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30 Jun 2008 07:00
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30 June 2008
IPSA Group PLC
Interim ResultsΒ for the six months ended 31 March 2008
IPSA GroupΒ PLC, the independent power plant developer in southernΒ Africa,Β todayΒ announces itsΒ interim results for the six months toΒ 31Β March 2008.Β
Highlights include:
Losses for the six month period, reflecting early development and construction costs inΒ IPSA'sΒ programme of projects.
First sales of electricity under contract to users such as City Power of Johannesburg and Eskom, the state-owned power company.
Signing of a Memorandum of Co-operation with the South African Government's Central Energy Fund (Pty) Limited for a key role as a private sector developer to the integrated energy project being developed at the Coega Industrial Development Zone. This will beΒ one of the first examples of a public-private partnership inΒ South AfricaΒ for an integratedΒ LNGΒ to electricity project.
SaleΒ of a 50 per cent. interest inΒ IPSA'sΒ coal power project development company, Elitheni Clean Coal Holdings Limited, to Exodus Africa LLC for US$5 million.
Commenting,Β Stephen Hargrave,Β ChairmanΒ of IPSA,Β said:
"We are very pleased with the progress the Group has made since ourΒ last results announcement. This period hasΒ marked IPSA's first sales of electricity under contract to users such as City Power of Johannesburg and Eskom, the state-owned power company, as your Company evolved from being purely a developer of new power plants to an owner-operator supplying electricity intoΒ South Africa's grid.
We are looking forward to participating further in the power generation tenders announced by Eskom and to developing our other initiatives, all with a view to achieving the Group's goal of gaining a significant share of the South African power generation market within the next five years."
For further information contact:Β
Peter Earl,Β CEO, IPSA GroupΒ PLC: +44 (0)20 7793 7676
Elizabeth Shaw,Β COO, IPSA GroupΒ PLC: +44 (0)20 7793 7676
Nick NaylorΒ / Jamie Boyd, Noble & Company Ltd: +44 (0)20 7763 2200
Sean Lunn, Hichens, Harrison (South Africa) Ltd: +27 21 950 2711
Allan Piper,Β FirstΒ CityΒ Financial Public Relations: +44 (0)20 7242 2666
Dino TheodorouΒ / Melissa Harris, PSG Capital (Pty.)Β Limited +27 11 797 8400
Jacques de Bie, College Hill (South African PR Advisers) +27 11 447 3030
IPSA GROUPΒ PLC
Interim results for theΒ 6 monthΒ period toΒ 31 March 2008
Chairman's Statement
I am pleased to report theΒ Group's interim resultsΒ for theΒ 6 monthΒ period toΒ 31 March 2008.Β This was a period of turmoil in the South African power industry but it marked IPSA's first sales of electricity under contract to users such as City Power of Johannesburg and Eskom, the state-owned power company as yourΒ Company evolved from being purely a developer of new power plants to an owner-operator supplying electricity intoΒ South Africa's grid.
AsΒ expected,Β theΒ GroupΒ made aΒ trading loss of Β£1.2m on sales of just under Β£1m. The after tax loss of Β£4.8m includes foreign exchange losses of Β£3.6m, in connection with the final instalment payment in respect of the Coega units, which was made in Euros and also arisingΒ onΒ the sterling loans made to our operating subsidiary pending refinancing with bank debt in Rand (2007: Β£245,000 loss).
During the periodΒ the CompanyΒ made the final payment in respectΒ ofΒ theΒ 521Β MW ofΒ Fiat Avio 501 DΒ gas turbinesΒ acquired in March 2007Β for the Coega IPP development project.Β In the opinion of the Directors these turbines now have aΒ market value considerably in excess of their costΒ toΒ IPSA. Your Board is currently considering ways to release that value while remaining committed to implementing the full 1,600 MW of combined cycle capacity planned for the Industrial Development ZoneΒ ("IDZ") outsideΒ Port Elizabeth.
1) NewcastleΒ Combined Heat and Power ("CHP")
The NewcastleΒ CHPΒ atΒ KwaZulu NatalΒ was finally commissioned andΒ has now commenced steady operation with both steam and electricity sales in the first half. The Company expects to see an improved economic return later in the year. Offers under the tender process for the Eskom cogeneration tariff,Β the Pilot National Cogeneration Programme ("PNCP"),Β were submitted at the end of MayΒ 2008Β and award is expected in SeptemberΒ 2008. IPSA believes that the new tariffs to be awarded under the PNCP tariff will be higher than those it already has and, as a result, has deferred its re-financing of theΒ NewcastleΒ plant in anticipation of a further improvement to its long term tariff.Β We haveΒ recentlyΒ announced plans for an increase in the installed capacity atΒ NewcastleΒ with the acquisition ofΒ sixΒ Deutz gas enginesΒ at a cost of Β£1m. These are due to enter commercial service in the second half of 2008 adding 8 MW of nominal capacity to the 18 MW of the original NewcastleΒ CHPΒ configuration. They willΒ enableΒ our plant inΒ NewcastleΒ toΒ increase sales of electricity andΒ improve the margins onΒ steamΒ sales.
2) Coega Fast Track Project,Β Port Elizabeth
InΒ January 2008Β IPSA announced that it had signed a Memorandum of Co-operation with the South AfricanΒ Government's Central Energy FundΒ (Pty) Limited ("CEF")Β for a key role as a private sectorΒ developer to the integrated energy project being developed at the Coega Industrial Development Zone. Under the role envisaged for IPSA, the Company will install its four Fiat Avio 501 D gas turbines (whichΒ have now beenΒ upgraded from D technology to DU (F Class) technology) in support of theΒ integrated liquid fuel and liquefied natural gas ("LNG") importation project being developed under the auspices ofΒ CEF. This will be one of the first examples of a public-private partnership inΒ South AfricaΒ for an integratedΒ LNGΒ to electricity project. CEF acts as the holding company for PetroSA, the state-owned oil company, and iGas, the state-owned gas company. Under the Memorandum of Co-operation signed with IPSA, CEF envisages IPSA proceedingΒ with its proposed 1,600 MW Coega Fast Track Combined Cycle Gas Turbine Project ("the Coega Project") in close collaboration with PetroSA and iGas so as to achieve rapid installation of new privately financed power generation capacity in tandem with the Government of South Africa's plans for Coega to be at the heart of a new energy centre providing liquid fuels andΒ LNGΒ to the industrial tenants of the IDZ.
IPSA is continuing to work on all of the necessary licences, consents and leases for installation of the firstΒ 521Β MW of capacity on a coastal site with access to sufficient cooling water to be able to convert the open cycle gas turbines to combined cycle at the earliest opportunity.
3) Elitheni Clean Coal Holdings
In NovemberΒ 2007Β IPSAΒ announced theΒ sale of a 50 per cent.Β interest in its coal power project development company, Elitheni Clean Coal Holdings Limited, to Exodus Africa LLC for US$5 million. The company is developing over 500 MW of coal-fired capacity in theΒ Eastern CapeΒ based on coal from the Elitheni coal mine at Indwe. Since January 2008, the owners of the Elitheni coal mine have announced increased coal reserves sufficient for IPSA to proceed with the first 250 MW of coal-fired capacity on a fast track basis. The Company is now finalising the engineering configuration for the first Elitheni Clean Coal block of steam turbines with a view to bringingΒ first capacity into production as quickly as possible.
4) BroadlyΒ BasedΒ Black Economic EmpowermentΒ ("BBBEE")
In August 2007, IPSA announced that it had reached agreement with Metropolitan Life of South Africa for funding an investment of Β£8 million in new shares in IPSA to give aΒ BBBEE group a fifteen per cent. shareholding in IPSA. Since that time, IPSA has worked very closely with itsΒ BBBEE partners and I am delighted to report thatΒ Rizelle SampsonΒ joined the Board of IPSA as a non-executive director in January 2008.Β
We areΒ veryΒ pleased with the progressΒ theΒ GroupΒ has made since our last results announcement.Β We are excited by theΒ furtherΒ opportunities that are presenting themselves inΒ South Africa. The country's continuing need for new generating capacity isΒ demonstratedΒ byΒ continuingΒ power shortages in many parts of the country. We are looking forward to participating further in the power generation tenders announced by Eskom and to developingΒ ourΒ other initiatives, allΒ with a view to achieving theΒ Group'sΒ goal ofΒ gainingΒ aΒ significantΒ share ofΒ theΒ South AfricanΒ powerΒ generationΒ marketΒ withinΒ the next five years.
Stephen HargraveChairman
Β Β
IPSA GROUPΒ PLC
CONSOLIDATED INCOME STATEMENT (unaudited)
for the half year endedΒ 31 March 2008
Notes 6 months to Β 6 months to
31/3/08 31/3/07
Β£'000 Β£'000
Revenue 3 957 -
Cost of sales 4 (1,439) -
Gross loss (482) -
Administrative expenses (721) (435)
Operating loss (1,203) (435)
OtherΒ (expense) / income 5 (3,639) 144
FinanceΒ (expense) /Β income (10) 46
Loss before tax (4,852) (245)
Tax expense - -
Loss for the period (4,852) (245)
Loss per ordinary share 6 5.42p 0.37p
Β (basic, diluted and headline)
CONSOLIDATED STATEMENT OF RECOGNISED INCOMEΒ ANDΒ EXPENSE (unaudited)Β
for the halfΒ year endedΒ 31 March 2008
6 months to 6 months to
31/3/08 Β 31/3/07
Β£'000 Β£'000
Loss for the period (4,852) (245)
Exchange difference on translation 532 13
Total recognized loss for the period (4,320) (232)
Β
Β
CONSOLIDATED BALANCE SHEETΒ (unaudited)
atΒ 31 March 2008
Β NotesΒ 31/3/08 30/9/07 31/3/07
Β£'000 Β£'000 Β£'000
Assets
Non-current assets
Intangible 7 833 833 833
Property, plant and equipment 8 32,960 32,724 30,403
33,793 33,557 31,236
Current assets
Trade and other receivables 651 1,092 736
Cash and cash equivalents 1,464 703 2,240
2,115 1,795 2,976
Total assets 35,908 35,352 34,212
Equity and liabilities
Equity attributable to equity holders
of the parent:
Share capital 1,792 1,792 1,522
Share premium account 25,267 25,267 17,498
Foreign currency reserve (18) (550) (438)
Retained loss (8,729) (3,877) (1,272)
Total equity 18,312 22,632 17,310
Non-current liabilities
Bank loan 9 15,000 - -
Current liabilities
Trade and other payables 2,596 12,720 16,902
Total equity and liabilities 35,908 35,352 34,212
Β Β
IPSA GROUPΒ PLC
STATEMENT OF CONSOLIDATEDΒ CASHΒ FLOWS (unaudited)
for the half year endedΒ 31 March 2008
Notes 6 months to 6 months to
31/3/08 31/3/07
Β£'000 Β£'000
CashΒ used inΒ operations (12,337) (898)
Interest (paid) / received (10) 46
Net cash (used) in (12,347) (852)
operating activities
Cash flows from investing activities
Β Purchase of plant and equipment (1,892) (8,721)
Β Cash flows from financing activities
Β Bank loan 9 15,000 -
Β Issue of shares (net of costs) - 11,287
15,000 11,287
Increase in cash and cash equivalents 761 1,714
Reconciliation and analysis of change in net funds
Increase in cash during the period 761 1,714
Cash and cash equivalents at start of period 703 526
Cash and cash equivalents at end of period 1,464 2,240
Β
Reconciliation of loss before tax to net cashΒ used inΒ operations:
Loss for the period (4,852) (245)
Depreciation 109 -
Changes in working capital
Β Decrease (increase) in debtors 441 (528)
Β DecreaseΒ in creditors (10,124) (79)
Exchange translation 2,079 -
InterestΒ net 10 (46)
Net cashΒ used inΒ operations (12,337) (898)
Β Β
IPSA GROUPΒ PLC
Notes to theΒ Interim Statement
for the six months endedΒ 31 March 2008
1. Basis of preparation
2. Accounting policies
This interim statement has been prepared in accordance with the Group's IFRS accounting policies. These policies were set out in the Group's Financial Statements for theΒ yearΒ endedΒ 30Β SeptemberΒ 2007.
3. Revenue
The Company's subsidiary inΒ South AfricaΒ commenced selling steam in September 2007 and electricity in October 2007. Monthly sales have increased during the period and are expected to reach economic levels in August 2008.
4. Cost of sales
During initial production,Β the volumes of gas consumed include test levels. For this reason, there was a gross loss during the period.
5. Other (expense) / income
Other expense representsΒ exchange losses arising onΒ the Company's purchase of equipment for the Coega project and losses in the Company's subsidiary on sterling denominated loansΒ from the CompanyΒ which have funded theΒ constructionΒ ofΒ the generatingΒ plant inΒ South Africa.Β
6. Loss per share
The loss per ordinary share has been calculated on the loss for the period of Β£4.852mΒ (2007 - Β£245k)Β divided by the weighted average numberΒ (89,564,081)Β of ordinary shares in issue during the periodΒ (2007 - 67,093,195).Β There is no difference between the basic, diluted and headline calculations.
7. Intangible
The intangible non-current asset represents the fair value of the supply contract owned by Newcastle Cogeneration (Proprietary) Limited.
Β
8. Property, plant and equipment
Property, plant and machineryΒ comprises the plant inΒ South AfricaΒ (Β£9.9m) and plant acquired for the Coega project (Β£23.1m).
9. Bank loan
In March 2008, the Company obtained a bank loan of Β£15m to finance the final instalment paymentΒ forΒ the Coega plant. The loan is repayable in September 2009. Interest is atΒ LIBOR plus 3.255%.
10. The Board of Directors approved this interim statement onΒ 27Β June 2008. This interim statement has not been audited.
11. Copies of this statement are being sent toΒ all shareholders on the register atΒ today's date. Copies may be obtained from the Company's registered office, 5thΒ Floor, Prince Consort House, Albert Embankment, London SE1 7TJ.
IPSA floated on the Aim market of the London Stock Exchange in September 2005Β and obtained a dual listing on the AltxΒ market of the Johannesburg Stock Exchange in October 2006.
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