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IPSA Group PLC IPSA Half Yearly Report

  IPSA Group PLC (IPSA) - Half Yearly Report

RNS Number : 3365S
IPSA Group PLC
29 November 2012








                                IPSA GROUP PLC

                                      

                          ('IPSA' or the 'Company')

                                      

       Unaudited Results for the 6 month period ended 30 September 2012



IPSA, the AIM  and Alt^x dual  listed independent power  plant developer  with 
operations in southern Africa, today  announces its unaudited interim  results 
for the 6 month period ended 30 September 2012.



Highlights:



· Revenue of £2.5m (2011 - £1.9m) comprising electricity sales of £2.1m
(2011 - £1.7m) and steam sales of £0.4m (2011 - £0.2m)



· Group after tax loss of £1.3m (2011 - £2.6m loss)



· As announced on 19 November, contracts for the sale of the remaining 2
turbines have been exchanged at a gross price of US$31.0m





Commenting, Richard Linnell, Chairman of IPSA, said:



"The plant in South Africa remains  fully operational and, although output  is 
still below full  capacity, the  plant is cash  generative. We  expect to  add 
additional capacity  by  early 2013.  We  believe  this will  make  the  plant 
profitable, covering  both operating  costs and  depreciation, and  contribute 
towards the Company's administrative overheads.



It is also most encouraging that the  lengthy negotiations on the sale of  the 
remaining two turbines  have resulted  in the  exchange of  new contracts,  as 
approved  by  our  key  creditors.  The  working  capital  position  will   be 
significantly improved once the sale of the turbines is completed and the sale
proceeds received".





For further information contact:

Phil Metcalf, CEO, Elizabeth Shaw, COO,

IPSA          Group          PLC           
 +44 (0)20 7793 5615



John Llewellyn-Lloyd, Harry Stockdale

Execution Noble &  Company Ltd  +44 
(0)20 7456 9191



Harry Ansell, James Joyce

W   H   Ireland   Ltd    
 +44 (0)20 7220 1666



Riaan van Heerden,

PSG                               Capital                               (Pty.) 
Ltd,  +27  (0)21   887 
9602



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

                                      

CHAIRMAN'S STATEMENT

I am pleased to report the Company's interim results for the six month  period 
to 30 September 2012. The results  are broadly in line with our  expectations. 
The net loss after tax for the period was £1.3m (2011 - £2.6m loss), giving a
basic loss per share  of 1.23p (2011  - loss per  share 2.43p). The  operating 
loss for the period under review was £0.8m (2011 - £0.8m). Other net  expense, 
comprising legal fees and storage costs associated with the turbines, a  final 
adjustment on the Sasol 'take-or-pay' settlement and unrealised exchange gains
was £0.3m (2011 - £1.0m).

Revenues of  £2.5m  (2011  -  £1.9m)  during  the  period  comprise  sales  of 
electricity amounting to £2.1m (2011 - £1.7m) and sales of steam amounting  to 
£0.4m (2011 - £0.2m).

NewCogen

During the six months  to 30 September 2012,  25.2 million kWh of  electricity 
was sold to Eskom under the MTPPP contract, up 22 per cent. compared with 20.7
million kWh for the same period last year. Steam sales totalling 38,174 tonnes
were supplied to Karbochem under an  interim steam contract, more than  double 
the 16,231 tonnes of steam in same period last year. An additional short  term 
steam contract was  agreed with  Lanxess for  October and  this will  increase 
Steam sales in the next period.

In accordance  with  the terms  of  the MTPPP  contract,  electricity  pricing 
remained the same during  the period, with the  next adjustments due in  April 
2013. Following a 2.8 per cent increase in the gas price as of 1 October 2012,
margins will be slightly eroded. Gas volumes purchased remain within the  take 
or pay obligations under the contract.

In July 2012,  we settled  our long  running dispute  with Sasol  Gas Ltd  for 
ZAR7.0m,  relieving  the  Company  from  this  obligation.  This  benefit  was 
reflected in our 31 March 2012 results.

The Turbines

The Company  has  announced  that  it has  exchanged  contracts  for  the  two 
remaining Siemens  Westinghouse 701  DU gas  turbines for  a consideration  of 
US$31.0m (approximately £19.4m at current  exchange rates). The purchaser  has 
already paid  a  non-refundable deposit  of  US$3.1m in  cash.  The  Directors 
anticipate that, following receipt of all the proceeds, the Company will be in
a position to settle with all  its creditors very shortly after completion  of 
the sale,  and that  there will  be £2.8m  cash remaining  after allowing  for 
immediate working  capital requirements  and repayment  of the  £5.1m of  loan 
principal and accrued  but unpaid  interest and legal  and other  fees due  to 
Standard Bank PLC  and approximately  £11.0m of  other liabilities,  including 
trade payables, loans, accrued interest and  amounts due to TurboCare SPA  for 
the refurbishment and  storage of the  turbines. Once the  sale proceeds  have 
been received and completion has occurred, we expect to record a pre-tax  book 
profit on the sale of the last  two turbines of approximately £3.6m (based  on 
current exchange rates).

Other Projects

The Directors  are  maintaining  an  active  interest  in  developing  further 
generation  capacity   in  southern   Africa,  where   there  are   increasing 
opportunities for Independent Power Producers,  and each potential project  is 
being assessed on  a case  by case basis  against a  background of  increasing 
demand and wholesale electricity prices.

Conclusion

Once the  sale of  the  turbines has  completed,  allowing settlement  of  all 
Company obligations and outstanding  debts, we are looking  to build upon  our 
presence in the IPP market within South Africa and further afield in  southern 
Africa.



Richard Linnell

Chairman

28th November 2012





IPSA GROUP PLC



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

for the 6 month period ended 30 September 2012





                                     Notes  6 months  6 months 12 months

                                             30/9/12   30/9/11   31/3/12

                                           unaudited unaudited   audited

                                               £'000     £'000     £'000

                                                                       
Revenue                                        2,474     1,884     4,371
Cost of sales                                (2,485)   (2,128)   (4,438)
Gross loss                                      (11)     (244)      (67)
Administrative expenses                        (783)     (543)   (1,380)
Operating loss                                 (794)     (787)   (1,447)
Profit on sale of non-current asset                -         -     6,116
                                                                   

Other (expense) / income               3       (274)     (966)     2,200
Finance expense                                (252)     (860)   (1,227)
(Loss) / profit before tax                   (1,320)   (2,613)     5,642
Tax expense                                        -         -         -
(Loss) / profit after tax                    (1,320)   (2,613)     5,642
Other comprehensive income:
Exchange differences on                        (718)   (1,014)     (980)
translation of foreign operation
Total comprehensive (loss) /                 (2,038)   (3,627)     4,662
profit attributable to equity
shareholders
(Loss) / earnings per ordinary share   4     (1.23p)   (2.43p)     5.25p
(basic, diluted and headline)







IPSA GROUP PLC



CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)

at 30 September 2012



                                            Notes   30/9/12   30/9/11  31/3/12

                                                  unaudited unaudited  audited

                                                      £'000     £'000    £'000

                                                                             
Assets
Non-current assets
Property, plant and equipment                 5       9,741    11,394   11,070
Current assets
Trade and other receivables                             704       957      816
Cash and cash equivalents                     6         147     2,690       35
                                                        851     3,647      851
Non-current assets classified as assets       7      15,712    34,279   15,712
held for sale


Total assets                                         26,304    49,320   27,633
Equity and liabilities
Equity attributable to equity holders of the parent:
Share capital                                         2,150     2,150    2,150
Share premium account                                26,767    26,767   26,767
Foreign currency reserve                            (3,752)   (3,068)  (3,034)
Profit and loss reserve                            (14,710)  (21,645) (13,390)
Total equity                                         10,455     4,204   12,493
Current liabilities
Trade and other payables                              7,492    24,113    7,814
Borrowings                                 8          8,357    21,003    7,326
                                                     15,849    45,116   15,140
Total equity and liabilities                         26,304    49,320   27,633





IPSA GROUP PLC



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

for the 6 month period ended 30 September 2012

                                                 6 months  6 months 12 months

                                                  30/9/12   30/9/11   31/3/12

                                                unaudited unaudited   audited

                                                    £'000     £'000     £'000

                                                                            
(Loss) / profit for the period                    (1,320)   (2,613)     5,642
Add back net finance expense                          252       860     1,227
Add back profit on sale of asset held for sale          -         -   (6,116)
Adjustments for:
Depreciation                                         368       420       809
Write down value of turbine                            -         -       780
equipment
Translation and unrealised                           243     (156)       464
 exchange adjustments
Change in trade and                                  112         7     2,150
 other receivables
Change in trade and                                (322)     1,564  (16,400)
 other payables
Cash (used in) / generated                          (667)        82  (11,444)
from operations
Interest paid                                           -       (2)       (8)
Net cash (used in) / generated from operations      (667)        80  (11,452)
Cash flows from investing
activities
Sale / (purchase) of plant and                          -         6       (1)
equipment
Proceeds from sale of asset                             -         -    22,912
held for sale
Deposit on assets held for resale                       -     1,910     1,257
                                                        -     1,916    24,168
Cash flow from financing
activities
Loans received                                        779       661     1,359
Loans repaid                                            -         -  (14,073)
                                                      779       661  (12,714)
Increase in cash and cash equivalents                 112     2,657         2
Cash and cash equivalents                              35        33        33
at start of period
Cash and cash equivalents                             147     2,690        35
at end of period





IPSA GROUP PLC





CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

for the 6 month period ended 30 September 2012



                  Share      Share      Foreign     Profit and loss    Total
                 capital    premium     currency        reserve        equity
                                        reserve
                            Account
                     £'000      £'000        £'000       £'000       £'000 
                                                                           
At 1.4.11            2,150     26,767      (2,054)    (19,032)       7,831 
                                                                           
Loss for the             -          -            -     (2,613)     (2,613) 
period
Exchange                 -          -      (1,014)           -     (1,014) 
differences
Total                    -          -      (1,014)     (2,613)     (3,627)
recognised                                                                 
expense
for the period                                                            
                                                                           
At 30.9.11           2,150     26,767      (3,068)    (21,645)       4,204 
                                                                           
Profit for the           -          -            -       8,255       8,255 
period
Exchange                 -          -           34           -          34 
differences
Total                    -          -           34       8,255       8,289
recognised                                                                 
expense
for the period                                                            
                                                                           
At 31.3.12           2,150     26,767      (3,034)    (13,390)      12,493 
                                                                           
Loss for the             -          -            -     (1,320)     (1,320) 
period
Exchange                 -          -        (718)           -       (718) 
differences
Total                    -          -        (718)     (1,320)     (2,038)
recognised                                                                 
expense
for the period                                                            
                                                                           
At 30.9.12           2,150     26,767      (3,752)    (14,710)      10,455 
                                                                           







Notes to the unaudited Interim Statement for the 6 month period ended 30
September 2012



1. Basis of preparation



These condensed consolidated  interim financial statements  do not  constitute 
statutory accounts within  the meaning  of Section  435 of  the Companies  Act 
2006. The comparative figures  for the year ended  31 March 2012 were  derived 
from the statutory accounts for that  period which have been delivered to  the 
Registrar of Companies.  Those accounts which  contained an unqualified  audit 
report, with an emphasis of matter paragraph on going concern, did not contain
any statements under  sections 489(2) or  (3) of the  Companies Act 2006.  The 
financial information contained in this interim statement has been prepared in
accordance with  all  relevant  International  Financial  Reporting  Standards 
("IFRS") as adopted by the  European Union in force  and expected to apply  to 
the Group's results for the year  ending 31 March 2013 and on  interpretations 
of those Standards released to date.



2. Accounting policies



These condensed consolidated interim  financial statements have been  prepared 
in accordance with the  Group's IFRS accounting  policies. These policies  are 
set out in the Group's financial statements for the year ended 31 March 2012.



3. Other income / (expense)               6 months 6 months 12 months

                                           30/9/12  30/9/11   31/3/12

                                             £'000    £'000     £'000

                                                                    
Exchange gains^1                               218      107       326
Storage, legal and insurance costs^2         (149)  (1,073)     (256)
Costs associated re loan for turbines^3      (184)        -     (320)
Write down value of turbine equipment^4                   -     (780)
Adjustment on gas take or pay contract^5     (159)        -     3,230
Total                                        (274)    (966)     2,200



^1 Exchange gains arising  on the € denominated  amount owing to Turbocare  in 
respect of the  refurbishment costs  of the  Siemens gas  turbines which  were 
originally acquired for the Coega project and  are now held as an 'asset  held 
for sale';



^2 Storage, legal and insurance costs in respect of the storage of the Siemens
gas turbines pending their sale (see note 7 below);



^3 These costs  represent charges,  including legal fees,  levied by  Standard 
Bank PLC in connection with their loan



^4 When the  turbines were acquired  in 2007, the  Company also acquired  some 
ancillary equipment at  a cost of  £1.2m. The  equipment is for  sale and  has 
written-down to £400k which represents the directors' estimate of the  current 
realisable value.

^

^5 The adjustment in the current period results from the weakening of the  ZAR 
vs. £ between  March 2012  when the  provision was  released and  the rate  in 
August when the claim was actually settled.







4. Loss per share                      6 months  6 months 12 months

                                        30/9/12   30/9/11   31/3/12

                                                                
Average number of shares                 107.5m    107.5m    107.5m
in issue during the period
(Loss) / profit for the period        £(1.320m) £(2.613m)   £5.642m
(Loss) / earnings per ordinary share    (1.23p)   (2.43p)     5.25p
(basic, diluted and headline)



5. Property, plant and equipment



Property, plant and  equipment comprises the  electricity generating plant  in 
South Africa owned by NewCogen.  The change in the  value since 31 March  2012 
comprises depreciation of £0.4m and an  exchange adjustment of £1m due to  the 
weakening of the ZAR  versus Sterling between 31  March 2012 and 30  September 
2012.



6. Cash and cash equivalents



At 30 September  2011, cash  and cash  equivalents included  US$4m (£2.6m)  in 
respect  of  deposits  received  on  the  turbine  sales.  These  funds   were 
transferred to  Standard Bank  PLC  and Turbocare  as  part repayment  of  the 
amounts owing to Standard Bank PLC and Turbocare.



7. Assets held for sale



At 30 September 2012 and 31 March 2012, these assets comprise 2 (30  September 
2011 - 4)  of the Siemens  gas turbines which  were acquired in  2007 for  the 
proposed Coega  project in  South Africa.  As previously  reported, the  Board 
decided, in view of  the delay in  that project, that  the turbines should  be 
sold. In January 2012, 2 of the turbines were sold. Contracts for the sale  of 
the remaining two turbines were exchanged in November 2012. Deposits totalling
US$3.1m have been received and  the balance of US$27.9m is  due to be paid  on 
completion.



8. Borrowings



Included within borrowings are the following loans:



a) Amount due to Standard Bank of £4.9m, including accrued interest and  legal 
fees (30/9/11 - £18.5m, 31/3/12 - £4.6m). In March 2008, the Company  obtained 
a bank loan of £15.0m from Standard  Bank PLC to finance the final  instalment 
payment for  the  purchase  of  the  4 Siemens  gas  turbines.  The  loan  was 
originally repayable in September 2009 and is now repayable on demand although
Standard Bank PLC have  agreed not to demand  repayment pending completion  of 
the sales contract referred to in 7 above.



b) Loan note of £0.8m, including accrued interest (30/9/11 - £0.7m, 31/3/12  - 
£0.7m). On 5 March 2010, the Company issued a £0.7m unsecured loan note,  with 
interest payable at 6%. The loan  note was originally repayable by 31  January 
2011. The repayment date has since been formally extended to 31 July 2013.  As 
repayment is now  overdue, interest  is accruing at  8%. Holders  of the  loan 
notes are entitled to subscribe for a total of 6.5m ordinary shares at a price
of 5p per share or  such lower price at which  any future ordinary shares  are 
issued prior to exercise.



c) Other  loans of  £2.6m,  including interest  (30/9/11  - £1.9m,  31/3/12  - 
£2.0m), comprising unsecured loans, with interest rates of between 5% and 12%.
The lenders have informally agreed to extend the repayments dates pending sale
of the remaining 2 turbines.







The Board of Directors approved this interim statement on 29th November  2012. 
This interim statement has not been audited.



Copies of this announcement are being sent to all shareholders on the register
at today's date. Copies may be obtained from the Company's registered  office, 
5th Floor, Prince Consort House, Albert Embankment, London SE1 7TJ.









About IPSA:



IPSA Group PLC is  a British company established  to develop power  generation 
projects in southern  Africa. It  is managed  by a  team with  a strong  track 
record in developing power projects worldwide and with considerable experience
in southern Africa.



IPSA floated on the AIM market of the London Stock Exchange in September  2005 
and obtained a  dual listing  on the Alt^x  market of  the Johannesburg  Stock 
Exchange in October 2006.







                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IR BKCDKNBDDNDB -0- Nov/29/2012 13:06 GMT
 
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