Unaudited Interim Results for the Six Month Period to 31 March 2009

In the six month period to 31 March 2009 the Group made a loss of £3.4m on sales of just under £1.0m. The loss per share, fully-diluted, was 3.80p.

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1) Newcastle Combined Heat and Power ("CHP") Plant

Having previously been commissioned and achieved sales of both steam and electricity, the Newcastle CHP facility in KwaZulu Natal has stood idle while waiting for the award of a power purchasing agreement with Eskom. As noted in the accounts, the Company's subsidiary in South Africa commenced selling steam in September 2007 and electricity in October 2007 but sales of electricity have been temporarily suspended since the end of September 2008 pending the application for and grant of an electricity supply contract. The delay in being awarded a contract has affected the Group's cash flow to the extent that steam sales have also been temporarily suspended since February 2009.

We are very hopeful that the power purchase agreement will be signed and implemented in the near future. The Company shares the frustration of shareholders that the agreement has taken so long to materialise. I can only assure shareholders that this is not the result of any lack of effort on the part of management, who have been working non-stop to finalise matters with Eskom; but it must be acknowledged that for Eskom the Newcastle CHP project is much less important than it is for IPSA. The resulting delay has had a number of negative impacts on the Group. In particular, the refinancing of the Newcastle project, already made more difficult by exceptionally poor conditions in international credit markets following the financial collapse of late 2008, has had to wait until an appropriate power purchase contract is in place, while the Group's profits and cashflow have been seriously hit by its obligations under the take or pay agreement with our gas provider, Sasol. That is, we find ourselves in a position of having to pay for gas we are not consuming while our generators sit there with nothing to do.

2) Fiat Avio 501 D turbines

During the period under review, and since the period end, IPSA has conducted negotiations with various parties outside South Africa for the sale of the turbines formerly earmarked for the Coega project near Port Elizabeth. It had become clear that the in-service date for the first 521 MW of open cycle gas turbine capacity at Coega, originally targeted for mid-2009, could not be achieved and IPSA has therefore been endeavouring to sell the four fully-refurbished Fiat Avio 501 D turbines acquired by the Company in March 2007 for the Coega project.

Despite various offers of interest, and moments when agreement appeared to be within sight, no firm purchaser has yet been identified for the turbines. The Directors continue to believe that the value of the turbines is considerably higher than the all-in purchase price of £32.6 million. The turbines are unusual in that they are able to run on heavy fuel oil, which makes them more adaptable than many competitors. However the terms of the Company's loan of £15 million from Standard Bank require the Company to repay the loan in full by the end of September 2009 and it is imperative that an appropriate transaction is agreed by then, or that appropriate refinancing arrangements are put in place.

3) Elitheni Clean Coal Holdings

The Group is developing over 500 MW of coal-fired capacity in the Eastern Cape based on coal from the Elitheni coal mine at Indwe. 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. Once again the advancement of this project has been hindered by our lack of cash, and further progress is dependent on the refinancing referred to above.

Overall it has been a very frustrating time. South Africa's need for new generating capacity is demonstrated by continuing power shortages in many parts of the country; the authorities have been obliged to make arrangements with other countries in the region to ensure uninterrupted supplies during the 2010 football World Cup. Our Newcastle facility has been waiting for the best part of a year while the award of a long term power purchase agreement has been held up by delays beyond our control. We are now very hopeful of good news on the power purchase agreement in the near future - but previous experience has taught us to be cautious about being too optimistic on timing.

The Company's financial position, clearly, is difficult. We have some excellent and valuable assets in the Newcastle plant and the four Fiat Avio turbines. On the other hand we are very short of cash; indeed we have already announced that during the period we were dependent for survival on funding from Independent Power Corporation PLC ("IPC"), a company controlled by our own chief executive. This funding has kept the Group alive but it is not a bottomless well. The current amount due to IPC is £0.63m, following the conversion of £0.55m of existing loan into ordinary shares in the Company in March 2009. In addition, interest payments of £0.58m are overdue in respect of the Company's senior secured bank loan.

Shareholders should note that the independent auditors included an emphasis of matter paragraph in their unqualified opinion of the Group's Financial Statements for the year ended 30 September 2008 in light of the uncertainties at the time.

It is essential for our survival that we make rapid progress with the refinancing of the Newcastle facility and the sale of the Fiat Avio turbines. Shareholders will be kept fully informed.

Stephen Hargrave
Chairman
25 June 2009