Interim Results Six months ended 30 June 2008. Interim Results Philip Cox, CEO

Interim ResultsSix months ended 30 June 2008

Interim ResultsPhilip Cox, CEO

Interim Results August 2008 International Power3

Highlights

Profit from operations £495m - up 19%

EPS 14.3p - up 7%

Interim dividend 3.56p per share up 29%

Portfolio growth continues– 3,105MW (net) new capacity additions announced– five new projects - new build / acquisitions– embedded growth - four opportunities crystallised via

existing projects– strong pipeline of further growth opportunities

One off issues impact Rugeley H2 profit by £45m

Locking in attractive spreads in the UK in 2009/2010

All numbers in this presentation exclude exceptional items and specific IAS39 mark to market movements, unless stated otherwise

Financial ReviewMark Williamson, CFO


Income statement

North AmericaEuropeMiddle EastAustraliaAsiaCorporate costsProfit from operationsInterestPBTTaxMinority interestProfit for the year

Reported EPSFX benefitUK tax reduction - deferred tax release

76 299

32 70 42

(24)495 (182)313 (63)(35)215

14.3p(0.6)p

13.7p

changeSix months ended 30 June

42 268

29 46 55

(24)416 (140)276 (41)(34)201

13.4p

(1.2)p12.2p

81% 12% 10% 52%

(24%)

19%

13%

7%

7%

12%

2008£m

2007£m


North America

Texas Coleto Creek dust emissions control

equipment installed H1 2007 Midlothian’s load factor reduced

– cooler weather in April and May– increased wind generation

Hays benefited from:– warmer weather– congestion in South Zone

New England Higher peak and lower offpeak

generation

Profit from operationsup 81%

£42m

£76m

H1 2007 H1 2008

£61m

£29m

£15m£13m

Share of JVs and associates Subsidiaries


Europe

Continued strong performance at First Hydro

First time contribution from Maestrale

Reduction in Rugeley’s contribution:

– FGD installation at Rugeley– record achieved dark spreads

in 2007

Good performance from Saltend and Deeside


£268m£299m

£239m£238m

£60m£30m

H1 2007 H1 2008



Middle East


£29m£32m

£20m£20m

£12m£9m

H1 2007 H1 2008

All assets achieved high operational performance

Full contribution from Umm Al Nar in H1 2008

Completed construction at Ras Laffan B in June

Hidd achieved full commercial operation in May 2008



Australia

Improved contributions from Hazelwood and Loy Yang B

Unplanned outage at Hazelwood – £16m H1 impact

Synergen able to capture high spot prices


£46m

£70m

£68m

£45m

£2m£1m

H1 2007 H1 2008



Asia

Malakoff sold in May 2007 for £249m (profit on disposal - £115m)

Planned outage at Paiton Acquisition of additional 31%

of Uch Delayed payments by offtaker

to Pakistan projects– no impact on earnings

Profit from operationsdown 24%


£55m

£42m

£36m

£8m

H1 2007 H1 2008

£47m

£6m


Interest cover and effective tax rate

PFOJVs and associates Interest Tax

PBITTotal interest Subsidiaries JVs and associates Interest coverProfit before total taxTotal tax Subsidiaries JVs and associates

Effective tax rate

2.6x2.5x

495

47 26

73 568

(182)(47)

(229)

339

(63)(26)(89)

26%

416

47 27

74 490

(140)(47)

(187)

303

(41)(27)(68)

22%

2008 2007Six months ended 30 June £m £m


Free cash flow

Operating cash flow from subsidiaries

Dividends - JVs and associates

Capex - maintenance

Cash generated from operations

Net interest paid

Tax paid

Free cash flow

£m

476

53

(34)

495

(155)

(31)

309

503

39

(63)

479

(202)

(49)

228

2008 2007Six months ended 30 June

(3%)

(26%)

£m


Movement in net debt

Free cash flow

Growth capex

Acquisitions and investments

Disposals

Dividend paid

FX & other

Payment to minorities

Change in net debt

Opening net debt

Closing net debt

309

(99)

(140)

417

(118)

(18)

(31)

320

(3,575)

(3,255)

228

(80)

(167)

-

(112)

(122)

(19)

(272)

(4,662)

(4,934)

2008 2007£m £mSix months ended 30 June


Balance sheet

Non-current assets

Goodwill and intangibles

PP&E

Investments

Other long-term assets

Net current liabilities

Non-current liabilities

Net debt

Net assets

Gearing

Debt capitalisation

Net debt of JVs and associates

901

5,721

1,292

1,530

9,444

(355)

(1,420)

(4,662)

3,007

155%

61%

(1,297)

991

5,961

1,480

1,626

10,058

(601)

(1,516)

(4,934)

3,007

164%

62%

(1,336)

30 June 2008

£m £m

31 December2007


Net debt structure

Cash and cash equivalents

Recourse debt

IPR facility (revolver)

Convertible bond (2023)(2)



Non recourse debt

IPM - acquisition debt

IPM - Mitsui preferred equity

North America

Europe

Middle East

Australia

Asia

Total net debt

1,486

(29)

(117)

(453)

(153)

(752)

(243)

(151)

(888)

(2,927)

(305)

(1,120)

(34)

(5,668)

(4,934)

Total£m

IPRCorporate

(1) Project debt is secured solely on the assets and cash flow of the project concerned (non recourse)(2) The convertible bonds are shown at their final maturity date although they can be converted earlier

As at 30 June 2008

Project cash/(debt) (1)

357

(29)

(117)

(453)

(153)

(752)

-

-

-

-

-

-

-

-

(395)

1,129

-

-

-

(243)

(151)

(888)

(2,927)

(305)

(1,120)

(34)

(5,668)

(4,539)

JVs and associatesoff-balance sheet

net debt (1)

-

-

(145)

(210)

(604)

(68)

(309)

(1,336)

(1,336)

Maturity

2023

2015

2013

2012

2008

2010-2013

2010-2026

2017-2025

2010-2019

2020

Maturity

2013-2019

2009-2020

2021-2030

2009-2012

2008-2018

£m £m £m


Financial summary

PFO up 19%– all regions up, except Asia– Asia reflects sale of Malakoff in 2007

EPS up 7%

Interim dividend of 3.56 pence per share

Free cash flow remains strong

Funding of growth continues– Convertible bond – May 2008– US peaking plants – July 2008

Interim ResultsPhilip Cox, CEO


Load continues to grow– little signs of economic

downturn in Texas– economy benefiting from oil

industry / demographics

Shift in supply balance between Texas Zones

– STP nuclear plant moved to Houston Zone resulting in congestion in South Zone

– increased wind generation resulted in extra offpeak supply to North Zone

Pricing environment– strong prices in South Zone

in H1– late start to North Zone peak

season, lower off peak pricing

US - Texas

Achieved dark spread ($/MWh)

Load factor

Forward contracted

Coleto Creek

29

75%

n/a

30

95%

95%(3)

Midlothian

Achieved spark spread ($/MWh)

Load factor

Forward contracted

14

55%

n/a

15

40%

80%(3)

Hays


Load factor

Forward contracted

10

45%

n/a

21

70%

80%(3)

(2)

20072008

Full Year(1)

20072008

Full Year(1)

20072008

Full Year(1)

IPR forecast

Excludes SO2 costs

% of anticipated output for the full year

(1)

(2)

(3)


Fundamentals remain strong– capacity market provides

stable earnings– energy prices remain strong

on peak– off peak pricing affected by

increased imports from Canada and New York

Load growth continues at modest levels– new supply from demand resources should increase energy

margins– new peakers planned in Connecticut will have little effect on

IPR plant energy margins

Regional Greenhouse Gas Initiative (RGGI)– CO2 rules take effect January 2009– quarterly auction of credits beginning in September – not all RGGI State ready in time – may cause price volatility– IPR CCGT plants well positioned

US - New England


Load factor

Forward contracted

New England

16

60%

n/a

27

40%

85%(3)

(2)

20072008

Full Year(1)

IPR forecast

Includes FCM receipts

% of anticipated output for the full year

(1)

(2)

(3)


US peaking plant acquisition

Four peaking plants totalling 1,857MW

Location: PJM, MISO– attractive long term supply demand fundamentals

Modern, efficient plant at significant (over 30%) discount to new build

Attractive return on investment - underpinned by capacity payments

Opportunity for further expansion– large sites allow conversion to CCGT and/or additional

peaking units

PlantArmstrongPleasantsCalumetTroy

Capacity Fuel type Location625MW313MW303MW616MW

Dual - gas/oilDual - gas/oilGasDual - gas/oil

Pennsylvania, PJMWest Virginia, PJMIllinois, PJMOhio, MISO

MISOPJM

Calumet TroyArmstrong

ChicagoColumbus Pleasants

Charleston

Pittsburgh


Europe - UK 2008

Significant overhaul and construction work (FGD) at Rugeley during 2008– final FGD commissioning – phased in December 2008/early 2009– LCPD sulphur limits to be met via use of low sulphur coal and derogated

hours running– extended outage at Rugeley - failure of a new component on

recommissioning on one unit

Total PFO impact £45m in H2 2008

Spark spreads holding up despite sharp recent decline in spot market gas– short-term benefit for Deeside un-contracted capacity

Strong performance at First Hydro– tight market conditions due to supply shortfalls– strong performance in balancing mechanism and short term markets– continued demand for reserve capacity

% of anticipated output for the full year(2) Pre cost of CO2(1) IPR forecast (3)

Spread £/MWh

Load factor

Forward contracted

28

70%

55%

23

50%

n/a

Rugeley Deeside

2007

18

45%

95%

34

65%

n/a

2008 20072008

(3)

Full Year

(2)n/a

90%

99%

n/a

90%

n/a

Saltend

20072008(1) (1) (1)


Europe - UK outlook

Locking in attractive dark spreads in the UK in 2009/2010– Rugeley:

– 2009: 6.7TWh contracted @ spread £29/MWh– 2010: 4.3TWh contracted @ spread £28/MWh

– Saltend: – 2009: 75% forward contracted– 2010: 45% forward contracted

– Deeside:– fundamentals not fully reflected in forward spark spreads

UK market fundamentals remain strong


Europe - continental assets

Elecgas construction programme on track– commercial operation in 2011

Building on existing platform of wind portfolio– 55 new MW added year to date– pipeline of further projects across Europe / UK– Maestrale, Levanto operating well

All long term contracted assets performing well– good performances in Iberia/Turkey– particularly strong performances at ISAB, Czech Republic

Elecgas - Schematic


Middle East - construction programme

Ras Laffan B - Qatar

Key elements constructed ahead of time and on budget– three of four desalination units entered commercial

operation ahead of schedule

High plant availability and output

Another excellent project delivery adds to strong track record in region

Hidd - Bahrain

Build programme successfully completed:– now fully available with full power

1,006MW (gross) and water 90 MIGD – strong plant availability 92.4%

Fujairah F2 - UAE

Construction programme underway

Full commercial operation - 2010Fujairah F2 - Schematic

The facility will be constructed by an EPC consortium of Alstom and SIDEM.


Australia

Significant improvement in achieved prices

Availability at Hazelwood in H1 constrained by boiler issues - now fixed

Some softening of forward pricing (approximately 10% down on last month):

– mild winter weather– high plant availability– main hydro-electric reservoirs remain at low levels in Victoria and

Tasmania– Hazelwood 2008 average achieved price estimated at A$44MWh

Long term fundamentals attractive– record demand in March 2008

(1)IPR forecast % of anticipated output for the full year

(2)

Achieved average price ($/MWh)

Victoria, Hazelwood 2007

3244

2008

Full Year(1)

Load factor

Forward contracted

99%

85%

95%

n/a

Hazelwood Loy Yang B

2007

75%

85%

80%

n/a

2008 20072008Full Year

(2)

80%

99%

75%

n/a

Pelican Point

20072008(1) (1) (1)


Australia - emissions trading update

Emissions trading scheme planned for implementation July 2010

Government consultation Green Paper published in July 2008

Proposes emissions reduction (carbon pollution reduction scheme) across multiple sectors

– wider burden sharing - covering 77% of emissions– 5 year time horizons for annual emission limits – ultimate target: 60% reduction from 2000 levels by 2050

Government recognises importance of coal fired generation (brown and black)

– security of supply– benefit to Australian economy– Green paper proposes specific assistance

Detailed consultation process continues– IPR closely involved at all levels

Further clarification on scheme expected via White Paper by December 2008


Asia - Paiton 3 expansion

815MW expansion at existing Paiton site– super-critical coal fired plant– IPR ownership 40.5%*– location: Java-Bali grid with high power demand

30 year PPA signed with PLN, state utility

Commercial operation targeted for 2012– equipment supplier - MHI– fixed price contract– shared infrastructure with existing plant

Total project cost £732m– funding structure in line with long term PPA projects– financing underway and expected to close in early 2009

Excellent embedded growth opportunity

*includes holding via 9.2% economic interest


Portfolio growth continues

Multiple sources of growth– new build expansion at existing assets– increased ownership of existing assets– greenfield development projects – acquisitions

Five new projects totalling 3,105MW (net) announced year to date– across North America, Europe and Asia– continued growth in line with investment criteria despite tightening EPC

market and the credit crunch

Five investments total over £1billion in enterprise value– all projects financed on attractive terms – and expected to deliver good returns

* In addition to the above holding International Power also has the rights to additional returns from Paiton equivalent to a further 9.2% ~ which would equate to a 40.5% interest and 331MW net

Project Country Net Capacity

(MW)

Contract

Type

Peaking plants x 4 US 1,857 Merchant

Uch Pakistan 177 Contracted

Turbogas Portugal 403 Contracted

Elecgas Portugal 415 Contracted

Paiton 3* Indonesia 253 Contracted

3,105

Fuel

Gas/Oil

Gas/Oil

Gas

Gas

Coal


Update on growth opportunities

Acquired four US peaking plants - 1,857MW - in targetted market

Coleto expansion - Texas environmental permit application submitted

Construction at Elecgas, 830MW CCGT on track

Acquired additional 40% of Turbogas

Renewables - 55MW of wind projects brought online, further pipeline of projects

Eneco 840MW CCGT - EPC and offtake negotiations continue

New markets - ongoing

North America

Europe



Three bids submitted in H1 2008– outcome on one awaited

Strong medium and long term project pipeline– four further bids in 2008

- totalling 3,300MW/35 MIGD (gross) - Saudi Arabia, Abu Dhabi, Morocco

– longer term outlook remains very strong

Exploring alternative options for Mmamabula

Middle East



Full consents for– 300MW expansion consent at Pelican Point (South Australia)– 120MW peaking site in NSW

Wind development opportunities

Signed long term PPA for 815MW Paiton III expansion

Development projects in existing markets - Indonesia, Pakistan and Thailand - remain active and continue to progress

– West Java 1,320MW coal-fired, Indonesia – Pakistan - Kapco 450MW CCGT, Hubco 225MW oil, Uch 400MW

gas/oil– TNP 2 Cogeneration (120MW gas), Thailand

Vietnam– pre-qualified to bid for Nghi Son 2 (1,200MW IPP)– progressing development of two other coal-fired plants

Australia

Asia


Summary

Solid H1 2008 financial performance

Performance in 2008 impacted by Rugeley and Hazelwood outages

Fundamentals in our markets remain attractive– UK: locking in attractive dark spreads for 2009/2010– US: our markets remain attractive– Australia: market fundamentals remain robust– Middle East and Asia: strong demand growth and multiple

growth opportunities

Well positioned to finance and deliver on growth opportunities

Appendix


Six months ended 30 June

North America

Europe

Middle East

Australia

Asia

Regional total

Corporate

PFO

Disposals

- Malakoff sale

- Disposal to Mitsui

Net finance expense

(Loss)/profit before tax

Income tax credit

(Loss)/profit for the period

SpecificIAS 39

MTMExceptional

Items

2007

Total

SpecificIAS 39

MTMExceptional

Items Total

Exceptional items and specific IAS 39 MTM

2008

£m £m £m £m £m £m

(93)

(269)

-

62

-

(300)

-

(300)

-

-

(25)

(325)

61

(264)

(93)

(269)

-

62

-

(300)

-

(300)

-

-

(25)

(325)

61

(264)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(3)

(24)

-

(433)

-

(460)

-

(460)

-

-

(19)

(479)

143

(336)

(3)

(33)

-

(433)

-

(469)

-

(469)

115

153

(19)

(220)

143

(77)

-

(9)

-

-

-

(9)

-

(9)

115

153

-

259

-

259

Documents

Interim Results Six months ended 30 June 2008. Interim Results Philip Cox, CEO