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IPS
IPSA
IPS - IPSA GROUP PLC - Unaudited interim results for the six month period to
31 March 2010
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")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTH PERIOD TO 31 MARCH 2010
Chairman`s Statement
I am pleased to report the Company`s interim results for the six month period
to 31 March, 2010. The results are broadly in line with our expectations. The
net loss after tax for the half year is GBP0.83m (2009 half year loss -
GBP3.4m), giving a basic loss per share of 0.87p (2009 half year loss per
share 3.8p). The operating loss for the period under review was GBP1.08m
(2009 - GBP1.2m). During the comparative period in 2009 our South African
operations saw some revenues to offset the operating expenses. Unrealised
foreign exchange gains during the first half of our current financial year
have offset the interest and storage costs incurred.
The last year was a period of continued difficulty in the South African power
industry as Eskom struggled to re-arrange its finances and to meet its
obligation to sign contracts with independent power producers (IPPs) for the
provision of privately generated electricity. Now at last we seem to be
sensing the first signs of an integrated energy policy for South Africa which
includes IPPs at its heart.
1) Newcastle Cogeneration
IPSA was the first company in South Africa to build a new IPP power plant, yet
in spite of that accolade, the gas fired power at Newcastle in KwaZulu Natal
remained idle for the whole of the reporting period with its staff on standby
to generate in the event that Eskom finalised the Medium Term Power Purchase
Programme (MTPPP) tender process which began in September 2008. As at 31
March 2010, no contracts under the MTPPP had been awarded and none have been
announced to date. In the meantime IPSA`s plant did not run but continued to
incur both direct costs of employing staff as well as rent, rates, rates and
gas supply liabilities of a normal, fully constructed power plant.
Since the end of the half year, there have been promising signs that the
bottleneck in the contracting process between Eskom and the South African
electricity regulator, NERSA, has been cleared. In parallel with the planned
start up, IPSA is engaging with potential South African lenders for a
refinancing of up to USD20 million of its own inter-company funding of the
Newcastle plant, based upon a power purchase agreement under the MTPPP.
Financial close is targeted to occur in the current financial year.
2) Coega Fast Track Project, Port Elizabeth
In October 2008, IPSA announced that it had put its four Siemens industrial
gas turbines, purchased in 2007 for installation at the IDZ as part of our
proposed fast track coastal power plant development at Coega, on the market.
To date one turbine is under contract to a company controlled by Peter Earl,
IPSA`s chief executive, for a project outside South Africa. In March 2010,
IPSA announced that it had entered into a marketing agreement with TurboCare
SpA and Standard Bank which provided for the marketing of the units as well as
a formal standstill arrangement in respect of the amounts due to both these
entities now and arising over the period of the agreement.
Early in April 2010, IPSA was informed by the Coega Development Corporation,
owners of the IDZ, that it had qualified for a new tender at Coega to supply a
combined cycle power plant serving the IDZ. A request for proposals will be
issued shortly. IPSA is working in partnership with Arcus GIBB (Pty) Limited,
the consulting engineers.
3) Elitheni Clean Coal Holdings
As previously announced, IPSA has continued to work on the environmental
impact assessment for the Indwe based coal fired power development through its
wholly owned subsidiary, Elitheni Clean Coal Holdings Limited. IPSA has
executed an option to acquire a suitable site adjacent to the Elitheni mine.
The Company is now also advancing its planning consents and engineering plans
for the first Elitheni Clean Coal unit of up to 250 MW.
On 5 March 2010 the Company entered into an agreement with RAB Energy Fund
Limited and certain other investors (together the "Loan Note Holders") to
issue GBP650,000 of unsecured loan notes (the "Loan Notes") to the Loan Note
Holders. The proceeds from issuing the Loan Notes are being used for
development of the Elitheni coal project at Indwe, South Africa, and for
general operational and working capital purposes.
We believe that real progress has been made at IPSA since our last results
announcement. South Africa needs new generating capacity more than ever as is
shown by the current fear of power shortages just as the country`s show case
football tournament begins. I am pleased to have taken over as chairman of
IPSA from Stephen Hargrave just as the first new private power initiatives for
two years start to be announced. I am looking forward to making sure that
IPSA becomes a leading player in the supply of independent South African power
generation capacity in the near future.
Richard Linnell
Chairman
4 June 2010
IPSA GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)for the
half year ended 31 March 2010
Notes 6 months 6 months 12 months
31/3/10 31/3/09 30/9/09
GBP`000 GBP`000 GBP`000
Revenue 3 - 955 1,039
Cost of sales 4 (501) (1,663) (2,227)
Gross loss (501) (708) (1,188)
Administrative expenses (576) (492) (985)
Other income/(expense) 5 743 (1,296) (1,792)
Finance expense (net) (496) (908) (1,501)
Loss before tax (830) (3,404) (5,466)
Tax expense - - -
Loss after tax (830) (3,404) (5,466)
Other comprehensive
income / (expense):
Exchange differences on (346) (250) (1,108)
translation
Total comprehensive (1,176) (3,654) (6,574)
income / (expense)
attributable to
equity interests
Loss per ordinary share 6 0.87p 3.80p 5.92p
(basis, diluted and
headline)
IPSA GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)at 31 March
2010
Notes 31/3/10 30/9/09 31/3/09
GBP`000 GBP`000 GBP`000
Assets
Non-current assets
Intangible 7 625 666 708
Property, plant and 8 14,481 13,978 12,217
equipment
15,106 14,644 12,925
Current assets
Assets held for resale 9 31,629 32,253 32,639
Trade and other 2,238 2,380 290
receivables
Cash and cash 318 136 865
equivalents
34,185 34,769 33,794
Total assets 49,291 49,413 46,719
Equity and liabilities
Equity attributable to equity holders of the parent:
Share capital 1,900 1,900 1,900
Share premium account 26,027 26,027 26,003
Foreign currency (1,908) (1,562) (704)
reserve
Retained loss (14,624) (13,794) (11,732)
Total equity 11,395 12,571 15,467
Current liabilities
Trade and other 6,010 5,540 3,618
payables
Supplier loan 10 14,189 14,013 11,529
Bank loan 11 16,400 15,997 15,000
Loan note 12 650 - -
Other borrowings 647 1,292 1,105
37,896 36,842 31,252
Total equity and 49,291 49,413 46,719
liabilities
IPSA GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)for the half
year ended 31 March 2010
Share Share Foreign Profit Total
Capita Premium Currency and Loss Equity
l Account Reserve Reserve
GBP`00 GBP`000 GBP`000 GBP`000 GBP`000
0
At 1.10.08 1,792 25,267 (454) (8,328) 18,277
Issue of shares 108 736 - - 844
net of issue costs
Total recognised - - (250) (3,404) (3,654)
expense
for the period
At 31.3.09 1,900 26,003 (704) (11,732) 15,467
Adjustment to - 24 - - 24
share issue costs
Total recognised - - (858) (2,062) (2,920)
expense
for the period
At 30.9.09 1,900 26,027 (1,562) (13,794) 12,571
Total recognised - - (346) (830) (1,176)
expense
for the period
At 31.3.10 1,900 26,027 (1,908) (14,624) 11,395
IPSA GROUP PLC
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (unaudited)
for the half year ended 31 March 2010
6 months 6 months 12 months
31/3/10 31/3/09 30/9/09
GBP`000 GBP`000 GBP`000
Loss for the period (830) (3,404) (5,466)
Add back net finance 496 908 1,501
expense
Adjustments for:
Depreciation 392 348 813
Amortisation of 42 42 84
intangible
Translation and (1,165) (1,215) (4,296)
unrealised
exchange gains
Change in trade and 142 1,164 (925)
other receivables
Change in trade and 524 2,262 7,195
other payables
Cash (used in) / generated (399) 105 (1,094)
from operations
Interest paid - net (58) (40) (81)
Net cash (used in) / (457) 65 (1,175)
generated from operations
Cash flows from investing
activities
Purchase of plant and (11) (26) (30)
Equipment
Additions to assets held - (386) -
for resale
(11) (412) (30)
Cash flow from financing
Activities
Loan note issued 650 - -
Other loans - 513 68
Issue of shares (net - 294 868
of costs)
650 807 936
Increase / (decrease) in 182 460 (269)
cashand cash equivalents
Cash and cash equivalents 136 405 405
at start of period
Cash and cash equivalents 318 865 136
at end of period
IPSA GROUP PLC
Notes to the unaudited Interim Statement for the half year ended 31 March 2010
1. Basis of preparation
The interim financial statements do not constitute statutory accounts within
the meaning of Section 435 of the Companies Act 2006. The comparative figures
for the year ended 30 September 2009 were derived from the statutory accounts
for that year which have been delivered to the Registrar of Companies. Those
accounts which contained an unqualified audit report, with an emphasis of
matter paragraph on going concern, did not contain any statements under
section 237(2) or (3) of the Companies Act 1985. The financial information
contained in this interim statement has been prepared in accordance with all
relevant International Reporting Standards (`IFRS`) in force and expected to
apply to the Group`s results for the year ending 30 September 2010 and on
interpretations of those Standards released to date.
2. Accounting policies
These condensed consolidated interim financial statements have 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
2009.
3. Revenue
The Company`s subsidiary in South Africa commenced selling steam in September
2007 and electricity in October 2007. As explained in detail in the financial
statements to 30 September 2009, sales of electricity and steam have been
temporarily suspended pending the application and prospective grant of an
electricity supply contract.
4. Cost of sales
Cost of sales comprises routine plant maintenance and depreciation and, in the
prior periods, the cost of gas consumed and plant operating costs.
5. Other income / expense) 6 months 6 months 12 months
31/3/10 31/3/09 30/9/09
GBP`000 GBP`000 GBP`000
Exchange gains / (losses)1 282 (1,469) (1,414)
Exchange gains2 901 1,081 3,352
Storage costs3 (440) - (762)
Gas - take or pay4 - (908) (2,968)
Total 743 (1,296) (1,792)
1 Exchange gains / (losses) arising on the Euro denominated amount
owing to Turbocare in respect of the refurbishment costs of the 4
Siemens gas turbines which were originally acquired for the Coega
project and are now held as an `asset held for resale`
2 Exchange gains arising in the Company`s subsidiary on sterling
denominated loans from the Company which have funded the
construction of the generating plant in South Africa
3 Storage costs in respect of the storage of the 4 Siemens gas
turbines pending their sale (see note 9 below)
4 The `take-or-pay` gas contract was terminated by Sasol in July 2009.
During prior periods the charge represents the difference between
the minimum offtake level required under the `take-or-pay` contract
and the gas actually used since for certain periods the plant in
Newcastle was unable to operate due to the absence of a electricity
offtake agreement.
6. Loss per share 6 months 6 months 12 months
31/3/10 31/3/09 30/9/09
Average number of shares 95.0m 89.6m 92.3m
in issue during the period
Loss for the period GBP0.830m GBP3.404m GBP5.466m
Loss per ordinary share 0.87p 3.80p 5.92p
(basic, diluted and
headline)
7. Intangible
The intangible non-current asset represents the fair value of the steam supply
contract owned by Newcastle Cogeneration (Proprietary) Limited.
8. Property, plant and equipment
Property, plant and equipment comprises the electricity generating plant in
South Africa owned by Newcastle Cogeneration (Proprietary) Ltd.
9. Assets held for resale
The 4 Siemens gas turbines are owned by the Company and are for sale. The
turbines were originally acquired for the Coega project in South Africa but in
view of the delay in the project, the Board decided that it would be in the
best interest of shareholders to sell the turbines.
In December 2009, a conditional contract was entered into for the disposal of
one turbine and a non-refundable deposit of USD1m was received by way of set-
off against a loan from Independent Power Corporation PLC. This deposit has
been deducted from the cost of the turbines.
On 5th March 2010, the Company entered into an agency agreement with Standard
Bank and Turbocare in respect of the marketing of the 4 Siemens gas turbines
and the distribution of the proceeds received in connection with the sale. The
agreement also provides for a standstill agreement whereby Turbocare and
Standard Bank (see 10 and 11 below) have undertaken that they will not take
proceedings against the Company to recover debts owed to them and that they
will not enforce any security rights they may have during the term of the
agreement. This agreement terminates on 31 January 2011 or earlier in the
event that Standard Bank and Turbocare are paid all sums due to them prior to
that date or at Standard Bank`s election after 30 November 2010 in the event
that a sale has not been secured.
10. Supplier loan
This represents an amount of Euro15.9m owing to Turbocare, the supplier of the
4 Siemens gas turbines, in respect of the refurbishment and storage of the
turbines, plus interest. As set out in note 9 above, the Company, Turbocare
and Standard Bank have entered into a standstill agreement with respect to the
payment of the amounts owing and also an agreement covering the marketing of
the turbines and the distribution of the sale proceeds.
11. Bank loan
In March 2008, the Company obtained a bank loan of GBP15m from Standard Bank
to finance the final instalment payment for the purchase of the 4 Siemens gas
turbines. The loan was originally repayable in September 2009 but has been
extended, as set out in note 9 above, under the standstill agreement between
the company, Turbocare and Standard Bank until at least 30 November 2010.
12. Loan note
On 5th March 2010, the Company issued a GBP650k unsecured loan note, with
interest payable at 6%. The loan note is repayable by 31 January 2011 or the
earlier of a change of control of the Company or the sale of two of the steam
turbines or a full or partial sale of certain plant and equipment in South
Africa. The loan note holders have also been issued warrants over 6.5m
ordinary shares exercisable between the repayment date and 30 months
thereafter at the lower of 19 pence per share and the price at which any
future ordinary shares are issued prior to such exercise.
13. The Board of Directors approved this interim statement on 3 June 2010.
This interim statement has not been audited.
14. 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.
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.
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
John Llewellyn-Lloyd, Execution Noble & Company Ltd
Harry Stockdale (Nominated Adviser and Broker) +44 (0)20 7456 9191
Riaan van Heerden, PSG Capital (Pty) Limited, (South African Sponsors) +27 11
326 5083
Or visit IPSA`s website: www.ipsagroup.co.uk
Date: 04/06/2010 10:10:02 Produced by the JSE SENS Department.
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