| Thu 23 Jul 2009, 13:30 | | IPS - IPSA - Financial And Trading Update |
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IPS
IPSA
IPS - IPSA - Financial And Trading Update
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration Number 5496202)
AIM Share Code IPSA ISIN GB00BOCJ3F01
JSE Share Code IPS ISIN GB00BOCJ3F01
("IPSA" or "the company")
FINANCIAL AND TRADING UPDATE
Following the announcement of the interim results for the six months ended 31
March 2009 on 25 June 2009, the Company is providing an update.
1. Short term financing and related party transaction
The Company informed shareholders on 31 March 2009 that Independent Power
Corporation PLC ("IPC"), a company controlled by Peter Earl (chief executive of
both IPSA and IPC), was provisionally prepared to make further loans to the
Company for working capital purposes. IPSA confirms that on 22 July 2009 it
received an advance of $250,000 (GBP152,068) from IPC. This loan is payable on
demand and is on the same commercial terms as previous loans made by IPC to
IPSA.
Following the advance of $250,000, the balance due to IPC is GBP0.78 million.
Under the AIM Rules, the aggregated loan from IPC is classified as a related
party transaction. The Independent Directors, being Stephen Hargrave and Neil
Bryson, consider, having consulted with Noble & Company Limited (the Company`s
nominated adviser), that the terms of the aggregated loan from IPC are fair and
reasonable insofar as IPSA`s shareholders are concerned.
In addition, IPC has indicated it may be prepared to make up to an additional
$750,000 (GBP456,204) available, subject to certain conditions. A further
announcement will be made to shareholders in the event that additional financing
is provided by IPC.
2. Siemens Westinghouse 501 DU turbines
IPC has expressed an interest in purchasing one or more of the Company`s four
Siemens Westinghouse 501 DU gas turbines (formerly referred to as the Fiat Avio
501 D turbines, but now upgraded), for deployment in future combined cycle
projects in the Middle East and in Asia. IPC is currently developing
appropriate projects for the turbines.
IPSA originally acquired the 501s for the proposed Coega Fast Track project at
Port Elizabeth but delays to the procurement process for that project have
persuaded the Board to seek to sell the turbines (which are currently in store
in Italy and are available for immediate delivery) especially in view of the
Company`s need to make interest payments and capital repayment totalling GBP15.7
million to Standard Bank by the end of September 2009, which financed the
original purchase of the turbines. On the basis of market intelligence, the
directors anticipate that the sale of the four turbines would generate funds
substantially in excess of the amount required to repay the Standard Bank loan
and other outstandings. However it must be emphasised that any such sale is
dependent, inter alia, on appropriate financing being available for the
project(s) in which the turbine(s) may be deployed. It is intended that in the
event of IPC completing the purchase of one or more of the turbines that the
working capital loans referred to in the first paragraph above will be offset
against the purchase price. Euro12.4m (GBP10.7m) is owing to the manufacturer
which has refurbished the 501s and this amount is not payable until the machines
are sold.
3. Newcastle combined heat and power plant
IPSA has recently learned that power purchase contracts under Eskom`s Medium
Term Power Purchasing Programme ("MTPPP") previously advertised for immediate
implementation by Eskom, will not now be awarded until April 2010 at the
earliest. The Company had tendered power to the MTPPP at the lowest price sought
by Eskom and had been required under the terms of the tender not to reach
agreement to supply any other customer (e.g., independent industrial purchasers)
during the tender period. It is therefore a great disappointment to the board of
IPSA that a further delay is now proposed.
As a result, the Company`s Newcogen subsidiary is now in negotiations aimed at
restarting production of steam at its plant in Newcastle, KwaZulu Natal in order
to supply customers on-site. Newcogen will be making every effort to function
at operating break-even until such time as Eskom implements the MTPPP.
IPSA is also seeking to move ahead with its clean coal projects in the Eastern
Cape using coal from the Elitheni mine on the basis of private sector power
contracts. As power conservation measures come into effect in South Africa at
the end of this year, a number of larger power users may be facing significant
increases in their electricity costs. IPSA intends to target these power users
for private power purchase agreements.
For further information contact:
Peter Earl, CEO, IPSA Group PLC: +44 (0)20 7793 5615
Elizabeth Shaw, COO, IPSA Group PLC: +44 (0)20 7793 5615
John Llewellyn-Lloyd / Sunil Sanikop, Noble & Company Ltd: +44 (0)20 7763 2200
Dino Theodorou, PSG Capital (Pty.) Limited: +27 11 797 8400
Jacques de Bie, College Hill (South African PR Advisers): +27 11 447 3030
or visit IPSA`s website:
www.ipsagroup.co.uk
About IPSA:
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: 23/07/2009 13:30:01 Produced by the JSE SENS Department.
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