International Power plc – Interim Management Statement
(London – 11 November 2009) International Power today
publishes its Interim Management Statement, in respect of the
period from 1 July 2009 to 10 November 2009.
Philip Cox, CEO of International Power, said: "We continue to
benefit from strong operational performance and our diversified
international portfolio. We now expect 2009 EPS to be broadly in
line with 2008, and free cash flow to be significantly ahead of
- Europe and Australia ahead of expectations; US markets remain
- Excellent free cash flow driving strong corporate
- Completed acquisition of Canadian wind farm developer, AIM
PowerGen, in October 2009
- A$425 million refinancing completed for SEA Gas pipeline in
Australia, in October 2009
Financial and operating update
The US merchant markets remain challenging due to weak gas
prices and lower demand. As a result, in Texas we now expect 2009
spreads and load factors to be marginally down on the guidance
given at our Interim Results on 11 August 2009. However, expected
2009 spreads and load factors in New England remain in line with
our previous guidance.
In the UK, First Hydro benefited from higher margins in the
short-term market and increased ancillary services revenue as a
result of reduced plant availability in the system. Saltend's
strong operational performance continues and the expected spark
spread has improved as a result of capturing lower market gas
prices. Rugeley and Deeside continue to perform in line with our
Australia has continued to perform well and the expected spread
and load factor for Hazelwood remain in line with our expectations.
The proposed Carbon Pollution Reduction Scheme (CPRS) is scheduled
for debate by the Senate in late November, and we continue to
engage with Government on scheme design and implementation.
In the Middle East and Asia our long-term contracted portfolio
continues to operate well.
Growth opportunities and portfolio update
The Group's strong free cash flow and corporate liquidity,
together with continued access to project finance, provides good
flexibility for the financing of growth opportunities.
In October, we successfully completed the acquisition of AIM
PowerGen Corporation (AIM), one of Canada's largest independent
wind farm developers, for a total cash consideration of C$119
million. The portfolio is concentrated in Ontario, with 40MW of
wind farms in operation. An additional 40MW is under construction
and was successfully project financed with a 20-year fixed rate
facility, in October 2009. In addition, AIM has an advanced
development pipeline of 1,200MW across Canada.
We are currently constructing three plants in the Middle East
and Europe. At Fujairah F2 in the UAE (2,000MW, 130MIGD),
construction is progressing well with completion expected in 2010.
Both the Elecgas 830MW CCGT project, in Portugal, and the T-Power
420MW CCGT project, in Belgium, are on schedule to reach commercial
operation in 2011.
The Middle East, Northern and Southern Africa and Asia continue
to offer significant short and medium-term growth opportunities. We
are actively evaluating a number of new projects across these
markets for potential developments in Morocco, Saudi Arabia, Oman,
Indonesia, Thailand and Vietnam. We continue to realise additional
value from our existing sites, for example in Indonesia where
financial close of the proposed 815MW coal-fired Paiton 3 plant
(located within the existing Paiton complex) is expected
In October, the sale of Hartwell, a 318MW gas and oil-fired
peaking facility located in Georgia, was successfully completed
generating cash proceeds to International Power of some US$50
We announced the sale of our Czech business to J&T Group in
July. The transaction received unconditional clearance from the
Czech competition authorities on 6 November 2009 and is expected to
complete later this month. 2009 results will include the benefit of
a dividend received from Pražská
Teplárenská (49% owned by International Power) in
July of this year.
In October, the A$425 million SEA Gas project refinancing was
completed. This new financing will run until October 2012 and fully
replaces the existing financing, which was due to expire in
The Hazelwood refinancing of A$445 million is due by February
2010. We are actively reviewing refinancing options, whilst closely
monitoring developments on the proposed CPRS.
The US combined cycle gas turbine fleet refinancing of US$769
million is due by July 2010. A number of refinancing options are
under consideration, including the temporary pay down of this
For 2009, the expected effective tax rate is estimated at 24%,
although there is potential for this to decrease if we are
successful in resolving historic tax issues across the Group.
Group profitability has benefited from a weakening of sterling
against the euro, the Australian dollar and the Czech koruna.
On 10 November 2009 Standard & Poor's upgraded our corporate
credit rating to BB.
We now expect 2009 EPS to be broadly in line with 2008,
reflecting the strong operational performance across our portfolio.
The financial position of the Group remains strong, with good
corporate liquidity and free cash flow significantly ahead of last
As anticipated, forward margins in our US and UK markets remain
challenging reflecting lower demand and weak gas prices. However,
the fundamentals of our business remain attractive with global
demand for additional power generation continuing to drive growth,
particularly in developing economies.
International Power will report financial results for the year
ending 31 December 2009 on 9 March 2010.
For further information please contact:
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About International Power
International Power plc is a leading independent electricity
generating company with 32,959MW gross (21,249MW net) in operation
and 3,320MW gross (1,018MW net) under construction. International
Power has power plants in operation or under construction in
Australia, the United States of America, the United Kingdom,
Belgium, Canada, the Czech Republic, France, Germany, Italy, the
Netherlands, Portugal, Spain, Turkey, Bahrain, Oman, Qatar, Saudi
Arabia, the UAE, Indonesia, Pakistan, Puerto Rico and Thailand.
International Power is listed on the London Stock Exchange with
ticker symbol IPR. Company website: