Companies: RUR   

Latin American power group Rurelec has increased first-half operating profit 31 per cent to £1.97 million.

The AIM-quoted company, which develops power generation projects and owns power plants in Bolivia and Argentina, lifted turnover 11 per cent to £10.5 million in the six months to June. Pre-tax profits for the first half-year show a hefty fall from £7 million to £1.6 million, but that is because the 2006 interim figure was swollen by £5.6 million of 'negative goodwill' on asset acquisitions.

Chief executive officer Peter Earl says electricity demand is outstripping supply in both countries, but a weak dollar has blunted gains in sterling. He argues that will be counteracted next year when the company starts to earn euro-denominated carbon credits.

As from next April, Rurelec will be earning carbon credits in Argentina and achieve more than 250,000 attributable tonnes a year. Noting that the price of these credits has risen from £5 a tonne last year to £8.5 now, Earl says the company has set up a new division, Rurelec Climate Change Finance, to securitise and sell forward the United Nations Certified Emission Reductions earned, so as to lock in this price rise as far as possible.

Rurelec is keen to expand into Chile and Peru, says Earl, who maintains the politics are friendly provided companies keep out of northern South American countries, such as Venezuela and Colombia. At 53p, the shares continue to have speculative long-term potential.

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Rurelec	AIM	£24.02m	28.00p	-1.00p
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Rurelec power plant progress			13/08/2008
Rurelec profits plunge			23/05/2008
Rurelec sees carbon credit gains			27/09/2007
Diploma delivers despite dollar headwind			29/05/2007
'Negative goodwill' helps Rurelec			09/05/2007