Final Results

IPSA GROUP PLC

('IPSA' or the 'Group')

Audited Results for the year ended 31 March 2012

IPSA, the AIM and Altx dual listed independent power plant developer with operations in southern Africa, today announces its audited results for the year ended 31 March 2012.

Highlights:

·; Revenue of £4.4 million (18 months to 31 March 2011 - £0.8 million)

·; Group after tax profit of £5.6 million (18 months to 31 March 2011 - £5.2 million loss)

·; Key components are:

o Plant operating loss of £0.9 million (18 months to 31 March 2011 - £2.2 million loss)

o Profit on sale of 2 turbines of £6.1 million (18 months to 31 March 2011 - nil)

o Credit of £3.6m arising from settlement with Sasol (18 months to 31 March 2011 - release of accrual - £1.2 million)

Since the year-end, settlement has been reached with Sasol over their claim under the 2007 'take-or-pay' contract funded by a new loan from Sterling Trust Limited of £0.6 million. The financial impact of this settlement has been reflected in these financial statements.

Commenting, Richard Linnell, Chairman of IPSA, said:

"The year to 31 March 2012 has seen a significant improvement in the trading performance of the plant in South Africa and, as previously announced, in January this year, the company sold 2 of its 4 turbines, realizing a gross profit on this sale of £6.1 million. Completion of the sale of the remaining 2 turbines is expected soon following which the working capital of the Group will be stabilized. Since the year-end, the recently announced settlement of the claim by Sasol is also important as it removes a major uncertainty which was hindering refinancing of the plant in South Africa."

For further information contact:

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

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

John Llewellyn-Lloyd/ Harry Stockdale, Execution Noble & Co. Ltd

 (Nominated Adviser and Joint Broker) +44 (0)20 7456 9191

James Joyce/Harry Ansell, W. H. Ireland Limited (Broker) +44 (0)20 7220 1666

Riaan van Heerden, PSG Capital (Pty.) Limited, (AltX Designated Advisors) +27 (0)11 797 8400

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

The financial information set out below does not constitute the company's statutory accounts for the year ended 31 March 2012 or the 18 month period ended 31 March 2011 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) include an emphasis of matter on going concern without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

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 2012.

The year under review has seen a number of very significant events, the principal one being the completion of the sale in January 2012 of two of the four 701 DU turbines (the "Turbines") the Company has held since acquiring them for a project in South Africa in March 2007.

Group turnover has increased significantly to £4.4 million (2011 £0.8 million) as the operating results reflect 12 months of electricity sales and 9 months of steam sales from the Group's plant in South Africa, as compared to just a few weeks of sales reported in the period ended 31 March 2011. Although the combined revenue of £4.4 million from electricity and steam sales was not sufficient to record an operating profit after depreciation, it does nonetheless represent a major improvement as, excluding depreciation, the plant recorded a gross profit of £730,000 (2011: gross loss £630,000) and an operating loss, excluding depreciation, of just £60,000 (2011: £970,000 loss).

The profit for the year also includes a profit of £6.1m arising from the sale of the two turbines and, as a result of this sale, I am pleased to report a major reduction in debt and trade creditors. Debt, comprising loans and bank borrowings, at 31 March 2012 amounted to £7.3 million as compared to £19 million at 31 March 2011. Trade creditors have fallen from £21 million to a little under £8 million. As previously reported the Company originally acquired the four turbines for a proposed project in South Africa and when it became clear that the project would be delayed, the Board decided that it would be in the best interests of shareholders to sell the turbines to a third party rather than sell them to a Group owned project company.

The process to sell the remaining two turbines continues to experience delays. The Board is currently negotiating with a number of potential buyers and at least two of these appear to offer a realistic prospect of being able to complete on satisfactory terms.

A major event since the year-end was reaching settlement with Sasol Gas Limited in South Africa, announced in early August 2012. As previously reported, Sasol Gas was seeking penalties and other costs in connection with their termination of the gas contract in September 2009. Resolution of this dispute has allowed us to release provisions made in prior years and these, net of the settlement amount, have been credited to 'other income'.

Taken together, the improvement in the Newcogen plant operating performance, the sale of two of the turbines and reaching a settlement with Sasol means that if the sale of the remaining two turbines is completed at the prices being negotiated, the Group will have a positive cash balance and no debt, putting the Group in a strong position to consider new power generating projects in South Africa and neighbouring areas. I therefore remain hopeful that the plans to expand the facility at Newcastle in order to maximise the benefit of the existing MTPPP contract will be fulfilled enabling the expanded operation to move into a strong operating position before I next report to you.

Finally, I wish to draw to your attention the fact that the independent auditors have again included an emphasis of matter paragraph in their unqualified audit opinion.

Richard Linnell

Chairman

31 August 2012

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

During this period we have established 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 2012 approximately 700,000 GJ of gas and suffered no penalties under the contract we have in place with Spring Lights.

Electricity prices are adjusted annually under the MTPPP contract. In April 2012, the price was increased by 9.8 per cent. in line with the December 2011 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 broadly in line with the increase in the electricity tariff, though an increase of 8.1 per cent. in July last year means that margins have been slightly eroded. 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 the next six to nine months certain major maintenance activities will be required on the gas turbines, which will result in a reduction of revenues over approximately one month.

We continue to explore a number of opportunities to increase and add to the capacity at the Newcastle site, with one programme having already been completed. This was the implementation of Water Injection for both gas turbines which has increased output by over 300 kW, and has the additional environmental benefit of reducing NOx emissions from the power plant. We are currently examining a project which could add a further 50 MW to the capacity at Newcastle although this development will take around 18-24 months to be implemented.

NewCogen takes the safety of its employees seriously and only one incident was experienced during the year and no workplace injuries have been reported. A full review of the incident was conducted and the recommended changes in operating procedures proposed have been implemented.

THE TURBINES

The sale of two of the Gas Turbines was completed for $35 million with Bright Day in January 2012 and the proceeds distributed to Standard Bank and Turbocare, significantly reducing the level of debt to both parties.

The contract for the sale of the second pair of Turbines to Lezayre Holdings Limited terminated at the end of January 2012 and the deposit was distributed to creditors. IPSA is continuing to work closely with this potential buyer who continues to express firm interest in the turbines and is hopeful of closing the sale as soon as possible. In the meantime a further buyer has come forward and this transaction is also being aggressively pursued. The IPSA Board is minded to take whichever offer fully materialises first.

When the sale of the remaining two turbines is completed the Directors expect that IPSA will be clear of all debts and will have surplus funds which it can then apply to growing the business in and around South Africa.

WORKING CAPITAL

Working capital has continued to be very tight for IPSA, but no further support, other than funding for the Sasol settlement, has been required at NewCogen to date.

During the period we have been able to reduce the exposure of IPSA to its creditors as a result of the sale of two of the Turbines. The Loan Notes previously held by RAB Capital have been purchased by Sterling Trust and others, and new loan terms have been offered to unsecured lenders, including the loan noteholders, who have agreed to extend the loan terms to 31 July 2013 as announced on 27th July 2012.

With the much reduced level of exposure to Standard Bank and Turbocare, and the settlement with Sasol Gas having been achieved, our creditor position is much improved and we are examining options for raising some modest additional funding to resolve all outstanding creditor issues regardless of the timing involved in selling the remaining gas turbines.

GENERAL 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, the resolution of the legacy problems at IPSA is well timed, and we will have many excellent opportunities to develop the business in the coming 12 months. Since joining as the CEO in September of last year, there have been many challenging moments, but I am encouraged to see the options becoming available for growth in the future, and for IPSA to start to realise its potential in a growing and welcoming market.

Phil Metcalf

Chief Executive

31 August 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2012

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 March 2012

The financial statements were approved by the Board on 31 August 2012.

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 2012

The financial statements were approved by the Board on 31 August 2012.

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 2012

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 2012

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 2012

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2012

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 2012

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 by the Group's gas fired plant in Newcastle, Republic of South Africa, and the sale of 2 turbines originally bought for a proposed project near Port Elizabeth.

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 Alternative Investment Market ("AIM") in London and, since October 2006, the shares have had a dual listing on AltX (the Alternative Exchange 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 set out in the Chairman's statement and the Chief Executive's review, the Company's subsidiary in South Africa is generating electricity under a Medium-Term Power Purchase ("MTPPP") Agreement with Eskom and is also supplying steam to local businesses, thereby producing positive cash flow, before depreciation. The Directors are planning to increase the capacity of the plant which, if successful, will mean that the plant will operate profitably after depreciation.

Completion of the sale of the 2 remaining turbines on the indicative terms proposed would enable the Company to repay the borrowings from Standard Bank and other lenders, all of whom have granted informal extensions of the original repayment terms, settle the amounts owed to Turbocare under the refurbishment agreement and provide sufficient working capital for the foreseeable future.

Following the proposed sale of the 2 remaining turbines, the Group's only cash generating asset will be its subsidiary in South Africa, until new projects are developed. The timing of receiving repayments of the £22.0 million funding provided by the Company for the construction of the plant, and future dividends from South Africa, is dependent upon refinancing the plant which is expected to prove more attractive to local lenders now that a satisfactory settlement of the sums claimed by Sasol under the previous "take-or-pay" gas supply agreement has been concluded.

Accordingly, until the sale of the turbines is completed, there remains a material degree of uncertainty regarding the Company and the Group's ability to continue as a going concern.

The Directors have concluded that the combination of these circumstances represent a material uncertainty that casts significant doubt upon the Company's ability to continue as a going concern. Nevertheless the Directors do consider that there is a reasonable expectation that the sale of the remaining 2 turbines will complete on terms which will enable the Company to repay all its borrowings and other liabilities and provide adequate resources to continue in operational existence for the foreseeable future. For these reasons, 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 2012.

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 2012 the Group's revenue comprised the sale of electricity and steam from the plant in South Africa and the sale proceeds realised from the sale of 2 turbines held as assets for sale.

Operating expenses are recognised in Profit or Loss 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 15 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) the MTPPP contract with Eskom will continue for the foreseeable future and b) a discount rate of 13 per cent, no impairment to these assets has occurred. (The value in use calculation shows a recoverable amount exceeding carrying value by £2.2 million. The discount rate would need to increase to 15 per cent before the carrying value was less than the recoverable amount); and

ii) the value of non-current assets classified as held for sale where it has been assumed that the contracts in prospect will complete at not less than their carrying value; 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 2012 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:

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 2013. The Directors do not expect that the adoption of this standard will have a material impact on the financial statements of the Group.

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 2013. The Directors do not expect that the adoption of this standard will have a material impact on the financial statements of the Group.

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.

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 Board).

Management currently identifies two operating segments, being operations in RSA (comprising the business of generating electricity and steam) and the head office in the UK. These operating segments are monitored and strategic decisions are made on the basis of segment operating results. The electricity is sold to Eskom (the main buyer on behalf of the Government in South Africa) and the steam is sold to one industrial customer which operates 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.

The Parent Company has provided 100per cent of the funding for the construction of the plant. The loans are denominated in sterling and therefore the ZAR value of the loan is affected by movements in the value of the ZAR versus sterling.

In 2007 the Parent Company acquired the Turbines from an Italian manufacturer. The liability arising from the refurbishment, storage and interest charges is denominated in euro and the sterling liability outstanding during the year and at the year end is therefore affected by movements in the exchange rate between sterling and euro.

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

ii) Sensitivity to price changes in electricity 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 £437,000 (18 months to 31.3.2011:£80,000) 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 £321,000 (18 months to 31.3.2011: £63,000) lower or higher.

iii) Sensitivity to interest rates

The majority of the Group's funding has been provided by share capital. In 2008, the Group agreed a £15.0 million floating rate bank loan to assist in the funding of the Turbines. At the beginning of the year, this loan plus accrued interest amounted to £17.2 million. In March 2012, repayments of the loan reduced the value of the loan and accrued interest to £4.6 million. If the interest rate on the loan had been 10 per cent higher or lower during the year, the effect on the finance expense for the year would have been to increase or decrease the finance expense by £71,000 (18 months to 31 3.2011: £124,000).

The Group has other short term loans. A 10 per cent change in the interest rate applied to these loans would have changed the interest expense for the year by £27,000 (31.3.2011: £12,000).

Audit fees comprise £29,000 (18 months to 31.3.2011: £31,000) paid to the Company's auditors and £10,000 (18 months to 31.3.2011: £16,000) 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 the year, 2 of the turbines were sold. It is expected that the remaining two turbines will be sold during 2012 (see note 20).

1 These costs relate to storage and insurance of the 2 remaining Turbines (see note 8a and note 20).

2 During the year, Standard Bank levied charges, including legal fees, on the loan in connection with the turbines.

3 When the turbines were acquired in 2007, the Company also acquired some ancillary equipment at a cost of £1.2 million. This equipment remains unsold and has been written-down to £400,000 which the Directors consider is the current market value.

4 In prior periods, the plant in Newcastle was unable to supply electricity due to the absence of an electricity offtake agreement with the result that the gas purchased for the plant was less than the minimum offtake level required under a "take-or-pay" contract with Sasol, a gas supplier in South Africa. At 30 September 2009 an accrual was made in respect of the shortfall in that year. The adjustment at 31 March 2011 represents a reduction in the accrual following a review of the accrual.

The adjustment in the current year represents the difference between the amount which Sasol has agreed to settle its claim for gas not supplied and the amount which had been provided in respect of potential claims at 31 March 2011

5 The Company's loan to NewCogen is a sterling denominated loan. The gain in the 18 month period to 31 March 2011 arose as a result of the strengthening of the ZAR versus sterling. Since 1 April 2011, any gain or loss arising on this loan as a result of movements in the value of the ZAR versus sterling has been recognised as a movement through the Foreign Currency Reserve as the loan is now regarded as quasi-equity.

6 Exchange gains arising on the euro liability to Turbocare as a result of the value of the € weakening against sterling.

7 Following the temporary cessation of steam generation in 2009, the steam supply contract was terminated and accordingly the carrying value of the contract was impaired to nil.

1Bank interest comprises interest on the Standard Bank loan. (see also note 24).

2Loan note interest comprises interest on the £650,000 loan note (see also note 24).

3Other loans interest comprises interest on other loans (see also note 24).

4Other interest represents an accrual for interest payable on the overdue sum due to Turbocare. In the prior period, other interest also included a provision for interest which may have become payable to Sasol in respect of a claim which has now been settled with no interest becoming due.

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 £3.7 million (31.3.2011: £5.3 million) in respect of the Group and £0.9 million (31.3.2011: £2.1 million) in respect of the Company.

12 Profit attributable to the parent company

The profit attributable to the Parent Company, IPSA Group PLC, was £3.8 million (18 months to 31.3.2011: £2.6 million loss). 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 Profit per share

The profit per share (period ended 31.3.2011 - loss) is calculated by dividing the result for the year / period attributable to shareholders by the weighted average number of shares in issue during the year / period.

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.

The intangible asset represented the Directors' estimate of the fair value of a contract, owned by NewCogen at the date of acquisition, to supply steam from the electricity generating plant. As a result of the termination of the contract following temporary cessation of the supply of steam, the Directors wrote-off the asset.

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

i) Investment in Blazeway Engineering Ltd

The Company owns 100per 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 100per cent of Newcastle Cogeneration (Pty.) Ltd (a company incorporated in the RSA).

ii) Investment in Elitheni Clean Coal Holdings Ltd

The Company owns 100 per cent of the issued share capital of Elitheni Clean Coal Holdings Ltd ("ECCH"), a company incorporated under the British Virgin Islands Companies Act 2004 (company number 1437070). ECCH owns 100 per cent of the issued share capital of Indwe Power (Pty.) Ltd ("IPPL"), a company incorporated in RSA. ECCH was incorporated as a vehicle to acquire land which, subject to planning approvals, was intended as a potential site for the construction of a coal fired generating plant to be owned by IPPL. During a prior period, the company acquired an option over suitable land at a cost, including fees, of £133,000. However, the Directors decided to allow the option to lapse following the decision to terminate the coal supply agreement between IPPL and Strategic Natural Resources PLC. The cost of acquiring the option was written-off in an earlier period.

Imputed interest at the rate of 3 month LIBOR plus 1.5 per cent, amounting to £0.5 million, has been added to the loan during the year (18 months to 31.3.2011: £1.4 million). ZAR 30 million / £2.7 million of the loan has been subordinated in favour of other creditors of NewCogen.

1 This comprises a non interest bearing deposit of ZAR 3.2 million which has been paid to NewCogen's gas supplier as collateral against amounts owing in respect of gas supplied.

2 Vat receivable at 31.3.2011 of £2.0 million represented amounts of Vat charged by Turbocare for the refurbishment and storage of the Turbines. In the opinion of the Directors, supported by independent advice, Vat is not due on the refurbishment or storage costs since the supply relates to work done on equipment which will be exported. However, pending reaching an agreement with Turbocare, the Directors have decided that at 31 March 2012 the amount should be added to the cost of the Turbines.

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 the 2 (31 March 2011 - 4) turbines, plus ancillary equipment, which were acquired in 2007 for the Coega project at a cost of £21.8 million. During 2008, the Company refurbished the turbines at a cost of £9.8 million and £0.6 million was added to the cost in respect of interest on a £15.0 million bank loan which was used to partly finance their purchase and is secured by a first charge on the assets. Following the completion of their refurbishment and the delay in the timetable for the Coega project, it was decided in 2009 to sell the Turbines and since then the asset has been reclassified as 'assets held for sale'. Sale of 2 of the turbines was completed in January 2012 (see note 8a). The carrying value of the remaining two turbines is £15.3 million and the carrying value of the ancillary equipment is £0.4 million.

The Directors consider, on the basis of contracts in prospect, that the fair value, based on 'open market value', is in excess of the carrying value. 'Open market value' assumes willing buyer and willing seller.

The shares allotted in February 2011 were issued at 8 pence per share for cash. The premium, net of £10,000 of expenses was credited to the share premium account.

At the year end, a total of 6.8 million warrants were outstanding, exercisable as follows - 6.5 million between the repayment date of the £650,000 loan note (see note 23 below) and 30 months thereafter at 5 pence per share and 300,000 at any time before 16 June 2012 at 15 pence per share.

Trade payables include:

1 An amount of €5.5 million / £4.6 million (31.3.2011: €16.8 million / £14.8 million) owing to 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 €5.5 million is an amount of €2.3 million of VAT (see note 182 above) which the Directors do not regard as being due. The amount owing is overdue following the termination of a formal standstill agreement originally entered into in March 2010.

2 An amount of £0.6 million (31.3.2011: £4.4 million) in respect of amounts claimed by Sasol under the now terminated "take-or-pay" contract. The figure of £0.6 million represents the amount at which Sasol has, since the year end, agreed to accept in full and final settlement of its claims under the "take-or-pay" contract.

3 Other payables includes an accrual for Directors' remuneration and salaries of £1.2 million (31.3.2011: £840,000) accrued but unpaid in respect of remuneration due to the Directors and one employee - see also note 28.

1 The bank loan was originally repayable on 30 September 2009. Formal extensions have been granted since then though since 31 March 2012 the balance is overdue and subject to an informal standstill arrangement pending the sale of the remaining 2 turbines. Interest is calculated on 3 month LIBOR plus a margin of 2.25 per cent and a default margin of 2 per cent. The interest rate applicable at 31 March 2012 was 4.5 per cent (31 March 2011: 4.5 per cent). Interest charged during the year amounted to £0.7 million (31 March 2011: £1.2 million). Charges added to the loan during the year, in respect of fees associated with an extension of the repayment date amounted to £673,000. The loan is secured by a first charge on the turbines.

2 The loan note was issued in March 2010. Interest is payable at 6 per cent per annum plus a default margin of 2 per cent. The original repayment date of the loan note has been extended to 31 July 2013. Holders of the loan notes are 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.

3 Other loans, plus accrued interest comprise:

These other loans were due to be repaid by 31 July 2012 and the lenders have informally agreed to extend the repayment date pending the sale of the 2 turbines. Interest rates on the loans vary between 0.75 per cent and 12 per cent.

All borrowings are denominated in sterling.

24 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) Liquidity risk

The Group attempts to anticipate the future cash requirements for each project and seeks to put in place appropriate equity and debt facilities to match the funding requirements of these projects. Given the delays experienced in projects to date and the extended time taken to secure a buyer for the Company's turbines, the Company has necessarily obtained extensions to credit facilities. As set out in note 3.2, the Directors anticipate that the proceeds from the sale of the turbines will provide the Group and the Company with sufficient working capital for the foreseeable future but until that time, the Group and the Company will be dependent upon its creditors continuing to grant extended terms.

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