Trading Update

2 August 2013

IPSA Group PLC

("IPSA" or the "Company")

Trading Update

New Generation Capacity for Newcastle

Arbitration with Turbocare

IPSA Group PLC (AIM: IPSA), the developer, owner and operator of power generation capacity in southern Africa, is pleased to announce that NewCogen, the Company's wholly owned generation subsidiary, has acquired a Deutz gas fired engine of 1.3 MW which is due to be installed at the Newcastle site by the end of October and which will operate under the existing MTPPP contract with ESKOM. This is the first new capacity at Newcastle since the original plant was commissioned in 2007.

Furthermore, NewCogen is in advanced discussions for installing up to 8MW of gas engines through a co-operation agreement with a third party willing to bring its own funding for the expansion. Through these and other programmes in development, NewCogen and IPSA will be well positioned to respond positively to the recently issued Request for Registration and Interest issued by the Department of Energy to which IPSA responded on the 12 July 2013, with new capacity capable of being installed within the next 18 months.

IPSA is also pleased to announce that, following the receipt of the agreed £1,000,000 from Sterling Trust in relation to the vendor placing of Rurelec PLC shares issued as part of sale of the turbines announced on 10 June 2013, the Company has been able to meet its immediate obligations to non-salary creditors, with the exception only of Turbocare S.p.A ("Turbocare") with whom IPSA is in dispute in relation to a sum of approximately €4.9 million which Turbocare claims it is owed under the Turbine Refurbishment Agreement ("the Agreement").

Under the Agreement, in the event that Turbocare has not been paid the sum which it is claiming by 15 September 2013, the matter will proceed to settlement by arbitration under the London Court of International Arbitration ("LCIA"). The directors of IPSA believe a substantially lower sum is owed. Accordingly, Turbocare has filed a request to commence arbitration under the LCIA process and IPSA has accepted this request. The directors believe that the LCIA process will take many months to conclude.

The Directors of IPSA would draw shareholders' attention to the fact that the full amount claimed by Turbocare has already been recognised as a creditor balance in the Company's accounts even though IPSA's position remains that the sums billed by Turbocare are incorrect. IPSA has made an offer to Turbocare to settle prior to arbitration commencing and still hopes to achieve settlement between the parties outside of the arbitration process.

Until the sale of the final two turbines is completed and final sums received from Rurelec PLC, the Company's working capital position will remain tight, although approximately £1.2m of outstanding salary creditors are not due for payment until the earlier of the date that IPSA has sufficient funds or 31 May 2014, as previously announced. The majority of the Company's assets are held in the form of the operating plant at NewCogen, together with surplus turbine equipment held by Turbocare which the Company is considering selling in order to raise funds.

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