10
13
15
16
17
18
19
20
21
22
23
IBC
245461 Rurelec Annual Report Cover v1 copy 2 27/06/2017 21:17 Page 1
RURELEC PLC
18 Soho Square, London W1H 3QL
Tel: +44 (0) 20 7025 8026
8/
Visit us online at
www.rurelec.com
ANNUAL REPORT
AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Stock code: RUR