TIDMRUR
RNS Number : 6171E
Rurelec PLC
30 June 2023
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in
the United Kingdom pursuant to the European Union (Withdrawal) Act
2018. Upon the publication of this announcement via Regulatory
Information Service (RIS), this inside information is now
considered to be in the public domain.
30 June 2023
Rurelec PLC
("Rurelec" or the "Company")
Audited results for the year ended 31(st) December 2022
Rurelec PLC (AIM:RUR), announces its audited results for the
year ended 31 December 2022.
Following the end of the period under review, Rurelec has
disposed of its Argentinean Joint Venture interests (the
"Disposal") (see announcements dated 16 May 2023 and 12 June 2023).
The sale completed on 9 June 2023 and the Company has now received
the initial consideration of GBP2.4 million (US$ 3 million).
Further contingent payments of up to US$2m (c. GBP1.6m) are payable
up to 36 months after completion, depending on whether certain
conditions are met. This is detailed in the announcement of 16 May
2023. The Disposal was approved by the Company's shareholders at
the General Meeting on 1 June 2023. The meeting also approved a
Special Dividend of 0.2p per share, which was payable to
shareholders on the register as at 23 June 2023.
As Rurelec has now disposed of all, or substantially all of its
business and assets it is now deemed to be an AIM 15 cash shell.
The only significant assets left in the Company are two Siemens
701DU turbines. Accordingly, pursuant to AIM Rule 15, before 11
December 2023, Rurelec must make an acquisition or acquisitions
which constitutes a reverse takeover under Rule 14 of the AIM Rules
for Companies otherwise Rurelec's Ordinary Shares will be suspended
from trading on AIM. Furthermore, if a qualifying acquisition is
still not completed by Rurelec by 12 June 2024 the admission of the
Company's ordinary shares to trading on AIM will be cancelled. The
Board's main focus is now on maximising returns for shareholders
from the sale of the two Siemens 701DU turbines and completing an
AIM Rule 14 compliant transaction before 11 December 2023.
Annual General Meeting
A copy of the annual report and accounts, and the notice of AGM
will be posted to shareholders today, and copies are also now
available from the Company's website www.rurelec.com .
The annual general meeting of Rurelec PLC will be held at 5 St.
John's Lane, London, England, EC1M 4BH at 11.00 a.m. on 2 August
2023.
For further information please contact:
Rurelec PLC WH Ireland Ltd
Andy Coveney, Executive Director Katy Mitchell
www.rurelec.com
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Tel: +44 (0)20 7549 2829 Tel: +44(0) 20 7220 1666
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NON-EXECUTIVE DIRECTOR'S STATEMENT
Dear Shareholder
The strategy for Rurelec has now evolved as the disposal of the
Argentinian interests and the reduction of the cost base over
recent years has stabilised the financial position of the Group. We
will continue to seek to sell the turbines which may take some time
and concurrently we will look to recapitalise the business through
a transformative acquisition to deliver shareholder value. We are
in the early stages of considering opportunities which will take
some months to prepare. We are also mindful of our obligations to
complete an AIM Rule 14 compliant acquisition within the relevant
timelines. Any such AIM Rule 14 compliant acquisition will be
subject to shareholder approval; will be notified without delay and
will be accompanied by the publication of an AIM Rule compliant
admission document in respect of the proposed enlarged entity. The
proposed acquisition may or may not be in the power and energy
sector.
For a number of years, the Company's shares have traded at a
significant discount to net asset value making it dilutive to issue
new shares. The Directors believe that this discount can be reduced
or be eliminated if the turbines are sold or their value can be
ring fenced for the benefit existing shareholders. This is now a
priority for us in the short term and ahead of any acquisition.
The year in review
The Company's cost base remained steady during the year, despite
inflationary pressures. With relatively few suppliers, every
invoice is scrutinised by the board, and only limited further
savings can be made while Rurelec remains a publicly quoted company
responsibly. Currently expenditure is now less than GBP1 million
per annum.
Group current liabilities at 31 December 2022 stood at GBP0.47
million, which compares with the position at 31 December 2021 of
GBP0.45 million.
As announced on 16 May 2023 the Company entered into an
agreement to dispose of its Argentinean Joint Venture being
operating assets owned by Energia del Sur, S.A ("EdS") and held by
Joint Venture PEL.
Cash at 31 December 2022 stood at GBP0.45 million (2021: GBP0.75
million), but as at 30 June 2023, cash was GBP2.289 million after
the receipt of the consideration for the Disposal (but note this is
before a special dividend of GBP1.12 million) which is due to be
paid to the shareholders on 14 July 2023.
Argentina
These assets were transferred to Assets Held for sale on 31
December 2022. Their sale was announced on 16 May 2023 and
completed on 9 June 2023, and an initial consideration of US$3
million was received on the same date. Further contingent payments
of up to USGBP2m may be payable if certain conditions, as outlined
in the announcement of 9 May 2023, are met.
Outlook
As announced on 12 June 2023 the Company completed the disposal
of PEL which allowed the Company to declare a dividend to
shareholders which was paid on 23 July 2023. The Directors now have
two goals which will run concurrently; to sell the turbines and to
undertake a transformative acquisition for Rurelec.
The turbines have been in storage in Italy since 2008. Whilst
they are of a dated design, the Directors believe they are of a
high engineering quality. The Directors also consider that changes
in global energy markets, such as those occurring as a result of
the war in Ukraine, means there is still demand for such ageing
assets. The Directors expect that they are likely to be deployed in
developing countries and during the year the Company followed up on
a number of leads in different geographies. The complex and often
slow nature of financing power projects of the scale for which
these turbines will be used makes it difficult for the Directors,
both to determine the credibility of a purchaser, and to predict
the timing of any sale, ahead of receipt of a contractual
commitment validated by a deposit. The Directors are continuing to
explore all leads, including the esoteric and improbable.
The Company is seeking an acquisition to create value for
shareholders. The Directors are at the early stages of evaluating
opportunities, which will likely be subject to shareholder approval
and require an AIM Rule compliant admission document. This process
is likely to take several months, but with difficult capital
markets the Directors anticipate that companies which are unable to
list onto AIM (a market of the London Stock Exchange) through an
IPO directly, may consider a reverse takeover (pursuant to AIM Rule
14 of the AIM Rules of Companies) with Rurelec to be a compelling
proposition. However, the Directors believe they will need to
undertake some further restructuring if the Company has not sold
the turbines at the time an acquisition is identified, in order to
ensure that both Rurelec and the turbines achieve best value.
As set out above, the acquisition or acquisitions which
constitutes a reverse takeover under Rule 14 of the AIM Rules for
Companies must take place before 11 December 2023 otherwise
Rurelec's Ordinary Shares will be suspended from trading on
AIM.
Paul Shackleton
Non-executive Director
30 June 2023
STRATEGIC REPORT
Strategy
The overall strategy for the Group remains the continued
stabilisation of its financial position, with the intention of
enabling value to be realised from the asset portfolio and
ultimately returned to shareholders. In pursuing this aim the
Directors considered it appropriate to reclassify the Group's two
main assets, the Joint Venture ("JV") assets in Argentina and two
Siemens 701 turbines ("turbines"), as Assets Held for Sale at 31
December 2022. As announced on 16 May 2023, a Sale and Purchase
Agreement for the JV assets had been signed in mid-May. The sale
was authorised at the Company's General Meeting on 1 June 2023. The
completion of the sale was announced on 12 June 2023 and the
Company received the initial GBP2.4 million (US$3 million)
consideration on 9 June 2023, with the potential for further
contingent consideration payable over the next 36 months. Following
the disposal of the JV Assets, the Company became an AIM Rule 15
Cash Shell.. The Directors are now focused on two goals which will
run concurrently; to sell the turbines and to undertake a
transformative acquisition for Rurelec.
Liquidity
This strategy has been determined by the on-going financial
position of the Group. The main borrowing of the Group was the 2016
secured BPAC loan, which was repaid in 2019 enabling the associated
debenture to be released. The Group thus became debt-free in 2019
and it remained debt-free throughout 2022. Current liabilities have
remained stable at GBP0.47 million (2021: GBP0.45 million). With
the sale of PEL any further increase in Group liquidity is now
dominated by the timing and quantum of inflows from two main
sources - disposal of the turbines and the sale of the cash
shell.
During 2022, continued normal operations and cash generation at
EdS enabled the Argentinian operations to remit unsecured debt
repayments of GBP0.8 million (2021: GBP0.6 million) to Patagonia
Energy Limited ("PEL"). Of this amount, Rurelec received GBP0.6
million (2021: GBP0.3 million) of debt repayments from PEL under
the terms of the November 2019 Umbrella Agreement regulating the
division of debt repayments to be made by PEL to its two JV
partners.
Post year end to date, the Group has received GBP2.4 million
(US$3 million) of the initial consideration from the sale of
PEL.
Group liquidity - cash outflows
There are now no group debt outflows, and outflows on Group
administrative expenses were GBP0.97 million (2021: GBP0.97
million).
Group liquidity - post balance sheet date sale of JV
interests
As announced on 16 May 2023 a Sales and Purchase Agreement for
the PEL was signed, the sale was authorised at the General Meeting
on 1 June 2023 along with a special dividend of 0.2p per share. As
announced on 12 June 2023 the sale completed on 9 June and the
Company received the initial US$3 million consideration on the same
date. Following the disposal, the Group became an AIM Rule 15 Cash
Shell. With the receipt of funds of GBP2.4 million (US$ 3 million)
on 9 June 2023 the Group is in a position whereby it can meet
expected costs for 12 months after the signing of this report.
Group liquidity - asset sales
The Board remains hopeful for the prospects of realising other
group assets notably the two Siemens 701 DU 125MW turbines and
generators in storage in Italy. A sale of these assets would have a
material effect on group liquidity if and when it occurs, but the
sale of these units is dependent on a customer undertaking a
suitable project as this size of older turbine are very rarely
bought "for stock"- they would only be bought by a buyer with a
specific project in mind in an appropriate territory where such
turbines are permitted to operate. Hence the exact timing of a
future sale remains uncertain, and this introduces a natural
unpredictability to the timing of receipts from such sales.
Financial Results and Going Concern
The operating loss for the year of GBP2.4 million for 2022
represents a slight increase in losses compared to the GBP2.1
million operating loss for 2021. Included in the loss is an
impairment in the carrying value of Group assets of GBP1.4 million
(2021: GBP1.5 million) coupled with administration expenses which
remained stable at a Group level at GBP0.97 million (2021: GBP0.97
million). In the prior year these losses were offset by a gain of
GBP330k (2022: GBPnil) on the disposal of the Arica turbine,
recorded in Other Income. Other Expense is comprised of GBP0.2
million impairment of assets in Chile, all assets are now fully
impaired in 2023 it was decided to discontinue operations in Chile,
please see note 28 Subsequent Events for further details.
Additionally, there was a GBP1.2 million impairment of the JV
interests on their initial reclassification as Assets Held for
Sale, the carrying value was determined as the lower of fair value
and sales proceeds minus costs to sell.
The overall loss before tax for the year was GBP2.2 million
(2021: GBP3.6 million). There was no net finance expense (2021:
GBP1.3 million). There was a GBP0.2 million gain in foreign
exchange (2021: losses GBP0.2 million).
Following the disposal of the Argentinean JV interests, the
Company is deemed to be a Cash Shell pursuant to Rule 15 of the AIM
Rules for Companies. The consequences of this are that before 11
December 2023, being six months after Rurelec became an AIM Rule 15
cash shell, Rurelec must make an acquisition or acquisitions which
constitutes a reverse takeover under Rule 14 of the AIM Rules for
Companies otherwise Rurelec's Ordinary Shares will be suspended
from trading on AIM. Furthermore, if a qualifying acquisition is
not completed by Rurelec by 12 June 2024, the admission of the
Company's ordinary shares to trading on AIM will be cancelled. The
financial statements include a material uncertainty to going
concern related to these matters as explained in note 1c.
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
financial and non-financial targets which are set annually.
Financial KPIs
Financial KPIs address cashflow, operating profitability, net
asset value and earnings per share.
i) Cash Flows
The Group is heavily focused on optimising cashflow generation.
It regularly monitors actual and forecast Net Cashflows used in
Operating Activities, Net Cashflows Generated by Investing
Activities (predominantly the repayment of loans from PEL) and Net
Cash Used in Financing Activities (although those will in the
foreseeable future be minimal as the Group has become debt-free).
The Net decrease in Cash and Cash Equivalents in the year was
GBP0.3 million (2021: increase GBP77k), cash balances at the
year-end were GBP0.45 million (2021: GBP0.75 million).
ii) Operating profitability
Operating loss excludes all non-operating costs, such as
financing 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 an operating loss of
GBP2.4 million in the year (2021 GBP2.1 million loss).
iii) 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 1.8 pence per share
(2021: 2.2 pence per share).
iv) Earnings per share
Earnings per share provide a measure of the overall
profitability of the Group. It is defined as the profit or loss
attributable to each Ordinary Share based on the consolidated
profit or loss for the year after deducting tax. Growth in earnings
per share is indicative of the Group's ability to identify and add
value. The Group made a loss of 0.39 pence per share in the year
(2021: loss of 0.65 pence per share).
Non-Financial KPIs
Non-financial KPIs address other important technical aspects of
the business, such as gross capacity, operating efficiency and
availability. As announced on 16 May 2023 a Sales and Purchase
Agreement for the JV assets was signed, the sale was authorised at
the General Meeting on 1 June. The sale completed on 09 June.
Review of Financial Performance
Group Results
The Group loss after tax for the financial year under review is
GBP2.2 million (2021: GBP3.7 million loss). This included
impairment adjustments of GBP1.4 million (2021: impairments GBP1.5
million), net expected credit losses of GBPnil (2021: GBP1.3
million), an impairment provision of GBPnil (2021: GBP0.1 million)
relating to closure costs of 100per cent. owned subsidiary SEA
Energy S.A. and foreign exchange gains of GBP0.2 million (2021:
GBP0.2 million losses). The impairments//Net Expected Credit Losses
are detailed below:
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
Impairments//Net Expected Credit
Losses
Impairment on investment in Joint
Venture - 1,336
Impairment of amounts due from joint 1,195 -
venture
Impairment of Chile Transformer (note 35 -
12)
Impairment of Chile performance bonds 210 -
Net Expected Credit Losses - 1,345
Provision re closure costs of SEA
Energy - 133
Total 1,440 2,814
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Group revenue was GBPnil (2021: GBPnil). Operating and
Administrative expenses amounted to GBP0.970 million (2021: GBP0.97
million). Operating loss was GBP2.4 million (2021: GBP2.1 million
loss). The loss before tax is GBP2.2 million (2021: GBP3.7 million
loss). The basic loss per share is 0.39p (2021: 0.65p loss). Total
assets are GBP10.86 million (2021: GBP12.97 million). Total equity
stands at GBP10.2 million (2021: GBP12.5 million), or a Net Asset
Value of 1.8 pence per share (2021: 2.2 pence per share).
The results for the operations in Argentina, and Chile are shown
below.
Energia del Sur S.A. Results
These assets were transferred to Assets Held for sale on 31
December 2022. Their sale was announced on 16 May 2023 and
completion was announced on 12 June 2023.
Rurelec Chile
The development of our 100 per cent. owned investments in Chile
has expensed limited direct costs in the year of GBP39k (2021:
GBP83k). Capitalised development costs are GBPnil (2021: GBPnil) on
the Central Illapa project. As previously announced the Arica
turbine was disposed of in the prior year, the sales proceeds were
US$1.0 million, the net profit of GBP330k is shown in other income
note 8b. All sale proceeds were received during the prior year. The
development costs associated with the Central Illapa project were
impaired to GBPnil in 2021 (2020: GBPnil). At a Board meeting on 21
June 2023, it was decided that activities in Chile would be
regarded as discontinued operations. All remaining assets have been
fully impaired in these financial statements with a charge of
GBP210k being recorded in Other Expense (2021: GBPnil).
Review of Operations
Argentina
As announced on 16 May 2023 a Sales and Purchase Agreement for
the JV assets was signed, the sale was authorised at the General
Meeting on 1 June 2023. The sale completed on 9 June 2023 and the
Company received the initial US$3 million consideration on the same
date. Following the disposal, the Group became a AIM Rule 15 Cash
Shell.
The Argentinian Joint Venture interests were transferred to
Assets Held for Sale on 31 December 2022, in accordance with IFRS
5, please see note 13 for further details.
The following table sets out the prior year's Group's 50 per
cent. share of its interest in Patagonia Energy Limited ("PEL") the
BVI registered joint venture holding company of EdS, its 100 per
cent. owned Argentinian operating subsidiary.
Group share of Joint Venture results Year Ended Year Ended
and net assets
31.12.2022 31.12.2021
GBP'000 GBP'000
Results
Revenue - 3,300
Operating Expenses - excluding foreign
exchange losses - (2,175)
Foreign exchange losses - 130
EBITDA - 1,255
Depreciation - (1,047)
EBIT - 208
Intragroup interest - credit re write
back of prior year charge - 2,478
Third party interest payable - (398)
Profit before tax - 2,288
Tax - 151
Profit after tax - 2,439
Summary of Statement of Financial
Position
Non-current assets - 10,871
Cash - 1,419
Current trade and other receivables - 918
Non-current liabilities - (17,100)
Current liabilities - (907)
Net assets/(liabilities) - (4,798)
Chile
Arica
In the prior year, following the reassessment of the project,
the Board sought to redeploy the Frame 6B turbine acquired for the
project. As separately announced on 9 September 2021 a sale of the
turbine was concluded at US$1.0 million (approximately GBP0.72
million), the gain of GBP330k being shown in Other Income. All
proceeds were received in the year, see note 8b for further
details. The associated transformer was fully impaired in the year
(2021: GBP35k).
Central Illapa
The Company has been unable to secure the partners required for
this project. The Directors reviewed the project and decided to
reclassify the turbines originally acquired for it to Assets Held
for Sale, please see note 13 for further details.
Turbines
These assets were reclassified as held for sale at 31 December
2022. The Group's carrying value is 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 has been assessed at
GBP7.8 million (2021: GBP7.8 million). The Directors also obtained
an independent valuation produced by a competent person. Based on
valuation advice the Directors have decided not to further impair
the carrying value of these turbines (2021: GBPnil).
Future developments have been considered in the non-executive
Director's statement.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group have been
stated as the following risks, though most of these risks are
reduced or eliminated as discussed in note 1.c.
a) Political risk - there are significant political risks in the
areas where the Group operates. These include potential for
unfriendly actions towards foreign investments (including the
imposition of exchange controls that can significantly reduce the
return on investment due to the difficulty and cost of repatriating
funds) and towards the domestic utilities sector generally, the
imposition of new tariffs and/or taxes and/or government cash
shortages resulting in slow payment for electricity generated. That
political risk also extends to labour laws which can result in
significant employment-related cost inflation and punitive
employment compensation legislation which can make it difficult and
uneconomic to carry out staff restructuring programmes. There is
also the possibility that domestic economic instability could lead
to political unrest or vice versa. These are significant risks to
Rurelec which are inherent in operating in such territories.
b) Exposure to foreign currency - The Group's activities are in
South America and therefore results will be affected by exchange
rate movements and local inflation rates.
c) Liquidity - Following the receipt of the initial
consideration of GBP2.4 million (US$ 3 million) the Group is in a
position to meet its forecast short-term cash requirements. Please
see Going Concern in the Directors Report and note 1c for further
details.
d) Economic, market and business operations risk resulting from
pandemics, particularly the COVID-19 pandemic. In March 2020, the
World Health Organisation declared the spread of COVID-19 to be a
pandemic. The rapid spread of the virus and consequent global
emergency containment measures resulted in business closures,
travel shutdowns and restrictions that severely curtailed economic
activity and political and economic decision making. The prolonged
nature of the COVID-19 pandemic had a severe negative impact on the
UK and Chilean economies where the Group operates. The demand for
electricity experienced some decline from the reduced industrial
and commercial activity, but background demand was maintained. The
greater risk has been the effect of the pandemic on already fragile
economies such as that of Argentina and measures such as emergency
labour laws and restrictions on profit returns from utility
companies generally have been implemented to prevent social
hardship with the expectation that business meets the burden of
that implementation.
To date, the pandemic had not had a significant impact on
operations. London head office operations of Rurelec were able to
continue remotely without disruption. All current Head Office
records were digitised before the UK lockdown to allow for remote
access and work has continued from employees' homes.
The adverse economic and social effects of the COVID-19 pandemic
started to recede in late 2021. Although many global supply chains
continued to be disrupted and distorted ats Economies recovered,
this has had little discernible effect on EdS or Rurelec to date.
However, despite widespread global stimulus packages and efforts to
control and eradicate the virus, it is not currently known what the
lasting effects of COVID-19 and its variants will be on the growth
rates of global economies, and what the effect will be on the
ongoing demand for electricity, the ability to operate and the
ability to obtain spare parts and engineering expertise in the
event of maintenance or equipment breakdowns. There are no
guarantees there will not be yet further disruption and this could
extend to an inability to transfer funds out of the country for
debt repayments owed to the Group. Group cash flows have been
prepared under the scenario that cash will continue to be received
under current conditions and local management's expectations.
e) War in Ukraine - its current effects on the Group are not
considered to be an adjusting post balance sheet event. See the
Directors Report and note 5 - exchange rate sensitivity for further
details.
Directors' Section 172 Statement
Statement by the directors in performance of their statutory
duties in accordance with s172(1) Companies Act 2006.
The Board of Directors of Rurelec Plc acknowledge that they have
a statutory duty under s172 (1) (a-f) of the Act to promote the
success of the Company for the benefit of the members as a whole
considering broader stakeholder interests, and notably having
regard to:
a) the likely consequence of any decision in the long term;
b) the interests of employees;
c) the need to foster business relationships with suppliers, customers and others;
d) the impact of operations on the community and the environment;
e) the desirability of the company maintaining a reputation for
high standards of business conduct; and
f) the need to act fairly as between members of the Company
We report below on how in the year ended 31 December 2021 the
Board's strategies, actions and key decision making took place
observing these duties with the objective of delivering positive
outcomes for the Company, its shareholders and its wider
stakeholders the most relevant of which have been identified as
including creditors, employees of the Company and of interests in
foreign JV operations and those impacted by its operations in the
wider community.
a) Regarding the likely consequences of long-term decision
making, those decisions were made with clear strategic focus on the
need to return value to shareholders and the need to continue to
build financial strength, thereby avoiding the near-insolvency
event experience by the Company in the past. That strategy drove
cash conservation and cost cutting decisions so that the business
could withstand financial stress. The Company was able to withstand
those stresses in 2022.
b) Our employees are fundamental to the delivery of our
strategy. The Board has prioritised fair remuneration and pension
arrangements for those employees and undertakes regular
communication updates in an open environment. Decisions taken to
maximise the resilience of the business, preserving cash and
minimising risk, are taken after prioritising the continued
employment of those employee roles that have been instrumental to
the turnaround of the business. Rurelec's Directors have been
instrumental in using impending retirements and encouraging
part-time working to lower the future costs of its Argentinian
operations.
c) Regarding the need to foster business relationships with
suppliers, customers and others, Rurelec has for some time been
keen to repay arrears to trade creditors who have supported the
business over a significant timescale and to repay in full all
secured creditors. The Company has been freed from the interest
burden that was being paid on past loans, thereby benefitting other
stakeholders. Rurelec is now essentially debt- free and, as
operating circumstances allow, the Board's stated objective of
returning value to shareholders can be realised.
d) Regarding the desirability of Rurelec maintaining a
reputation for high standards of business conduct, the Board of
Directors' intention is to ensure that the business operates and
behaves in a responsible manner with high standards of business
conduct and governance. Regular communication amongst the Board and
employees and effective, formally recorded Board Meetings ensure
such standards are maintained. Where appropriate, independent legal
advice is obtained to support the decision process.
e) Regarding the need to act fairly, as between members of the
Company, all shareholders are welcome to express their views at the
Annual General Meeting. In December 2019, the Company took the
decision to apply to shareholders and the law courts for a capital
reconstruction in 2020. This reconstruction was duly approved in
2020 to facilitate the distribution of future returns to
shareholders should cash reserves grow to the extent of permitting
this. On 1 June 2023 there was a General Meeting at which the
shareholders unanimously voted for the proposed disposal of PEL and
a 0.2p dividend per share to be paid from the proceeds.
The Strategic Report was approved by the Board of Directors on
30 June 2023 and was signed on its behalf by:
_______________________
Andrew Coveney (Executive Director)
BOARD OF DIRECTORS
ANDY COVENEY
Executive Director
Member of the Institute of Chartered Accountants, qualified as
Chartered Accountant in 1990. After obtaining a degree in Geology
from the University of Durham he joined Deloitte Haskins &
Sells, in 1991 then specialising in Corporate Finance advisory
work. In 1993, Andy embarked on a 15-year spell as FD/MD of several
financial and operational turnarounds in the manufacturing and
distribution sectors, starting with the acquisition and subsequent
turnaround of CP Pharmaceuticals Limited, a loss-making division of
Fisons plc before it was sold to Wockhardt Group a decade later.
Founded Coveney Associates Consulting in 2010 providing FD advice,
turnaround services and cashflow management advice to a portfolio
of businesses.
PAUL SHACKLETON
Non-Executive Director
Paul is the Senior Independent Non-Executive Director and
Chairman of the Audit Committee. He is a corporate finance adviser
at Arden Partners PLC. After university, he spent six years as an
officer in the British Army. In 1996 he joined UBS limited where he
worked with small caps covering Mergers and Acquisitions and Equity
capital markets for listed and AIM traded companies. He
subsequently joined Singer & Friedlander Limited where he was a
founder member of the team which undertook a MBO to form Bridgewell
Limited. Since then, he has continued to specialise in small
companies; his experience also includes being an adviser to Rurelec
between 2006 and 2017.
DIRECTORS' REPORT
The Directors submit their annual report together with the
audited financial statements for the year ended 31 December
2022.
Principal activities
The Company and the Group's principal activity has been 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
acquired assets in Argentina and Bolivia and commenced development
of new power generation projects in Peru and Chile. The power
generation projects in Peru were sold on 30 January 2018. In
September 2021, the Frame 6B turbine acquired for the Arica project
in Chile was sold. As announced on 16 May 2023 a Sales and Purchase
Agreement for the PEL was signed, the sale was authorised at the
General Meeting on 1 June along with a special dividend of 0.2p per
share. The sale completed on 09 June and the Company received the
initial GBP2.4 million (US$ 3 million) consideration on the same
date. Since the disposal of certain assets, the principal activity
of the Group will change in accordance as the Directors seek
partners to take the group forward in 2023 and beyond, following
the disposal of the Argentinian operations in June 2023.
Results and dividends
The Group results for the year ended 31 December 2022 are set
out in the Consolidated Statement of Total Comprehensive
Income.
No dividend was paid during the year to 31 December 2022 (2021:
nil).
Share capital
Details of the issued share capital are set out in Note16.
Going concern
Accounting standards require that Directors satisfy themselves
that it is reasonable for them to conclude whether it is
appropriate to prepare financial statements on a going concern
basis. In assessing the going concern position of the Group and
Company, the Directors have taken into account the uncertainties,
cash flows, and implementation of revised strategy. The Directors
have reviewed financial projections and strategy to 30 June 2024,
and have considered projections for a base case and a stress
case.
At the date of the signing of the Financial Statements, having
considered Rurelec's current cash balances and the cash forecasts
including the receipt of the initial consideration of US$3 million,
the Directors believe, bearing in mind the reduced outgoings of the
Group, there is currently sufficient headroom in existing working
capital facilities to avoid the need to seek further sources of
working capital. This is a significant improvement from the prior
years. Refer to Note 1c.
Directors
The following Directors served during the year and up to the
date of signature of the financial statements as follows:
Andy H. Coveney - Executive Director, was elected at 2022 Annual
General Meeting.
Paul Shackleton was appointed as Non-Executive Director on 26
July 2021 and elected at the 2021 Annual General Meeting.
Directors' interests
The Directors' beneficial interests in the number of shares in
the Company were on the reference dates as stated below:
29.06.2023 31.12.2022 31.12.2021
Andrew H. Coveney - - -
Paul Shackleton - - -
Directors' Indemnity
The Company's Articles of Association provide, subject to the
provisions of UK legislation, an indemnity for Directors and
officers of the Company in respect of liabilities they may incur in
the discharge of their duties or in the exercise of their powers,
including any liabilities relating to the defence of any
proceedings brought against them which relate to anything done or
omitted, or alleged to have been done or omitted, by them as
officers or employees of the Company. Appropriate directors' and
officers' liability insurance cover is in place in respect of all
the Directors.
Significant 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 notifiable at 29 June
2023, being the last practicable date for reporting this
information.
Number of shares % holding
Sterling Trust Ltd 303,092,303 53.989
Askar Alshinbayev 96,565,166 17.201
Peter Gyllenhammar AB 22,535,946 4.014
Mr & Mrs Scott 17,808,000 3.172
The percentages shown are based on 561,387,586 shares in
issue.
Risk management and objectives
The financial risk management policies and objectives are set
out in Note 23.
Impact Assessments
United Kingdom's Exit from the European Union (Brexit)
The UK left the European Union ("EU") at 11.00 pm on 31 January
2020. The Transition period that was put in place - during which
the UK was still subject to EU rules - ended on 31 December 2020.
The rules governing the new relationship between the EU and UK took
effect on 1 January 2021. The new Trade and Cooperation Agreement
and other agreements were reached between the UK and the EU on 24
December 2020 and were signed during the Transition period. They
entered into force on 1 May 2021.
The Group has very limited transactions with EU members and
those are limited to the provision of services. Rurelec entity and
the Group has only one supplier of services based in the EU.
Therefore, Brexit has not had a material impact on the Company.
War in Ukraine
The Group has no activities in, or relating to, Ukraine. Whilst
the war's future impacts are by nature uncertain, at the time of
signing this report, no direct impact on the Group is anticipated
over the following 12 months.
Statement of directors' responsibilities
The Directors are responsible for preparing the Strategic
Report, the Directors' Report, Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Company and Group financial statements
in accordance with UK adopted international accounting standards.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs and profit or loss of the Company and
Group for that period. In preparing these financial 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;
-- state whether they have been prepared in accordance with UK
adopted international accounting standards, subject to any material
departures disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and Group
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
Group, and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Statement as to disclosure of information to auditor
As far as the Directors are aware, they have each taken all
necessary steps to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that
information.
As far as the Directors are aware, there is no relevant audit
information of which the Company's auditor is unaware.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies Act
2006.
Auditor
Pursuant to Section 489 of the Companies Act 2006, BDO LLP has
expressed its willingness to continue in office as auditor and a
resolution to reappoint it will be proposed at the forthcoming
Annual General Meeting.
On behalf of the Board
Maria J. Bravo Quiterio
Company Secretary
30 June 2023
CORPORATE GOVERNANCE REPORT
for the year ended 31 December 2022
Introduction
Rurelec PLC applies the QCA Corporate Governance Code (the "QCA
Code") published in April 2018 and this Corporate Governance report
for the year ended 31 December 2022 is based upon the Code.
The principal means of communicating our application of the QCA
Code are this Annual Report and our Corporate Governance section on
our website (
https://www.rurelec.com/about-us/corporate-governance/qca-compliance-table
).
This report sets out the Group's application of the Code,
including where appropriate, cross reference to other sections of
the Annual Report.
Where our practices depart from the expectations of the Code, an
explanation is given as to why, at this time, it is appropriate for
the Group to depart from the Code.
The QCA Code is constructed around ten broad principles and a
set of disclosures which notes appropriate arrangements for growing
companies and requires companies who have adopted the QCA Code to
provide an explanation about how they are meeting those principles
through the prescribed disclosures. In the paragraphs below,
Rurelec PLC explains how it has applied them.
Principle 1. Establish a strategy and business model which
promotes long-term value for shareholders.
The Board is committed to strengthening the Group's underlying
financial position. The Board sets out to deliver long-term value
to shareholders in the following ways:
-- Stabilising the Group's position by reducing cash outflows;
-- Reducing the Company's vulnerability to fluctuations in the
timing of debt repayments receivable from subsidiaries and JVs;
-- Working with joint venture partners to ensure that debts from
those entities are repaid to the fullest extent possible;
-- Using that financial stability to permit an orderly
realisation of assets and investments in a timescale that allows
maximisation of the proceeds of such sales;
-- Where asset realisations are not possible in the short term
due to market conditions, preserving the value of those assets
and/or maximising the cashflow generated by those assets; and
-- Look to recapitalise the business through a transformative acquisition.
The execution of this strategy presents key challenges in the
maximisation of returns on assets given market conditions. Those
challenges are addressed by ensuring that the Company is stable
enough to be able to avoid having to offload such assets when to do
so would minimise value, instead choosing to seek opportunities to
maximise the long term returns that will optimise value for
shareholders.
The business model as to how the Company plans to make money for
its investors revolves around maximising the long term collection
of debts owed in connection with the JV formed to develop the EdS
business in Argentina, whilst repaying Rurelec's own creditors and
continually assessing the value and saleability of its assets with
a view to developing and/or realising those assets in such a way as
to maximise the returns to all shareholders. At the same time, the
Company will be assessing options as it seeks to complete a
transformative acquisition.
The Group and the Company are fully compliant with this
principle.
Principle 2. Seek to understand and meet shareholder needs and expectations.
The Board attaches great importance to providing shareholders
with clear and transparent information on the Group's activities,
strategy and financial position. Details of all shareholder
communications are provided on the Group's website.
The Board regards the annual general meeting as a good
opportunity to communicate directly with shareholders via an open
question and answer session.
The Company lists contact details on its website and on all
announcements released via RNS, should shareholders wish to
communicate with the Board.
The resolutions put to a vote at past AGMs can be found in
www.rurelec.com/investors/circulars
The Board seeks to engage with all shareholders as and when
relevant information needs to be disclosed. The Board recognises
that shareholders may have different time horizons for their
shareholdings and is mindful of the need to consider the interests
of shareholders as a whole in this regard.
Shareholders can communicate with the Company through the email
address in its website. The Board is responsible for reviewing all
communications received from members and determining the most
appropriate response.
The Group and the company are fully compliant with this
principle.
Principle 3. Take into account wider stakeholder and social
responsibilities and their implications for long-term success.
The contraction of the Group and the focus on stabilisation of
the financial position of the business has led to frequent
communication at Board level and regular communication with
suppliers/funders to maintain their confidence in the business
model and strategy being pursued by the Board. The long-term
success of the Group relies on maintaining open communication and
good relationships with its stakeholders.
Communication also extends to the Board receiving regular
updates and feedback within the small London-based workforce in the
Company and there are also regular communications with the
directors of the Group's joint venture partner in the British
Virgin Islands. The Group's main trading asset was the joint
venture operation in Argentina. This operation was run by a
full-time local management team that maintains good relations with
all key stakeholders to the business in Argentina. This asset has
since been disposed of by the Group.
The Group and the Company are fully compliant with this
principle.
Principle 4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
Given past changes in the Company's financial position, the
Board considers risk management to be of paramount importance and
this has driven its strategy of pursuing financial stability rather
than expansion in order that shareholder value can be maximised
through an orderly realisation of the Group's assets. The risk
position of the Group is considered on a regular basis by the Board
given the cash constraints that the Group has had to work within.
The feedback on its strategy of pursuing a low-risk approach is
received clearly in terms of reductions in cash outflow as measured
by weekly reviews of cash forecasting models, and in terms of
reduced exposure to fluctuations in cash inflow.
Although the Company does not undertake specific risk
assessments, the Board as a whole undertakes regular views of the
principal risks and uncertainties facing the Group as reported in
page 7, Strategic Report. The Company has not yet implemented a
risk register which should be under the Audit Committee reporting
and therefore it is not compliant with the QCA Code.
Principle 5. Maintain the Board as a well-functioning, balanced team led by the chair.
The board acknowledges that the Company is not compliant with
the QCA Code as the Company currently does not have a Chairman nor
two independent Non-Executive Directors.
The Board takes collective responsibility for the quality of,
and approach to corporate governance by the Company, governance and
the systems and procedures by which the Company is directed and
controlled. A prescribed set of rules does not itself determine
good governance or stewardship of a company and, in fulfilling
their responsibilities, the Directors believe that they govern the
Company in the best interests of the shareholders, whilst having
due regard to the interests of other 'stakeholders' in the Group
including, in particular, customers, employees and creditors.
The Board is responsible for running the Company, including all
major business and financial risks and taking strategic
decisions.
The Directors communicate at least weekly on significant
matters, in particular on matters affecting cashflow and on matters
concerning the joint venture in Argentina.
Paul Shackleton was considered to be independent since his
appointment in July 2021. The board evaluated the independence
requirements of the QCA Code and considered that Paul Shackleton
was independent during the period.
The number of times the Board met during the year to 31 December
2022 was 19. All serving directors were present at all the Board
meetings.
The three principal standing committees of the Board are the
Audit, Nominations and Remuneration Committees.
Audit, Remuneration and Nominations Committees
The Board acknowledges that the Company is not compliant with
the QCA Code terms of reference for these committees as these
committees should be made up only of Independent Non-Executive
Directors. As Paul Shackleton is the Company's only Independent
Non-Executive Director, matters normally reserved for these
committees are currently considered by the whole board. The
business of the board committees will resume when further
appropriate appointments are made to the board.
The executive director is a part time director of the Company
although all directors are expected to commit sufficient time to
the Company in addition to attending the Board meetings.
The Board minutes and papers are circulated to directors in good
time and ahead of the relevant Board meeting.
The Board has established audit committees which meet regularly.
Remuneration and Nominations Committees do not meet as there are no
sufficient members. Details of Committee Meetings for the
period:
Director Date of Date of Role at Date of Board Committee
Appointment Resignation 31 December (re-) appointment
2021
Andrew H. Coveney 16.11.2016 - Executive Director 30.06.2022 - - -
Paul R.A. Shackleton 26.07.2021 - Senior Independent 14.10.2021 N R A
Non-Executive
N = Nomination Committee
R = Remuneration Committee
A = Audit Committee
The Audit Committee met 2 times during the year to 31 December
2022. All the committee members were present at the meetings.
Due to the size of the Company, the Board does not comply with
the principle that the Board should at least have two independent
directors and therefore its committees' membership is also not
compliant with their terms of reference. Given the current level of
transactions within the Company, the Board considers that adequate
resources are available at Board level, although a further
non-executive director is currently being sought.
Principle 6. Ensure that between them, the directors have the
necessary up to date experience, skills and capability
The Company has two directors, Paul Shackleton, Senior
Independent Non-Executive Director and Andrew Coveney, Executive
Director. Biographical details of the Directors can be obtained in
https://www.rurelec.com/about-us/biographies
As the financial position of the Group evolved, so have the
skills required of its directors. The current directors have been
chosen for their skills in maintaining, preserving and realising
shareholder value by pursuing financial stability rather than by
pursuing the aggressive expansion of the past. The Executive
Directors serving during the period, have a wealth of experience of
dealing with the consequence of deterioration in the financial
positions of businesses and in implementing the change necessary to
restore such businesses back to stability. Those skills have been
honed within financial and restructuring backgrounds. It is
important that the directors are seen to be professional, reliable,
trustworthy and represent a safe pair of hands.
The directors keep their skills up to date by attending
professional briefings from the Nominated Adviser and lawyers
covering regulations that are relevant to their role as directors
of an AIM-quoted Company.
The Board is grateful for the regular, thorough and diligent
input of a qualified professional Company Secretary. As such the
Company Secretary provides frequent advice to the Board. On legal
matters, the Company Secretary is supported by the Company's
solicitors. The Independent Non-Executive Director provides
guidance and support on relevant matters on a regular basis.
Principle 1.
Principle 7. Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement.
The Board evaluates its own performance on a monthly basis and
also regularly considers any feedback from external parties as and
when that feedback is received.
Board performance is evaluated in the light of its own strategic
objectives and tactical plans, in particular in relation to cash
management and other financial forecasts. Any Board appointments
are considered closely in relation to the ability of the proposed
Director to make an active contribution to delivering value to
shareholders through the achievement of the strategies and plans
balanced against the cost of such an appointment.
The Company has not previously engaged any external evaluation
for the performance of the Board members or external advisors for
succession planning. Candidates to the Board have been proposed by
the Board members based on their skills and experience and the
requirements of the Company at the time of the appointment.
There are currently no formal evaluations of the Board.
Therefore, the Group and the Company comply only partly with this
principle.
Principle 8. Promote a corporate culture that is based on ethical values and behaviours.
The Group's corporate culture is based on creating an atmosphere
of trust, openness, communication and professionalism. Due to the
size of the Company, the Board is in very close contact with all
employees and is able to engender an ethical, professional and
effective environment in its day to day and strategic
activities.
The Company has currently 4 employees (including the directors).
The Board seeks to ensure that all of its employees are aware of
its ethical values communicating on a personal basis with its
employees and encourages the adoption of these values through the
appraisal and recruitment process.
The Group and the company comply with this principle.
Principle 9. Maintain governance structures and processes that
are fit for purpose and support good decision making by the
Board.
In addition to the high level of explanation of the application
of the QCA Code set out in the corporate governance statement:
-- The Board of Directors is responsible for approving Company
policy and strategy. The Board meets regularly throughout the year.
To enable the Board to perform its duties, each director has access
to advice from the Company Secretary and independent professionals
at the Company's expense.
-- The Board currently comprises an Executive Director and a
Non-Executive Director. Under the QCA Code a further Non-Executive
Director is required to be compliant with the said code. A further
Non-Executive Director is being sought.
-- Biographical details of the Board of Directors can be obtained in www.rurelec.com/about-us/board-of-directors-and-senior-management .
-- All matters are reserved for the Board although the Board has
chosen to delegate some of them to the Audit, Remuneration and
Nominations Committees which will issue advice to the Board on
those matters. Some of the matters reserved for the Board
include:
o Reviewing, approving and guiding group strategy, annual
budgets and business plans; setting performance objectives;
monitoring and implementing corporate performance; and overseeing
major capital expenditures and disposals;
o Monitoring the effectiveness of the Company's governance
arrangements and practices, making changes as needed to ensure the
Company's governance framework complies with current best practices
in accordance with the size of the Company;
o Monitoring and managing potential conflicts of interest that
may arise with Board members, shareholders and external
advisers;
o Overseeing the process of external disclosure and communications.
-- The Board is also responsible for all other matters which are
considered to be of importance to the Group as a whole because of
strategic, financial or reputational implications or
consequences.
-- The Board has established audit, remuneration and nominations
committees however owing to the size of the board at the current
time, all matters are dealt with by the board. Details of these
committees are set out in Principle 5 above.
-- 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.
-- There are no plans to change the current governance framework.
-- The role of the Chair, which is currently undertaken by the
Independent Non-Executive Director includes:
o to take the chair at general meetings and Board meetings;
o providing leadership to the Board;
o ensuring proper information for the Board;
o planning and conducting Board meetings effectively;
o getting all directors involved in the Board's work;
o ensuring the Board focuses on its key tasks
o determination of the order of the agenda;
o ensuring that the Board receives accurate, timely and clear information;
o keeping track of the contribution of individual directors and
ensuring that they are all involved in discussions and
decision-making;
o to ensure effective communication with shareholders and, where appropriate, the stakeholders.
Principle 10. Communicate how the Company is governed and is
performing by maintaining a dialogue
Disclosure of the outcomes of all votes are in
www.rurelec.com/investors/proxy-results
Historical annual reports and other governance-related material,
including notices of all general meetings over the last five years
can be obtained in www.rurelec.com/investors/circulars
Further disclosure required under QCA Principle 10 can be found
in Principles 5 and 9 above.
Maria J. Bravo Quiterio
Company Secretary
30 June 2023
Independent auditor's report to the members of Rurelec Plc
Opinion on the financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the Parent Company's affairs as at 31
December 2022 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
-- the Parent Company financial statements have been properly
prepared in accordance with UK adopted international accounting
standards and as applied in accordance with the provisions of the
Companies Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements of Rurelec Plc (the
'Parent Company') and its subsidiaries (the 'Group') for the year
ended 31 December 2022 which comprise the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated statement of financial position, the company statement
of financial position, the consolidated statement of cash flows,
the company statement of cash flows, the consolidated statement of
changes in equity, the company statement of changes in equity and
notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and UK
adopted international accounting standards and, as regards the
Parent Company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's
Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
Material uncertainty related to going concern
We draw attention to note 1c that explains that following the
sale of its joint venture interest post year-end, the Group and
Parent Company have no trading activities and the Parent Company is
classified as a cash shell under AIM 15 regulations, and that the
Directors are seeking a suitable acquisition within the required
timeframe to maintain the Parent Company's listing on AIM. As
stated in note 1c to the financial statements, these events or
conditions, along with other matters as set out in note 1c to the
financial statements, indicate that a material uncertainty exists
that may cast significant doubt on the Group's and Parent Company's
ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
We considered going concern to be a Key Audit Matter because of
the significance of this issue. In auditing the financial
statements, we have concluded that the directors' use of the going
concern basis of accounting in the preparation of the Group and
Parent Company's financial statements is appropriate. Our
evaluation of the directors' assessment of the entity's ability to
continue to adopt the going concern basis of accounting and in
response to the key audit matter included the following
procedures:
-- Reviewing the reasonableness of the Directors' budget and
cash flow forecasts prepared for a period of at least 12 months
from the date of approval of the financial statements;
-- Checking the mathematical accuracy of the budgets and forecasts;
-- Obtaining support for the Directors' assumptions used in the
forecast, including assumptions for cash receipts relating to asset
disposal under the severe but plausible downside scenario;
-- Reviewing the reasonableness of the Directors' stress tests
performed on the forecasts based on receiving no further funding
and considering the impact on the Group's going concern;
-- Reviewing the executed Share Purchase Agreement of its
interest in joint venture (Patagonia Energy Ltd) and Electrica del
Sur S.A. to confirm the sale value, validity, and any conditions
precedent;
-- Confirming the actual cash payments of the joint venture sale
agreement by agreeing it to the post year-end bank statement;
-- Inquiring of those charged with governance and reviewing
underlying documents to validate their search for potential
suitable targets;
-- Reviewing board meeting minutes during the year and post year
end to identify any other issues that may indicate inability of the
Group to continue as a going concern; and
-- Reviewing the adequacy of the disclosures in the financial
statements against the requirements of accounting standards and
consistency of the disclosures against the Directors' assessment of
going concern.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Overview
100% (2021: 100%) of Group profit before
Coverage tax
100% (2021: 100%) of Group total assets
2022 2021
1. Going concern x x
----- -----
2. Valuation of turbine x x
Key audit matters assets
----- -----
3. Valuation of investments x
and recoverability
of intercompany loans,
including loans to
joint venture
----- -----
Valuation of investments and recoverability
of intercompany loans, including loans
to joint venture is no longer considered
to be a key audit matter because the
investment in joint venture was classified
as held for sale and disposed subsequent
to year end and the carrying value
was impaired as at 31 December 2022
to reflect the recoverable amount.
----------------------------------------------
Group financial statements as a whole
Materiality
GBP305,000 (2021: GBP351,000) based
on 3% (2021: 3%) of net assets.
----------------------------------------------
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group's system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there
was evidence of bias by the Directors that may have represented a
risk of material misstatement.
Our Group audit focused on the parent company which gave us
sufficient coverage over the Group's total assets and profits
before tax while considering the appropriateness of coverage over
the audit risks identified. In establishing our overall approach to
the Group audit, we determined the type of audit procedures that
needed to be performed in respect of each component. The only
significant component was the Parent company, and the Group audit
team undertook a full scope audit of the parent company.
Non-significant components were subject to either specified
audit procedures over large or higher risk balances and group level
analytical procedures. The Group audit team completed the
procedures on non-significant components.
These specified procedures, together with our detailed review of
procedures performed by component auditor, provided us the evidence
that we need for our opinion on the financial statements as a
whole.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest
effect on the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the "Material uncertainty
related to going concern" section of our report, we have determined
the matter below to be the key audit matter to be communicated in
our report.
Key audit matter How the scope of our audit
addressed the key audit matter
Valuation The Group owns two Our audit procedures over
of turbine Siemens turbines. valuation of turbine assets
assets At the year end the included the following:
Directors obtained
Note 12 independent valuations * Performed physical inspection of the assets to verify
and 13 from a third party the existence of the assets, their storage and
to assess the carrying present condition, to identify any indicators of
Accounting value of these assets. impairment;
policy 2.8
and 2.9 Given the complexity
of the valuation involved, * Reviewed the valuation report prepared by the
the carrying value Directors' independent expert, assessing the
of the turbine assets conclusions reached and the underlying assumptions
was considered to used;
be a key area of focus
for our audit.
* Confirmed the Directors' expert's independence,
As at 31 December competence and objectivity by reviewing their
2022, these assets qualifications, work experience and terms of
are classified as engagement;
held for sale.
* Reviewed the expressions of interest of external
parties, provided by management, to assess
reasonableness and legitimacy of these valuations,
and checked that the value of the assets is
recoverable through potential sale;
* Reviewed insurance documentation to check appropriate
risk coverage is in place; and
* Confirmed with the title owners that the there are no
objections to transfer the turbine assets to external
buyers.
Key observations:
We considered that the judgements
and estimates made by management
in determining the value
and classification of turbine
assets were appropriate.
---------------------------- -------------------------------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
Group financial statements Parent company financial
statements
2022 2021 2022 2021
GBP GBP GBP GBP
-------------- -------------- ------------------- ------------------
Materiality 305,000 351,000 274,000 346,000
-------------- -------------- ------------------- ------------------
Basis for 3% of Net assets Materiality 3% of Net
determining was capped assets
materiality at 90% of
Group materiality
------------------------------ ------------------- ------------------
Rationale The Group's activities As the Company's We considered
for the benchmark of investing in power key assets net assets
applied assets are focused are classified to be the
on the realisation as held most appropriate
of asset sales, therefore of sale, benchmark
net assets was considered we have as the
to be the most appropriate capped a primary focus
benchmark. percentage of the users
of Group of the financial
materiality statements
to respond are on capital
to aggregation growth.
risk.
------------------------------ ------------------- ------------------
Performance
materiality 183,000 211,000 164,000 208,000
-------------- -------------- ------------------- ------------------
Basis for We set performance materiality at 60% (2021:
determining 60%) of overall materiality.
performance
materiality
-----------------------------------------------------------------------
Rationale In reaching our conclusion on the level of
for the percentage performance materiality to be applied for
applied for 2022 we considered a number of factors including
performance the expected total value of known and likely
materiality misstatements (based on past experience),
our knowledge of the group's internal controls
and management's attitude towards proposed
adjustments.
-----------------------------------------------------------------------
Component materiality
For the purposes of our Group audit opinion, we set materiality
for each significant component of the Group. The Group's only
component is the Parent Company whose materiality is set out
above.
Reporting threshold
We agreed with the Audit Committee that we would report to them
all individual audit differences in excess of GBP9,000 (2021:
GBP8,000). We also agreed to report differences below this
threshold that, in our view, warranted reporting on qualitative
grounds.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report and accounts other than the financial statements and our
auditor's report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon. Our responsibility is to read
the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work
performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and
matters as described below.
Strategic In our opinion, based on the work undertaken
report and in the course of the audit:
Directors' * the information given in the Strategic report and the
report Directors' report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
* the Strategic report and the Directors' report have
been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding
of the Group and Parent Company and its environment
obtained in the course of the audit, we have
not identified material misstatements in the
strategic report or the Directors' report.
Matters We have nothing to report in respect of the following
on which matters in relation to which the Companies Act
we are required 2006 requires us to report to you if, in our
to report opinion:
by exception
* 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 financial statements are not in
agreement with the accounting records and returns; or
* certain disclosures of Directors' remuneration
specified by law are not made; or
* we have not received all the information and
explanations we require for our audit.
------------------------------------------------------------------------
Responsibilities of Directors
As explained more fully in the statement of Directors'
responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group's and the Parent Company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
Non-compliance with laws and regulations
Based on:
-- Our understanding of the Group and the industry in which it operates;
-- Discussion with management and those charged with governance; and
-- Obtaining and understanding of the Group's policies and
procedures regarding compliance with laws and regulations;
We considered the significant laws and regulations to be
UK-adopted international accounting
standards, UK tax legislation, AIM Listing Rules, and the
Companies Act 2006.
Our procedures in respect of the above included:
-- Review of minutes of meeting of those charged with governance
for any instances of non-compliance with laws and regulations;
-- Review of financial statement disclosures and agreeing to supporting documentation; and
-- Review of legal expenditure accounts to understand the nature of expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to
material misstatement, including fraud. Our risk assessment
procedures included:
-- Enquiry with management and those charged with governance
regarding any known or suspected instances of fraud;
-- Review of minutes of meeting of those charged with governance
for any known or suspected instances of fraud;
-- Discussion amongst the engagement team as to how and where
fraud might occur in the financial statements;
-- Performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud; and
-- Reviewed estimates and judgements applied by Management in
the financial statements to assess their appropriateness and the
existence of any systematic bias.
Based on our risk assessment, we considered the areas most
susceptible to fraud to be exertion of bias in accounting estimates
and management override of controls.
Our procedures in respect of the above included:
-- Testing a sample of journal entries throughout the year,
which met a defined risk criteria, by agreeing to supporting
documentation; and
-- Challenging the assumptions and judgements made by management in their significant
accounting estimate related to the valuation of turbines by
performing the procedures as set out in the Key Audit Matters
section of our report.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members who were
all deemed to have appropriate competence and capabilities and
remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities . This description forms
part of our auditor's report.
Use of our report
This report is made solely to the Parent 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 Parent Company's members those matters we are required to state
to them in an auditor's 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 Parent Company and the
Parent Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Rida Rahmani (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
30 June 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127)
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2022
Restated
Notes Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
-------------------------------------- ------ ----------- -----------
Revenue 4 - -
Gross Profit - -
Administrative Expenses 6 (998) (967)
Other Income 8b 25 352
Impairment Charges 8b (1,924) (1,469)
Operating Loss (2,897) (2,084)
Share of Joint Venture Profit/(Loss) 22 - -
Net foreign Exchange Gains/(Loss) 8a 661 (259)
Finance Income 9 - 491
Finance Expense 9 - (1,827)
Profit /(Loss) before Tax (2,236) (3,679)
Tax Expense 10 - -
Loss for the year attributable to
owners of the Company (2,236) (3,679)
-------------------------------------- ------ ----------- -----------
Earnings per Share - in pence 11
Basic Loss per Share (0.39) (0.65)
Diluted Loss per Share (0.39) (0.65)
------------------------------- --- ------- -------
The Notes on pages 32 to 54 form an integral part of these
Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
---------------------------------------------- ----------- -----------
Loss for the year (2,236) (3,634)
Other Comprehensive Income for the year:
Items that will be subsequently reclassified
to income statement:
Exchange Differences on Translation
of Foreign Operations (122) 285
Total Other Comprehensive Income (122) 285
Loss for the year attributable to owners
of the Company (2,358) (3,349)
---------------------------------------------- ----------- -----------
The Notes on pages 32 to 54 form an integral part of these
Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2022
Restated Restated
31.12.2022 31.12.2021 01.01.2021
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ---------------------- ----------------------- -----------------------
Assets
Non-current Assets
Property, Plant and Equipment 12 - 7,808 8,220
Investment in Joint Venture 20,22 - 312 1,648
Trade and Other Receivables 14a - 3,103 4,586
- 11,223 14,454
Assets held for sale 13 10,108 - -
Current Assets
Trade and Other Receivables 14b 91 997 1,142
Cash and Cash Equivalents 16 449 745 668
540 1,742 1,810
Total Assets 10,648 12,965 16,264
------------------------------- ------ ---------------------- ----------------------- -----------------------
Equity and Liabilities
Shareholders' Equity
Share Capital 17 5,614 5,614 5,614
Foreign Currency translation
Reserve 956 1,078 793
Retained Earnings/Losses 3,582 5,819 9,497
Total Equity attributable to
owners of the Company 10,152 12,511 15,904
Current Liabilities
Trade and Other Payables 18a 496 448 353
Current Tax Liabilities 19 - 6 7
Total Liabilities 496 454 360
Total Equity and Liabilities 10,648 12,965 16,264
------------------------------- ------ ---------------------- ----------------------- -----------------------
The financial statements were approved by the Board of Directors
on 30 June 2023 and were signed on its behalf by Andrew Coveney and
Paul Shackleton.
Andrew Coveney Paul Shackleton
The notes on pages 32 to 54 form an integral part of these
Consolidated Financial Statements.
COMPANY STATEMENT OF FINANCIAL POSITION COMPANY NUMBER: 4812855
At 31 December 2022
Restated Restated
31.12.2022 31.12.2021 01.01.2021
Notes GBP'000 GBP'000 GBP'000
------------------------------ ------ ---------------------- ----------------------- -----------------------
Assets
Non-current Assets
Investment in Joint Venture 20,22 - 312 1,648
Trade and Other Receivables 14a - 3,104 4,586
- 3,416 6,234
Assets held for sale 13 10,108 - -
Current Assets
Inventories 15 - 7,773 7,773
Trade and Other Receivables 14b 89 825 1,397
Cash and Cash Equivalents 16 446 743 667
535 9,341 9,837
Total Assets 10,643 12,757 16,071
------------------------------ ------ ---------------------- ----------------------- -----------------------
Equity and Liabilities
Shareholders' Equity
Share Capital 17 5,614 5,614 5,614
Retained Earnings/Losses 4,545 6,727 10,003
Total Equity 10,159 12,341 15,617
Current Liabilities
Trade and Other Payables 18a 484 410 447
Current Tax Liabilities 19 - 6 7
Total Liabilities 484 416 454
Total Equity and Liabilities 10,643 12,757 16,071
------------------------------ ------ ---------------------- ----------------------- -----------------------
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 GBP2.2million (2021: loss GBP3.2
million).
The financial statements were approved by the Board of Directors
on 30 June 2023 and were signed on its behalf by Andrew Coveney and
Paul Shackleton.
Andrew Coveney Paul Shackleton
The notes on pages 32 to 54 form an integral part of these
Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
Notes Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
--------------------------------------------- ------ ----------- -----------
Cash Flows from Operating Activities
Cash used in Operations 21 (912) (991)
Net Cash used in Operating Activities (912) (991)
Cash Flows from Investing Activities
Net proceeds from Sale of Turbine - 721
Loan Repayments from Joint Venture
Company 599 347
Net Cash generated from Investing
Activities 599 1,068
Net Cash (Outflow)/Inflow before
Financing Activities (313) 77
(Decrease)/Increase in Cash and
Cash Equivalents (313) 77
Cash and Cash Equivalents at the
Start of the year 745 668
Exchange gains on cash and cash equivalents 17 -
Cash and Cash Equivalents at the
End of the year 449 745
--------------------------------------------- ------ ----------- -----------
The notes on pages 32 to 54 form an integral part of these
Consolidated Financial Statements.
COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
Notes Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
--------------------------------------------- ------ ----------- -----------
Cash Flows from Operating Activities
Cash used in Operations 21 (898) (909)
Net Cash used in Operating Activities (898) (909)
Cash Flows from Investing Activities
Investment in and Loans to Subsidiaries - (83)
Loan repayments from Subsidiaries - 721
Loan Repayments from Joint Venture
Company 599 347
Net Cash generated from Investing
Activities 599 985
Net Cash (Outflow)/Inflow before
Financing Activities (299) 76
(Decrease)/Increase in Cash and
Cash Equivalents (299) 76
Cash and Cash Equivalents at the
Start of the year 743 667
Exchange gains on cash and cash equivalents 17
Cash and Cash Equivalents at the
End of the year 446 743
--------------------------------------------- ------ ----------- -----------
The notes on pages 32 to 54 form an integral part of these
Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
Share Capital Foreign Retained Total
Currency Losses/Earnings
translation
Reserve
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------------------------- ----------------------------- --------------------------
Balance at
01.01.2021 5,614 793 8,648 15,055
Correction of
prior period
errors (note
28) 849 849
Balance at
01.01.2021 -
as
restated 5,614 793 9,497 15,904
Loss for the
year
attributable
to owners of
the parent -
as restated - - (3,679) (3,679)
Exchange
Differences - 285 - 285
Total
Comprehensive
Loss -
as restated - 285 (3,679) (3,394)
Balance at
31.12.2021-
as
restated 5,614 1,078 5,818 12,510
Balance at
01.01.2022-
as
restated 5,614 1,078 5,818 12,510
Loss for the
year
attributable
to owners of
the parent - - (2,236) (2,236)
Exchange
Differences - (122) - (122)
Total
Comprehensive
Loss - (122) (2,236) (2,358)
Balance at
31.12.2022 5,614 956 3,582 10,152
The notes on pages 32 to 54 form an integral part of these
Consolidated Financial Statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
Share Share Accumulated Special Total
Capital Premium Losses Non-distributable
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------------------------- ----------------------------- --------------------------- ----------------------------------
Balance at
01.01.2021 5,614 - 9,153 - 14,767
Correction of
prior period
errors (note
28) 849 849
Balance at
01.01.2021
- as restated 5,614 - 10,002 - 15,616
Loss for the
year - - (3,276) - (3,276)
Total
Comprehensive
Loss - - (3,276) - (3,276)
Balance at
31.12.2021
- as restated 5,614 - 6,726 - 12,340
Balance at
01.01.2022
- as restated 5,614 - 6,726 - 12,340
Loss for the
year - - (2,181) - (2,181)
Total
Comprehensive
Loss - - (2,181) - (2,181)
Balance at
31.12.2022 5,614 - 4,545 - 10,159
Notes: 17
The notes on pages 32 to 54 form an integral part of these
Consolidated Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2022
1. GENERAL INFORMATION, BASIS OF PREPARATION AND NEW ACCOUNTING STANDARDS
1a. General information
Rurelec PLC is the Group's ultimate parent company ("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 Group ("Group") consists of Rurelec PLC and all of its
subsidiaries as listed in note 20. The nature of the Group's
operations and its principal activities are the generation of
electricity in South America. Following the disposal of Rurelec's
Argentinean Joint Venture interests in May 2023 the Company is an
AIM 15 cash shell.
1b. Basis of preparation
The Company and the consolidated financial statements have been
prepared in accordance with UK adopted international accounting
standards, in conformity with the requirements of the Companies Act
2006.
The principal accounting policies adopted in the preparation of
the Company and the consolidated financial statements financial
statements are set out in note 2. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
The Company and the consolidated financial statements are
presented in Pound Sterling which is also the functional currency
of the Company and the Group. The other functional currencies of
the Group entities are Chilean Pesos and United States Dollars.
Amounts are rounded to the nearest thousand, unless otherwise
stated.
Basis of measurement
The Company and the consolidated financial statements have been
prepared on a historical cost basis.
1c. Going concern
Accounting standards require that Directors satisfy themselves
that it is reasonable for them to conclude whether it is
appropriate to prepare financial statements on a going concern
basis. In assessing the going concern position of the Group and
Company, the Directors have taken into account the uncertainties,
cash flows, and ability to find a target for reverse acquisition.
All scenarios discussed below, represent a material uncertainty
that casts significant doubt upon the company's ability to continue
as a going concern. These scenarios are also discussed in the
strategic and directors report of the annual report. The Directors
have reviewed financial projections and strategy to 30 June 2024,
and have considered projections for both the base and the severe
but plausible downside sensitivity scenario.
The potential scenarios which could lead to the Group and
Company not being a going concern are considered to be:
a. Reverse merger
Following the disposal of the Argentinean JV interest, the
Company is deemed to be an AIM Rule 15 cash shell. The consequences
of this are that before 11 December 2023, being six months after
cash shell status, the Company must make an acquisition or
acquisitions which constitutes a reverse takeover under Rule 14 of
the AIM Rules for Companies otherwise it's ordinary shares will be
suspended from trading on AIM. Furthermore, if a qualifying
acquisition is not completed by 12 June 2024, the admission of the
Company's ordinary shares to trading on AIM will be cancelled. The
Directors are seeking a suitable reverse acquisition in order to
maintain the admission of the Company's shares to AIM before 11
December 2023 and to support the going concern of the company by
transferring the business of the acquiror into the Company.
The Directors have concluded that the conditionality of finding
a suitable reverse acquisition in six months represents a material
uncertainty which may cast significant doubt on the group's and
parent company's ability to continue as a going concern as an AIM
listed company. While the Directors have a preference and priority
to maintain the listing on AIM, they will consider alternative
proposals including those where the listing is cancelled.
Turbines
The company will continue to explore potential buyers for the
701 DU 125MW turbines ("turbines"). Further updates on this
initiative will be made as appropriate.
b. Liquidity
At the date of the signing of the financial statements, having
taken account of current cash balance of GBP2.3 million out of
which GBP1.2 million are reserved for declared dividends, and the
cash forecasts where outgoings are now reduced, the Directors
believe, bearing in mind the reduced outgoings of the Group, there
is currently sufficient headroom in existing working capital
facilities to avoid the need to seek further sources of working
capital. The base case forecast model was further adjusted to
establish at what point additional funding is required without
further mitigating actions. In the Directors assessment this is
unlikely to happen in next 12 months.
As at 31 December 2022, turbines are classified as held for sale
and an active programme to locate a potential buyer has been
initiated. The turbines were purchased from IPSA in 2013 and IPSA
retain their title but have no beneficial interest in them. The
assets are available for immediate sale in their present condition
at a price that is reasonable in relation to its current fair
value. The Directors are confident that the sale is highly probable
within 12 months from the reporting period.
Whilst the directors have instituted measures to preserve cash
and find buyers for turbines to generate cash inflow, these
circumstances create material uncertainties to continue in
operational existence for the foreseeable future.
The directors have prepared budgets and forecasts, and performed
stress tests thereon, for a period of at least 12 months from the
date of signing of the financial statements to assess the Group and
Company's ability to continue as a going concern. Beyond the
12-month period, after making enquiries and considering the
uncertainties described above, the directors have a reasonable
expectation that the company has adequate resources to continue in
operational existence for the foreseeable future. For these
reasons, they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
1d. New accounting standards
The Directors consider that no revisions to IFRS standards
implemented in the year have had any significant effect on these
statements.
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
2022. 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.
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 (IFRS11). 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 less impairment in
the statement of financial position of the Company.
2.2 Equity Accounted Joint Ventures
The Group reports its interests in joint ventures using the
equity method of accounting, except when the investment is
classified as held for sale.
2.3 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.
2.4 Foreign Currency Translation
The financial information is presented in pound 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 'Foreign Exchange (Losses)/Gains'.
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 pound sterling at the closing rate at the reporting
date. Income and expenses have been converted into pound sterling
at the average rates over the reporting period. The resulting
exchange differences are recognised in other comprehensive income
and accumulated in equity within the foreign exchange reserve. 2022
marks the sixth year of inflation accounting adjustments in
Argentina. It is the Directors' judgement that the Argentine GAAP
hyperinflation adjustments to the accounts of the Group's Joint
Venture operations in Argentina give an approximate fair value of
these operations. There are no material differences arising from
Argentine GAAP inflationary accounting and IAS 29.
Non-monetary assets are valued at historic rates.
2.5 Expense recognition
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.
2.6 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 (2021: GBPnil).
2.7 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.
2.8 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
Depreciation of an asset commences when it is available for use,
i.e. when it is in location and condition necessary for it to be
capable of operating in the manner intended by management. 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.
2.9 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 of
disposal 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 it's 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.
2.10 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.
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 accounted for through other
comprehensive income or charged or credited directly to equity in
which case the related deferred tax is also charged or credited
directly to equity, or other comprehensive income.
2.11 Financial Assets
The Group's financial assets include cash and cash equivalents,
loans and receivables, held at amortised cost.
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. These are assets held on a 'hold to collect' basis.
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
remeasured to test for impairment, the carrying value is less
provision for impairment. Any impairment is recognised in the
income statement.
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.
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 Short term leases
IFRS 16 provides a single lessee accounting model, requiring the
recognition of assets and liabilities for all leases, together with
the option to exclude leases where the lease term is 12 months or
less, or where the underlying asset is of low value. IFRS 16
substantially carries forward the lessor accounting in IAS 17, with
the distinction between operating leases and finance leases being
retained. The Group does not have significant leasing activities
acting as a lessor, also, there are no impacts as a lessee.
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. These inventories were transferred to Assets Held
for Sale on 31 December 2022, please see notes 12 and 13 for
further details.
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.
"Foreign currency reserve" represents the differences arising
from translation of investments in overseas subsidiaries.
"Retained Losses/Earnings" represents losses/earnings to date,
after prior years transfers from 'Share. Capital' and Share premium
account'.
2.16 Pensions
Under the Pensions Act 2008, every employer in the UK must put
certain staff into a workplace pension scheme and contribute
towards it. This is called 'automatic enrolment'. Rurelec's staging
date was 1 October 2017. Rurelec chose to set up its auto enrolment
contribution plan pension scheme with NEST which ensures access to
suitable, low-charge pension provision to meet the new duty to
enrol all eligible workers into a workplace pension
automatically.
Rurelec also offers a Salary Sacrifice Scheme within NEST by
which employees sacrifice part of their salary in exchange for the
company to make an employer contribution on their behalf to the
pension scheme and also to contribute their national insurance
savings on the amount sacrificed by the employee.
During the year under review, the Company continued its
contributions to the contribution plan NEST Pension scheme.
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 development of generation assets and
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.
2.18 Non-current assets held for sale and discontinued
operations
The Group and Company classifies non-current assets and disposal
groups as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through
continuing use. Non-current assets and disposal groups classified
as held for sale are measured at the lower of their carrying amount
and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of an asset
(disposal group), excluding finance costs and income tax
expense.
The criteria for held for sale classification is regarded as met
only when the sale is highly probable, and
the asset or disposal group is available for immediate sale in
its present condition. Actions required to
complete the sale should indicate that it is unlikely that
significant changes to the sale will be made or that
the decision to sell will be withdrawn. Management must be
committed to the plan to sell the asset and the
sale expected to be completed within one year from the date of
the classification.
Property, plant and equipment and intangible assets are not
depreciated or amortised once classified as held
for sale.
Assets and liabilities classified as held for sale are presented
separately as current items in the statement of
financial position.
Discontinued operations are excluded from the results of
continuing operations and are presented as a
single amount as profit or loss after tax from discontinued
operations in the statement of profit or loss.
3. KEY ASSUMPTIONS AND ESTIMATES
When preparing the financial statements, management makes a
number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income from
loan repayment receipts and asset sales 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:
Impairment - management review tangible and intangible assets,
including intra group and Joint Venture loans, at each balance
sheet date to determine whether there is, in their judgement, any
indication that those assets have suffered an impairment loss. The
key assumption used in the plant and equipment's annual impairment
assessment is estimating the residual value of the assets. Based on
the market demand, the directors apply judgement to estimate the
price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. The sale of these units is dependent on a
customer undertaking a suitable project as this size of older
turbine are very rarely bought "for stock"- they would only be
bought by a buyer with a specific project in mind in an appropriate
territory where such turbines are permitted to operate. Hence the
exact timing of a future sale remains uncertain, and this
introduces a natural unpredictability to the timing and value of
receipts from such sales.
Income - the Group is reliant on asset sales, a material
uncertainty exists as to whether projected receipts will occur.
Expected Credit Losses - judgements used to assess the ECL's for
the current year included the macroeconomic factors which includes
inflation forecasts and foreign exchange controls.
4. SEGMENT ANALYSIS
Management currently identifies the Group's two geographic
operating segments; Chile, 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
Group's joint venture operations in Argentina have been excluded,
see note 22 for more detail.
The following tables provide an analysis of the operating
results, total assets and liabilities, in 2022 and 2021 for each
geographic segment.
a) 12 months to 31.12.2022
Chile UK Consolidation Total
Adjustments
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------------- --------
Administrative Expenses (43) (955) - (998)
Loss from Operations (43) (955) - (998)
Other Income - 25 - 25
Other Expense (245) (2,571) 892 (1,924)
Foreign Exchange (Losses)/Gains 2 658 1 661
Finance Income - 696 (696) -
Finance Expense (696) - 696 -
Loss before Tax from Operations (982) (2,147) 893 (2,236)
Tax Expense - - - -
Total Loss (982) (2,147) 893 (2,236)
Total Assets 248 10,665 (33) 10,880
Total Liabilities 13,614 456 (13,602) 468
b) 12 months to 31.12.2021
Chile UK Consolidation Total
Adjustments
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------------- --------
Administrative Expenses (123) (844) - (967)
Loss from Operations (123) (844) - (967)
Other Income 365 (13) - 352
Other Expense - (1,469) - (1,469)
Foreign Exchange (Losses)/Gains (324) 110 - (214)
Finance Income - 1,173 (682) 491
Finance Expense (682) (1,827) 682 (1,827)
Loss before Tax from Operations (764) (2,870) - (3,634)
Tax Expense - - - -
Total Loss (764) (2,872) - (3,634)
Total Assets 452 17,090 (5,382) 12,160
Total Liabilities 12,966 462 (12,974) 454
5. EXCHANGE RATE SENSITIVITY ANALYSIS
The key exchange rates applicable to the results were as
follows:
Year Ended Year Ended
31.12.2022 31.12.2021
------------ ------------
i) Closing rate
US $ to GBP 1.20582 1.34894
CLP (Chilean Peso) to GBP 1,032.0 1,139.4
ii) Average rate
US $ to GBP 1.2319 1.35751
CLP (Chilean Peso) to GBP 1,068.1 1,050.8
If the exchange rate of sterling at 31 December 2022 had been
stronger or weaker by 10 per cent. from the above, with all other
variables held constant, shareholder equity at 31 December 2022
would have been GBP1.1 million (2021: GBP1.2 million) lower or
higher than reported.
If the average exchange rate of sterling during 2022 had been
stronger or weaker by 10 per cent. with all other variables held
constant, the effect on the loss for the year would have been
GBP1.1 million (2021: GBP1.2 million) higher or lower than
reported.
If the average exchange rate of sterling during 2022 had been
stronger or weaker by 10 per cent. with all other variables held
constant, the effect on the total other comprehensive loss for the
year would have been GBP1.1 million (2021: GBP1.1 million) higher
or lower than reported.
6. ADMINISTRATIVE EXPENSES
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
Expenditure incurred in administrative
expenses is as follows:
Payroll and Social Security 373 397
Services, Legal and Professional 299 213
Office Costs and General Overheads 216 269
Audit Costs(1) 110 88
Total 998 967
----------- -----------
(1) Audit services include GBP110k (2021: GBP88k) paid to the
auditors for the audit of the Company, Group's UK subsidiaries and
Group's financial statements. The group auditors also provided
taxation services for the Group in the year, the costs were GBP22k
(2021: GBP15k).
7. EMPLOYEE COSTS
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
a) Group
Aggregate remuneration of all employees
and Directors 348 372
Social Security Costs 16 17
Pension Costs 8 8
----------- -----------
Total 372 397
----------- -----------
The average number of employees in the Group, including
Directors, during the year was as follows:
Year Ended Year Ended
31.12.2022 31.12.2021
----------- -----------
Management 2 3
Administration and development 3 3
Total 5 6
----------- -----------
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
b) Company
Aggregate remuneration of all employees
and Directors 332 357
Social Security Costs 14 15
Pension Costs 8 8
----------- -----------
Total 354 380
----------- -----------
The average number of employees in the Company, including
Directors, during the year was as follows:
Year Ended Year Ended
31.12.2022 31.12.2021
----------- -----------
Management 2 3
Administration and development 2 2
Total 4 5
----------- -----------
c) Directors' remuneration
The total remuneration paid to the Directors was GBP206k (2021:
GBP246k). The total remuneration of the highest paid Director was
GBP176k (2021: GBP145k). There were no health insurance costs,
bonuses, pension costs or share based payments paid during the year
(2021: GBPnil).
Year Ended Year Ended Year Ended
31.12.2022 31.12.2022 31.12.2021
GBP'000 GBP'000 GBP'000
Base Salary/Fee Total Total
---------------- ----------- -----------
B Rowbotham - - 9
S Morris - - 79
A Coveney 176 176 145
P Shackleton 30 30 13
---------------- ----------- -----------
Total 206 206 246
B Rowbotham has been on payroll in 2020 and 2021 until his
resignation on 13 April 2021.
S Morris provided services under a service agreement contract
with SC Morris Ltd and received GBP26.4k via payroll in the prior
year. Simon resigned on 17 August 2021.
A Coveney provided services under a service agreement contract
with Coveney Associates Consulting Ltd and received GBP30k via
payroll (2021: GBP30k).
8. a) FOREIGN EXCHANGE
Year Ended Restated
Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
Foreign Exchange gains/(losses) 661 (259)
Total 661 (259)
----------- ------------
Foreign currency-based assets are translated at the relevant
year end rates.
b) OTHER INCOME/IMPAIRMENT CHARGES
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
Other Income
Net profit on disposal of Chile
turbine (note 12) - 330
Director's fees due from EdS 25 22
----------- -----------
Total 25 352
----------- -----------
Impairment Charges
Impairment on investment in Joint
Venture (note 13) - 1,336
Impairment of amounts due from joint 1,679 -
venture (note 14)
Impairment of Chile Transformer 35 -
(note 12)
Impairment of Chile performance 210 -
bonds (note 14)
Provision for closure costs relating
to investment in SEA Energy S.A. - 133
Total 1,924 1,469
----------- -----------
9. FINANCE INCOME & EXPENSE
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
Finance Income
Reversal of 2021 Expected Credit
Losses - 491
Other Interest Received - -
------------ -----------
- 491
-------------------------------------------------------- -----------
Finance Expense
Charge for 2022 Expected Credit Losses(1) - 1,827
Other interest payable - -
------------ -----------
- 1,827
-------------------------------------------------------- -----------
(1) Expected credit losses were charged in the prior year as the
Amended Loan Notes repayments were projected to be received over a
longer period of time, with final repayment in 2034. These loans
were classified as held for sale and received cash in June
2023.
10. TAX EXPENSE
The relationship between the expected tax expense at basic rate
of 19 per cent. (2021: 19 per cent.) and the tax expense actually
recognised in the income statement can be reconciled as
follows:
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
Result for the year before tax (2,208) (3,634)
Standard rate of Corporation Tax
in UK 19% 19%
Expected Tax Credit (420) (690)
Tax effect not deductible in determining
taxable profits (39) 94
Unrecognised Loss carried forward (385) 675
Actual Tax Expense - -
Comprising:
Current Tax Expense - -
Deferred Tax/(Net Credit) - -
----------- -----------
Total Credit (Expense) - -
----------- -----------
The estimated accumulated unrecognised deferred tax asset is
GBP3.1 million (2021: GBP2.8 million), based on cumulative tax
losses of GBP16.9 million (2021: GBP4.9 million). A deferred tax
asset is not recognised as an asset due to the uncertainty and
unknown timing of its realisation against future profits.
11. EARNING 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.
Year Ended Year Ended
31.12.2022 31.12.2021
Average number of shares in issue 561,387,586 561,387,586
Result for the year
Total Loss attributable to equity GBP2.2m GBP3.7m
holders of the parent
Basic Loss per share 0.39p 0.65p
Diluted Loss per share 0.39p 0.65p
----------------------------------- ------------ ------------
There is no difference between the Basic and Diluted loss per
share.
12. PROPERTY PLANT AND EQUIPMENT
Plant and Plant under Total
Equipment Construction
GBP'000 GBP'000 GBP'000
------------------------------- -------------------------------- --------------------------------
a) Group
Cost at
01.01.2021
(restated) 16,195 2,030 18,225
Exchange
Adjustments
(restated) - 18 18
Disposal - (1,677) (1,677)
Cost at
31.12.2021
(restated) 16,195 371 16,566
Exchange
Adjustments - 44 44
Disposal - - -
Transfer to
Assets Held
for
Sale (note
13) (16,195) - (16,195)
Cost at
31.12.2022 - 415 415
Accumulated
Depreciation
and
Impairment
at 1.1.2021
(restated) 8,423 1,582 10,005
Exchange
Adjustments
(restated) - 9 9
Charge for - - -
the year
Charge for - - -
impairment
for the
year
Disposal - - -
Accumulated
Depreciation
and
Impairment
at
31.12.2021
(restated) 8,423 336 8,759
Exchange
Adjustments - 44 44
Charge for
impairment
for the
year - 35 35
Transfer to
Assets Held
for
Sale (note
13) (8,423) - (8,423)
Accumulated
Depreciation
and
Impairment
at
31.12.2022 - 415 415
Net Book
Value -
31.12.2021 7,773 35 7,808
Net Book - - -
Value -
31.12.2022
NBV
transferred
to HFS 7,773
The plant and equipment (2021: GBP7.8 million) relates to two
Siemens turbines, stored in Venice for use in the Central Illapa
project purchased from IPSA for US $25.0 million. IPSA retains the
title but has no beneficial interest in the turbines. The turbines
were transferred to Assets Held for Sale on 31 December 2022; see
note 13 for further details. Plant under construction comprised a
transformer in Chile which is impaired during year. The turbine
plant in Chile GBPnil (2021: GBPnil) was sold in the prior year as
announced on 09 September 2021, and all proceeds were received
before the year end, with the profit on disposal, shown in Other
Income, was GBP0.3 million.
Company - The Company had no property, plant and equipment.
13. ASSETS HELD FOR SALE
The following assets have been transferred to assets held for
sale:
a) Joint Venture - Argentinian interests
Investment (note 20) GBP312k
Receivable (note 14) GBP2,023k
Total GBP2,335k
Patagonia Energy Ltd ("PEL") is the joint venture company which
owns Energia del Sur, S.A ("EdS") based in Argentina and in which
Rurelec has a 50 per cent. share. The above are the Group's and
Company investment and receivable in PEL. The sale was completed on
16 May 2023, the initial proceeds of GBP2.4 million were received
on 09 June 2023. The sale included two conditional deferred
payments of $1 million due in 2024 and 2025. Immediately before the
classification as held for sale, the recoverable amount was
estimated for JV investment and receivable from PEL and an
impairment has occurred (note 14).
b) Plant & Equipment (Company: Inventories) GBP 7,773k
Two Siemens Westinghouse 701 128 MW gas turbine generators
("701s") are expected to be sold in the next 12 months. There was
interest from various parties in 2022, but as yet no sale has
concluded. Subsequent to year end discussions remain ongoing with
regard to the disposal. The carrying value has been tested for
impairment and the directors consider that no impairment has
occurred as the carrying amount of the asset did not fall below its
fair value less costs to sell.
As at 31 December 2022, asset held for sale for both Group and
Company is GBP10,108k.
14. TRADE AND OTHER RECEIVABLES
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
------------- -------------
a) Group - non-current
Amounts due from Joint Venture
Companies(1) - 3,103
b) Group - current
Amounts due from Joint Venture
Companies(1) 714
Tax Receivable - VAT 10 4
Other Receivables and Prepayments
(3) 81 279
------------- -------------
91 997
------------- -------------
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
------------- -------------
a) Company - non-current
Amounts due from Joint Venture
Companies(1) - 3,103
b) Company - current
Amounts due from Joint Venture
Companies(1) - 714
Tax Receivable - VAT 9 4
Amounts due from subsidiary undertakings(2) - -
Other Receivables and Prepayments
(3) 80 107
------------- -------------
89 825
------------- -------------
(1) Amounts due from joint venture companies represent the
amounts lent by the Company, net of impairments, to PEL. These
loans were replaced in 2019 with Amended Loan Notes, as previously
announced on 19 November 2019. The carrying value of the loans is
based on the replacement Amended Loan Notes, gross value at 31
December 2022 of GBP 11.1million (2021: GBP10.5 million). Movement
is due to exchange adjustments. These notes bear zero interest and
have a long stop maturity of 31 December 2039. Carrying values have
been determined by discounting the predicted future repayments at a
rate of 9 per cent. pa, it is anticipated that the notes will be
fully repaid in 2034. The notes are held in the Statement of
Financial Position at their discounted value. The loans were
transferred to assets held for sale on 31 December 2022, please see
note 13 for further details. Prior to held of sale classification,
the directors tested for impairment and recorded adjustment for
GBP1.7 million. In prior year impairment of GBP1.8 million was
recorded. The first GBP0.5 million repayment was received in
December 2019, in 2020: GBP1.8 million and in 2021 GBP0.3 million
were received, one repayment of GBP0.6 million has been received in
2022.
(2) Receivable balance from Cochrane Power Limited of GBP11.4
million (2021: GBP11.4 million) repayable on demand with nil per
cent interest. These loans have been impaired to GBPnil (2021:
GBPnil) in Cochrane Power Limited, the UK holding company for
assets in Chile. Other loans of GBP1.4 million (2021: GBP.1.4
million) related to subsidiaries of Cochrane Power Limited where
the rights have been assigned to the Company. None of the entities
are trading. The Directors performed assessment and these loans
have been impaired to GBPnil (2021: GBPnil). As per subsequent
events note 27 it was decided that activities in Chile would be
regarded as discontinued operations. No interest income recognised
as income is not probable.
(3) During the year Chile performance bonds were impaired due to
uncertainty over their recoverability as the project will not be
completed.
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.
15. INVENTORIES
Restated
Company - Inventories Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
------------ -----------
Inventories - 7,773
------------ -----------
Inventories comprised of two Siemens 701DU turbines acquired
from IPSA in June 2013. IPSA retains the title but has no
beneficial interest in the turbines. Storage and insurance costs
for the turbines in the year totalled GBP109k (2021: GBP105k). They
were transferred to Assets Held for Sale on 31 December 2022,
please see note 13 for further details.
16. CASH AND CASH EQUIVALENTS
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
a) Group - current
Cash and short-term bank deposits 449 745
b) Company - current
Cash and short-term bank deposits 446 743
----------- -----------
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 per annum. The Group holds cash balances to meet
its day-to-day requirements.
17. SHARE CAPITAL
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
------------------------------------- ----------- -----------
In issue, authorised, called up and
fully paid
561,387,586 ordinary shares of 1p
each 5,614 5,614
------------------------------------- ----------- -----------
Ordinary shares have no redemption rights and are entitled to
full rights to dividends and excess capital on winding up.
The issued share capital of the Company consists of 561,387,586
ordinary shares of GBP0.01 each.
18. TRADE AND OTHER PAYABLES
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
a) Group - current
Trade Payables 130 97
Accruals 366 351
496 448
b) Company - current
Trade Payables 84 46
Amount due to subsidiary undertakings
(note 25) 257 229
Accruals 142 135
483 410
----------- -----------
19. TAX LIABILITIES
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
------------ -----------
Group/Company - Current
Other tax and social security - 6
- 6
-------------------------------------------- -----------
20. INVESTMENTS
PEL Total
GBP'000 GBP'000
--------- ---------
Cost at 31.12.2021 11,652 11,652
Cost at 31.12.2022 11,652 11,652
Accumulated Impairment at 01.01.2021 (10,004) (10,004)
Impairment in year (1,336) (1,336)
Accumulated Impairment at 31.12.2021 (11,130) (11,130)
Accumulated Impairment at 31.12.2022 (11,130)
Transfer to Assets Held for Sale
(note 13) (312) (312)
Carrying Value at 31.12.2022 - -
Carrying Value at 31.12.2021 312 312
The balance was transferred to Assets held for Sale on 31
December 2022, please see note 13 for further details. As announced
on 12 June 2023 the asset was disposed of on 09 June 2023, please
see note 28 Post Balance Sheet Events.
At the year end the Company held the following investments:
Direct investments:
1. 50 per cent. (2021: 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. This investment was
transferred to Assets Held for Sale on 31 December 2022. The asset
was disposed off on 09 June 2023, please see note 27 Post Balance
Sheet Events.
2. 100 per cent. (2021: 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.
3. 100 per cent. (2021: 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
Project Finance Limited owned at the year-end 95 per cent. interest
in SEA Energy S.A.
4. 5 per cent. (2021: 5 per cent. of SEA Energy S.A. a company
registered in Argentina under registration number CUIT
30-71022906-2.
Indirect investments:
Name Trading address/registered Interest
address Held
--------------------------- -------------------------------- ---------
Energia del Sur, S.A.* Arroyo 880, Piso 2 50%
---------
C10007AAB
---------
Ciudad Autónoma de Buenos
Aires
Argentina
------------------------------------------------------------ ---------
Electrica del Sur,
S.A.* Arroyo 880, Piso 2 50%
---------
C10007AAB
---------
Ciudad Autónoma de Buenos
Aires
Argentina
------------------------------------------------------------ ---------
SEA Energy, S.A.** Arroyo 880, Piso 2 95%
---------
C10007AAB
---------
Ciudad Autónoma de Buenos
Aires
Argentina
------------------------------------------------------------ ---------
Rurelec Chile SpA*** c/o Guerrero Olivos 100%
---------
Av. Vitacura 2939, Piso 8
---------
Las Condes
Santiago
Chile
------------------------------------------------------------ ---------
Rurelec Chile Limitada*** c/o Guerrero Olivos 100%
---------
Av. Vitacura 2939, Piso 8
---------
Las Condes
Santiago
Chile
------------------------------------------------------------ ---------
Termoelectrica del
Norte, S.A.*** c/o Guerrero Olivos 100%
---------
Av. Vitacura 2939, Piso 8
---------
Las Condes
Santiago
Chile
------------------------------------------------------------ ---------
Central Illapa, S.A.*** c/o Guerrero Olivos 100%
---------
Av. Vitacura 2939, Piso 8
---------
Las Condes
Santiago
Chile
------------------------------------------------------------ ---------
*Held via Patagonia Energy Limited and equity accounted as a
joint venture, see Note 22.
**Held via Rurelec Project Finance Limited
***Held via Cochrane Power Limited
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.
21. PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
Year Ended Year Ended
31.12.2022 31.12.2021
a) Group GBP'000 GBP'000
Loss for the year before tax (2,236) (3,634)
Net Finance Income - (491)
Net Finance Expense - 1,827
Adjustments for:
Foreign exchange (gains)/losses (661) 214
Write down of investment - 1,366
Impairment of amounts due from Joint 1,679 -
Venture
Impairment of Chile transformer 35 -
Impairment of Chile performance bonds 210 -
Costs re investment in SEA Energy - 134
Gain on disposal - (330)
Movement in Working Capital:
Change in Trade and Other Receivables 19 (173)
Change in Trade and Other Payables 42 96
Cash Used in Operations (912) (991)
----------- -----------
Year Ended Year Ended
31.12.2022 31.12.2021
b) Company GBP'000 GBP'000
----------- -----------
Loss for the year before tax (2,147) (3,230)
Net Finance Income - (1,173)
Net Finance Expense - 1,827
Adjustments for:
Foreign exchange gains (160) (108)
Write down of loans - 492
Impairment of JV receivable 1,679 -
Write down of investment - 1,336
Costs re investment in SEA Energy - 134
Movement in working capital:
Change in Trade and Other Receivables (299) (147)
Change in Trade and Other Payables 25 (38)
Cash Used in Operations (898) (909)
----------- -----------
22. 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 per cent. of EdS, its operating asset 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 it has been accounted for using the equity accounting
method as set out in IAS 28
As announced on 16 May 2023 a Sales and Purchase Agreement for
the JV assets was signed, the sale was authorised at the General
Meeting on 1 June 2023. As announced on 12 June 2023 the sale
completed on 09 June and the Company received the initial US$3
million consideration on the same date.
The Joint Venture interest were transferred to Assets Held for
Sale on 31 December 2022, in accordance with IFRS 5; please see
note 13 for further details. A fair value adjustment on their
initial recognition of GBP1.7 million was charged to Other Expense.
Please see note 8b for further details.
The following table sets out the prior year's Group's 50 per
cent. share of its interest in Patagonia Energy Limited ("PEL") the
BVI registered joint venture holding company of EdS, its 100 per
cent. owned Argentinian operating subsidiary. The Group did not
participate in prior year profits of the joint venture, as they are
exceeded by previous losses. Current year results are not disclosed
as per IFRS 12 as the JV is now classified as Assets Held for
Sale.
Group share of Joint Venture results Year Ended Year Ended
and net assets
31.12.2022 31.12.2021
GBP'000 GBP'000
Results
Revenue - 3,300
Operating Expenses - excluding foreign
exchange losses - (2,175)
Foreign exchange losses - 130
EBITDA - 1,255
Depreciation - (1,047)
EBIT - 208
Intragroup interest - credit re write
back of prior year charge - 2,478
Third party interest payable - (398)
Profit before tax - 2,288
Tax - 151
Profit after tax - 2,439
Summary of Statement of Financial
Position
Non-current assets - 10,871
Cash - 1,419
Current trade and other receivables - 918
Non-current liabilities - (17,100)
Current liabilities - (907)
Net assets/(liabilities) - (4,798)
23. 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. 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 did not participate in prior year profits
of the joint venture, as they are exceeded by previous losses.
Current year results are not disclosed as per IFRS 12 as the JV is
now classified as Assets Held for Sale. Refer to note 22. None of
the group entities are trading in South America therefore the
Directors are of the view that these accounts require no further
adjustment related to hyperinflation.
The Group also had exposure to the US Dollar 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.
The following table sets out when the financial obligations fall
due:
Year Ended Year Ended
31.12.2022 31.12.2021
a) Group GBP'000 GBP'000
----------- -----------
Current - due within 1 year:
Trade Payables 130 97
Accruals 366 351
Tax Liabilities - 6
Total due within 1 year: 496 454
Year Ended Year Ended
31.12.2022 31.12.2021
b) Company GBP'000 GBP'000
----------- -----------
Current - due within 1 year:
Trade Payables 84 46
Accruals 142 135
Amount due to subsidiary undertakings
(note 25) 257 229
Tax Liabilities - 6
Total due within 1 year: 483 416
c) 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.
d) 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 2022 Company Company Group Group
Financial Borrowings Financial Borrowings
Assets and Payables Assets and Payables
at at Amortised at at
Cost Amortised
Amortised Amortised Cost
Cost Cost
GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------- ----------- --------------
Trade and Other Receivables - - -
> 1 year
Trade and Other Receivables
< 1 year 90 - 91 -
Cash and Cash Equivalents 446 - 449 -
Trade and Other Payables
< 1 year - (483) - (496)
Total 536 (483) 540 (496)
----------- -------------- ----------- --------------
31 December 2021 Company Company Group Group
Financial Borrowings Financial Borrowings
Assets and Payables Assets and Payables
at at Amortised at at
Cost Amortised
Amortised Amortised Cost
Cost Cost
GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------- ----------- --------------
Trade and Other Receivables
< 1 year 3,103 - 3,103 -
Trade and Other Receivables
< 1 year 814 - 986 -
Cash and Cash Equivalents 743 - 745 -
Trade and Other Payables
< 1 year - (416) - (454)
Total 4,660 (416) 4,834 (454)
----------- -------------- ----------- --------------
24. SHORT TERM LEASE COMMITMENTS
Office premises
Office premises relates to the Company's offices. These are of
low value, and less than one year GBP16k (2021: GBP16k).
25. 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, who are considered Key Management
Personnel which amounted to GBP0.2 million (2020: GBP0.3
million).
Year Ended Year Ended Year Ended
31.12.2022 31.12.2022 31.12.2021
GBP'000 GBP'000 GBP'000
Base Salary/Fee Total Total
---------------- ----------- -----------
B Rowbotham - - 9
S Morris - - 79
A Coveney 177 177 145
P Shackleton 30 30 13
---------------- ----------- -----------
Total 207 207 246
B Rowbotham provided services under a service agreement contract
with Mountbeach Associates Ltd until June 2017, since then he was
on payroll. He resigned on 13 April 2021.
S Morris provided services of GBP54k under a service agreement
contract with SC Morris Ltd. He resigned on 17 August 2021.
A Coveney provided services of GBP147k under a service agreement
contract with Coveney Associates Consulting Ltd.
P Shackleton joined on 27 July 2021, and he is on payroll.
ii) Accrued interest on loans from its 100% subsidiary Rurelec
Project Finance Ltd ("RPFL") totalling GBPnil (2020: GBPnil). The
loan balance outstanding at the year-end due to RPFL was GBP0.3
million (2021: due GBP0.2 million).
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
Year-end Creditor (note 18) 256 229
Interest credited/(charged) - -
----------- -----------
iii) Received loan repayments of GBP599k from PEL (2021: GBP347k).
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
Y/E Debtor - 3,807
Repayment 599 367
Interest charged - -
Transfer to Assets Held for 2,023 -
Sale (note 13)
----------- -----------
i)
iv) Provided loans and charged interest of 0.5% per month to its
100 per cent. subsidiary Cochrane Power Ltd. Net loans were GBP14k
(2021: net repayment in the year GBP0.7 million (2020: loans of
GBP0.2 million). The total outyear end at the year-end was GBP12.1
million (2020: GBP11.4 million). These loans have been impaired to
GBPnil (2021: GBP nil). As per subsequent events note 27 it was
decided that activities in Chile would be regarded as discontinued
operations. No interest income recognised as income is not
probable.
Year Ended Year Ended
31.12.2022 31.12.2021
GBP'000 GBP'000
----------- -----------
Y/E Debtor - -
(Repayment)/Further loans made 14 (638)
Assignment of loan to Rurelec
plc. - (1,266)
Interest charged - 682
----------- -----------
26. CONTROL
The Directors consider that the ultimate controlling party is
Sterling Trust Limited on the basis of their 53.9% shareholding in
the Company.
27. POST BALANCE SHEET DATE EVENTS
As announced on 16 May 2022 the Company signed a Sales and
Purchase Agreement for its Joint Venture interests in Argentina. A
deposit of US$ 600k was paid to a solicitor's account. This with
the remaining US$ 2.4 million initial payment was received on 09
June 2023. The Sales and Purchase Agreement included the
possibility of two further payments of US$1 million which could be
paid in 2024 and 2025, providing certain qualifying conditions are
met. Under current market and Argentinean economic circumstances
there can be no certainty that these conditions will be met, as a
result of this these amounts have been excluded from this
report.
At the General Meeting held on 1 June 2023 shareholders
unanimously voted to approve the sale and a special dividend of 0.2
pence per share. The dividend will be paid on 14 July 2023 to
shareholders on the register as at 23 June 2023. The associated
ex-dividend date will be 22 June 2023.
At a Board meeting on 21 June 2023, it was decided that
activities in Chile would be regarded as discontinued operations.
All remaining assets have been fully impaired in these financial
statements with a charge of GBP210k being recorded in Other Expense
(2021: GBPnil).
There are no other significant subsequent events.
28. PRIOR PERIOD ADJUSTMENTS
The consolidated income statement, consolidated statement of
financial position, company statement of financial position,
consolidated statement of changes in equity and company statement
of changes in equity have been restated due to incorrect accounting
treatment related to foreign exchange losses/ gains. The Group and
Company recorded foreign exchange translation for non-monetary
items held at cost which understated the property plant and
equipment and inventories (company). The following corrections to
prior periods were identified resulting in the changes set out
below. An additional comparative Statement of Financial Position
for group and company has been presented in order to demonstrate
the impact to the opening position in the prior year.
Group Impact on the Statement of Profit or Loss and Other
Comprehensive Income
Restated
Notes Year Ended Year Ended
Extract 31.12.2021 Adjustments 31.12.2021
GBP'000 GBP'000 GBP'000
------------------------- ------- ----------- ------------ -----------
Net Foreign Exchange
Losses (214) 45 (259)
Loss before Tax (3,634) 45 (3,679)
Tax Expense -
Loss for the year
attributable to owners
of the Company (3,634) (3,679)
---------------------------------- ----------- ------------ -----------
Group Impact on the Statement of Financial Position
Reported Adjusted Reported Adjusted
Extract 01.01.2021 Adjustment 01.01.2021 31.12.2021 Adjustment 31.12.2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------------- ---------------- ---------------- ----------------- ----------------
Property,
Plant
and
Equipment 7,371 849 8,220 7,003 805 7,808
Retained
Earnings 8,648 849 9,497 5,014 805 5,819
Company Impact on the Statement of Financial
Position
Reported Adjusted Reported Adjusted
Extract 01.01.2021 Adjustment 01.01.2021 31.12.2021 Adjustment 31.12.2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------------- ---------------- ---------------- ----------------- ----------------
Inventories 6,923 849 7,772 6,968 805 7,773
Retained
Earnings 9,153 849 10,002 5,922 805 6,727
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FR FMMATMTTJBBJ
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