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

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Interim Results

Six months ended 30 June 2008


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Interim Results

Philip Cox, CEO


Highlights l.jpg

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


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

Financial Review

Mark Williamson, CFO


Income statement l.jpg

Income statement

2008£m

2007£m

change

Six months ended 30 June

North America

Europe

Middle East

Australia

Asia

Corporate costs

Profit from operations

Interest

PBT

Tax

Minority interest

Profit for the year

Reported EPS

FX benefit

UK tax reduction

- deferred tax release

76

299

32

70

42

(24)

495

(182)

313

(63)

(35)

215

14.3p

(0.6)p

13.7p

42

268

29

46

55

(24)

416

(140)

276

(41)

(34)

201

13.4p

(1.2)p

12.2p

81%

12%

10%

52%

(24%)

19%

13%

7%

7%

12%


North america l.jpg

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%

£76m

£61m

£42m

£29m

£15m

£13m

H1 2007

H1 2008

Share of JVs and associates

Subsidiaries


Europe l.jpg

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%

£299m

£268m

£239m

£238m

£60m

£30m

H1 2007

H1 2008

Share of JVs and associates

Subsidiaries


Middle east l.jpg

Middle East

  • 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

Profit from operationsup 10%

£32m

£29m

£20m

£20m

£12m

£9m

H1 2007

H1 2008

Share of JVs and associates

Subsidiaries


Australia l.jpg

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%

£70m

£68m

£46m

£45m

£1m

£2m

H1 2007

H1 2008

Share of JVs and associates

Subsidiaries


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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

£8m

£42m

£6m

£47m

£36m

H1 2007

H1 2008

Share of JVs and associates

Subsidiaries


Interest cover and effective tax rate l.jpg

Interest cover and effective tax rate

2008

2007

£m

£m

Six months ended 30 June

PFO

JVs and associates

Interest

Tax

PBIT

Total interest

Subsidiaries

JVs and associates

Interest cover

Profit before total tax

Total tax

Subsidiaries

JVs and associates

Effective tax rate

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%

2.5x

2.6x


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Free cash flow

2008

2007

£m

£m

Six months ended 30 June

Operating cash flow from subsidiaries

Dividends - JVs and associates

Capex - maintenance

Cash generated from operations

Net interest paid

Tax paid

Free cash flow

503

39

(63)

479

(202)

(49)

228

476

53

(34)

495

(155)

(31)

309

(3%)

(26%)


Movement in net debt l.jpg

Movement in net debt

2008

2007

Six months ended 30 June

£m

£m

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

228

(80)

(167)

-

(112)

(122)

(19)

(272)

(4,662)

(4,934)

309

(99)

(140)

417

(118)

(18)

(31)

320

(3,575)

(3,255)


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Balance sheet

30 June 2008

31 December2007

£m

£m

Non-current assets

Goodwill and intangibles

PP&E

Investments

Other long-term assets

Net current liabilities

Non-current liabilities

Net debt

Net assetsGearing

Debt capitalisationNet debt of JVs and associates

991

5,961

1,480

1,626

10,058

(601)

(1,516)

(4,934)

3,007

164%

62%(1,336)

901

5,721

1,292

1,530

9,444

(355)

(1,420)

(4,662)

3,007

155%

61%(1,297)


Net debt structure l.jpg

Net debt structure

JVs and associatesoff-balance sheetnet debt (1)

Project cash/(debt) (1)

IPRCorporate

Total

Maturity

Maturity

As at 30 June 2008

£m

£m

£m

£m

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

1,129

-

-

-

(243)

(151)

(888)

(2,927)

(305)

(1,120)

(34)

(5,668)

(4,539)

357

(29)

(117)

(453)

(153)

(752)

-

-

-

-

-

-

-

-

(395)

1,486

(29)

(117)

(453)

(153)

(752)

(243)

(151)

(888)

(2,927)

(305)

(1,120)

(34)

(5,668)

(4,934)

2023

2015

2013

2012

2008

2010-2013

2010-2026

2017-2025

2010-2019

2020

-

-

(145)

(210)

(604)

(68)

(309)

(1,336)

(1,336)

2013-2019

2009-2020

2021-2030

2009-2012

2008-2018

(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


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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


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Interim Results

Philip Cox, CEO


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US - Texas

  • 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

Full Year

(1)

Coleto Creek

2008

2007

(2)

Achieved dark spread ($/MWh)

Load factor

Forward contracted

30

95%

95%

29

75%

n/a

(3)

Full Year

(1)

Midlothian

2008

2007

Achieved spark spread ($/MWh)

Load factor

Forward contracted

15

40%

80%

14

55%

n/a

(3)

Full Year

(1)

Hays

2008

2007

Achieved spark spread ($/MWh)

Load factor

Forward contracted

21

70%

80%

10

45%

n/a

(3)

(1)

IPR forecast

Excludes SO2 costs

% of anticipated output for the full year

(2)

(3)


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US - New England

Full Year

(1)

New England

2008

2007

(2)

Achieved spark spread ($/MWh)

Load factor

Forward contracted

27

40%

85%

16

60%

n/a

(3)

(1)

IPR forecast

Includes FCM receipts

% of anticipated output for the full year

(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 peaking plant acquisition l.jpg

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

Armstrong

Calumet

Troy

MISO

PJM

Pittsburgh

Chicago

Columbus

Pleasants

Charleston

Plant

Capacity

Fuel type

Location

ArmstrongPleasantsCalumetTroy

625MW313MW303MW616MW

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

Pennsylvania, PJMWest Virginia, PJMIllinois, PJMOhio, MISO


Europe uk 2008 l.jpg

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

Rugeley

Deeside

Saltend

(1)

(1)

(1)

2008

2007

2008

2007

2008

2007

Full Year

(2)

Spread £/MWh

Load factor

Forward contracted

18

45%

95%

34

65%

n/a

28

70%

55%

23

50%

n/a

n/a

90%

99%

n/a

90%

n/a

(3)

(1)

(2)

(3)

IPR forecast

Pre cost of CO2

% of anticipated output for the full year


Europe uk outlook l.jpg

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 l.jpg

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


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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 - 2010

Fujairah F2 - Schematic

The facility will be constructed by an EPC consortium of

Alstom and SIDEM.


Australia25 l.jpg

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

Full Year

(1)

Victoria, Hazelwood

2008

2007

Achieved average price ($/MWh)

44

32

Hazelwood

Loy Yang B

Pelican Point

(1)

(1)

(1)

2008

2007

2008

2007

2008

2007

Full Year

Load factor

Forward contracted

75%

85%

80%

n/a

99%

85%

95%

n/a

80%

99%

75%

n/a

(2)

(1)

(2)

IPR forecast % of anticipated output for the full year


Australia emissions trading update l.jpg

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 l.jpg

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


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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

Project

Country

Net Capacity

Fuel

Contract

(MW)

Type

Peaking plants x 4

US

1,857

Gas/Oil

Merchant

Uch

Pakistan

177

Gas/Oil

Contracted

Turbogas

Portugal

403

Gas

Contracted

Elecgas

Portugal

415

Gas

Contracted

Paiton 3*

Indonesia

253

Coal

Contracted

3,105

* 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


Update on growth opportunities l.jpg

Update on growth opportunities

North America

  • 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

Europe


Update on growth opportunities30 l.jpg

Update on growth opportunities

Middle East

  • 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


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Update on growth opportunities

Australia

  • 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

Asia


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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


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Appendix


Exceptional items and specific ias 39 mtm l.jpg

Exceptional items and specific IAS 39 MTM

Six months ended 30 June

2008

2007

SpecificIAS 39MTM

SpecificIAS 39MTM

Exceptional

Items

Exceptional

Items

Total

Total

£m

£m

£m

£m

£m

£m

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

(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)

-

(9)

-

-

-

(9)

-

(9)

115

153

-

259

-

259

(3)

(33)

-

(433)

-

(469)

-

(469)

115

153

(19)

(220)

143

(77)


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