29th Jun 2007 08:30
IPSA Group PLC29 June 2007 29 June 2007 IPSA Group PLC Interim results for the six months ended 31 March 2007 IPSA Group PLC ('IPSA' or 'the Company'), the independent power plant developerin southern Africa, today announces its results for the six months to 31 March2007. Highlights include: - Successful secondary listing of shares on ALTx - Gross funds of £12.1 million raised during the period - €31.2 million (£21.3 million) acquisition of 500 MW of gas turbinesdestined for the Coega Project - Negotiations continue on further projects in the Eastern Cape regionof South Africa - Commissioning of first gas-fired independent power plant in SouthAfrica - Black Economic Empowerment discussions underway Commenting, Stephen Hargrave, Chairman of IPSA, said: "We are very pleased with the progress the Company has made since our lastresults announcement. The initial 18 MW project at Newcastle, KwaZulu Natal,was commissioned, and has since begun producing steam. We have also secured500MW of turbines at an extremely attractive price compared to the market whichare intended for the Coega Project. We are excited by the further opportunitiesthat are presenting themselves in South Africa where the country's need for newgenerating capacity is shown by power shortages in many parts of the country,and we are looking forward to playing a part in meeting that need." For further information contact: Peter Earl, CEO, IPSA Group PLC 020 7793 7676John Llewellyn-Lloyd, Noble & Company Limited 020 7763 2200Allan Piper, First City Financial 07736 064 982 020 7242 2666 Chairman's Statement 31 March 2007 I am pleased to report the Company's second interim results since its flotationon the AIM market of the London Stock Exchange. During the period to 31 March 2007, IPSA substantially completed theconstruction of the Newcastle combined heat and power plant, the first gas-firedindependent power plant ("IPP") in South Africa. In addition the Companysuccessfully listed its shares on ALTx, the alternative exchange operated by theJSE Ltd ("JSE"), the first AIM-quoted company to do so. The Company has seenstrong interest in its shares in South Africa as the only listed electricutility. The group has also been successful in acquiring 500 MW of gas-firedturbines costing €31.2 million (approximately £21.3m), which are intended forthe Coega IPP development project. As expected, the Company made a loss duringthe 6 months to 31 March 2007 amounting to £245,000 (2006: £144,000 loss). 1) Newcastle CHP Construction of the Newcastle combined heat and power plant ("CHP") wassubstantially completed during the first half of the financial year andcommissioning began. The plant was officially inaugurated on 16 February by theMayor of Newcastle. Since the end of the interim period on 31 March we havecommenced production of steam from the project, and we are in discussions withcommercial banks in South Africa to provide Rand-denominated term funding forthe Newcastle project in the near future in order to release equity for futuredevelopments. To date, the Newcastle project has been funded entirely fromequity. 2) Coega Fast Track Project, Port Elizabeth Since January 2006 a series of power cuts have made South Africa's predictedshortages of electricity a subject of national political importance. Inaddition, the country's peak demand reserve margin has dropped to some 1,700 MW,a level substantially below that which would normally be regarded as an adequatemargin of headroom. In March 2007 IPSA acquired four Fiat Avio turbines at ahighly competitive price compared to today's market, which are intended to beinstalled as part of the first phase of the Coega Project. To help finance thepurchase, in April 2007 the Company arranged a US$20 million bridge financingfacility for the turbines with Standard Bank PLC, London. These turbines havenow enabled IPSA to be in a position to complete the fast track installation ofthe open cycle phase of the project at the earliest opportunity. The £21.3million cost of the turbines equates to around US$80,000 per MW. Furtherdevelopment work, such as the environmental studies and engineering studies, hasbeen initiated and a site lease is under negotiation. The installed cost of thetwo generating blocks of the Coega Project, including the recently acquiredturbines, is expected to be below US$250,000 per MW, a level which wouldgenerally be considered a competitive price for a large plant. The group iscurrently planning on a total of 1,600 MW for the full project. Shareholderswill be kept fully informed of developments. 3) Indwe IPP, Eastern Cape IPSA has announced the anticipated development of mine-mouth clean coal powercapacity at the Elitheni coal deposit at Indwe, Eastern Cape. This deposit wasone of the first deposits to be worked in South Africa prior to the opening upof the Highveld coal reserves in the region close to Johannesburg in the early20th century. Initially, the Indwe IPP was expected to have an installed capacity of 400 MW.IPSA recently announced its intention to increase the size of the project underdevelopment to 500 MW, based on the Elitheni coal reserve potential. ElitheniCoal (Pty) Ltd, the owner of the mining licence, is 90% owned by StrategicNatural Resources Plc (see note 11). 4) Da Gama CHP, Eastern Cape IPSA has announced plans to develop an 80 MW CHP, also based on coal to besupplied from the Elitheni mine. The plant is to be located at the Da Gamatextile mill, King William's Town, Eastern Cape. 5) Black Economic Empowerment The Company is committed to spreading the ownership of its equity under theprinciples of South Africa's Black Economic Empowerment ("BEE") policy. It iscurrently in discussions with certain empowerment groups with a view to theirtaking a significant stake in the Company. The Directors are also committed toprotecting the interests of existing shareholders, and it is intended that anyinvestment in the shares of the Company by one or more empowerment groups willbe made in the interests of all shareholders going forward. Separately, we are also pleased to announce that we have received a credibleapproach from BEE-compliant investors wishing to take a significant equity stakein Newcastle Cogeneration (Pty) Ltd, the owner of our Newcastle CHP facility. We must emphasize that all these proposed BEE investments are still innegotiation. There is no guarantee that the proposed investments will becompleted as currently envisaged, if at all. In the event they do materialize,however, the Directors believe that this two-level approach to empowerment, atboth the PLC and the project level, will lead to a high level of economicownership of our developments by broad-based BEE groups. In our opinion thiswill be to the benefit of all concerned. We are very pleased with the progress the Company has made since our lastresults announcement. The initial 18 MW project at Newcastle, KwaZulu Natal wascommissioned and we are excited by the further opportunities that are presentingthemselves in South Africa. The country's need for new generating capacity isshown by power shortages in many parts of the country, and we are lookingforward to playing a part in meeting that need. Stephen HargraveChairman Consolidated Income Statement for six months ended 31 March 2007 (unaudited) Notes 6 months to 6 months to 31.3.07 31.3.06 £'000 £'000 Administrative expenses (435) (121) Other expense 4 (54) (69) Exchange gains 198 - Finance income 46 46 Loss before tax (245) (144) Tax expense - - Loss for the period (245) (144) Loss per ordinary share - basic 5 0.37p 0.27p Loss per ordinary share - diluted 5 0.37p 0.27p Statement of Recognised Income and Expense (unaudited) 6 months to 6 months to 31.3.07 31.3.06 £'000 £'000 Loss for the period (245) (144) Exchange difference on translation 13 2 Total recognized loss for the period (232) (142) Consolidated Balance Sheet (unaudited) Notes 31.3.07 30.9.06 31.3.06 £'000 £'000 £'000 Assets Non-current assets: Intangible 6 833 833 833 Property, plant and equipment 7 30,403 5,601 5,207 31,236 6,434 6,040 Current assets: Trade and other receivables 8 736 196 489 Cash and cash equivalents 2,240 526 1,539 2,976 722 2,028 Total assets 34,212 7,156 8,068 Equity and liabilities Equity attributable to equity holders of the parent: Share capital 9 1,522 1,093 1,093 Share premium account 9 17,498 6,640 6,640 Foreign currency reserve (438) (451) 2 Retained loss (1,272) (1,027) (144) Total equity 17,310 6,255 7,591 Current liabilities: Trade and other payables 10 16,902 901 477 Total equity and liabilities 34,212 7,156 8,068 Consolidated Cash Flow Statement (unaudited) Notes 6 months to 6 months to 31.3.07 31.3.06 £'000 £'000 Net cash outflow from operating activities (see below) (363) (133) Cash flows from investing activities: Interest received 46 46 Deposit paid 8 (535) - Payment of deferred consideration - (400) Purchase of plant and equipment 7 (8,721) (5,207) (9,210) (5,561) Cash flows from financing activities: Issue of shares (net of costs) 9 11,287 7,233 11,287 7,233 Increase in cash and cash equivalents 1,714 1,539 Reconciliation and analysis of change in net funds Increase in cash during the period 1,714 1,539 Cash and cash equivalents at start of period 526 - Cash and cash equivalents at end of period 2,240 1,539 Reconciliation of loss before tax to net cash outflow from operating activities: Loss for the period (245) (144) Changes in working capital: Decrease (increase) in debtors 7 (420) (Decrease) / increase in creditors (79) 477 Deduct: Interest received (46) (46) Net cash outflow from operating activities (363) (133) Notes to the unaudited financial statements 1. The unaudited financial information set out above does not constituteStatutory Accounts within the meaning of Section 240 of the Companies Act 1985. 2. The Company was incorporated on 1 July 2005. On 20 September 2005 theCompany acquired 100% of the share capital of Blazeway Engineering Limited, acompany incorporated in England and Wales. Blazeway Engineering Limited owns100% of the share capital of Newcastle Cogeneration (Proprietary) Limited, acompany incorporated in the Republic of South Africa. 3. The unaudited financial information has been prepared under thehistorical cost convention and in accordance with applicable InternationalFinancial Reporting Standards as issued by the International AccountingStandards Board. 4. Other expense in the unaudited consolidated income statement representscosts associated with listing the Company's shares on the Altx market of the JSE(2006 - AIM market). 5. The loss per ordinary share has been calculated on the loss for theperiod of £245,000 divided by the weighted average number of ordinary shares inissue during the period from 1 October 2006 to 31 March 2007 (67,093,195). 6. The intangible non-current asset represents the fair value of the supplycontract owned by Newcastle Cogeneration (Proprietary) Limited. 7. Property, plant and machinery represents construction in progress inNewcastle Cogeneration (Proprietary) Limited (£9.1m) and four Fiat Avio turbineswhich were acquired on 9 March 2007 at a price of €31.2m (£21.3m) as part of theproposal for the Coega Project outside Port Elizabeth. The price of €31.2m ispayable in three instalments. At 31 March 2007, the first 25% instalment hadbeen paid. The second 25% instalment was paid in April 2007 and the finalinstalment of 50% (€15.6m / £10.6m) is payable on 31 March 2008 - see 10 below. 8. Trade and other receivables includes a refundable commitment fee of£535,000 which has been paid in respect of securing gas supplies. In the eventthat the contracted level of supplies is not procured, any shortfall will bededucted from the deposit held. 9. In October 2006, the Company issued 5,499,839 shares at an average priceof ZAR 5.62 (38.5p) per share concurrently with the Company's listing on theAltx market of the JSE. On 24 October 2006 the Company issued 6,000,000 sharesat ZAR 6.05 (£0.42) per share. On 9 March 2007, the Company issued 2,500,000shares at 75p per share and 7,500,000 shares at ZAR 10.6665 (75p) per share. Thesurplus over the par value, less issue costs, has been credited to the sharepremium account. 10. Trade and other payables includes £5.5m paid in April in respect of thesecond 25% instalment payment due on the purchase of the four Fiat Avio turbinesplus the final 50% instalment of €15.6m (£10.6m) due on 31 March 2008 - see 7above. The payment made in April was funded by a draw down of US$10.5m from theStandard Bank bridge financing facility at Libor plus 2.25%. 11. Strategic Natural Resources Plc ("SNR") has a 90% per cent. shareholdinginterest in Elitheni Coal (Pty) Ltd ("Elitheni"). IPSA has secured fromElitheni an exclusive first right for the supply of coal to the planned IndweIPP and Da Gama CHP projects under a coal supply agreement, yet to benegotiated. The directors of IPSA participated in a fundraising carried out bySNR earlier this year in order to fund further prospecting activities. Togetherthe Directors currently hold 15.8% of the issued share capital of SNR. PeterEarl and Elizabeth Shaw, directors of IPSA, are also founding directors of SNR.A subsidiary of Independent Power Corporation PLC, a company controlled by PeterEarl and of which he, Elizabeth Shaw and Jimmy West are directors, has anoutstanding loan of £0.45 million to Elitheni. 12. This announcement is being sent to all shareholders on the register attoday's date and copies are available to the general public free of chargeduring office hours for one month from the date of the announcement at theCompany's registered office, Fifth Floor, Prince Consort House, AlbertEmbankment, London SE1 7TJ. Peter R. S. Earl 28th June 2007 IPSA Group Plc is a British company established to develop power generationprojects in southern Africa. It is managed by a team with a strong track recordin developing power projects worldwide and with considerable experience insouthern Africa. IPSA floated on the Aim market of the London Stock Exchange in September 2005and obtained a dual listing on the Altx market of the JSE in October 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
IPSA.L