Rurelec PLC Interim Results RNS 27 September 2013 & link for BRR Discussion from 27th September 2013 with Peter Earl

Currently having a lunch to unwind for the weekend. Will review the interims for RUR tonight (in a non-professional opinion). Then post under this heading; the snapshot looks as though the fundraising hit the Net Asset Value (NAV) but for very good reasons. Yes we have to acknowledge the decrease by 15% in NAV, however this should be made up in other gains post settlement & other asset sales / booked profit on sales. Remember the BirdSong % / Agreement has already/is being amortised in previous years accounts under payments/sharebased payments. Overall, the results show that progress has been made, admittedly at a discount to NAV but should prove fruitful in the future. Will update in due course, have a good weekend.  

Any question, as per the norm, will not be published if requested but will endeavour to answer from a viewpoint that is not legal or financial opinion. So will answer those already submitted by this evening (Caveat: pending if lunch rolls into Dinner/Evening Out). Guaranteed though by Saturday AM GMT at the very latest. 

As promised, we got there. Fab night and slightly fatigued from the fun!

Addition 28th September 2013 - 09:40 Rurelec PLC Interim Results RNS 27 September 2013 

Profitable in Argentina with margins improved with the project Debt being paid down; as mentioned in the BRR Media with Peter Earl Rurelec PLC Interim Results RNS 27 September 2013 Peter Earl is looking for a partner to develop the company production further makes sense to share the costs.

Peter Earl refers to being in "standby" from the Middle of October, with a 7 days RNS due once Rurelec have been notified from the Court. However, don't get fixated with that being the first of October or November, just let the process do its thing (my view). Micro-managing is unhealthy, and shows a lack of confidence in any investment, doesn't mean there are no risks, its more that you have to accept them, or sell up and move on! 

Please obviously do your on checks on these figures, its just what was glaring out at me whilst reading. I'll double check these in due course but there's no issue with challenging. Couple of things that cannot be ignored from the Interim Results, I suspect most people have noticed but they'll be covered anyway.

Having looked at the NAV (Net Asset Value), it has decreased some 15% or 3 pence per share decrease to 17 pence.

When going through the figures, they purchased planet and equipment but increased the attributable value which went up £23M to £41M from £18M. However the dilution of the fundraising should be recovered on the assets when they're in situ and in operation. The carrying value of the compensation increased near £5M from £48.8 to £53.7m, because of accrued attributable interest that has to be realised on the book as the case is on-going.

So there was a booked increase of near £28M or what would be a 5 pence per share increase? Yet overall the NAV has decreased 3p per share. Is it the issue and fundraising that has diluted? Yes, clearly but the company is now progressing with its plans for development. Perhaps needing more substance for a Santiago listing? Also there is % payable to holders/funders of the litigation claim, the BirdSong Agreement? This has been amortised in previous accounts (i.e. allowed for.), well 60% of it so far, so there's around £1,3M to be shown on the book/recorded/off-set.

So its fair to say the carrying value is at least 'realistic' for the Compensation and is on the low side (personal view) and likewise the compensation claim interest I'm led to believe is carried at a lower value than is likely from the settlement. With the above in mind, as a down side element, its likely "in the event" of no-settlement the NAV value would be around 7p max, so for calculating margin stop losses 3 pence is realistic. However, its clear RUR had an asset, it was nationalised, it was in production and the evidence available suggests (albeit not a professional opinion by the writer) that they have a very good case.  17-19 pence is certainly achievable post settlement as a very minimum. This is excluding any deals or reduction in ownership %'s to sell down assets which could add further value. 

So wait for the release of the Arbitration Decision, it may mean a few twists in the chapters ahead, all adding spice, in addition to the Santiago listing, sale of 50% assets, the future is certainly looking a lot more positive than negative.