IPSA GROUP PLC - Addition of New Generation Capacity in South Africa

Addition of New Generation Capacity in South Africa

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")



Addition of New Generation Capacity in South Africa



IPSA Group PLC (AIM: IPSA), the developer, owner and operator

of power generation capacity in southern Africa, today

announces that, as part of its further expansion plans, its

Newcastle Cogeneration subsidiary (“NewCogen”) has entered

into a contract to acquire two high efficiency Jenbacher 616

gas engines of 2 MW capacity each which, allowing for de-

rating due to site conditions in Newcastle, KZN, will provide

an additional 3.8 MW of capacity for selling power under

NewCogen’s existing MTPPP power contract with Eskom.



The gas engines are being acquired from Independent Power

Corporation PLC, a subsidiary of Rurelec PLC, for a total

purchase price of GBP1.2 million.    The consideration will be

satisfied as to the sum of GBP1 million by an offset of

approximately USD1.6 million against the debt of US D 6.5

million still owed by Rurelec to the Company arising from the

conditional agreement to dispose of the Company’s two Siemens

Westinghouse 701 DU gas turbines announced on 10 June 2103.

The balance of GBP0.2 million will be paid in cash when the

engines enter into commercial operations at the Company’s site

in Newcastle, which is expected to be in March 2014.



The purchase of the engines constitutes a related party

transaction under Rule 13 of the AIM Rules for Companies

because (i) Sterling Trust is a Substantial Shareholder (for

the purposes of the AIM Rules) in both Rurelec PLC and IPSA;

and (ii) Peter Earl and Elizabeth Shaw are each directors of

both Rurelec PLC and IPSA.



The independent directors of IPSA (being Richard Linnell and

Neil Bryson) having consulted with the Company’s nominated

advisor, W.H. Ireland, consider that the terms of the

transaction are fair and reasonable insofar as IPSA’s

shareholders are concerned.      The Company has obtained an

independent valuation of the two Jenbacher engines.



IPSA further announces that the 1.3 MW Deutz TBG 620k gas

engine purchased in August 2013 has completed testing and is

now being shipped to South Africa. The engine is expected to

be installed and commissioned before year end.

With the installation of these three gas engines, the

Newcastle plant will generate at the full 14.3 MW capacity

contracted under the PPA with ESKOM.   This is significantly

higher than the average 10 MW which is being achieved at the

present time.



Commenting on the acquisition, CEO, Phil Metcalf said: “The

new capacity, which will operate at a significantly higher

efficiency than that of the current plant, will enable IPSA to

maximise the commercial potential of its existing MTPPP

contract with Eskom. It will also allow us to supply greater

capacity under whatever new PPA arrangements are put in place

when the current MTPPP programme comes to an end in 2015 and

the Department of Energy’s replacement PPA programme comes

into effect. With little additional operating costs required

to support these new gas engines, we are expecting a marked

improvement in margins at the Newcastle plant.”



London

22 November 21013



For further information contact:



Phil Metcalf, CEO                 +44 (0)20 7793 5615

IPSA Group PLC



James Joyce / Nick Field          +44 (0)20 7220 1666

W H Ireland Ltd



Riaan van Heerden,                 +27 (0)21 887 9602

PSG Capital (Pty) Ltd


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