Wrap Text
IPS - IPSA Group Plc - Unaudited results for the 6 month period ended 30
September 2011
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration Number 5496202)
AIM Share Code IPSA ISIN GB00BOCJ3F01
JSE Share Code IPS ISIN GB00BOCJ3F01
("IPSA" or "the company")
UNAUDITED RESULTS FOR THE 6 MONTH PERIOD ENDED 30 SEPTEMBER 2011
IPSA, the AIM and Altx 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 2011.
Highlights:
Revenue of GBP1.9m (2010 - GBP0.7m) comprising electricity sales of GBP1.7m
(2010 - GBP0.7m) and steam sales of GBP0.2m (2010 - nil)
Group after tax loss of GBP2.6m (2010 - GBP0.4m loss)
Production of electricity under the MTPPP contract and, since July 2011, re-
commencement of steam sales under a temporary contract, has generated a gross
margin (revenue less cost of gas consumed) of GBP0.5m (2010 - GBP0.1m)
As announced on 2 December 2011, new contracts for the sale of the 4 turbines
have been exchanged at a gross price of USD66.0m
Commenting, Richard Linnell, Chairman of IPSA, said:
"Following the significant delays before recommencing production of electricity
in March 2011, which was due to the protracted negotiations in finalizing the
MTPPP contract, it is pleasing to report that the plant in South Africa is now
fully operational and, although output is still below full capacity, the plant
is cash generative. We expect to add additional capacity by mid 2012 which we
believe will make the plant profitable, covering both operating costs and
depreciation, and will maximize revenues from our existing MTPPP contract.
"It is also most encouraging that the lengthy negotiations on the sale of the
turbines have resulted in the exchange of new contracts, approved by our key
creditors, on 30 November 2011. However, the working capital position will
remain extremely tight until the sales of the four Turbines are completed."
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 2011. All comparisons to the prior interim period are made to
results for the six months ended 30 September 2010. The previously published
unaudited interim results were for the twelve month period ended 30 September
2010 as the Company has changed its year end to 31 March.
The results are broadly in line with our expectations. The net loss after tax
for the period was GBP2.6m (2010 - GBP0.4m), giving a basic loss per share of
2.43p (2010 - loss per share 0.4p). The operating loss for the period under
review was GBP0.8m (2010 - GBP1m). Other expense (comprising legal fees and
storage costs associated with the turbines less unrealised exchange gains) was
GBP1.0m (2010 - Other income of GBP1.4m due to release of overprovision of gas
expense) and the net finance expense was GBP0.9m (2010 - GBP0.7m).
Revenues of GBP1.9m (2010 - GBP0.7m) during the period represented sales of
steam and electricity (2010 - electricity only during the FIFA World Cup South
Africa).
NewCogen
Following the recommencement of commercial operations at the plant on 24 March
2011, approximately 20.7 million kWh of electricity was sold to Eskom under the
MTPPP contract up to 30 September 2011. Steam sales were resumed in June and
16,231 tonnes of steam were supplied to Karbochem by 30 September 2011 under an
interim steam contract.
In accordance with the terms of the MTPPP contract, the sales price of
electricity was increased by 5.8 per cent in April 2011. Subsequently, margins
have suffered since July 2011 as a result of an 8.1 per cent increase in the gas
price following an increase in the Brent oil price, which is a component of the
escalation mechanism in the gas contract. We are considering a hedging contract
to help protect against material movements in the price of Brent oil.
In December 2010, Sasol Gas Ltd served a summary judgment notification on
NewCogen which we announced we would defend vigorously. Discussions have been
initiated with a view to resolving this dispute as soon as possible.
The Turbines
On 20 July 2011, the Company announced that that it had entered into conditional
equipment sale agreements in respect of its four Siemens Westinghouse 701 DU gas
turbines for an aggregate consideration of USD66.0 million (approximately
GBP42.3m at yesterday`s exchange rate). Each purchaser paid a deposit of USD2
million in cash, which was held on deposit at 30 September 2011. On 30 November
2011, having obtained the approval of Standard Bank PLC and Turbocare SpA, the
Company`s key creditors, revised contracts were exchanged with a completion date
of on or before 31 January 2012. The Directors anticipate that, following
receipt of all the proceeds, the Company will be in a position to settle with
all its creditors, including the GBP18.5m of loan principal and accrued but
unpaid interest and legal and other fees due to Standard Bank PLC and
approximately GBP15.1 million of trade payables, accrued interest and storage
charges 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 4 turbines of approximately
GBP6.3m (based on a USD/GBP exchange rate of 1.57 and a Euro/GBP rate of 1.17).
Working capital
In spite of the revenues arising from the recommencement of electricity sales
and the continuing very strict cost containment measures, the Group`s working
capital will continue to remain extremely tight until the Company completes the
sales of the turbines.
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. There are a number of potential opportunities
arising, particularly in South Africa, as demand for electricity increases once
more as a result of increased mining and other energy intensive manufacturing
activities.
Conclusion
With completion of the turbine sales due well before the end of our financial
year, and several projects in advanced stages of development, I look forward to
reporting more positive news in the annual report.
Richard Linnell
Chairman
London
8 December 2011
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited) for the 6
month period ended 30 September 2011
Notes 6 months 6 months 18 months
30/9/11 30/9/10 31/3/11
unaudited unaudited audited
GBP`000 GBP`000 GBP`000
Revenue 3 1,884 675 801
Cost of sales 4 (2,128) (1,156) (2,671)
Gross loss (244) (481) (1,870)
Administrative (543) (550) (1,876)
expenses
Operating loss (787) (1,031) (3,746)
Other (expense) / 5 (966) 1,364 955
income
Finance expense (net) (860) (711) (2,447)
Loss before tax (2,613) (378) (5,238)
Tax expense - - -
Loss after tax (2,613) (378) (5,238)
Other comprehensive
income:
Exchange differences (1,014) (36) (492)
on translation of
foreign operation
Total comprehensive (3,627) (414) (5,730)
loss attributable to
Equity Shareholders
Loss per ordinary 6 (2.43p) (0.40p) (5.47p)
share (basic, diluted
and headline)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited) at 30
September 2011
Notes 30/9/11 30/9/10 31/3/11
unaudited unaudited audited
GBP`000 GBP`000 GBP`000
Assets
Non-current assets
Intangible 7 - 583 -
Property, plant and 8 11,394 13,656 13,319
equipment
11,394 14,239 13,319
Current assets
Trade and other 957 2,154 2,966
receivables
Cash and cash 9 2,690 258 33
equivalents
3,647 2,412 2,999
Non-current assets 10 34,279 31,629 31,629
classified as assets
held for sale
Total assets 49,320 48,280 47,947
Equity and liabilities
Equity attributable to equity holders of the parent:
Share capital 2,150 1,900 2,150
Share premium account 26,767 26,027 26,767
Foreign currency (3,068) (1,944) (2,054)
reserve
Profit and loss (21,645) (15,002) (19,032)
reserve
Total equity 4,204 10,981 7,831
Current liabilities
Trade and other 11 24,113 19,502 21,055
payables
Borrowings 12 21,003 17,797 19,061
45,116 37,299 40,116
Total equity and 49,320 48,280 47,947
liabilities
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
for the 6 month period ended 30 September 2011
6 months 6 months 18 months
30/9/11 30/9/10 31/3/11
unaudited unaudited audited
GBP`000 GBP`000 GBP`000
Loss for the period (2,613) (378) (5,238)
Add back net finance 860 711 2,447
expense
Adjustments for:
Depreciation 420 415 1,317
Impairment of - 41 666
intangible asset
Translation and (156) (605) (1,648)
unrealised exchange
gains
Change in trade and 7 (46) (586)
other receivables
Change in trade and 1,564 (573) 1,179
other payables
Cash generated / (used 82 (435) (1,863)
in) operations
Interest paid (2) (3) (243)
Net cash 80 (438) (2,106)
generated/(used in)
operations
Cash flows from
investing activities
Sale / (purchase) of 6 11 (55)
plant and equipment
Deposit on assets held 2,560 624 624
for resale
Return of deposit (650) - -
1,916 635 569
Cash flow from
financing activities
Loan note issued - - 650
Other loans received 661 367 418
Other loans repaid - (624) (624)
Issue of shares - - 1000
Issue costs - - (10)
661 (257) 1,434
Increase / (decrease) 2,657 (60) (103)
in cash and cash
equivalents
Cash and cash 33 318 136
equivalents
at start of period
Cash and cash 2,690 258 33
equivalents
at end of period
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited) for the 6
month period ended 30 September 2011
Share Share Foreign Profit and Total
capital premium currency loss equity
Account reserve reserve
GBP`000 GBP`000 GBP`000 GBP`000 GBP`000
At 1.10.09 1,900 26,027 (1,562) (13,794) 12,571
Loss for the - - - (830) (830)
period
Other - - (346) - (346)
comprehensive
loss
Total recognised - - (346) (830) (1,176)
expense for the
period
At 31.3.10 1,900 26,027 (1,908) (14,624) 11,395
Loss for the - - - (378) (378)
period
Other - - (36) - (36)
comprehensive loss
Total recognised - - (36) (378) (414)
expense for the
period
At 30.9.10 1,900 26,027 (1,944) (15,002) 10,981
Loss for the - - - (4,030) (4,030)
period
Other - - (110) - (110)
comprehensive loss
Total recognised - - (110) (4,030) (4,140)
expense
for the period
Issue of shares 250 750 - - 1,000
Share issue costs - (10) - - (10)
Total transactions 250 740 - - 990
with owners
At 31.3.11 2,150 26,767 (2,054) (19,032) 7,831
Loss for the - - - (2,613) (2,613)
period
Other - - (1,014) - (1,014)
comprehensive loss
Total recognised - - (1,014) (2,613) (3,627)
expense for the
period
At 30.9.11 2,150 26,767 (3,068) (21,645) 4,204
Notes to the unaudited Interim Statement for the 6 month period ended 30
September 2011
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 18 month period ended 31 March 2011 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 2012 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 18 month period ended 31 March 2011.
3. Revenue
Following execution of the MTPPP ("Medium Term Power Purchase Programme")
agreement in August 2010 and a long term gas supply contract in February 2011,
the Company`s subsidiary in South Africa, Newcastle Cogeneration (Proprietary)
Ltd ("NewCogen") re-commenced selling electricity in March 2011 and steam in
June 2011.
4. Cost of sales
Cost of sales comprises cost of gas, routine plant maintenance, depreciation and
other direct costs.
5. Other income / 6 months 6 months 18 months
(expense) 30/9/11 30/9/10 31/3/11
GBP`000 GBP`000 GBP`000
Exchange gains1 107 407 422
Exchange gains2 - 180 1,226
Storage, legal and (1,073) (465) (1,267)
insurance costs3
Gas - take or pay4 - 1,242 1,240
Impairment charge5 - - (666)
Total (966) 1,364 955
1 Exchange gains arising on the Euro denominated amount owing to Turbocare in
respect of the refurbishment costs of the 4 Siemens gas turbines which were
originally acquired for the Coega project and are now held as an `asset held for
resale`;
2 Exchange gains arising in the Company`s subsidiary, NewCogen, on sterling
denominated loans from the Company which have funded the construction of the
generating plant in South Africa. Since 31 March 2011, the loans to NewCogen are
being accounted for as long-term / quasi-equity loans and gains and loss arising
from movement of the ZAR relative to Sterling are accounted for in the foreign
currency reserve.
3 Storage, legal and insurance costs in respect of the storage of the 4 Siemens
gas turbines pending their sale (see note 9 below);
4 The `take-or-pay` gas contract was terminated by Sasol Gas Ltd in July 2009.
During earlier periods, there was a charge representing the difference between
the minimum offtake level required under the `take-or-pay` contract and the gas
actually used since for certain periods the plant in Newcastle was unable to
operate due to the absence of a electricity offtake agreement. The credit in the
prior period represents the write-back of over-provisions in earlier periods;
5 Following the cessation of steam generation in 2009, the steam supply contract
was terminated and accordingly the carrying value of the contract was impaired
to nil.
6. Loss per share 6 months 6 months 18 months
30/9/11 30/9/10 31/3/11
Average number of 107.5m 95.0m 95.8m
shares in issue
during the period
Loss for the period GBP2.613m GBP0.378m GBP5.238m
Loss per ordinary 2.43p 0.40p 5.47p
share (basic,
diluted and headline)
7. Intangible
The intangible non-current asset represented the fair value of the steam supply
contract owned by NewCogen. This was written-off at 31 March 2011.
8. 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 2011
comprises depreciation of GBP0.4m and exchange adjustment of GBP1.5m.
9. Cash and cash equivalents
Cash and cash equivalents includes USD4m (GBP2.6m) in respect of deposits
received on the turbine sales (see also 11c below).
10. Assets held for resale
These assets comprise the 4 Siemens gas turbines which were acquired in 2007 for
the proposed Coega project in South Africa. As a result of the delay in that
project, it was decided that the turbines should be sold. Contracts for their
sale were exchanged on 30 November 2011 for a gross price of USD66.0m. Cash
deposits totalling USD4.0m have already been received and it is expected that
completion will occur before the end of January 2012. The increase in the
carrying value of these assets since 31 March 2011 includes (a) GBP2m of Italian
VAT which has been charged on the refurbishment work and which may not be
recoverable and which previously was carried in `trade and other receivables`
and (b) the refund of a deposit of USD1m (GBP650) received in December 2009
following non-completion of that contract.
11. Trade and other payables
Trade and other payables includes:
a) An amount of GBP15.1m (30/9/10 - GBP14.2m, 31/3/11 - GBP14.8m) owing to
Turbocare SPA, the supplier of the 4 turbines, in respect of the refurbishment
and storage of the turbines, plus interest.
b) An amount including interest of GBP4.0m (30/9/10 - GBP3.6m, 31/3/11 -
GBP3.6m) claimed by Sasol Gas Ltd against the Company`s subsidiary, NewCogen.
The claim is being disputed and unless a mutually agreeable settlement is
achieved, the parties will refer the claim to arbitration. The claim relates to
amounts invoiced by Sasol Gas Ltd prior to the termination of the gas supply
agreement by Sasol Gas Ltd in 2009.
c) An amount of USD4m (GBP2.6m) in respect of the deposits received on the
turbine sales (see 9 above).
12. Borrowings
Included within borrowings are the following loans:
a) Amount due to Standard Bank of GBP18.5m, including accrued interest and legal
fees (30/9/10 - GBP16.8m, 31/3/11 - GBP17.2m). In March 2008, the Company
obtained a bank loan of GBP15.0m 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 due on demand though Standard
Bank PLC have agreed not to demand repayment pending completion of the sales
contracts referred to in 9 above.
b) Loan note of GBP0.7m, including interest (30/9/10 - GBP0.7m, 31/3/11 -
GBP0.7m). On 5 March 2010, the Company issued a GBP0.7m unsecured loan note,
with interest payable at 6%. The loan note was originally repayable by 31
January 2011. The repayment date was formally extended to 31 July 2011. 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 8p
per share or such lower price at which any future ordinary shares are issued
prior to exercise.
c) Other loans of GBP1.9m, including interest (30/9/10 - GBP1.0m, 31/3/11 -
GBP1.1m), comprising unsecured loans, with interest rates of between 5% and 12%,
repayable within 12 months.
The Board of Directors approved this interim statement on 6 December 2011. 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 Altx market of the Johannesburg Stock
Exchange in October 2006.
Date: 08/12/2011 09:30:01 Supplied by www.sharenet.co.za
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