Audited Results for the year ended 31 March 2013

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", the "Group" or the "Company")

Audited Results for the year ended 31 March 2013

IPSA, the AIM and AltX listed independent power plant developer with operations in southern Africa, today announces its audited results for the year ended 31 March 2013.

Highlights:

· Revenue of £4.3 million (year to 31 March 2012 - £4.4 million)

· Group loss after tax of £1.9 million (year to 31 March 2012 - £5.6 million profit, including £6.1m exceptional profit on sale of 2 turbines)

· Plant gross loss of £0.9 million (year to 31 March 2012 - £0.1 million loss)

· Plant operating loss £1.7 million (year to 31 March 2012 - £0.9 million loss)

Since the year-end, the remaining 2 turbines have been sold for $25m (£16.1m) which has enabled the Company to repay its borrowings and the Board can now focus fully on developing a strategy of future growth and expansion of power generation in southern Africa. A pro-forma balance sheet at 31 July 2013 is provided at the end of this report.

Commenting, Richard Linnell, Chairman of IPSA, said:

"It was with considerable relief that I was able to report in June that the final 2 turbines had been sold. The debt and costs associated with these turbines have been a significant drain on shareholder value and with all of the Group's borrowings and the majority of the Group's creditors now repaid, the Board can concentrate on its core business of developing profitable power generation operations in southern Africa."

For further information contact:

Phil Metcalf, CEO, IPSA Group PLC +44 (0)20 7793 7676

Elizabeth Shaw, Finance Director, IPSA Group PLC +44 (0)20 7793 7676

James Joyce and Nick Field, WH Ireland Ltd (Nominated Adviser and Broker) +44 (0)20 7220 1666

Riaan van Heerden, PSG Capital (Pty) Limited, (South African Sponsors) +27 11 032 7400

Or visit IPSA's website: www.ipsagroup.co.uk 

CHAIRMAN'S STATEMENT

I am pleased to present to the shareholders of IPSA Group PLC (the "Group") the Report and Accounts for the year ended 31 March 2013.

In operating terms the Group has performed satisfactorily. However, the failure to dispose of the remaining two Siemens Westinghouse 701DU turbines (the "Turbines") during the financial year under review, together with significant deterioration in the sterling/ZAR exchange rate has resulted in a Group after tax loss of £1.9m.

Group turnover at £4.3 million is almost the same for this year in comparison to last year (2012: £4.4 million). The Group recorded an overall improvement in its operating figures. However an impairment charge of £1 million (2012: nil) has been booked against the carrying value of the plant in South Africa, further details are set out in note 14. As a result the operating loss increased from £1.45 million last year to £1.95 million loss in the current year.

As in the year to 31 March 2012, there were again a number of one-off items. In total, these amounted to a credit of £0.6 million (2012: £8.3 million credit, including £6.1 million profit on the sale of 2 turbines) and comprised costs associated with the turbines of £410k (2012:- £256k), legal costs associated with the loans on the turbines (which were in default) plus costs associated with extending the repayment of some loans, totalling £500k (2012:- £320k), foreign exchange losses on amounts due on the turbines of £459k (2012: £326k credit) and also a credit of £1.9 million in respect of a deposit paid by a prospective purchaser of the remaining two turbines which was subsequently forfeited. Further details are set out in note 9.

The net finance expense declined from £1.2 million to £0.5 million as a result of reduced indebtedness following the disposal of the first pair of Turbines last year.

The carrying value of the remaining Turbines and ancillary equipment in these financial statements remains at £15.71 million. In June 2013 the Company sold the Turbines for US$25 million (£16.1 million) and the remaining equipment is valued at no less than £4.0 million.

Although the combined revenue in the year of £4.3 million from electricity and steam sales was not sufficient to record an operating profit after depreciation, it does nonetheless represent continued reliable performance of the Newcastle Cogeneration plant. Excluding depreciation and the impairment charge, the plant recorded a gross profit of £0.70 million (2012: gross profit £0.73 million) and an operating loss, excluding depreciation and the impairment charge, of £0.03 million (2012: £0.06 million loss). In local currency, turnover was ZAR 58.1 million (2012: ZAR 51.7 million), gross profit before depreciation and the impairment charge was ZAR 9.4 million (2012: ZAR 8.6 million) and the operating loss, excluding depreciation and the impairment charge, was ZAR 0.8 million (2012: ZAR 0.7 million).

As I touched on briefly in my review of the Group financial statements above, the remaining two Turbines were sold in June 2013 to Rurelec PLC and a pro forma balance sheet has been prepared to illustrate the position of the Group at 31 July 2013, following the disposal. Of the total sales price the Group has received US$18.5m (£11.9 million) of which £10.2 million has been used to repay trade creditors and borrowings and approximately £1.7 million has been retained by the Company in cash and shares in the purchaser. The balance of the purchase price (US$6.5 million/£4.2 million) is due to be paid before June 2015. The amount owed to Turbocare SpA is currently under dispute, but has been fully provided for in the accounts at £4.2 million.

The disposal of the remaining two Turbines has been beneficial for the Group and we will work on further asset realisations over the coming year. We are now proceeding with plans to expand the facility at Newcastle in order to maximise the benefit of the existing MTPPP contract, which expires at the end of March 2015. Prior to that, in accordance with the tariff rules, NewCogen will, from March 2014, experience an 8 per cent. fall in the price that the Government buys electricity. In anticipation of that reduction, and in order to take advantage of opportunities arising from a continued shortage of capacity being added to the South African power system, we are developing further longer term plans to add additional, more efficient, capacity to the Newcastle site based on power purchase agreements, leveraging our generating licence, gird connection and gas availability, as well as seriously considering development at other locations in South Africa

Richard Linnell

Chairman

6 September 2013

CHIEF EXECUTIVE'S REVIEW OF OPERATIONS

NEWCOGEN

In the past year we have seen reliable operations at the Newcastle Cogeneration power plant, with availability of over 95 per cent.

Over the second full year of operation ending in March 2013, NewCogen generated 46,277 MWh of electricity (2012: 46,470 MWh), predominantly during peak hours on a two shifting basis, and delivered just under 68,700 tonnes of steam (2012: 57,000 tonnes). Electricity was delivered to Eskom under the MTPPP contract, which remains in place until March 2015. Steam was delivered to Karbochem and Lanxess under ad hoc arrangements in the absence of a firm long term contracts.

We continue to enjoy excellent relationships with ESKOM, the local Newcastle Municipality and our gas supplier, Spring Lights Gas (Pty) Limited ("Spring Lights"). We consumed during the 12 months to end of March 2013 approximately 683,000 GJ of gas which represented a minor shortfall against our minimum Take of Pay obligation of 700,000GJ which will be addressed in the next operational period.

Electricity prices are adjusted annually under the MTPPP contract. In April 2013, the price was increased by 9.8 per cent. in line with the December 2012 inflation figures. Gas prices are adjusted twice a year, now taking place in April and October, based on a combination of South African inflation figures and the price of Brent Crude in ZAR. The April increase was an increase of 10 per cent, and in October, it was 2.8 per cent. Future projections for gas price increases are currently forecast to be less than the increase we are anticipating in the electricity prices over the next year, but margins are susceptible to oil price and foreign exchange movements. In light of this, the directors have recorded an impairment charge of £1 million against the carrying value of the plant.

Certain major maintenance activities have been carried on out one of the gas turbines, which resulted in a reduction of revenues over approximately one month. The second gas turbine will undertake maintenance in a similar manner during the next operational period, with a similar reduction in revenues over six weeks in this case.

We continue to explore a number of opportunities to increase capacity at the Newcastle site, with programs already underway and a number of others being actively developed.

NewCogen takes the safety of its employees seriously and I am very pleased to report that there have been zero incidences or Lost Time Accidents in the past year.

THE TURBINES

The sale of last two of the Gas Turbines was completed for $25 million with Rurelec in June 2013. This sale did not include the Balance of Plant, which remains for sale and is valued at between $6-$10m. $6.5m of proceeds from the sale of the turbines is still awaited, but the initial consideration has allowed settlement with all major creditors, and no loans are now in default. Standard Bank in particular was fully paid out in March 2013.

On 15 October 2012 the Company announced that it had agreed to sell its two remaining Siemens Westinghouse 701 DU gas turbines to Iris Eco Power Sdn Bhd ("Iris"), a Malaysian power development company, for consideration of US$31 million (approximately £19.4 million). Unfortunately, the purchaser was unable to complete and the contract was terminated on 28 February 2013 In accordance with the terms of the contract the deposit of US$3.1m was not refundable and the funds were therefore retained by the Company and used to pay creditors.

WORKING CAPITAL

Working capital has continued to be very tight for IPSA, but the situation has been managed through the year successfully.

In August 2012 the Company received confirmation of the withdrawal of the claim by Sasol Gas Limited against Newcastle Co-generation (Pty) Limited ("NewCogen"), the Company's wholly owned subsidiary, for sums claimed under the gas supply agreement terminated in August 2009 (the "Claim") following payment by NewCogen of the sum of ZAR 7 million (approximately £550,000). Funding for the settlement was provided by Sterling Trust Limited, our largest shareholder, by way of a loan to NewCogen. The credit of £3.2 million arising from this satisfactory settlement was included in last year's Income statement.

On 27 March 2013 the Company obtained a new short term loan in the amount of £4.2m and used the proceeds to repay all of the Company's secured bank debt which had been in default for a considerable period of time. The new funding arrangement allowed sufficient time to achieve a sale of the Turbines, which duly took place in the first quarter of the new financial year.

The short term loan was subsequently increased in order to allow us to fund our maintenance program.

Following completion of the sale of the turbines both the Sterling loans to NewCogen and the short term loans to IPSA have been repaid. Whilst cash remains tight, we are now able to move forward with expansion projects although some additional modest funding will be required to achieve this in the short term.

GENERAL, RESTRUCTURING OF THE BOARD RENEWED FOCUS ON SOUTH AFRICA, AND OTHER PROJECTS

As far as we have been able to with limited funds, we have continued to monitor the market and examine opportunities which have arisen from time to time. With reserve margins at an all-time low in South Africa and with a backdrop of positive encouragement towards independent power producers ("IPPs") in South Africa, particularly with the introduction recently of a program sponsored by the Department of Energy for new capacity, the resolution of the legacy problems at IPSA is very well timed, and we will have many excellent opportunities to develop the business in the coming 12 months. It is of particular note that we have the capacity and infrastructure available and permitted in Newcastle to install addition capacity quickly in response to such enquiries and a growing number of potential Industrial based PPAs.

To make the most of this opportunity we are restructuring the Board, with the first steps already taken, with an intent and purpose to focus our management execution out of a base in South Africa, such that we are much closer to the major decision makers in Government, ESKOM and our main customers.

Since joining as the CEO in September of 2011, there have been many challenging moments, but I am encouraged to see the options becoming available for growth in the future and for a revitalised, restructured and re-capitalised IPSA can finally start to realise its full potential in a growing and welcoming and well regulated market

Phil Metcalf

Chief Executive

6 September 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2013

The accompanying accounting policies and notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 March 2013

The financial statements were approved by the Board on 6 September 2013.

P C Metcalf E R Shaw

Director Director

Company registration number: 5496202

The accompanying accounting policies and notes form an integral part of these financial statements

PARENT COMPANY STATEMENT OF FINANCIAL POSITION

at 31 March 2013

The financial statements were approved by the Board on 6 September 2013.

P C Metcalf E R Shaw

Director Director

Company registration number: 5496202

The accompanying accounting policies and notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 March 2013

The accompanying accounting policies and notes form an integral part of these financial statements

PARENT COMPANY STATEMENT OF CASH FLOWS

for the year ended 31 March 2013

The accompanying accounting policies and notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2013

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2013

The accompanying accounting policies and notes form an integral part of these financial statements

Notes to the Financial Statements

for the year ended 31 March 2013

The principal activity of IPSA Group PLC and its subsidiaries (the "Group") is the construction, development and operation of electricity generation assets and the supply of electricity to the wholesale market and major end-users. The parent Company is also involved in the purchase and sale of power related equipment and products.

During the year under review, the Group's operating activities included the generation and sale of electricity and steam by the Group's gas fired plant in Newcastle, Republic of South Africa, and the continued marketing of the remaining 2 turbines, which were sold after the year-end for $25m.

Further details are provided in the Chairman's statement and the Chief Executive's review of operations.

2 General information

IPSA Group PLC is the Group's ultimate Parent Company. It is incorporated and domiciled in England and Wales. The address of IPSA Group PLC's registered office is given on the information page. IPSA Group PLC's shares are traded on the AIM market of the London Stock Exchange PLC in London and, since October 2006, the shares have had a dual listing on Altx (the Alternative Exchange, a division of JSE Limited, of the Johannesburg market).

3 Summary of accounting policies

3.1 Basis of preparation

The financial statements have been prepared under the historical cost convention and in accordance with applicable International Financial Reporting Standards ("IFRS") as adopted by the European Union. The measurement bases and principal accounting policies of the Group are set out below.

3.2 Going concern

As announced in June 2013, the Company completed the sale of the remaining 2 turbines for a total consideration of $25m (£16.1m) of which £11.9m has been paid and the balance of £4.2m is expected to be received at least within the next 12 months.

This sale enabled the Company to repay all of its loans and settle the majority of its creditors, with the result that at 31 July 2013 there were only two main creditors - a) an amount claimed by Turbocare (the supplier of the turbines - £4.16 million at 31 March 2013) and b) unpaid salary due to the directors (£1.25 million at 31 March 2013) and four main assets - a) a cash balance of £0.7 million b) an amount of ancillary plant equipment which has been valued at in excess of £4 million, c) 8.5 million shares in Rurelec PLC valued at £1m and d) its 100% investment in Newcastle Cogeneration (Pty.) Ltd.

A pro-forma consolidated balance sheet at 31 July 2013, which does not form part of these financial statements, is shown as an appendix at the end of the financial statements.

The Company is in arbitration proceedings with Turbocare with respect to the amount claimed since a significant portion of the claim by Turbocare (which is fully provided in these financial statements at £4.16 million) is disputed. This process is expected to conclude early next year.

The directors have agreed a stand-still in respect of the amounts due to them pending the Company having sufficient cash to settle the overdue amounts.

Whilst there remains uncertainty with respect to the final settlement of the debt claimed by Turbocare and also uncertainly on the timing of the receipt of the £4.2 million deferred consideration and the sale proceeds of the ancillary plant equipment, the directors consider that the Company does have adequate resources to continue in operational existence for the foreseeable future and therefore the directors continue to adopt the going concern basis in preparing the annual report and accounts.

3.3 Basis of consolidation

The Group financial statements consolidate those of the Company and its subsidiary undertakings drawn up to 31 March 2013.

Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Unrealised gains on transactions between the Group and subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiary entities have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the acquisition method. The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the acquired company, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the acquired entity are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies.

3.4 Intangible assets acquired as part of a business combination

In accordance with IFRS 3: Business Combinations, an intangible asset acquired in a business combination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of an intangible asset reflects market expectations about the probability that the future economic benefits embodied in the asset will flow to the Group. Where an intangible asset might be separable, but only together with a related tangible or intangible asset, the group of assets is recognised as a single asset separately from the goodwill where the individual fair values of the assets in the group are not reliably measured. Where the individual fair value of the complementary assets is reliably measurable, the Group recognises them as a single asset, provided the individual assets have similar lives. Subsequent to initial recognition, intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is provided to write-off the cost of the intangible asset over its useful economic life.

3.5 Impairment of property, plant, equipment and intangible assets

At each balance sheet date, the Group reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

3.6 Foreign currency translation

The financial information is presented in pounds sterling, which is also the functional currency of the Parent Company.

In the separate financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of remaining balances at year end exchange rates are recognised in the income statement under "other income" or "other expenses", respectively.

In the consolidated financial statements, all separate financial statements of subsidiary entities, originally presented in a currency different from the Group's presentation currency, have been converted into sterling. Monetary assets and liabilities have been translated into sterling at the closing rate at the balance sheet date. Income and expenses have been converted into sterling at the average rates over the reporting period. Any differences arising from this procedure have been recognised in other comprehensive income and accumulated in the Foreign Currency Reserve.

3.7 Income and expense recognition

Revenue from the sale of goods and services is recognised when i) the Group has transferred to the buyer the significant risks and rewards of ownership of the goods and services which is when supply has been made, ii) the amount of revenue can be reliably measured and iii) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

In the year ended 31 March 2013 the Group's revenue comprised the sale of electricity and steam from the plant in South Africa. In the year to 31 March 2012, the profit from the sale of the 2 turbines held as assets for sale was credited to 'other income'.

Operating expenses are recognised in the consolidated statement of comprehensive income upon utilisation of the service or at the date of their origin. All other income and expenses are reported on an accrual basis.

3.8 Property, plant and equipment

Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment. No depreciation is charged during the period of construction.

All operational plant and equipment in the course of construction is recorded as plant under construction until such time as it is brought into use by the Group. Plant under construction includes all direct expenditure. On completion, such assets are transferred to the appropriate asset category.

Depreciation is calculated to write down the cost or valuation less estimated residual value of all property, plant and equipment other than freehold land by equal annual instalments over their estimated useful economic lives. The periods generally applicable are:

Plant and equipment: 3 to 25 years

Material residual values are updated as required, but at least annually, whether or not the asset is revalued. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

3.9 Non-current assets classified as held for sale

Assets are categorised as non-current assets classified as held for sale when the directors intend that the asset be sold rather than employed as an operating asset. Non-current assets classified as held for sale are valued at the lower of cost and fair value less costs to sell.

3.10 Borrowing costs

All borrowing costs, and directly attributable borrowing costs, are expensed as incurred except where the costs are directly attributable to specific construction projects, in which case the costs are capitalised as part of those assets.

3.11 Taxation

Current income tax assets and liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the period. All changes to current tax assets or liabilities are recognised as a component of tax expense.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising in investments in subsidiaries except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

3.12 Financial assets

The Group's financial assets include cash and cash equivalents, trade and other receivables.

Cash and cash equivalents include cash at bank and in hand as well as short term highly liquid investments such as bank deposits.

Receivables are non-derivative financial assets with fixed or determinable payment dates that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. Receivables are measured initially at fair value and subsequently re-measured at amortised cost using the effective interest method, less provision for impairment. Any impairment is recognised in Profit or Loss.

Trade receivables are provided against when objective evidence is received that the Group will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated cash flows.

3.13 Financial liabilities

Financial liabilities are obligations to pay cash or other financial instruments and are recognised when the Group becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in "finance expense" in the Statement of Comprehensive Income except to the extent that the costs are directly attributable to specific construction projects. Bank and other loans are raised for support of long term funding of the Group's operations. They are recognised initially at fair value, net of transaction costs. In subsequent periods, they are stated at amortised cost using the effective interest method. Finance charges, including premiums payable on settlement or redemption, and direct issue costs are charged to Profit or Loss on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

3.14 Hedging instruments

The Group has not entered into any derivative financial instruments for hedging or for any other purpose.

3.15 Equity

Equity comprises the following:

· "Share capital" represents the nominal value of equity shares;

· "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue;

· "Foreign currency reserve" represents the differences arising from translation of investments in overseas subsidiaries; and

· "Profit and loss reserve" represents retained earnings.

3.16 Investment in subsidiary undertakings

The Company's investments in subsidiary undertakings are stated at cost less any provision for impairment.

3.17 Amounts due from subsidiaries

Amounts due from subsidiaries are measured initially at fair value plus transaction costs and thereafter at amortised costs.

3.18 Key assumptions and estimates

The Group makes estimates and assumptions concerning the future. The resulting estimates will, by definition, seldom equal the related actual results. The Board has considered the critical accounting estimates and assumptions used in the financial statements and concluded that the main areas of significant risk which may cause material adjustment to the carrying value of assets and liabilities within the next financial year are in respect of:

i) the value of the power plant in NewCogen, where recoverable, has been assessed on a value in use basis amount based on the assumptions that a) a new contract on similar terms to the MTPPP contract is put in place and will continue for the foreseeable future and b) using a discount rate of 10.3 per cent, an impairment charge of £1 million has been recognised; and

ii) on the basis as shown in note 15, management have now classified the parent's receivables from its subsidiaries as equity in nature and hence all amounts receivable have been added to the net investment in that subsidiary. Management have performed an impairment review using discounted cash flow forecasts based on future plans and expectations. Management are satisfied that no impairment has arisen and will continue to review it on an annual basis; and

iii) the going concern basis for the preparation of these financial statements, further details of which are set out in note 3.2.

3.19 Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group in the 31 March 2013 financial statements

At the date of authorisation of these financial statements certain new standards, amendments and interpretations to existing standards have been published but are not yet effective. The Group has not early adopted any of these pronouncements. The new Standards, amendments and Interpretations that are expected to be relevant to the Group's financial statements are as follows:

Applicable for financial

Standard/interpretation Content years beginning on/after

IFRS 9 Financial instruments: Classification and measurement 1 January, 2015

IFRS 10 Consolidated Financial Statements 1 January, 2014

IFRS 11 Joint Arrangements 1 January, 2014

IFRS 12* Disclosure of Interests in Other Entities 1 January, 2014

IFRS 13* Fair Value Measurement 1 January, 2013

IAS 19 (Revised June 2011)* Employee Benefits 1 January, 2013

IAS 28 (Revised)* Investments in Associates and Joint Ventures 1 January, 2014

Amendments to IFRS 7* Disclosures - Transfers of Financial Assets and Offsetting Financial

Assets and Financial Liabilities - 1 July, 2011

Amendments to IAS 12* Deferred Tax: Recovery of Underlying Assets 1 January, 2012

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income 1 July, 2012

Amendments to IAS 32* Offsetting Financial Assets and Financial Liabilities 1 January, 2014

*Not expected to have a material impact on the Group.

IFRS 9, 'Financial instruments: Classification and measurement'

In November 2009, the Board issued the first part of IFRS 9 relating to the classification and measurement of financial assets. IFRS 9 will ultimately replace IAS 39. The standard requires an entity to classify its financial assets on the basis of the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, and subsequently measures the financial assets as either at amortised cost or fair value. The new standard is mandatory for annual periods beginning on or after 1 January, 2015.

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the portion of IAS 27 'Consolidated and Separate Financial Statements' that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 'Consolidation - Special Purpose Entities'. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in IAS 27. This standard becomes effective for annual periods beginning on or after 1 January, 2014.

Amendments to IAS 1 Presentation of Financial Statements (IAS 1 Amendments)

The IAS 1 Amendments require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will not be reclassified subsequently to profit or loss and (b) will be reclassified subsequently to profit or loss when specific conditions are met. It is applicable for annual periods beginning on or after 1 July, 2012. The Group's management expects this will change the current presentation of items in other comprehensive income; however, it will not affect the measurement or recognition of such items.

The directors do not anticipate that the adoption of these standards and interpretations in future periods will have any material impact on the financial statements of the Group.

4 Segment analysis

IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the chief operating decision maker (considered to be the Executive Board).

Management currently identifies two operating segments, being operations in RSA (comprising the business of generating electricity and, as a by-product, the generation of steam) and the head office in the UK. Each operating segment is monitored separately and strategic decisions are made on the basis of segment operating results. The electricity is sold to a single customer and the steam is sold to two industrial customers who operate from premises adjacent to the plant.

The following table provides a segmental analysis.

5 Sensitivity analysis

The value of shareholder equity and the results for the Group are affected by changes in exchange rates, prices for electricity, steam and gas, and interest rates. The following illustrates the effects of changes in these variables.

i) Sensitivity to exchange rates

The Group's electricity generating assets, which also provide steam to industrial customers, are located in South Africa and therefore the sterling value of the revenues and costs from this activity are affected by movements in the value of sterling versus the ZAR.

In addition to the effects arising from changes in the value of sterling relative to the ZAR, the Company's results are exposed to changes in the value of sterling versus the € in respect of the liability arising on the Turbines purchased from an Italian manufacturer since the liability is denominated in €.

The exchange rates applicable to the results for the current year and prior year were as follows:

If exchange rates had been 10% higher or lower, the effect on the Group's results and net equity would have been:

ii) Sensitivity to price changes in electricity and steam sold and gas purchased

The results of the Group are affected by the price that electricity and steam is sold at and by the price paid for the gas which is used by the turbines.

If the price of electricity and steam sold during the year had been 10 per cent higher or lower, the result for the year would have been £433,000 (year to 31.3.2012:£437,000) higher or lower.

If the price paid for gas used during the year had been 10 per cent higher or lower, the result for the year would have been £318,000 (year to 31.3.2012: £321,000) lower or higher.

iii) Sensitivity to interest rates

The Group has a number of short term interest bearing loans. A 10 per cent change in the interest rate applied to these loans would have changed the interest expense for the year by £49,000 (31.3.2012: £98,000).

Audit fees comprise £31,000 (year to 31.3.2012: £29,000) paid to the Company's auditors and £10,000 (year to 31.3.2012: £10,000) paid to the auditors in respect of the audit of subsidiary companies.

In 2007, the Company acquired 4 gas turbines. Following refurbishment of the turbines, the Company intended to sell the turbines to its subsidiary in South Africa which was tendering for a major power project. Due to weakening economic conditions, the project was delayed and it was decided that it was in the best interests of shareholders to sell the turbines to a third party. During 2012, 2 of the turbines were sold. The remaining two turbines were sold after the year-end.

1 These costs relate to storage and insurance of the 2 remaining Turbines and balance of plant.

2 During the year, Standard Bank levied charges, including legal fees, on the loan in connection with the turbines amounting to £328,000 (year to 31.12.12 - £320,000). Additional charges in connection with the Company's loans were incurred during the year and these comprised a) a 10% premium payable to holders of the loan notes in exchange for extending the repayment terms (£65,000), b) a 10% premium payable to certain loan providers in exchange for extending the repayment terms (£20,000) and c) a fee of $2m (£1.3m) payable to the lender who provided £4.1m of loan which enabled the Company to repay the borrowings from Standard Bank which were in default. This fee is payable on the sale of the remaining 2 turbines and as this new loan was drawn down shortly before the year-end, a pro-rata sum of £0.1 million in respect of this fee has been expensed in the current period. The balance of £1.2 million will be charged in the year to 31 March 2014.

3 During the year, a conditional contract was entered into for the sale of the 2 remaining turbines. The prospective purchaser paid a non-refundable deposit of $3.1m (£1.9m) which was forfeited due to non-performance of the contract terms. This sum has been credited to Other Income (see note 9). The directors have been advised that the purchaser intends to seek recovery of the forfeited deposit. However no provision for repayment of the deposit has been made as the directors have been advised that there are no valid grounds for returning the deposit.

4 Exchange losses (2012 - gains) gains arising primarily on the euro liability to Turbocare as a result of the change in the value of the € against sterling.

1Bank interest comprises interest on the Standard Bank loan (see also note 22).

2Loan note interest comprises interest on the £650,000 loan note (see also note 22).

3Other loans interest comprises interest on other loans (see also note 22).

4Other interest represents an accrual for interest payable on the overdue sum due to Turbocare.

11 Tax expense / credit

No UK corporation tax or foreign tax is payable on the results of the Group. The relationship between the expected tax credit and the tax credit actually recognised is as follows:

No deferred tax asset has been recognised owing to uncertainty as to the timing and utilisation of the tax losses. In the event that a deferred tax asset was recognised at the balance sheet date, it is estimated that the value of the deferred tax asset would be £3.6 million (31.3.2012: £3.7 million) in respect of the Group and £1.0 million (31.3.2012: £0.9 million) in respect of the Company.

12 Profit attributable to the parent company

The loss attributable to the Parent Company, IPSA Group PLC, was £0.2 million (year to 31.3.2012: £3.8 million profit). As permitted by Section 408 of the Companies Act 2006, no separate profit and loss account is presented in respect of the Parent Company.

13 Loss per share

The loss per share (year ended 31.3.2012 - profit) is calculated by dividing the result for the year attributable to shareholders by the weighted average number of shares in issue during the year.

There is no difference between the basic and diluted earnings per share as the 6.8m warrants outstanding during the year were exercisable at a price either at or above the share price of the Company and therefore had no dilution effect.

Property, plant and equipment has been valued at cost. It represents the 18 MW plant in NewCogen.

The plant has been subject to an impairment review and the directors consider that an impairment of £1 million has arisen. The recoverable amount of this asset is established by assessing the value in use of the plant and discounting the estimated future cash flows using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset.

The main assumptions used in estimating the future cash flows include i) an asset life of 25 years, ii) continuing demand during that period for the electricity and steam generated by the plant, iii) escalation in the prices that electricity and steam will command based management's estimates and experience and iv) management's estimates of the price and availability of gas to supply the plant. The estimated future cash flows have been discounted at a rate of 10.3%.

1 Investment in Blazeway Engineering Ltd

The Company owns 100 per cent. of the issued share capital of Blazeway Engineering Ltd (a company incorporated in England and Wales, company number 5356014). The investment has been valued at cost. Blazeway Engineering Ltd owns 100 per cent. of Newcastle Cogeneration (Pty.) Ltd (a company incorporated in the RSA).

2 Loans to Newcastle Cogeneration (Pty.) Ltd

The Company has funded the construction of the plant in South Africa and the initial start-up losses with a combination of share capital (£2.8 million) and loans (£19.8 million). The loans were previously repayable on demand but in view of the start-up losses incurred, the Company regards the loan as quasi-equity and is no longer charging interest on the loans. As a result, the loans are now being classified as part of the Company's net investment in South Africa whereas in prior years, the loans were shown under Trade and other receivables (note 16).

The investments in and loans to subsidiary undertakings have been subjected to an impairment review. In spite of the Company's equity worth being greater than the Group's market value, the directors do not consider that any impairment has arisen since the directors believe that the Group's market value has been adversely affected by the losses arising from delays in bringing projects to completion and does not fully reflect the future potential of the Group given its position as an established independent power producer in RSA with the opportunities this provides to profitably expand operations in the area.

The loans to Newcastle Cogeneration (Pty.) Ltd are now regarded as part of Investment in subsidiary undertakings (note 15).

1 The gas deposit is no longer required as it has been replaced with a bank guarantee.

All trade and other receivables are unsecured and are not past their due dates. In the opinion of the directors, the fair values of receivables are not materially different to the carrying values shown above.

These assets comprise 2 (31 March 2012 - 2) of the original 4 turbines, plus ancillary equipment, which were acquired in 2007 for the Coega project in South Africa. As a result of the delay in the timetable for the Coega project, it was decided in 2009 to sell the Turbines and since then this asset has been classified as 'assets held for sale'. Sale of 2 of the turbines was completed in January 2012. The remaining 2 turbines were sold in June 2013 for $25 million (£16.1 million). There remains a quantity of ancillary equipment, which has been valued at not less £4 million. It is expected that this equipment will be sold during the next 12 months.

There were no changes in the share capital of the Company during the year (2012 - none).

Trade payables include:

1 An amount of €4.9 million / £4.2 million (31.3.2012: €5.5 million / £4.6 million) claimed by Turbocare in respect of the refurbishment work (which was completed in 2008 on the turbines originally acquired for the Coega project) plus storage charges and interest (calculated at 1 month EURIBOR plus 1 per cent per annum on the amount outstanding). Included within the €4.9 million is an amount of €2.3 million of VAT which the directors do not regard as being due. The Company is in discussions with Turbocare with the objective of reaching a negotiated settlement of the amounts claimed.

2 Other payables includes an accrual for directors' remuneration and salaries of £1.26 million (31.3.2012: £1.20m) accrued but unpaid in respect of remuneration due to the directors and one employee - see also note 27.

1 The bank loan, together with overdue interest, was repaid in full in March 2013.

2 The loan note was issued in March 2010. Interest is payable at 6 per cent per annum. With the exception of £0.01 million, the loan note has been repaid since the year-end. Holders of the loan notes were entitled to subscribe for a total of 6.5 million ordinary shares at a price of 5 pence per share or such lower price at which any future ordinary shares are issued prior to exercise. No exercise has taken place.

3 Other loans, plus accrued interest comprise:

Interest rates on these loans vary between 0.75 per cent and 12 per cent. All the loans have been repaid since the year-end.

All borrowings are denominated in sterling.

23 Financial instruments and risk management

The Group is exposed to a variety of financial risks which result from both its operating and investing risks. The Group's risk management is coordinated to secure the Group's short to medium term cash flows by minimising the exposure to financial markets. The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant risks to which the Group is exposed are described below. As the Group has only one operating subsidiary, the impact on the parent Company is deemed to be materially similar to the impact on the Group.

a) Foreign currency risk

The Group's principal trading operations are based in South Africa and as a result the Group has exposure to currency exchange rate fluctuations in the ZAR relative to sterling.

b) Interest rate risk

Group funds are invested in short term deposit accounts, with a maturity of less than three months, with the objective of maintaining a balance between accessibility of funds and competitive rates of return.

c) Capital management policies and liquidity risk

The Company considers its capital to comprise its ordinary share capital, share premium, accumulated retained earnings and other reserves.

The Company's objective when maintaining capital is to safeguard the Group's ability to continue as a going concern so that it can provide returns for shareholders and other stakeholders.

The Company meets its capital needs by a combination of equity and debt funding and attempts to anticipate the future cash requirements for each project and put in place appropriate equity and debt facilities to match the funding requirements of these projects. As a result of the time taken to secure a purchaser for the Company's turbines, the Company was required during the year to obtain extensions to the repayment dates of loans and bank borrowings. Since the year-end, these loans and borrowings have been repaid.

The Group does not have any derivate or hedging instruments.

d) Credit risk

Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the face of the balance sheet (or in the detailed analysis provided in the notes to the financial statements). Credit risk, therefore, is only disclosed in circumstances where the maximum potential loss differs significantly from the financial asset's carrying amount. The Group's trade and other receivables are actively monitored to avoid significant concentrations of credit risk. The Company's primary credit risk relates to the investment in its subsidiaries. As noted in note 3.18, this is reviewed on an annual basis.

e) Fair values

In the opinion of the directors, there is no significant difference between the fair values of the Group's and the Company's assets and liabilities and their carrying values and none of the Group's or the Company's trade and other receivables are considered to be impaired.

The financial assets and liabilities of the Group and the Company are classified as follows:

In the opinion of the directors, there is no significant difference between the fair values of the Group's and the Company's financial assets and liabilities and their carrying values.

24 Capital commitments

There were no outstanding capital commitments at the year end.

25 Contingent liabilities

During the year, the Company entered into a contract for the sale of 2 turbines. The prospective purchaser paid a non-refundable deposit of $3.1m (£1.9m). Under the terms of the contract, the deposit was forfeited as the purchaser failed to complete the contract. The Company has been advised that the purchaser intends to initiate proceedings to recover the deposit. No provision has been made in these financial statements as the directors have been advised by their solicitors that the recovery claim has no validity.

26 Related party transactions

Material transactions with related parties during the year were as follows:

i) Charge to the Company of £60,000 by Independent Power Corporation PLC ("IPC") under a "Shared Services Agreement" for the provision of offices and other administrative services. P Earl, E Shaw and P Metcalf are directors of IPC. A sum of £136,000 was owing to IPC at 31 March 2013 (31.3.2012: £252,000).

ii) Short term loan from IPC amounting to £1.2 million, including accrued interest, at 31 March 2013 (31.3.2012: £1.1m). Interest on the loan, which is being charged at 8 per cent, amounted to £84,000 (year to 31.3.2012: £142,000). The loan was due to be repaid on 31 July 2012 and an informal extension was been granted pending the sale of the remaining 2 turbines. The loan was repaid after the year-end.

iii) An accrual for Group salaries (short term employee benefits) payable to key management totalling £77,000 during the year (12 months to 31.3.2012: £340,000). The £77,000 is after deduction £317,000 of salary and fee entitlements which had accrued but which was waived. The amount waived was equivalent to 20% of the amount accrued but unpaid in the 4 year period to 31 March 2013.

Transactions between the Company and NewCogen:

i) Waiver of imputed interest of £0.5 million (year to 31 3.12: £0.5 million charged).

No remuneration was paid to the directors during the year. The amounts accrued and waived (see below) for directors who served during the year was:

The directors agreed to waived 20% of the outstanding accrued salary and fee entitlements as at 31 March 2013. The amounts accrued and unpaid at 31 March 2013 in respect of directors who served during the year totalled £1.0 million, comprising the following amounts: R Linnell - £106k, N Bryson - £95, M Cox - £102k, P Earl - £150k, J Eyre - £177k, P Metcalf - £80k, R Sampson - £90k and E Shaw - £177k. Since the year end, each director has been paid £20k in respect of the amounts accrued at 31 March 2013. The remaining balances owing will be paid when the Company has sufficient cash resources available.

No salaries or fees were paid during the year to 31 March 2012. The amounts accrued in respect of salaries and fees in that year were as follows: