20th Jun 2006 07:01
IPSA Group PLC20 June 2006 20 June 2006 IPSA Group PLC Results for the Period to 31 March 2006 IPSA Group PLC ('IPSA' or 'the Company'), the independent power plant developerin southern Africa, today announces its results for the period to 31 March 2006. Highlights include: - Successful flotation on AIM - Acquisition and transportation of 18 MW CHP plant to South Africa - Negotiations continue on two further projects at Prospecton Basin, Durban and Simunye, Swaziland - Preliminary agreements signed for two significant new power generation projects in the Eastern Cape region of South Africa to provide a total of 1200 MW Commenting, Stephen Hargrave, Chairman of IPSA, said: "We are pleased with the progress that IPSA has made since its successfulflotation on AIM. The Company has made considerable progress with its initial18 MW project at Newcastle and we are excited by the opportunities that arepresenting themselves in South Africa due to the current power shortages beingexperienced." For further information contact: Peter Earl, CEO, IPSA Group PLC 020 7793 7676 Mark Froggatt, Noble & Company Limited 020 7763 2200 Allan Piper, First City Financial 07736 064982 020 7436 7486 Chairman's Statement 31 March 2006 I am pleased to report the Company's first results since its flotation on theAIM market of the London Stock Exchange. As expected, the Company made a loss of£143,822 in the 10 months to 31 March 2006, a period which significantlyadvanced its position in southern Africa. At the time of the flotation, IPSA had an option to acquire a combined heat andpower plant located in Bury, Lancashire. This plant, with its two SiemensTornado gas turbines and associated steam turbine and boiler, was successfullyacquired, dismantled and shipped to Newcastle, KwaZulu Natal, where constructionis now underway. It will be the first independent gas-fired power plant to bebuilt in South Africa. Negotiations continue in respect of the two other potential projects outlined inthe Company's prospectus, in Durban and Swaziland. In addition, we are nowpursuing the development of a fast track combined cycle gas turbine project of800 MW at Coega Development Corporation's Industrial Development Zone at PortElizabeth. If realised, this project will be a major step forward for theCompany and will in our view cement our position as the leading independentpower generator in southern Africa. Further out, the potential resumption oflarge-scale coal mining at Elitheni, near East London, gives IPSA the prospectof developing up to 400 MW of clean coal power capacity at the mouth of themine. Macroeconomic developments in South Africa are tending in the Company's favour.The country is undergoing a period of rapid economic growth after ten years ofrestructuring of the economy. Power generation development has been minimalduring this decade, as a result of which South Africa now finds itself in urgentneed of new power plants, particularly in the Eastern and Western Cape. We arewell positioned to help meet that need and are looking forward with confidence. The Board of IPSA believes that it has sufficient resources from its existingcapital base to initiate its new programme of development, but we are continuingto explore the possibility of a joint listing of the Company's shares on theJohannesburg Stock Exchange. Stephen Hargrave 20 June 2006 CHIEF EXECUTIVE'S REVIEW 1) Existing Projects. a) Newcastle The Karbochem project construction programme at Newcastle, KwaZulu Natal, isrunning on schedule to produce its first revenues in the Company's currentfinancial year. Work is approximately 45 per cent. complete and it is envisagedthat at the current rate of progress the Newcastle plant will be ready forinitial commissioning by September 2006. Expenditure on the Newcastle projecthas also been increased in a number of areas as previously announced, butoverall, the directors of IPSA are aiming to achieve a net position for theNewcastle project in line with the original September 2005 capital expenditurebudget. On 15 June 2006 the Company announced that it had signed a standby creditfacility of US $4 million with Standard Bank PLC, London, to provide bridgefinance for Newcastle pending finalisation of a Rand denominated mortgage on theplant when it is completed. This US dollar bridge loan allows IPSA to moveahead with other power projects in southern Africa in advance of the expectedrelease of equity due to occur when the plant is commissioned later in 2006. As planned, the Company has initiated discussions with commercial banks in SouthAfrica to provide Rand denominated funding for the Newcastle project in order torelease equity for future developments. The Newcastle project to date has beenfunded entirely from equity, and it is envisaged that even at completion theNewcastle project should be no more than 50:50 debt:equity funded, giving theproject the ability to release further cash through debt drawn down uponcommercial operation for re-investment in other IPSA projects. b) Prospecton Basin, Durban. IPSA expects to make a formal proposal for up to 75MW of gas fired generationcapacity to be located in the Prospecton Basin in Durban. The plant is expectedto supply steam capacity to the oil refinery as well as use off-gas from thefacility to complement gas purchases from Sasol. c) Simunye, Swaziland IPSA is continuing its discussions with the Swaziland Electricity Board inadvance of negotiating the terms of a full project agreement with thecontrolling shareholders in the Royal Swazi Sugar Corporation processingfacility in Simunye in Eastern Swaziland. This project is expected to qualifyfor carbon credits through the United Nations Clean Development Mechanism underthe Kyoto Protocol. 2) New Project - Coega, Port Elizabeth IPSA has signed preliminary agreements for the lease of a 20 hectare site atCoega Development Corporation's Industrial Development Zone ("the IDZ") at PortElizabeth with the intention of developing a fast track combined cycle gasturbine ("CCGT") project of 800 MW. This project would initially operate inopen cycle at 500MW using liquid fuels pending construction of an LNG receivingterminal at the IDZ which Coega Development Corporation is planning as part ofits infrastructure upgrade plans. The IDZ is an important element in SouthAfrica's policy of adding value to locally mined metals and minerals. A numberof energy intensive metal-processing and smelting companies are moving onto theIDZ site subject to the availability of reliable, sustainable, regionalgeneration of electric power. Since January 2006 a series of power cuts in the Western Cape have made SouthAfrica's predicted shortages of electricity a subject of national politicalimportance. IPSA has therefore chosen to accelerate its plans for new capacityin the southern coastal cities of South Africa to meet the need for new, fasttrack capacity. The Coega Fast Track Power Project ("Coega Fast Track") is themost pressing of these generation projects. South Africa has only a limited number of port locations suitable for the importof LNG. To date, no LNG power projects have been developed in South Africa.However, IPSA believes that the LNG based CCGT experience gained by managementin the 1990s will give the Company a strong basis for attempting to bring tofinancial close South Africa's first successful LNG-fired CCGT project. IPSAtherefore took steps in March 2006 to secure a total of 500 MW of unused SiemensWestinghouse-designed dual-fuel gas turbines of 125 MW each at a favourableprice. These turbines were available for immediate delivery. They also havethe advantage that they can run on liquid fuels in open cycle pending conversionto CCGT operation once the planned LNG receiving terminal is completed at Coegain around 2009/10. Subsequently, IPSA has also managed to secure further similarly powered turbinesfrom Alstom on equally advantageous terms. A decision as to which set ofturbines to acquire will be taken as soon as possible. In the case of both turbine options, the total cost of the first phase of 500 MWis estimated at some US $150 million. The balance of conversion to CCGT isexpected to cost a further US $150 million. IPSA is in discussions with SouthAfrican financial institutions for project financing the initial 500 MW of CoegaFast Track. 3) New Project - Elitheni, East London IPSA has signed preliminary agreements for the development of up to 400 MW ofmine-mouth clean coal power capacity at the Elitheni coal deposit in EastLondon. Elitheni was one of the first coal deposits to be worked in SouthAfrica prior to the opening up in the early 20th century of the Highveld coalreserves in the region close to Johannesburg. Under the terms of the agreement, IPSA has been granted an exclusive right toact as power developer for the Elitheni coal reserve. IPSA will itself advance£100,000 of its own funds in the form of a subordinated loan to Elitheni whichwill be returned from the revenues of first commercial coal production on the9,000 hectare production site. IPSA has no further responsibility for anyadditional funding at Elitheni but will be responsible for its own environmentalimpact assessment on site together with project engineering costs. Unaudited Consolidated Income Statement for the period from Incorporation to 31March 2006 Notes 10 months to 31 March 2006 Unaudited £ Revenue - Administrative expenses (120,568) Other expense 4 (69,011) Finance income 45,757 Loss before tax (143,822) Tax expense - Loss for the period (143,822) Loss per ordinary share - basic 5 0.27p Loss per ordinary share - diluted 5 0.27p Statement of Recognised Income and Expense for the period from Incorporation to31 March 2006 10 months to 31 March 2006 Unaudited £ Loss for the period (143,822) Exchange difference on translation 2,696 of foreign operations Total recognised loss for the period (141,126) Unaudited Consolidated Balance Sheet at 31 March 2006 Notes 31 March 2006 Unaudited £ Assets Non-current assets: Intangible 7 833,000 Property, plant and equipment 8 5,207,676 6,040,676 Current assets: Trade and other receivables 488,810 Cash and cash equivalents 1,539,364 2,028,174 Total assets 8,068,850 Equity and liabilities Equity attributable to equity holders of the parent: Share capital 1,092,593 Share premium account 9 6,640,464 Foreign currency reserve 2,696 Retained loss (143,822) Total equity 7,591,931 Current liabilities: Trade and other payables 476,919 Total equity and liabilities 8,068,850 Net assets per share 6 13.90p Unaudited Consolidated Cash Flow Statement for the period from Incorporation to31 March 2006 Notes 10 months to 31 March 2006 Unaudited £ Net cash outflow from operating activities (131,774) Cash flows from investing activities: Interest received 45,757 Payment of deferred consideration (400,000) Purchase of plant and equipment 8 (5,207,676) Net cash used in investing activities (5,561,919) Cash flows from financing activities: Issue of shares (net of issue costs) 9 7,233,057 Increase in cash and cash equivalents 1,539,364 Reconciliation and analysis of change in net funds Increase in cash during the period 1,539,364 Cash and cash equivalents at start of period - Cash and cash equivalents and end of period 1,539,364 Notes to the unaudited financial statements 1. The unaudited financial information set out above does not constituteStatutory 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 theCompany acquired 100% of the share capital of Blazeway Engineering Limited, acompany incorporated in England and Wales. Blazeway Engineering Limited owns100% of the share capital of Newcastle Cogeneration Company (Proprietary)Limited, a company incorporated in the Republic of South Africa 3. The unaudited financial information has been prepared under thehistorical cost convention and in accordance with applicable InternationalFinancial Reporting Standards as issued by the International AccountingStandards Board 4. Other expense in the unaudited consolidated income statement representscosts associated with listing the Company's shares on the AIM market 5. The loss per ordinary share has been calculated on the loss for theperiod of £143,822 divided by the weighted average number of ordinary shares inissue during the period from 20 September 2005 to 31 March 2006 (53,438,485) 6. The net asset value per ordinary share has been calculated on net assetsof £7,591,931 divided by the 54,629,630 ordinary shares in issue on 31 March2006 7. The intangible non-current asset represents the provisional fair valueof the supply contract owned by Newcastle Cogeneration Company (Proprietary)Limited. This contract is expected to begin to generate income later this year 8. Property, plant and machinery represents construction in progress inNewcastle Cogeneration Company (Proprietary) Limited and has been valued at cost 9. On 20 September 2005, the Company issued 29,629,630 new ordinary sharesat 27p per share. The issue costs have been charged to the share premium account 10. Post balance sheet date event - on 13 June 2006, Blazeway EngineeringLimited obtained a US$4m bridging facility from Standard Bank PLC. Thisfacility, which is secured on the assets of Blazeway Engineering Limited, isavailable for immediate drawdown and will be used as a standby facility tosupport the cashflow required for the Newcastle Project while the group proceedsto develop its two new power projects at Coega and Elitheni 11. This announcement is being sent to all shareholders on the register at 20June 2006 and copies are available to the general public free of charge duringoffice hours for one month from the date of the announcement at the Company'sregistered office, Fifth Floor, Prince Consort House, Albert Embankment, LondonSE1 7TJ Peter R. S. Earl 20th June 2006 For further information contact: Peter R. S. EarlChief Executive OfficerTel: +44 (0)20 7793 7676 IPSA Group PLC is a British company established to develop power generationprojects in southern Africa. It is managed by a team with a strong track recordin developing power projects worldwide and with considerable experience inSouthern Africa. IPSA floated on the Aim market of the London Stock Exchange in September 2005 inorder to gain access to European institutional capital for new power projects. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
IPSA.L