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Rurelec – less bad news from Argentina, but has auditor Grant Thornton resigned?

By Nigel Somerville, the Deputy Sheriff of AIM | Tuesday 2 May 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

AIM-listed Rurelec (RUR) updated the market last Thursday that its currently crocked power generation plant held in its JV Energia Del Sur in Argentina may get fixed rather sooner than first feared – even if the proposed repair sounds a bit of a Heath Robinson affair. Good news. The slightly more disconcerting news is that the Companies House website is showing an Auditor’s Resignation filing as being processed and available in five days.

Storm damage resulting in a fire had knocked out some switches which in turn shut down the JV power plant back on 31 March - but not notified to the market until 12 April. The company had notified that whilst a repair job would likely take 30 days or so, a shortage of parts meant that repairs could be 60 days or longer before completion.

Hmm, 31 March – roll forward a couple of months and we should be up and running at the start of June – IF the parts arrive.  

Last Thursday the company had slightly better news that it had sourced some spare parts which should see the repair work completed before mid-May. The Heath Robinson bit? The Directors have got some parts which they believe can be engineered to fit the EDS power plant. OK, so we won’t know until they try – but if it all works then they’ve done well.

However there is a little potential sting in the tail:

There is a risk, however, that the testing could reveal secondary damage to other areas of the plant as a result of the unplanned rapid shutdown when the incident happened.

Oh, so we might not be up and running quite as soon as hoped. Or we might. And then we are told that the financial impact of all this is still uncertain – but the directors consider this latest development to be positive.

OK, that looks like potentially good news.

Now to the auditor: has Grant Thornton resigned? If so why, and will there be anything which GT needs to bring to the attention of Rurelec shareholders and creditors?

The filing on Companies House is still being processed and “will be available in 5 days”. It was lodged on 28 April so I guess that means this Friday if we are lucky.

Having had a quick scan of Rurelec RNSs I’ve not found a notification for this. On the other hand the company only filed resolutions reappointing GT in August last year and July 2015 back in January of this year. Maybe someone has been clearing out the back of the head office sofa.

We might note (HERE) that fellow crocked Peter Earl outfit IPSA, where he was reappointed last year (he hasn’t been at Rurelec – not yet, anyway) also lost Grant Thornton as its auditor. Perhaps that is just coincidence.

But maybe Rurelec would like to update the market on its auditor situation?

It could easily be that this is just a very old filing, so I’m not even all that sure there is much to announce.

On the other hand, it is now May and Rurelec might have a bit of explaining to do to a new auditor (if it has one lined up) to get its FY16 accounts out by the end of next month and avoid an AIM suspension.

Let’s hope all is well – and that Rurelec will reassure quickly, for the company has enough problems to deal with right now.

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