5th Jun 2019 17:54
LONDON (Alliance News) - Rurelec PLC on Wednesday said is loss narrowed significantly in 2018 due to a drop in administrative expenses, foreign exchange, and a gain on the disposal of its Peruvian operations.
However, the company raised concerns around its cashflow due to liquidity issues and shares in the company closed down 17% at 0.81 pence.
Rurelec Executive Directors Simon Morris and Andy Coveney said: "Cash generation was again hit by intermittent cash remittances from Argentina. However, the group has been able to weather this storm due to reductions in group operating costs and the disposal of the group's cash-absorbing Peruvian operations.
"Although there have been improvements in the group's finances, liquidity still remains a significant issue for the group and the auditors have assessed that there remains a material uncertainty around the group's cashflow."
Rurelec, an electricity utility with a focus on the ownership and operation of Latin American power plants, posted a GBP622,000 pretax loss for 2018. This was a fraction of its GBP5.8 million loss the year before.
Administrative expenses dropped to GBP1.5 million from GBP2.1 million and the company made exchange rate gains of GBP1.7 million, largely through loans to Argentine operations, compared to a GBP2.5 million loss on exchange in 2017.
Moreover, Rurelec recorded a GBP1.3 million book gain on the disposal of its Peruvian operations, with no such gain in 2017. Interest payable also shrank to GBP177,000 from GBP419,000.
Rurelec holds a 50% investment in Patagonia Energy Ltd, which owns Energia del Sur SA in Argentina. The asset operated at a reduced output in 2018 as planned maintenance of the Energia del Sur plant, to which Rurelec has made loans, was delayed due to a lack of loan finance. An overhaul of the steam turbine between October and January is expected to enhance the longevity and cash-generative ability of the joint venture.
Non-executive Director Brian Rowbotham said: "Given the difficulties faced by the Argentinian operation in the period, the Rurelec board note that the group's financial position has strengthened as remittances from EdS have been received and the relationship with our JV partner, Basic Energy Ltd has improved. It is also encouraging to note the major investments in refurbishing the steam and gas turbines and generators at the Argentinian plant which the directors believe should maximise the opportunities for future income generation in Argentina and remittances to the group now that plant has resumed normal operating output."
"Overall, although the group liquidity position remains tight, it has nevertheless improved but the ongoing working capital position of the company depends on EdS continuing to make its loan repayments on time, and according to its schedule which can not always be guaranteed."
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