Annual Report and Accounts

Rurelec PLC
09 May 2007

DATE: 9 May 2007


                                  Rurelec PLC
                          ('Rurelec' or 'the Company')


                              PRELIMINARY RESULTS
                 FOR THE YEAR ENDED 31 DECEMBER 2006 (audited)


Highlights


   •Acquisition of controlling interest in Bolivia's largest electricity
    generator in January 2006
   •Group turnover in year to 31 December 2006 - £20.7m
   •Group after tax profit attributable to shareholders of the Company of
    £14.46m, including one-off 'negative goodwill' of £13.3m arising from
    acquisition of assets in Bolivia and fair value adjustments
   •Net Asset Value per share rose from 26.7p at 31 December 2005 to 50p at
    31 December 2006
   •Dividend of 2.25p per share declared



Jimmy West, Chairman, said: 'In 2006, the Company has made very significant
progress in achieving its objective of becoming one of the leading power
generators in South America.


'The strong operating performance of the Rurelec businesses in Argentina and
Bolivia continue to deliver both cash flow and profits. We intend to expand our
operations into neighbouring countries in the Southern Cone in the months to
come and look forward to continued success throughout 2007.'



For further information:

Rurelec PLC             Daniel Stewart          Parkgreen Communications
Peter Earl, CEO         Paul Shackleton         Clare Irvine / Lindsay Bancroft
[phone]     [phone]     [phone]






RURELEC PLC



CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2006


I am pleased to report that Rurelec PLC has produced an excellent set of results
for the last financial year to 31 December 2006 and is today declaring a
dividend of 2.25 pence.


In the twelve months ended 31st December 2006, Rurelec reported after tax profit
attributable to shareholders of £14.5 million, inclusive of 'negative goodwill'
of £13.3m. The profits after tax for the six months ended 31st December 2005
were £2.1 million. Total reported equity for the Group at the end of the period
under review was £64.3 million (£5.7 million at 31 December 2005), with net
asset value standing at £34.3 million, approximately 50 pence per share (26.7
pence per share as at 31 December 2005).


The Company is reporting earnings per share for the current financial year of
21.2 pence. For the half year ended 30th June, 2006 Rurelec reported earnings
per share of 9.05 pence per share. As in the case at the half year, a
significant part of the reported earnings consists of one-off benefits due to
the treatment of negative goodwill, which the Company is required to take to its
profit and loss account under IFRS reporting standards. These earnings cannot be
distributed to shareholders as a dividend. The reason for the uplift is the fact
that the Company has been successful in adding shareholder value in both its
acquisitions of existing power plants and in its development of new power
generation capacity at below the open market value of that new capacity, a
reflection of the Rurelec management team's experience and ability as power
developers.


While much of the Company's reported earnings relate to such revaluation
uplifts, I would like to draw the attention of shareholders to the very strong
operating performance of the Rurelec businesses in Argentina and Bolivia, which
continue to deliver both cash flow and profits. Our markets in the Southern Cone
of Latin America are achieving record economic growth and this is reflected in
the underlying growth in operating income of the Rurelec plants.


In recent weeks, our Guaracachi subsidiary has paid a dividend net of Bolivian
withholding tax of US $3.0 million to Rurelec. In anticipation of the receipt of
this dividend, our finance team locked in a foreign exchange swap at US $1.9295
to the pound, the equivalent of 2.25 pence per Ordinary share in Rurelec. The
Board is declaring a dividend to shareholders equivalent to this amount.


During the last financial year, Rurelec completed the acquisition of a
controlling stake in 360 MW of existing power plant capacity and then
substantially completed the development and installation of 79 MW of new
gas-fired capacity in Bolivia. Today, Rurelec companies are constructing a
further 160 MW of new combined cycle capacity eligible for certified emissions
reduction certificates (CERs) under the United Nations Clean Development
Mechanism. By any standards, this has been a period of extraordinary growth. I
am pleased to report that we anticipate continued growth in the Southern Cone of
Latin America over the foreseeable future.


In March 2007, we announced that Freddie Fisher had joined the Board of Rurelec
as a non-executive director. Freddie has considerable experience in the
international capital markets and we anticipate that he will assist the Company
as we move to more inventive ways to finance our ambitious expansion plans.
Equally, we will be bidding farewell to Frank Mattos, who will retire from the
Rurelec Board at the next Annual General Meeting. We offer our thanks to Frank
for his service to Rurelec over the last three years.









RURELEC PLC


CHAIRMAN'S STATEMENT - continued

FOR THE YEAR ENDED 31 DECEMBER 2006



Power development is normally a slow business, as is the case with all
infrastructure projects that require design and construction. However the speed
with which Rurelec is adding new megawatts is rapid since we are serving
developing markets that have little reserve capacity: any delay risks power cuts
within those markets. The excellent relations Rurelec companies enjoy with their
respective host governments underlines the important contribution we are making
in these countries to keep the lights on when others have been slow to invest in
the past. I am delighted that the confidence we have shown in Argentina and
Bolivia has produced good results for Rurelec shareholders while also
contributing to continued economic growth. We intend to build on that
relationship of trust to expand our operations into neighbouring countries in
the Southern Cone in the months to come.


Jimmy West,

Chairman


8 May 2007




RURELEC PLC


CHIEF EXECUTIVE'S REVIEW OF OPERATIONS

FOR THE YEAR ENDED 31 DECEMBER 2006


Rurelec's power generation businesses are performing well and the markets in
which Rurelec currently generates electricity are experiencing considerable
economic growth. Argentina's economy continues to grow at 9 per cent. while
Bolivia is enjoying GDP growth of almost 6 per cent. As we reported at the half
year stage, demand for electricity in turn is exceeding all previous demand
forecasts. As a result, the governments of both Argentina and Bolivia have
requested Rurelec's local subsidiaries to accelerate and increase expansion
plans for new power capacity to match the needs of the power markets in the
south of Latin America. Rurelec is still meeting the challenge that such rapid
demand growth represents.


Today Rurelec controls a group of four major operating power plants comprising
515 MW of fully operational installed capacity in Bolivia and Argentina with a
further 160 MW under construction or at the ground-breaking stage and over 120
MW in advanced development.


Argentina


Rurelec is now six months into the construction phase of the 60 MW combined
cycle expansion of its Energia del Sur ('EdS') power plant in Patagonia.


EdS is the Argentine company which owns and operates one of the most southerly
power plants in Argentina, serving the partially isolated power grid based on
Comodoro Rivadavia. Existing capacity is 76 MW and Rurelec owns an effective 50
per cent. interest in EdS following its July 2005 purchase of a 50 per cent.
stake in Patagonia Energy Limited ('PEL').


PEL is converting the original 1990s plant to combined cycle gas turbine
expansion ('CCGT') by adding a steam turbine and heat recovery steam generator
to the two open cycle General Electric 6B gas-fired turbines of EdS. During
2006, PEL acquired a steam turbine and air cooling system at very favourable
prices to implement the combined cycle conversion. The project is eligible for
carbon credits under the Kyoto Protocol and Rurelec is exploring innovative ways
to use these carbon credits as security for project finance. The steam turbine
and cooling system are now in Patagonia as part of a 96 container load shipment
of plant and construction materials. This is the first expansion of generation
capacity in Argentina since 2001 and the start of building work was a milestone
in the Argentine power industry as it recovers from the economic turmoil of five
years ago. When completed in early 2008, the CCGT conversion will add some 60 MW
of new capacity in the south of Argentina where demand growth has out-stripped
reserve capacity in the southern power grid.


Since the year end, EdS has achieved financial close with Standard Bank Plc,
London for a medium term dollar based loan of US $18 million for the financing
of the new CCGT capacity. This was the first overseas financing for a power
plant in Argentina since the peso crash of 2001. Again, this is an important
milestone in the regional banking sector and opens the way to further project
financing for new Rurelec projects in Argentina.



Bolivia


In January 2006, Rurelec completed the acquisition of a controlling stake in
Empresa Guaracachi SA, Bolivia's largest power generation company and the
biggest consumer of natural gas in the country. All of Guaracachi's power
plants, consisting of 360 MW of nominal capacity at the time of the take-over,
are thermal plants running on natural gas. Bolivia has the second largest
reserves of natural gas in Latin America and has been looking to expand the
market for its single most important resource.






RURELEC PLC


CHIEF EXECUTIVE'S REVIEW OF OPERATIONS - continued

FOR THE YEAR ENDED 31 DECEMBER 2006


For the two years prior to the Rurelec acquisition, Guaracachi had been operated
by the senior officers of Independent Power Corporation PLC, the British power
developer founded in 1995 whose management created Rurelec. The transfer of
control to Rurelec was therefore completed swiftly and this permitted Guaracachi
to accelerate its plans for expansion within Bolivia through organic growth.


The first new capacity completed in 2006 was the successful commissioning in
August of four new Jenbacher 616 gas engines at Guaracachi's Aranjuez plant in
Sucre. With a 42 per cent. thermal efficiency, these machines are now in service
and are baseload providers of power for Bolivia's original capital and the seat
of its Supreme Court. The new capacity was installed in time for the constituent
assembly that was launched in Sucre in August 2006.


A far larger expansion was substantially completed in 2006 in the form of the
General Electric 6 FA gas turbine installed in Santa Cruz de la Sierra,
Bolivia's principal commercial centre to the east of the country and the home of
Bolivia's oil and gas industry. This turbine, now unromantically named GCH 11,
was successfully commissioned in early 2007 and was officially inaugurated by
the Minister of Public Works and the British Ambassador to Bolivia on 13 March,
2007. It has a nominal capacity of 71 MW though the high ambient temperature of
Santa Cruz, which is on the edge of Amazonia, means that it is de-rated to 62 MW
for practical purposes.


Together, these two new power facilities in Sucre and Santa Cruz represent some
10 per cent. of the peak demand of Bolivia. Today, Guaracachi's installed
nominal capacity in Bolivia has increased by 22 per cent. from 360 MW to just on
440 MW.


At the same time as completing its current additions to plant capacity,
Guaracachi has been working on two further expansion projects.


The first project is the 80 MW CCGT expansion which consists of the conversion
in Santa Cruz of two existing General Electric 6FA gas turbines to combined
cycle operation. This project is Bolivia's first carbon credit power generation
project under the Kyoto Protocol. Following extensive discussions with the
Government of Bolivia, the Board of Guaracachi has given its approval to proceed
with the CCGT conversion and a provisional generation licence is to be granted,
allowing Guaracachi to initiate the project. A Siemens steam turbine has been
reserved in Germany and is to be acquired on excellent terms following recent
engineering due diligence. The turbine which has been reserved will allow the
CCGT project capacity to be increased from the 80 MW originally announced to
just under 100 MW using ancillary firing. This increase in the size of the
project is necessary to meet Bolivia's growing demand for new power capacity.
Guaracachi has received funding offers for the CCGT conversion from a number of
local and regional banks. Acquisition of the steam turbine and the decision to
commence construction are expected within weeks. The CCGT project is due to be
commissioned in the first half of 2008.


The second project is the 120 MW greenfield power plant to be based in Yacuiba
in Bolivia's Department of Tarija close to the border with Argentina. This new
plant is intended to stimulate economic growth to the south of Bolivia where the
national transmission grid has not yet been extended. The plant will also be
interconnected to the northern grid system of Argentina which currently suffers
from power shortages.











RURELEC PLC


CHIEF EXECUTIVE'S REVIEW OF OPERATIONS - continued

FOR THE YEAR ENDED 31 DECEMBER 2006





Guaracachi is in the closing stages of a protracted negotiation with the
Bolivian national oil and gas company, YPFB, for a long term gas supply for the
Yacuiba plant. A preliminary agreement for the sale of electricity was signed
with CEMSA, the Argentine power trading subsidiary of Endesa of Spain, some time
ago and has recently been extended. A study is also under way to increase the
size of the Yacuiba project from the previously announced 120 MW in anticipation
of an extension of the Bolivian national grid from Tarija to Yacuiba. Guaracachi
has now completed the purchase of a site for the Yacuiba plant. This is adjacent
to the site acquired by Rurelec's wholly-owned subsidiary, Energais, which has
been developing in parallel an isolated generation project using Jenbacher gas
engines to serve the local community in Yacuiba and Villa Montes. Energais
recently obtained all necessary environmental consents for its own project site
and Guaracachi expects to receive similar consents on a fast track basis.


Energais continues to negotiate the installation of its two 3 MW Worthington
dual fuel engines in Riberalta and Guayamerin. As part of a move to greater
sustainability in isolated generation, Energais is now actively exploring the
use of bio-fuels in its dual fuel motors and is working to replace the use of
imported and expensive mineral diesel in its new local power plants.


Expansion


Rurelec is studying a number of expansion possibilities in line with its
intention to become one of the leading power generation companies in Southern
Cone of Latin America. At the present time, Rurelec has over US $ 200 million of
unused debt capacity between its own balance sheet and those of its various
companies. The policy of Rurelec is now to bring the Company in line with
gearing ratios typical in other parts of the world for power companies with
strong cash producing operations. While rapid growth is expected to continue in
both Argentina and Bolivia from the development projects already in train, the
Company hopes to add capacity in both Chile and Peru in future years both
through greenfield development and by means of acquisition to create a balanced
portfolio of profitable power plants on both sides of the Andes.







Peter Earl

Chief Executive


Date: 8 May 2007




















RURELEC PLC


CONSOLIDATED INCOME STATEMENT AND STATEMENT OF RECOGNISED INCOME AND EXPENSE

FOR THE YEAR ENDED 31 DECEMBER 2006



Consolidated income statement                                            Year ended          6 months ended
                                                                           31.12.06                31.12.05
                                                   Notes                      £'000                   £'000
 
Revenue                                                4                     20,660                   1,864
Cost of sales                                                               (15,853)                 (1,502)
 
Gross profit                                                                  4,807                     362
Administrative expenses                                                      (2,426)                   (308)
Other income                                           5                      2,426                       -

Negative goodwill arising on                           6                     13,313                   2,067
acquisition of subsidiary

Finance income                                                                  200                       8
Finance expense                                                                (632)                      -

Profit before tax                                                            17,688                   2,129
Tax expense                                            7                     (1,296)                    (76)

Profit for the year / period                                                 16,392                   2,053

Attributable to minority interests                                            1,934                       -
Attributable to shareholders of                                              14,458                   2,053
Rurelec Plc
                                                                             16,392                   2,053

Earnings per share (basic)                             8                     21.17p                  10.28p
Earnings per share (diluted)                           8                     21.17p                  10.28p


Statement of recognised income and expense

Exchange differences on translation                                          (4,564)                   (385)
of foreign operations
Profit for the financial year / period                                       14,458                   2,053

Total recognised income and expense for the year / period                     9,894                   1,668




RURELEC PLC

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2006



                                                                           31.12.06                  31.12.05
                                                  Notes                       £'000                     £'000
Assets
Non-current assets
Property, plant and equipment                          9                     70,886                     4,853
Intangible assets                                                                 3                         7
Trade and other receivables                                                     442                       406
Deferred tax assets                                                             359                       327
                                                                             71,690                     5,593
Current assets
Inventories                                                                   3,146                       460
Trade and other receivables                                                   8,530                     2,578
Cash and cash equivalents                                                     3,179                       424
                                                                             14,855                     3,462

Total assets                                                                 86,545                     9,055

Equity and liabilities
Equity attributable to equity holders of the parent
Share capital                                         10                      1,366                       427
Share premium account                                 11                     21,303                     3,568
Foreign currency reserve                              11                     (4,948)                     (384)
Retained earnings                                     11                     16,542                     2,084

Total equity attributable to                                                 34,263                     5,695
shareholders of Rurelec Plc

Minority interests                                                           29,985                         -

Total equity                                                                 64,248                     5,695

Non-current liabilities
Trade and other payables                                                        247                       431
Deferred tax liabilities                                                        739                         -
Borrowings                                                                   10,522                         -

Total non-current liabilities                                                11,508                       431

Current liabilities
Trade and other payables                                                      5,935                     2,478
Borrowings                                                                    4,854                       451

Total current liabilities                                                    10,789                     2,929

Total liabilities                                                            22,297                     3,360

Total equity and liabilities                                                 86,545                     9,055




RURELEC PLC


CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2006



                                                                    Year ended                 6 months ended
                                                                      31.12.06                       31.12.05
                                                   Notes                 £'000                          £'000
Net cash inflow / (outflow)                           12                   505                           (58)
from operating activities

Cash flows from investing activities
Purchase of plant and equipment                                         (7,157)                         (387)
Sale of fixed assets and spares                                          2,426                             -
Interest received                                                          200                             8
Acquisition of interest in                                              (7,166)                            -
subsidiary (net of cash)
Acquisition of interest in joint venture                                  (863)                       (2,474)
  (net of cash)

Net cash used in investing activities                                  (12,560)                       (2,853)

Net cash outflow before financing activities                           (12,055)                       (2,911)

Cash flows from financing activities

Issue of shares (net of costs)                                          18,674                         2,979
Proceeds from bank loans                                                 1,301                             -
Repayment of bank loans                                                 (1,761)                            -
Interest paid                                                             (478)                            -
Tax paid                                                                (1,004)                            -
Payment of dividend to minorities                                       (1,922)                            -
Dividend paid                                                                -                          (107)

Net cash in from financing activities                                   14,810                         2,872

Increase / (decrease) in cash and cash equivalents                       2,755                           (39)

Reconciliation and analysis of change in net funds

Increase / (decrease) in cash during year / period                       2,755                           (39)

Cash and cash equivalents at start of year / period                        424                           463

Cash and cash equivalents at end of year / period                        3,179                           424


NOTES TO THE PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2006



1 Nature of operations


Rurelec PLC and its subsidiary and joint venture entities ('The Group')
principal activity is the operation of electricity generation assets and the
supply of electricity to the wholesale market and major end-users. The Group
also buys and sells related assets as opportunities arise. During the period
under review, all of the Group's electricity generation assets were located in
South America.


2 General information


Rurelec PLC is the Group's ultimate parent company. It is incorporated and
domiciled in England and Wales. Rurelec PLC's shares are traded on the
Alternative Investment Market ('AIM') in London.


The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the EU and
International Financial Reporting Standards as issued by the International
Accounting Standards Board.


The consolidated financial statements for the year ended 31 December 2006
(including the comparatives for the six months period ended 31 December 2005)
were approved by the Board of directors on 8 May 2007.


3 Basis of preparation


The financial statements have been prepared under the historical cost convention
and in accordance with applicable International Financial Reporting Standards
('IFRS') as adopted by the European Union.


4 Segment analysis


During the year to 31 December 2006 and the six months to 31 December 2005, all
of the Group's revenues arose from electricity generating activities. There were
no revenues derived from the sale of equipment purchased with a view to
subsequent resale.

The following table provides a segmental analysis by geographic region:


                              Argentina          Bolivia            UK        Intra-Group          Total
                                  £'000            £'000         £'000              £'000          £'000

Revenue                           3,735           16,925             -                -           20,660
Cost of sales                    (3,105)         (12,748)            -                -          (15,853)
Administrative expenses            (515)          (1,125)         (515)               -           (2,155)
Exchange gains / (losses)            (2)            (497)          228                -             (271)
Other income                          -            2,426             -                -            2,426
Negative goodwill                     -           13,313             -                -           13,313
Finance income                        -              181            19                -              200
Finance expense                     (28)            (601)           (3)               -             (632)
Dividend received                     -                -         1,841           (1,841)               -
Profit before tax                    85           17,874         1,570           (1,841)          17,688
Tax expense                        (310)            (986)            -                -           (1,296)
Profit/(loss) for the year         (225)          16,888         1,570           (1,841)          16,392


Segment analysis (continued)


Total assets                      7,775           78,630        26,425          (26,285)          86,545
Total liabilities                 3,368           18,763         2,094           (1,928)          22,297
 
Capital expenditure               2,320            4,837             -                -            7,157
Depreciation                        327            2,258             -                -            2,585



5 Other income


Other income represents the book profit on the sale of surplus plant and
equipment.



6 Negative goodwill arising on acquisition of subsidiary


Negative goodwill arising on acquisition of subsidiary represents the excess of
the provisional fair values of the assets less the liabilities acquired
following the acquisition of the 50.00125% interest in Empresa Electrica
Guaracachi S.A. over the cost of acquiring the shares - see note 13.


In 2005, negative goodwill arising on acquisition represents the excess of the
provisional fair values of the assets less the liabilities acquired following
the acquisition of the 50% interest in Patagonia Energy Limited and its
subsidiary company, over the cost of acquiring the shares.



7 Tax expense


The relationship between the expected tax expense at the basic rate of 30% (31
December 2005 - 30%) and the tax expense actually recognised in the income
statement can be reconciled as follows:


                                                                           Year ended             6 months
                                                                             31.12.06             31.12.05
                                                                                £'000                £'000
Result for the period before tax                                               17,688                2,129
Standard rate of corporation tax in UK                                             30%                  30%
Expected tax expense                                                            5,306                  639
Adjustment for tax exempt income
 relating to negative goodwill                                                 (3,994)                (620)
Effect of lower rate (19% vs. 30%) on UK result                                     -                   20
Adjustment for different overseas tax rates                                      (205)                  12
Accelerated allowances                                                           (229)                   -
Consolidation adjustments with no tax effect                                       73                    -
Tax on overseas dividends, less double tax relief                                 345                    -
Other timing differences and non-deductible expenses                                -                   25
Actual tax charge                                                               1,296                   76




8 Earnings per share


a) Basic and diluted earnings per share:


Basic earnings per share is calculated by dividing the profit for the period
attributable to shareholders by the weighted average number of shares in issue
during the period. For diluted earnings per share, the weighted average number
of shares is adjusted to assume conversion of all dilutive potential ordinary
shares. The fully diluted calculation of earnings per share is unchanged from
the basic calculation as the warrants are anti-dilutive since the warrants have
not been exercised and have expired.

                                                                          Year ended              6 months
                                                                            31.12.06              31.12.05
Profit attributable to equity holders of the Company (£'000)                 £14,458                £2,053
Total shares in issue (average during the period)                         68,288,775            19,970,924
Basic EPS                                                                     21.17p                10.28p
Diluted EPS                                                                   21.17p                10.28p



b) Underlying earnings per share:


Income, or expenses, of a one-off nature do not relate to the profitability of
the Group on an on-going basis and the calculation of underlying earnings per
share excludes such items. The average weighted number of shares in issue during
the period is unchanged from the numbers used in the calculation of the basic
earnings per share.



                                                                               £'000                 £'000
Profit attributable to equity holders of the Company                         £14,458                 £2,053
(as above)
Less: non-recurring 'negative goodwill'                                     (£13,313)               (£2,067)
Underlying profit / (loss) attributable to equity holders                     £1,145                   (£14)
of the Company
Underlying EPS                                                                 1.68p                (0.07p)





9  Property, plant and                              Land          Plant and        Plant under         Total
   equipment                                                      equipment       construction
                                                   £'000              £'000              £'000         £'000
Cost at 1 July 2005                                    -                  -                724           724
Additions                                              -                181                206           387
Assets acquired on acquisition                       115              4,036                  -         4,151
Exchange adjustments                                  (7)              (278)                 -          (285)
Cost at 31 December 2005                             108              3,939                930         4,977
Additions                                              9              3,366              3,782         7,157
Assets acquired on acquisition                     4,934             54,520             10,470        69,924
Exchange differences                                (567)            (6,602)            (1,309)       (8,478)
Cost at 31 December 2006                           4,484             55,223             13,873        73,580

Depreciation at 1 July 2005                            -                  -                  -             -
Charge for year                                        -                128                  -           128
Exchange adjustments                                   -                 (4)                 -            (4)
Depreciation at 31 December 2005                       -                124                  -           124
Charge for period                                      -              2,585                  -         2,585
Exchange adjustments                                   -                (15)                 -           (15)
Depreciation at 31 December 2006                       -              2,694                  -         2,694

Net book value - 31.12.06                          4,484             52,529             13,873        70,886
Net book value - 31.12.05                            108              3,815                930         4,853




9 Property, plant and
  equipment (continued)


The value of property, plant and equipment recognised upon the initial inclusion
of Empresa Electrica Guaracachi S.A. in the financial statements was
£69,924,000. This amount includes a positive fair value adjustment of
£14,293,000 resulting from a professional valuation carried out at the date of
the acquisition.


10  Share capital                                                            31.12.06               31.12.05
                                                                                £'000                  £'000
a) Authorised
      120,000,000 ordinary shares of 2p each                                    2,400                    600
      (31 December 2005 - 30,000,000)
b) Allotted, called up and fully paid
      68,288,775 ordinary shares of 2p each                                     1,366                    427
      (31 December 2005 - 21,350,000)

Reconciliation of movement in share capital during the period                  Number                  £'000
 
At 1 July 2005                                                             12,600,000                    252
Allotment on 29 July 2005                                                   8,750,000                    175
Balance at 31 December 2005                                                21,350,000                    427
Allotment on 6 January 2006                                                46,938,775                    939
At 31 December 2006                                                        68,288,775                  1,366
 


11 Statement of changes in shareholders' equity

                                        Share           Share         Foreign       Retained           Total
                                      capital         premium        currency       earnings          equity
                                                                      reserve
                                        £'000           £'000           £'000          £'000           £'000

Balance at 1.7.05                         252             764               1            138           1,155
Allotment on 29.7.05                      175           3,325               -              -           3,500
Share issue costs written-off               -            (521)              -              -            (521)
Dividend paid                               -               -               -           (107)           (107)
Translation differences                     -               -            (385)             -            (385)
Profit for the period                       -               -               -          2,053           2,053
Balance at 31.12.05                       427           3,568            (384)         2,084           5,695

Balance at 1.1.06                         427           3,568            (384)         2,084           5,695
Allotment on 6.1.06                       939          18,775               -              -          19,714
Share issue costs written-off               -          (1,040)              -              -          (1,040)
Translation differences                     -               -          (4,564)             -          (4,564)
Profit for the year                         -               -               -         14,458          14,458
Balance at 31.12.06                     1,366          21,303          (4,948)        16,542          34,263







12 Reconciliation of profit before tax to cash generated from operations


                                                                            12 months               6 months
                                                                             31.12.06               31.12.05
                                                                                £'000                  £'000
Result for the period before tax                                               17,688                  2,129

Add: Depreciation and amortisation                                              2,588                    130

Deduct:    Other income                                                        (2,426)                     -
           Negative goodwill                                                  (13,313)                (2,067)

Changes in working capital:
  Inventories                                                                    (545)                    33
Trade and other receivables - current                                          (4,080)                (1,368)
Trade and other payables - current                                                161                  1,093

Interest received                                                                (200)                    (8)
Interest paid                                                                     632                      -

Net cash inflow / (outflow) from operating activities                             505                    (58)




13 Acquisition


In January 2006, the Company acquired 100% of the issued share capital of
Bolivia Integrated Energy Limited (BIE), a company registered in the British
Virgin Islands, under registration number 510247. BIE owns, through an
intermediary holding company, 50.00125% of the issued share capital of Empresa
Electrica Guaracachi S.A. (EGSA), a company registered in Bolivia. EGSA is a
generator and supplier of electricity to the national grid in Bolivia. The 
provisional fair values of the assets and liabilities acquired were as follows:

                                                        Book value           Fair value          Provisional
                                                                            adjustments          fair values
                                                             £'000                £'000                £'000
Property, plant and machinery                               55,631               14,293               69,924
Trade and other receivables > 1 year                            14                    -                   14
Inventories                                                  2,475                    -                2,475
Trade and other receivables < 1 year                         3,311                    -                3,311
Cash                                                        12,018                    -               12,018
Trade and other payables > 1 year                             (285)                   -                 (285)
Borrowings > 1 year                                        (15,125)               1,352              (13,773)
Deferred tax liability                                           -                 (460)                (460)
Trade and other payables < 1 year                           (4,199)                   -               (4,199)
Borrowings < 1 year                                         (1,361)                 124               (1,237)
Total net assets                                            52,479               15,309               67,788
Less: Minority interest                                    (26,239)              (7,654)             (33,893)
Total net assets acquired                                   26,240                7,655               33,895
Excess of net assets acquired over cost                                                              (13,313)
  ('negative goodwill')
Purchase consideration                                                                                20,582

Paid during the year                                                                                  19,184
Loan note outstanding at 31 December 2006                                                              1,265
Exchange gain                                                                                            133
Total                                                                                                 20,582



13 Acquisition (continued)


The purchase consideration for the shares was $35m, of which $30m was paid in
cash on completion and $3m was paid in cash in April 2006. The final instalment
of $2m is due to be paid by 31 December 2007. Costs associated with the purchase
of the shares amounted to £128,000.


The 'provisional fair value' adjusted net assets acquired represent a surplus
over the amount paid - 'negative goodwill'. In accordance with the Group's
accounting policy on goodwill, this negative goodwill has been credited to the
income statement (note 6).


14 Related party transactions


a) Company - during the year the Company entered into material transactions with
related parties as follows:


i) Paid £120,000 to Independent Power Corporation PLC under a 'Shared Services
Agreement'. P R Earl is a shareholder and director of Independent Power
Corporation PLC and J G West and E R Shaw are directors. An amount of £11,750
was outstanding at 31 December 2006.


ii) Advanced funds of £114,000, by way of a working capital loan, to Energia
Para Sistemas Aislados S.A. (ESA). At 31 December 2006, the balance due by ESA
was £1,202,000 (31.12.2005 - £1,088,000).


iii) Advance funds of £727,000, by way of a working capital loan, to Patagonia
Energy Limited (PEL). At 31 December 2006, the balance due by PEL was £727,000
(31.12.2005 - nil).


iv) Acquired 100% of the share capital of Bolivia Integrated Energy S.A. from
Southern Integrated Energy S.A., a wholly owned subsidiary of Independent Power
Corporation PLC, for a total consideration of US$35m (see note 13). At 31
December 2006, an amount of £1,265,000 was owing to SIE in respect of deferred
consideration.


b) Group - during the year, companies in the Group entered into material
transactions with related parties as follows:


i) Empresa Electrica Guaracachi S.A. (EGSA) paid for engineering services
amounting to £130,000 to Independent Power Operations Ltd, a wholly owned
subsidiary of Independent Power Corporation PLC. An amount of £10,000 was owing
at 31 December 2006.


ii) Energia Para Sistemas Aislados S.A. (ESA) owed, at 31 December 2006, £33,000
to Independent Power Operations (Bolivia) Ltd, a 100% subsidiary of Independent
Power Corporation PLC in respect of engineering services.



                      This information is provided by RNS
            The company news service from the London Stock Exchange