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Rurelec posts £17.4 million profit in H1, stable basis going forward

Published: 13:58 30 Sep 2010 BST

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Rurelec (LON:RUR) is ready for a ‘more encouraging’ second half, after reporting a £17.4 million profit for the first six months of the year - lifted by a one-off gain in the period.

The company is now ‘relatively stable’ and looking for growth in Argentina, after the unexpected nationalisation of its Bolivian assets in May.

With the £17.4 million profit and £47 million expected in compensation, the much anticipated financing of the Argentine power generation plant looks to be in hand.

"The administration of Evo Morales has given its word that fair compensation will be paid and we have no reason to doubt those promises," Rurelec chief executive Peter Earl said.

"Looking to the future, we now have a relatively stable basis for our business in Argentina.” 

The Argentine business unit, Energia del Sur S.A. (EdS) reached a growth milestone in August when it was granted Resolution 220 status.

With the signing of a ‘Resolution 220’ contract from the Argentine wholesale electricity market administrator, the company has been able to charge a premium for the power generated at its new 136MW power plant in the Chubut Province of Patagonia.

The subsequent increase in power generation margins will begin to show in the current financial reporting period.

“Rurelec can now look forward to releasing some of the cash tied up in Argentina through the long-awaited refinancing of the EdS plant."

For the six month period, ended 30th June 2010, Rurelec reported a £17.4m net profit (H109: £3.4 million loss), with earnings per share (EPS) up to 0.42p per share (H109: 2.99p loss).

The dramatic improvement is almost entirely down to a one off gain of £15million, as well as an estimated £1.4m trading profit from the discontinued Bolivian operations.

EdS made a trading profit of just over £1m - with £0.5 million attributable to Rurelec – during the period. The company’s performance will be boosted in the second half, after ‘Resolution 220’ took effect in September.

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