IPSA.L Regulatory News (IPSA)

 4 April 2014

IPSA Group PLC

("IPSA" or the "Company")

Operational Update

IPSA is pleased to announce that it has successfully commissioned additional capacity at its Newcastle Cogeneration Site in Newcastle, Kwa-Zulu Natal. The Deutz engine arrived in South Africa in early January and after an intensive 8 week programme completed the installation including all local certification and entered commercial operations on 20 March 2014. The efficiency of the engine is exceeding earlier projections, making this very cost effective generation on this site.

We are also pleased to announce that the installation programme for the two Jenbacher engines acquired late last year is progressing and is fully funded with support from local company FTech through a combined sterling and rand loan of ZAR5.9 million and £140,000. These engines are anticipated to be on line by mid August 2014. In addition two small LV generators are being added which together with the other gas engines will allow the site to maximise output under the current power purchase agreement in place with ESKOM and increase it by an average of 50% above last years' levels. With the addition of gas engines the overall efficiency of the installed capacity improves by 20% from last year's average.

With all the new capacity in operation the Newcastle site will be well-positioned to participate in upcoming Department of Energy IPP programmes, allowing us to bid into these opportunities immediately with existing capacity and with the full knowledge that we can expand the capacity of the Newcastle site to at least 30 MW in the future using the existing infrastructure and gas supply contracts already in place.

 Phil Metcalf, Chief Executive Officer, quoted, "after a long period of no growth in this business, we have finally turned the corner with the installation of these efficient gas engines and this provides us with a sound platform for growth in an environment which is now open for business as far as IPPs are concerned. Our shareholders have been remarkably patient and I sincerely hope that we can now reward that fortitude".

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