| Mon 30 Jun 2008, 8:00 | | IPS - Ipsa Group PLC - Interim Results for the six months ended 31 March 2008 |
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IPS
IPSA
IPS - Ipsa Group PLC - Interim Results for the six months ended 31 March 2008
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration Number 5496202)
AIM Share Code: IPSA ISIN: GBOOBOCJ3F01
JSE Share Code: IPS ISIN: GBOOBOCJ3F01
("IPSA" or "the company")
30 June 2008
Interim Results for the six months ended 31 March 2008 IPSA Group PLC, the
independent power plant developer in southern Africa, today announces its
interim results for the six months to 31 March 2008.
Highlights include:
- Losses for the six month period, reflecting early development and
construction costs in IPSA`s programme of projects.
- First sales of electricity under contract to users such as City Power
of Johannesburg and Eskom, the state-owned power company.
- Signing of a Memorandum of Co-operation with the South African
Government`s Central Energy Fund (Pty) Limited for a key role as a
private sector developer to the integrated energy project being developed
at the Coega Industrial Development Zone. This will be one of the first
examples of a public-private partnership in South Africa for an
integrated LNG to electricity project.
- Sale of a 50 per cent. interest in IPSA`s coal power project development
company, Elitheni Clean Coal Holdings Limited, to Exodus Africa LLC for
US$5 million.
Commenting, Stephen Hargrave, Chairman of IPSA, said:
"We are very pleased with the progress the Group has made since our last
results announcement. This period has marked IPSA`s first sales of
electricity under contract to users such as City Power of Johannesburg and
Eskom, the state-owned power company, as your Company evolved from being
purely a developer of new power plants to an owner-operator supplying
electricity into South Africa`s grid.
We are looking forward to participating further in the power generation
tenders announced by Eskom and to developing our other initiatives, all with
a view to achieving the Group`s goal of gaining a significant share of the
South African power generation market within the next five years."
For further information contact:
Peter Earl, CEO, IPSA Group PLC: +44 (0)20 7793 7676
Elizabeth Shaw, COO, IPSA Group PLC: +44 (0)20 7793 7676
Nick Naylor / Jamie Boyd, Noble & Company Ltd: +44 (0)20 7763 2200
Sean Lunn, Hichens, Harrison (South Africa) Ltd: +27 (0)21 950 2711
Allan Piper, First City Financial Public Relations: +44 (0)20 7242 2666
Dino Theodorou / Melissa Harris, PSG Capital
(Pty) Limited +27 (0)11 797 8400
Jacques de Bie, College Hill +27 (0)11 447 3030
30 June 2008 IPSA GROUP PLC
Interim results for the 6 month period to 31 March 2008
Chairman`s Statement
I am pleased to report the Group`s interim results for the 6 month period to
31 March 2008. This was a period of turmoil in the South African power
industry but it marked IPSA`s first sales of electricity under contract to
users such as City Power of Johannesburg and Eskom, the state-owned power
company as your Company evolved from being purely a developer of new power
plants to an owner-operator supplying electricity into South Africa`s grid.
As expected, the Group made a trading loss of GBP1.2m on sales of just under
GBP1m. The after tax loss of GBP4.8m includes foreign exchange losses of
GBP3.6m, in connection with the final instalment payment in respect of the
Coega units, which was made in Euros and also arising on the sterling loans
made to our operating subsidiary pending refinancing with bank debt in Rand
(2007: GBP245,000 loss).
During the period the Company made the final payment in respect of the 521 MW
of Fiat Avio 501 D gas turbines acquired in March 2007 for the Coega IPP
development project. In the opinion of the Directors these turbines now have
a market value considerably in excess of their cost to IPSA. Your Board is
currently considering ways to release that value while remaining committed to
implementing the full 1,600 MW of combined cycle capacity planned for the
Industrial Development Zone ("IDZ") outside Port Elizabeth.
1) Newcastle Combined Heat and Power ("CHP")
The Newcastle CHP at KwaZulu Natal was finally commissioned and has now
commenced steady operation with both steam and electricity sales in the
first half. The Company expects to see an improved economic return later
in the year. Offers under the tender process for the Eskom cogeneration
tariff, the Pilot National Cogeneration Programme ("PNCP"), were
submitted at the end of May 2008 and award is expected in September 2008.
IPSA believes that the new tariffs to be awarded under the PNCP tariff
will be higher than those it already has and, as a result, has deferred
its re-financing of the Newcastle plant in anticipation of a further
improvement to its long term tariff. We have recently announced plans for
an increase n the installed capacity at Newcastle with the acquisition
of six Deutz gas engines at a cost of GBP1m. These are due to enter
commercial service in the second half of 2008 adding 8 MW of nominal
capacity to the 18 MW of the original Newcastle CHP configuration. They
will enable our plant in Newcastle to increase sales of electricity and
improve the margins on steam sales.
2) Coega Fast Track Project, Port Elizabeth
In January 2008 IPSA announced that it had signed a Memorandum of Co-
operation with the South African Government`s Central Energy Fund (Pty)
Limited ("CEF") for a key role as a private sector developer to the
integrated energy project being developed at the Coega Industrial
Development Zone. Under the role envisaged for IPSA, the Company will
install its four Fiat Avio 501 D gas turbines (which have now been
upgraded from D technology to DU (F Class) technology) in support of the
integrated liquid fuel and liquefied natural gas ("LNG") importation
project being developed under the auspices of CEF. This will be one of
the first examples of a public-private partnership in South Africa for an
integrated LNG to electricity project.
IPSA GROUP PLC
Chairman`s statement (continued)
CEF acts as the holding company for PetroSA, the state-owned oil company,
and iGas, the state-owned gas company. Under the Memorandum of Co-
operation signed with IPSA, CEF envisages IPSA proceeding with its
proposed 1,600 MW Coega Fast Track Combined Cycle Gas Turbine Project
("the Coega Project") in close collaboration with PetroSA and iGas so as
to achieve rapid installation of new privately financed power generation
capacity in tandem with the Government of South Africa`s plans for Coega
to be at the heart of a new energy centre providing liquid fuels and LNG
to the industrial tenants of the IDZ.
IPSA is continuing to work on all of the necessary licences, consents and
leases for installation of the first 521 MW of capacity on a coastal site
with access to sufficient cooling water to be able to convert the open
cycle gas turbines to combined cycle at the earliest opportunity.
3) Elitheni Clean Coal Holdings
In November 2007 IPSA announced the sale of a 50 per cent. interest in
its coal power project development company, Elitheni Clean Coal Holdings
Limited, to Exodus Africa LLC for US$5 million. The company is developing
over 500 MW of coal-fired capacity in the Eastern Cape based on coal from
the Elitheni coal mine at Indwe. Since January 2008, the owners of the
Elitheni coal mine have announced increased coal reserves sufficient for
IPSA to proceed with the first 250 MW of coal-fired capacity on a fast
track basis. The Company is now finalising the engineering configuration
for the first Elitheni Clean Coal block of steam turbines with a view to
bringing first capacity into production as quickly as possible.
4) Broadly Based Black Economic Empowerment ("BBBEE")
In August 2007, IPSA announced that it had reached agreement with
Metropolitan Life of South Africa for funding an investment of GBP8
million in new shares in IPSA to give a BBBEE group a fifteen per cent.
shareholding in IPSA. Since that time, IPSA has worked very closely with
its BBBEE partners and I am delighted to report that Rizelle Sampson
joined the Board of IPSA as a non-executive director in January 2008.
We are very pleased with the progress the Group has made since our last
results announcement. We are excited by the further opportunities that are
presenting themselves in South Africa. The country`s continuing need for new
generating capacity is demonstrated by continuing power shortages in many
parts of the country. We are looking forward to participating further in the
power generation tenders announced by Eskom and to developing our other
initiatives, all with a view to achieving the Group`s goal of gaining a
significant share of the South African power generation market within the
next five years.
Stephen Hargrave
Chairman
IPSA GROUP PLC
CONSOLIDATED INCOME STATEMENT (unaudited)
for the half year ended 31 March 2008
Notes 6 months to 6 months to
31/3/08 31/3/07
GBP`000 GBP`000
Revenue 3 957 -
Cost of sales 4 (1,439) -
Gross loss (482) -
Administrative expenses (721) (435)
Operating loss (1,203) (435)
Other (expense) / income 5 (3,639) 144
Finance (expense) / income (10) 46
Loss before tax (4,852) (245)
Tax expense - -
Loss for the period (4,852) (245)
Loss per ordinary share 6 5.42p 0.37p
(basic, diluted and headline)
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited)
for the half year ended 31 March 2008
6 months to 6 months to
31/3/08 3 1/3/07
GBP`000 GBP`000
Loss for the period (4,852) (245)
Exchange difference on translation 532 13
Total recognized loss for the period (4,320) (232)
IPSA GROUP PLC
CONSOLIDATED BALANCE SHEET (unaudited)
at 31 March 2008
Notes 31/3/08 30/9/07 31/3/07
GBP`000 GBP`000 GBP`000
Assets
Non-current assets
Intangible 7 833 833 833
Property, plant and equipment 8 32,960 32,724 30,403
33,793 33,557 31,236
Current assets
Trade and other receivables 651 1,092 736
Cash and cash equivalents 1,464 703 2,240
2,115 1,795 2,976
Total assets 35,908 35,352 34,212
Equity and liabilities
Equity attributable to equity holders
of the parent:
Share capital 1,792 1,792 1,522
Share premium account 25,267 25,267 17,498
Foreign currency reserve (18) (550) (438)
Retained loss (8,729) (3,877) (1,272)
Total equity 18,312 22,632 17,310
Non-current liabilities
Bank loan 9 15,000 - -
Current liabilities
Trade and other payables 2,596 12,720 16,902
Total equity and liabilities 35,908 35,352 34,212
IPSA GROUP PLC
STATEMENT OF CONSOLIDATED CASH FLOWS (unaudited)
for the half year ended 31 March 2008
Notes 6 months to 6 months to
31/3/08 31/3/07
GBP`000 GBP`000
Cash used in operations (12,337) (898)
Interest (paid) / received (10) 46
Net cash (used) in (12,347) (852)
operating activities
Cash flows from investing
activities
Purchase of plant and equipment (1,892) (8,721)
Cash flows from financing
activities
Bank loan 9 15,000 -
Issue of shares (net of costs) - 11,287
15,000 11,287
Increase in cash and cash equivalents 761 1,714
Reconciliation and analysis of change in net funds
Increase in cash during the period 761 1,714
Cash and cash equivalents at start of period 703 526
Cash and cash equivalents at end of period 1,464 2,240
Reconciliation of loss before tax to net cash used in operations:
Loss for the period (4,852) (245)
Depreciation 109 -
Changes in working capital
Decrease (increase) in debtors 441 (528)
Decrease in creditors (10,124) (79)
Exchange translation 2,079 -
Interest net 10 (46)
Net cash used in operations (12,337) (898)
IPSA GROUP PLC
Notes to the Interim Statement
for the six months ended 31 March 2008
1. Basis of preparation
This interim statement is unaudited and does not constitute Statutory
Accounts within the meaning of Section 240 of the Companies Act 1985.
Statutory Accounts for the year ended 30 September 2007 have been filed with
the Registrar of Companies. The auditors have made a report on those
Statutory Accounts under Section 235 of the Companies Act 1985. The auditors`
reports were unqualified and did not contain a statement under Section 237
(2) of the Companies Act 1985. The financial information contained in this
interim statement has been prepared in accordance with the Listing Rules of
the Financial Services Authority and all International Financial Reporting
Standards (`IFRS`) in force and expected to apply to the Group`s results for
the year ended 30 September 2008 and on interpretations of those Standards
released to date.
2. Accounting policies
This interim statement has been prepared in accordance with the Group`s IFRS
accounting policies. These policies were set out in the Group`s Financial
Statements for the year ended 30 September 2007.
3. Revenue
The Company`s subsidiary in South Africa commenced selling steam in September
2007 and electricity in October 2007. Monthly sales have increased during the
period and are expected to reach economic levels in August 2008.
4. Cost of sales
During initial production, the volumes of gas consumed include test levels.
For this reason, there was a gross loss during the period.
5. Other (expense) / income
Other expense represents exchange losses arising on the Company`s purchase of
equipment for the Coega project and losses in the Company`s subsidiary on
sterling denominated loans from the Company which have funded the
construction of the generating plant in South Africa.
6. Loss per share
The loss per ordinary share has been calculated on the loss for the period of
GBP4.852m (2007 - GBP245k) divided by the weighted average number
(89,564,081) of ordinary shares in issue during the period (2007 -
67,093,195). There is no difference between the basic, diluted and headline
calculations.
7. Intangible
The intangible non-current asset represents the fair value of the supply
contract owned by Newcastle Cogeneration (Proprietary) Limited.
IPSA GROUP PLC
Notes to the Interim Statement (continued)
for the six months ended 31 March 2008
8. Property, plant and equipment
Property, plant and machinery comprises the plant in South Africa (GBP9.9m)
and plant acquired for the Coega project (GBP23.1m).
9. Bank loan
In March 2008, the Company obtained a bank loan of GBP15m to finance the
final instalment payment for the Coega plant. The loan is repayable in
September 2009. Interest is at LIBOR plus 3.255%.
10. The Board of Directors approved this interim statement on 27 June 2008.
This interim statement has not been audited.
11. Copies of this statement are being sent to all shareholders on the
register at today`s date. Copies may be obtained from the Company`s
registered office, 5th Floor, Prince Consort House, Albert Embankment, London
SE1 7TJ.
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 Johannesburg Stock
Exchange in October 2006.
Date: 30/06/2008 08:00:13 Produced by the JSE SENS Department.
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