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
Interim Results August 2008 International Power5
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
Interim Results August 2008 International Power6
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
Interim Results August 2008 International Power7
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
Profit from operationsup 12%
£268m£299m
£239m£238m
£60m£30m
H1 2007 H1 2008
Share of JVs and associates Subsidiaries
Interim Results August 2008 International Power8
Middle East
Profit from operationsup 10%
£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
Share of JVs and associates Subsidiaries
Interim Results August 2008 International Power9
Australia
Improved contributions from Hazelwood and Loy Yang B
Unplanned outage at Hazelwood – £16m H1 impact
Synergen able to capture high spot prices
Profit from operationsup 52%
£46m
£70m
£68m
£45m
£2m£1m
H1 2007 H1 2008
Share of JVs and associates Subsidiaries
Interim Results August 2008 International Power10
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%
Share of JVs and associates Subsidiaries
£55m
£42m
£36m
£8m
H1 2007 H1 2008
£47m
£6m
Interim Results August 2008 International Power11
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
Interim Results August 2008 International Power12
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
Interim Results August 2008 International Power13
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
Interim Results August 2008 International Power14
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
Interim Results August 2008 International Power15
Net debt structure
Cash and cash equivalents
Recourse debt
IPR facility (revolver)
Convertible bond (2023)(2)
Convertible bond (2015)(2)
Convertible bond (2013)(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
Interim Results August 2008 International Power16
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
Interim Results August 2008 International Power18
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
Achieved spark spread ($/MWh)
Load factor
Forward contracted
10
45%
n/a
21
70%
80%(3)
(2)
20072008
Full Year(1)
20072008
Full Year(1)
20072008
Full Year(1)
IPR forecast
Excludes SO2 costs
% of anticipated output for the full year
(1)
(2)
(3)
Interim Results August 2008 International Power19
Fundamentals remain strong– capacity market provides
stable earnings– energy prices remain strong
on peak– off peak pricing affected by
increased imports from Canada and New York
Load growth continues at modest levels– new supply from demand resources should increase energy
margins– new peakers planned in Connecticut will have little effect on
IPR plant energy margins
Regional Greenhouse Gas Initiative (RGGI)– CO2 rules take effect January 2009– quarterly auction of credits beginning in September – not all RGGI State ready in time – may cause price volatility– IPR CCGT plants well positioned
US - New England
Achieved spark spread ($/MWh)
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)
Interim Results August 2008 International Power20
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
Interim Results August 2008 International Power21
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)
Interim Results August 2008 International Power22
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
Interim Results August 2008 International Power23
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
Interim Results August 2008 International Power24
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.
Interim Results August 2008 International Power25
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)
Interim Results August 2008 International Power26
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
Interim Results August 2008 International Power27
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
Interim Results August 2008 International Power28
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
Interim Results August 2008 International Power29
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
Interim Results August 2008 International Power30
Update on growth opportunities
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
Interim Results August 2008 International Power31
Update on growth opportunities
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
Interim Results August 2008 International Power32
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
Interim Results August 2008 International Power34
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