Press Releases

05/11/2004

International Power plc Financial Results for the Nine Months ended 30 September 2004

Full announcement including financials in PDF format .

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(London – 5 November 2004) International Power (IPR) today announces its results for the nine-month period ended 30 September 2004 and reports on key developments to date.

Sir Neville Simms, Chairman of International Power, said, “The business has performed well operationally, and financially in line with expectations, generating earnings per share of 6.3p (on a post rights basis – 7.1p on a pre rights basis) for the nine months ended 30 September. The pricing environment across our merchant markets remains largely unchanged with the exception of the UK which is currently showing some improvement.”

“We have now completed the acquisition of Turbogas in Portugal and the consent process for the EME acquisition is progressing well. The shareholder circular will be posted shortly and we expect the transaction to be completed by the end of 2004,” Sir Neville added.

Highlights

EPS guidance remains at the upper end of the range of 5.9p to 7.6p on a post-rights basis (7.0p to 9.0p on a pre-rights basis)
EME acquisition on track for completion in December 2004
Turbogas acquisition completed
Rights Issue successfully completed
Preferred bidder status awarded for 1,025 MW power and water project in Qatar, Middle East
Full commercial operation commenced on programme at Shuweihat S1, Abu Dhabi


Financial Summary	Quarter ended		Nine months ended
	30 September		30 September
	2004	2003	2004	2003
	£m	£m	£m	£m
Profit on ordinary activities before interest and tax
Excluding exceptional items	56	71	206	209
Including exceptional items	56	78	221	224

Profit on ordinary activities before tax
Excluding exceptional items	29	38	116	126
Including exceptional items	22	45	109	141


Earnings per share – Basic – on post rights basis*
Excluding exceptional items	1.7p	1.9p	6.3p	6.4p
Including exceptional items	1.1p	2.2p	5.7p	7.5p
* Historic figures adjusted for Theoretic ex-Rights price factor


Earnings per share – Basic – on pre rights basis
Excluding exceptional items	1.9p	2.1p	7.1p	7.2p
Including exceptional items	1.4p	2.5p	6.5p	8.4p
Operating cash flow from ordinary activities	65	82	196	213

North America

As expected, the North American business recorded a loss before interest and tax which amounted to £1 million (2003: Profit £13 million), reflecting the low spark spreads in Texas and New England. The 2004 summer (June, July, August) spark spreads remained low with no material change from the 2003 summer. For reference, the nine month period to 30 September 2003 included compensation payments from Alstom of £22 million, versus £5 million in the current nine month period. The contracted assets, Hartwell and Oyster Creek, delivered a consistent performance and generated a profit before interest and tax of £11 million (2003: £12 million).

We continue to anticipate market recovery in both New England and Texas in the period 2007 to 2009.

Europe

Profit before interest and tax in Europe increased to £65 million (2003: £50 million), mainly reflecting higher profitability at EOP and some limited improvement in the UK. In the UK, the recent significant increase in gas prices has resulted in a strengthening of forward power prices. This is beneficial for our coal fired plant Rugeley, but spark spreads for our gas fired Deeside plant remain low.

On November 4, we completed the acquisition of a 75% shareholding in the 990 MW combined cycled gas turbine (CCGT) Turbogas plant from RWE, following approval from the Portuguese Competition Authority and Energias De Portugal’s (EDP) waiver of its pre-emption rights. International Power has granted EDP an option to purchase a 20% interest in Turbogas during the first nine months following completion, or during a term beginning on 1 January 2008 and ending on 31 December 2009. In addition, we have signed an agreement to acquire a further 5% shareholding in the plant from Koch Transporttechnik, and this is expected to complete by February 2005.

Middle East

The Middle East business generated profit before interest and tax of £21 million (2003: £20 million). JV / Associates earnings at £9 million were up (2003: £3 million) reflecting earnings contribution from Umm Al Nar which was acquired in July 2003. However, earnings from subsidiaries in 2003 included a higher level of cost recoveries and success fees in relation to development work in the region, together with some revenue in the form of liquidated damages for commissioning Al Kamil.

In October, the 1,500 MW Shuweihat power and water plant started full commercial operation and has since contributed to the region’s profitability. Construction of the Umm Al Nar expansion project and the Tihama cogeneration (Saudi Aramco) plants is progressing on schedule.

International Power, together with partners Qatar Electricity & Water Company and Chubu Electric, has been awarded preferred bidder status for the 1,025 MW, 60 MIGD Ras Laffan B power and water project by the Government of Qatar. The plant’s entire power and water output will be sold under a long term Power and Water Purchase Agreement (PWPA). We will provide financial information relating to the debt/equity structure of this project on signing of the PWPA, which together with financial close is expected by the end of 2004.

Australia

In Australia, profit before interest and tax for the nine months ended 30 September was £80 million (2003: £78 million). Hazelwood delivered a strong performance, attributable to high plant availability and achieved contract prices that were higher than the underlying market prices. Pelican Point’s earnings were down due to lower spark spreads in South Australia. The SEAGas pipeline is now in operation and has contributed to earnings from Q1 2004 as planned.

Asia

Performance in Asia was also broadly in-line with last year, with profit before interest and tax for the nine months ended 30 September at £64 million (2003: £67 million).

Our assets in Pakistan (HUBCO and KAPCO) have performed well. At KAPCO, of which we own 36%, our partner WAPDA intends to sell down a 20% block of its 64% shareholding via an Initial Public Offering (IPO). This IPO of 20% of the plant's total equity has been approved by all shareholders and is expected in the near future.

Other – Financial

The effective tax rate of the Group has reduced to 26% (2003: 32%) as a result of the confirmation of foreign tax holidays and the resolution of a number of tax issues across the Group.

The translation effect of foreign exchange, comparing the nine months to 30 September 2004 to the same period in the prior year, has adversely affected profit after tax by £5 million (EPS by 0.4p).