Unaudited Interim Results

4 June 2010

Unaudited Interim Results for the Six Month Period to 31 March 2010

Chairman's Statement

I am pleased to report the Company's interim results for the six month period to 31 March, 2010. The results are broadly in line with our expectations.  The net loss after tax for the half year is £0.83m (2009 half year loss - £3.4m), giving a basic loss per share of 0.87p (2009 half year loss per share 3.8p).  The operating loss for the period under review was £1.08m (2009 - £1.2m).  During the comparative period in 2009 our South African operations saw some revenues to offset the operating expenses.  Unrealised foreign exchange gains during the first half of our current financial year have offset the interest and storage costs incurred.

The last year was a period of continued difficulty in the South African power industry as Eskom struggled to re-arrange its finances and to meet its obligation to sign contracts with independent power producers (IPPs) for the provision of privately generated electricity.  Now at last we seem to be sensing the first signs of an integrated energy policy for South Africa which includes IPPs at its heart.

1)   Newcastle Cogeneration

IPSA was the first company in South Africa to build a new IPP power plant, yet in spite of that accolade, the gas fired power at Newcastle in KwaZulu Natal remained idle for the whole of the reporting period with its staff on standby to generate in the event that Eskom finalised the Medium Term Power Purchase Programme (MTPPP) tender process which began in September 2008.  As at 31 March 2010, no contracts under the MTPPP had been awarded and none have been announced to date.  In the meantime IPSA's plant did not run but continued to incur both direct costs of employing staff as well as rent, rates, rates and gas supply liabilities of a normal, fully constructed power plant.

Since the end of the half year, there have been promising signs that the bottleneck in the contracting process between Eskom and the South African electricity regulator, NERSA, has been cleared.  In parallel with the planned start up, IPSA is engaging with potential South African lenders for a refinancing of up to US $20 million of its own inter-company funding of the Newcastle plant, based upon a power purchase agreement under the MTPPP.  Financial close is targeted to occur in the current financial year.

2)    Coega Fast Track Project, Port Elizabeth

In October 2008, IPSA announced that it had put its four Siemens industrial gas turbines, purchased in 2007 for installation at the IDZ as part of our proposed fast track coastal power plant development at Coega, on the market.  To date one turbine is under contract to a company controlled by Peter Earl, IPSA's chief executive, for a project outside South Africa.  In March 2010, IPSA announced that it had entered into a marketing agreement with TurboCare SpA and Standard Bank which provided for the marketing of the units as well as a formal standstill arrangement in respect of the amounts due to both these entities now and arising over the period of the agreement. 

Early in April 2010, IPSA was informed by the Coega Development Corporation, owners of the IDZ that it had qualified for a new tender at Coega to supply a combined cycle power plant serving the IDZ.  A request for proposals will be issued shortly.  IPSA is working in partnership with Arcus GIBB (Pty) Limited, the consulting engineers.

3)    Elitheni Clean Coal Holdings

As previously announced, IPSA has continued to work on the environmental impact assessment for the Indwe based coal fired power development through its wholly owned subsidiary, Elitheni Clean Coal Holdings Limited.  IPSA has executed an option to acquire a suitable site adjacent to the Elitheni mine. The Company is now also advancing its planning consents and engineering plans for the first Elitheni Clean Coal unit of up to 250 MW.

On 5 March 2010 the Company entered into an agreement with RAB Energy Fund Limited and certain other investors (together the "Loan Note Holders") to issue £650,000 of unsecured loan notes (the "Loan Notes") to the Loan Note Holders. The proceeds from issuing the Loan Notes are being used for development of the Elitheni coal project at Indwe, South Africa, and for general operational and working capital purposes.

We believe that real progress has been made at IPSA since our last results announcement.  South Africa needs new generating capacity more than ever as is shown by the current fear of power shortages just as the country's show case football tournament begins.  I am pleased to have taken over as chairman of IPSA from Stephen Hargrave just as the first new private power initiatives for two years start to be announced.  I am looking forward to making sure that IPSA becomes a leading player in the supply of independent South African power generation capacity in the near future.

Richard Linnell

Chairman

3 June 2010

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