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IPS
IPSA
IPSA/IPS - IPSA Group Plc - Interim results for the six months ended 31
March 2007
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration number 5496202)
AIM Share Code: IPSA ISIN: GB00B0CJ3F01
JSE Share Code: IPS ISIN: GB00B0CJ3F01
IPSA Group PLC (`IPSA` or `the Company`)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2007
IPSA Group PLC (`IPSA` or `the Company`), the independent power plant
developer in southern Africa, today announces its results for the six
months to 31 March 2007.
Highlights include:
- Successful secondary listing of shares on ALTx
- Gross funds of GBP12.1 million raised during the period
- Euro31.2 million (GBP21.3 million) acquisition of 500 MW of gas turbines
destined for the Coega Project
- Negotiations continue on further projects in the Eastern Cape region of
South Africa
- Commissioning of first gas-fired independent power plant in South Africa
- Black Economic Empowerment discussions underway
Commenting, Stephen Hargrave, Chairman of IPSA, said:
"We are very pleased with the progress the Company has made since our last
results announcement. The initial 18 MW project at Newcastle, KwaZulu
Natal, was commissioned, and has since begun producing steam. We have also
secured 500MW of turbines at an extremely attractive price compared to the
market which are intended for the Coega Project. We are excited by the
further opportunities that are presenting themselves in South Africa where
the country`s need for new generating capacity is shown by power shortages
in many parts of the country, and we are looking forward to playing a part
in meeting that need."
For further information contact:
Peter Earl, CEO, IPSA Group PLC 020 7793 7676
John Llewellyn-Lloyd, Noble & Company Limited 020 7763 2200
Allan Piper, First City Financial 07736 064 982
020 7242 2666
CHAIRMAN`S STATEMENT
31 March 2007
I am pleased to report the Company`s second interim results since its
flotation on the AIM market of the London Stock Exchange.
During the period to 31 March 2007, IPSA substantially completed the
construction of the Newcastle combined heat and power plant, the first gas-
fired independent power plant ("IPP") in South Africa. In addition the
Company successfully listed its shares on ALTx, the alternative exchange
operated by the JSE Ltd ("JSE"), the first AIM-quoted company to do so. The
Company has seen strong interest in its shares in South Africa as the only
listed electric utility. The group has also been successful in acquiring
500 MW of gas-fired turbines costing Euro31.2 million (approximately
GBP21.3 million), which are intended for the Coega IPP development project.
As expected, the Company made a loss during the 6 months to 31 March 2007
amounting to GBP245,000 (2006: GBP144,000 loss).
1. Newcastle CHP
Construction of the Newcastle combined heat and power plant ("CHP") was
substantially completed during the first half of the financial year and
commissioning began. The plant was officially inaugurated on 16 February by
the Mayor of Newcastle. Since the end of the interim period on 31 March we
have commenced production of steam from the project, and we are in
discussions with commercial banks in South Africa to provide Rand-
denominated term funding for the Newcastle project in the near future in
order to release equity for future developments. To date, the Newcastle
project has been funded entirely from equity.
2. Coega Fast Track Project, Port Elizabeth
Since January 2006 a series of power cuts have made South Africa`s
predicted shortages of electricity a subject of national political
importance. In addition, the country`s peak demand reserve margin has
dropped to some 1,700 MW, a level substantially below that which would
normally be regarded as an adequate margin of headroom. In March 2007 IPSA
acquired four Fiat Avio turbines at a highly competitive price compared to
today`s market, which are intended to be installed as part of the first
phase of the Coega Project. To help finance the purchase, in April 2007 the
Company arranged a US$20 million bridge financing facility for the turbines
with Standard Bank PLC, London. These turbines have now enabled IPSA to be
in a position to complete the fast track installation of the open cycle
phase of the project at the earliest opportunity. The GBP21.3 million cost
of the turbines equates to around US$80,000 per MW. Further development
work, such as the environmental studies and engineering studies, has been
initiated and a site lease is under negotiation. The installed cost of the
two generating blocks of the Coega Project, including the recently acquired
turbines, is expected to be below US$250,000 per MW, a level which would
generally be considered a competitive price for a large plant. The group is
currently planning on a total of 1,600 MW for the full project.
Shareholders will be kept fully informed of developments.
3. Indwe IPP, Eastern Cape
IPSA has announced the anticipated development of mine-mouth clean coal
power capacity at the Elitheni coal deposit at Indwe, Eastern Cape. This
deposit was one of the first deposits to be worked in South Africa prior to
the opening up of the Highveld coal reserves in the region close to
Johannesburg in the early 20th century.
Initially, the Indwe IPP was expected to have an installed capacity of 400
MW. IPSA recently announced its intention to increase the size of the
project under development to 500 MW, based on the Elitheni coal reserve
potential. Elitheni Coal (Pty) Ltd, the owner of the mining licence, is 90%
owned by Strategic Natural Resources Plc (see note 11).
4. Da Gama CHP, Eastern Cape
IPSA has announced plans to develop an 80 MW CHP, also based on coal to be
supplied from the Elitheni mine. The plant is to be located at the Da Gama
textile mill, King William`s Town, Eastern Cape.
5. Black Economic Empowerment
The Company is committed to spreading the ownership of its equity under the
principles of South Africa`s Black Economic Empowerment ("BEE") policy. It
is currently in discussions with certain empowerment groups with a view to
their taking a significant stake in the Company. The Directors are also
committed to protecting the interests of existing shareholders, and it is
intended that any investment in the shares of the Company by one or more
empowerment groups will be made in the interests of all shareholders going
forward.
Separately, we are also pleased to announce that we have received a
credible approach from BEE-compliant investors wishing to take a
significant equity stake in Newcastle Cogeneration (Pty) Ltd, the owner of
our Newcastle CHP facility.
We must emphasize that all these proposed BEE investments are still in
negotiation. There is no guarantee that the proposed investments will be
completed as currently envisaged, if at all. In the event they do
materialize, however, the Directors believe that this two-level approach to
empowerment, at both the PLC and the project level, will lead to a high
level of economic ownership of our developments by broad-based BEE groups.
In our opinion this will be to the benefit of all concerned.
We are very pleased with the progress the Company has made since our last
results announcement. The initial 18 MW project at Newcastle, KwaZulu
Natal was commissioned and we are excited by the further opportunities that
are presenting themselves in South Africa. The country`s need for new
generating capacity is shown by power shortages in many parts of the
country, and we are looking forward to playing a part in meeting that need.
Stephen Hargrave
Chairman
Consolidated Income Statement for six months ended 31 March 2007
(unaudited)
Notes 6 months to 6 months to
31.3.07 31.3.06
GBP`000 GBP`000
Administrative expenses (435) (121)
Other expense 4 (54) (69)
Exchange gains 198 -
Finance income 46 46
Loss before tax (245) (144)
Tax expense - -
Loss for the period (245) (144)
Loss per ordinary share - basic 5 0.37p 0.27p
Loss per ordinary share - diluted 5 0.37p 0.27p
Statement of Recognised Income and Expense (unaudited)
6 months to 6 months to
31.3.07 31.3.06
GBP`000 GBP`000
Loss for the period (245) (144)
Exchange difference on translation 13 2
Total recognized loss for the period (232) (142)
Consolidated Balance Sheet (unaudited)
Notes 31.3.07 30.9.06 31.3.06
GBP`000 GBP`000 GBP`000
Assets
Non-current assets:
Intangible 6 833 833 833
Property, plant and equipment 7 30,403 5,601 5,207
31,236 6,434 6,040
Current assets:
Trade and other receivables 8 736 196 489
Cash and cash equivalents 2,240 526 1,539
2,976 722 2,028
Total assets 34,212 7,156 8,068
Equity and liabilities
Equity attributable to equity holders of the parent:
Share capital 9 1,522 1,093 1,093
Share premium account 9 17,498 6,640 6,640
Foreign currency reserve (438) (451) 2
Retained loss (1,272) (1,027) (144)
Total equity 17,310 6,255 7,591
Current liabilities:
Trade and other payables 10 16,902 901 477
Total equity and liabilities 34,212 7,156 8,068
Consolidated Cash Flow Statement (unaudited)
Notes 6 months to 6 months to
31.3.07 31.3.06
GBP`000 GBP`000
Net cash outflow from
operating activities (see below) (363) (133)
Cash flows from investing activities:
Interest received 46 46
Deposit paid 8 (535) -
Payment of deferred consideration - (400)
Purchase of plant and equipment 7 (8,721) (5,207)
(9,210) (5,561)
Cash flows from financing activities:
Issue of shares (net of costs) 9 11,287 7,233
11,287 7,233
Increase in cash and cash equivalents 1,714 1,539
Reconciliation and analysis of change in net funds
Increase in cash during the period 1,714 1,539
Cash and cash equivalents at start of period 526 -
Cash and cash equivalents at end of period 2,240 1,539
Reconciliation of loss before tax to net cash outflow from operating
activities:
Loss for the period (245) (144)
Changes in working capital:
Decrease (increase) in debtors 7 (420)
(Decrease) / increase in creditors (79) 477
Deduct: Interest received (46) (46)
Net cash outflow from operating activities (363) (133)
Notes to the unaudited financial statements
1 The unaudited financial information set out above does not constitute
Statutory Accounts within the meaning of Section 240 of the Companies
Act 1985.
2 The Company was incorporated on 1 July 2005. On 20 September 2005 the
Company acquired 100% of the share capital of Blazeway Engineering
Limited, a company incorporated in England and Wales. Blazeway
Engineering Limited owns 100% of the share capital of Newcastle
Cogeneration (Proprietary) Limited, a company incorporated in the
Republic of South Africa.
3 The unaudited financial information has been prepared under the
historical cost convention and in accordance with applicable
International Financial Reporting Standards as issued by the
International Accounting Standards Board.
4 Other expense in the unaudited consolidated income statement
represents costs associated with listing the Company`s shares on the
Altx market of the JSE (2006 - AIM market).
5 The loss per ordinary share has been calculated on the loss for the
period of GBP245,000 divided by the weighted average number of
ordinary shares in issue during the period from 1 October 2006 to 31
March 2007 (67,093,195).
6 The intangible non-current asset represents the fair value of the
supply contract owned by Newcastle Cogeneration (Proprietary) Limited.
7 Property, plant and machinery represents construction in progress in
Newcastle Cogeneration (Proprietary) Limited (GBP9.1m) and four Fiat
Avio turbines which were acquired on 9 March 2007 at a price of
Euro31.2m (GBP21.3m) as part of the proposal for the Coega Project
outside Port Elizabeth. The price of Euro31.2m is payable in three
instalments. At 31 March 2007, the first 25% instalment had been paid.
The second 25% instalment was paid in April 2007 and the final
instalment of 50% (Euro15.6m / GBP10.6m) is payable on 31 March 2008 -
see 10 below.
8 Trade and other receivables includes a refundable commitment fee of
GBP535,000 which has been paid in respect of securing gas supplies. In
the event that the contracted level of supplies is not procured, any
shortfall will be deducted from the deposit held.
9 In October 2006, the Company issued 5,499,839 shares at an average
price of ZAR 5.62 (38.5p) per share concurrently with the Company`s
listing on the Altx market of the JSE. On 24 October 2006 the Company
issued 6,000,000 shares at ZAR 6.05 (GBP0.42) per share. On 9 March
2007, the Company issued 2,500,000 shares at 75p per share and
7,500,000 shares at ZAR 10.6665 (75p) per share. The surplus over the
par value, less issue costs, has been credited to the share premium
account.
10 Trade and other payables includes GBP5.5m paid in April in respect of
the second 25% instalment payment due on the purchase of the four Fiat
Avio turbines plus the final 50% instalment of Euro15.6m (GBP10.6m)
due on 31 March 2008 - see 7 above. The payment made in April was
funded by a draw down of US$10.5m from the Standard Bank bridge
financing facility at Libor plus 2.25%.
11 Strategic Natural Resources Plc ("SNR") has a 90% per cent.
shareholding interest in Elitheni Coal (Pty) Ltd ("Elitheni"). IPSA
has secured from Elitheni an exclusive first right for the supply of
coal to the planned Indwe IPP and Da Gama CHP projects under a coal
supply agreement, yet to be negotiated. The directors of IPSA
participated in a fundraising carried out by SNR earlier this year in
order to fund further prospecting activities. Together the Directors
currently hold 15.8% of the issued share capital of SNR. Peter Earl
and Elizabeth Shaw, directors of IPSA, are also founding directors of
SNR. A subsidiary of Independent Power Corporation PLC, a company
controlled by Peter Earl and of which he, Elizabeth Shaw and Jimmy
West are directors, has an outstanding loan of GBP0.45 million to
Elitheni.
12 This announcement is being sent to all shareholders on the register at
today`s date and copies are available to the general public free of
charge during office hours for one month from the date of the
announcement at the Company`s registered office, Fifth Floor, Prince
Consort House, Albert Embankment, London SE1 7TJ.
Peter R. S. Earl
28th June 2007
IPSA Group Plc is a British company established to develop power generation
projects in southern Africa. It is managed by a team with a strong track
record in developing power projects worldwide and with considerable
experience in southern Africa.
IPSA floated on the Aim market of the London Stock Exchange in September
2005 and obtained a dual listing on the Altx market of the JSE in October
2006.
Sponsor
Standard Bank
AIM nominated advisor
Noble & Company Limited
Date: 29/06/2007 09:30:01 Produced by the JSE SENS Department.
