RNS Number:3758P
International Power PLC
04 September 2003
International Power plc
Interim Results for the six months ended 30 June 2003
(London - 4 September 2003) International Power today announces its financial
results for the six-month period ended 30 June 2003 and reports on key
developments to date.
"As expected, 2003 has been challenging, particularly in North America and the
UK, where wholesale power prices and spark spreads remained low. However, the
rest of our portfolio continued to perform well and we remain on track to
deliver earnings in line with our guidance for this year," said Sir Neville
Simms, Chairman of International Power.
"In the first half of this year, we have been able to capitalise on the current
market environment and have executed selected business and financial
transactions that will enhance shareholder value," Sir Neville added.
Highlights
- Profit before interest and tax of #138 million (pre exceptional items)
- Operating cash flow of #131 million
- Earnings per share of 5.1p (pre exceptional items)
- Successful placement of US$252 (#158) million senior convertible bond
- US$1.77 billion financing of Umm Al Nar completed
- Achieved exclusivity to acquire interest in 4,000 MW Drax power plant
Financial Summary Six months ended 30 June
2003 2002
#m #m
Profit on ordinary activities before interest and tax
Excluding exceptional items 138 229
Including exceptional items 146 208
Profit on ordinary activities before taxation
Excluding exceptional items 88 162
Including exceptional items 96 141
Earnings per share - Basic (EPS)
Excluding exceptional items 5.1p 9.9p
Including exceptional items 5.8p 8.6p
Operating cash flow from ordinary activities 131 221
North America
In North America, losses in the first quarter attributable to the unusual
weather conditions in Texas and the high cost of gas transportation in New
England, together with the continued weak pricing conditions in both markets in
the second quarter, resulted in poor financial performance for the half year,
with profit before interest and tax of #1 million. Due to improved plant
availability, compensation for lost income from our main contractor (Alstom) was
lower in the first half of 2003 compared to the equivalent period last year. In
New England, power prices remained low during the third quarter due to soft
demand and mild weather. In Texas, prices continued to be below expectations
through August, notwithstanding a short period of record demand.
Near-term improvement in power prices in both markets remains dependent on
withdrawal of inefficient capacity in order to effect a fundamental shift in the
supply-demand balance. A high degree of uncertainty continues to impact the
generation sector in both of our North American markets, with four of the
largest portfolio generators in New England in Chapter 11, and two of the
largest generation companies in Texas in the process of being sold. As a
result, a certain inertia has existed on the supply side in both markets since
we last reported. In the absence of withdrawal of some existing capacity,
current forward prices are likely to remain low for the foreseeable future.
Europe & Middle East
All contracted assets, namely Pego, EOP, Marmara and Al Kamil, delivered robust
financial and operational performance, and the Europe and Middle East region
generated profit before interest and tax of #49 million. Earnings are lower in
comparison to the same period last year, primarily due to the termination of the
tolling contract with TXU Europe at Rugeley in late November 2002, and weak
wholesale power prices in the UK during the first half of this year.
However, electricity prices in the UK have recently shown modest improvement,
and although a portion of our UK generation capacity is contracted until March
2004, our uncontracted capacity remains well positioned to capture higher peak
prices.
We have entered into an exclusive arrangement with AES Drax Holdings Limited
(Drax) to participate in Drax's restructuring in order to acquire debt and
equity, for maximum total cash cost of #130 million. We look forward to a
successful conclusion of this process and our eventual participation in the
ownership and management of Drax.
In Italy, our 800MW CCGT Paduli project near Naples, which is being developed in
association with Ansaldo Energia, has received a key environmental authorisation
(VIA) from the Italian Ministry of Environment. This authorisation is an
important step towards obtaining complete approval to commence construction.
Alongside the permitting process, we continue to work towards securing viable
tolling or offtake contracts for Paduli and our other Italian projects.
In the Middle East, despite the backdrop of uncertainty associated with the
conflict in Iraq, together with our partners Tokyo Electric, Mitsui and ADWEA,
we successfully secured a US$1.77 billion financing package for the acquisition
and associated expansion of the Umm Al Nar power and water plant in Abu Dhabi.
As the principal operator, we have taken over control of plant operations (both
power and water desalination) and in the first month the plant has delivered
good performance. Preliminary construction related work on the expansion site
has also commenced. Our total equity commitment to Umm Al Nar is approximately
#56 million for our 20% shareholding.
With over 6,000 people working on site, construction of the Shuweihat S1 power
and water plant in Abu Dhabi continues to make good progress. The first two (of
a total of five) gas turbines have been successfully synchronised with the power
grid and have been tested on full load. The plant is expected to commence
commercial operation in Q3 2004.
Australia
Profit before interest and tax in Australia increased by 12% to #55 million from
#49 million last year. This increase was attributable to a combination of the
contractual prices secured together with tight control of operating expenditure.
Looking ahead, although forward prices have weakened, we remain largely
contracted through 2004 and moderately into 2005.
Construction of the SEAGas pipeline (650 km gas pipeline from Victoria to South
Australia) continues. Over 580 km of pipe has now been laid.
Rest of the World (ROW)
All assets in our ROW business segment performed well and generated profit
before interest and tax of #46 million.
We continue to monitor the value of all our investments in order to take
advantage of opportunities to realise value as they arise. In line with this
approach, we have monetised part of our investment in Hubco (in Pakistan) and
have generated cash of #21 million and a profit of #8 million, through the sale
of a 5% stake. Our equity interest in Hubco now totals 20.7%.
Interest
Interest at #50 million has benefited from a combination of lower interest rates
on our floating debt and the impact of exchange translation gains on monetary
assets.
Tax
The tax rate is 32%, compared to 30% last year, primarily reflecting the expiry
of some overseas tax holidays.
Capital Structure
In July, we announced the successful issue of a US$252 million (#158 million)
convertible bond, which has a minimum seven year term at a highly attractive
coupon of 3.75%. We expect to use the proceeds from this bond to refinance in
part the potential 'put' of the Company's 2% Convertible Bond in November 2003,
and to repay the US$60 million Euro-Dollar Bond, due in December 2003.
In May, we initiated a share buyback programme. To date we have purchased, for
cancellation, 5.5 million shares at a total cost of #6.7 million at prices
ranging from 114p per share to 132p per share. The share buyback programme
remains in effect.
In relation to the non-recourse US credit facility, which was raised to finance
International Power's merchant power plant construction programme in the US, all
technical defaults previously claimed by the US bank group were waived in May.
The outstanding debt of #615 million has therefore been re-designated in the
balance sheet from current debt to long term debt, reflecting its maturity date
of June 2006.
We have now completed the restructuring of the Rugeley credit facility, which
was in default as a consequence of the collapse of TXU Europe. The revised terms
include a reduction in debt from #160 million to #90 million, through a #70
million repayment by International Power, offset by the cancellation of a #70
million letter of credit that we had previously provided.
Cash Flow
A summary of the Group cash flow is set out below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Operating profit (pre JVs and associates) 51 86 105
Impairment - 45 103
------ ------ ------
51 131 208
Depreciation and amortisation 54 46 112
Movement in working capital and provisions (34) (35) (44)
Dividends from JVs/ associates/ investments 60 79 115
------ ------ ------
Operating cash flow 131 221 391
Capital expenditure - maintenance (39) (29) (48)
Interest and tax (47) (58) (108)
Exceptional items
- Kapco dividend - 24 42
- Hazelwood refinancing - (25) (25)
------ ------ ------
Free cash flow 45 133 252
Capital expenditure - growth (37) (60) (96)
Acquisitions and disposals 21 (133) (144)
Share buy back (6) - -
Foreign exchange and hedging (35) 38 85
Other (10) (2) (12)
------ ------ ------
Movement in net debt (22) (24) 85
Opening net debt (812) (897) (897)
------ ------ ------
Closing net debt (834) (921) (812)
====== ====== ======
The group has generated positive operating and free cash flow at #131 million
and #45 million respectively. However, cash flow performance is down in the
half year, principally due to the reduced profitability of our subsidiaries in
the US and the UK.
Balance Sheet
A summarised, reclassified presentation of the Group balance sheet is set out
below:
As at As at As at
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Fixed assets
Intangibles and tangibles 2,562 2,633 2,474
Investments 500 513 507
------ ------ ------
3,062 3,146 2,981
Net current liabilities (81) (145) (138)
Provisions and creditors > one year (278) (271) (262)
Net debt (834) (921) (812)
------ ------ ------
Net assets 1,869 1,809 1,769
====== ====== ======
Gearing 45% 51% 46%
Debt capitalisation 31% 34% 31%
Net assets at 30 June 2003 have increased by #100 million since 31 December
2002. This increase is due to the profitability of the group in the period, of
#65 million, together with exchange gains of #35 million reflecting the impact
of foreign exchange on the net investment in foreign entities and their related
borrowings.
Corporate Social Responsibility
Pego (600MW coal fired plant) in Portugal, has for the sixth consecutive year
received a gold award from the Royal Society for the Prevention of Accidents
(ROSPA) for continuous improvement in occupational safety management.
Hub (1,290MW oil fired plant) in Pakistan, which is operated and maintained by
International Power, has also received an award from ROSPA for outstanding
performance in the area of health and safety.
Outlook
The lack of liquidity in our markets in the US means that current forward prices
cannot be relied upon to predict the ultimate level of future prices. In the UK
wholesale prices over the short term have shown some signs of improvement.
Nonetheless, we believe that it is still too early to make any solid assumptions
regarding prices in 2004. We can, however, reaffirm our stated earnings per
share guidance for 2003 of 9p to 11p.
While these uncertain conditions prevail in two of our key markets, we continue
to focus on maximising value from our existing asset base and pursuing a wide
range of new investment opportunities within our existing markets.
Note:
With effect from 1 July 2003, in order to better reflect the nature of our
business around the world and the way in which our operations will be managed,
we will change the format of the geographic segmental analysis within our
financial reports. Included in the Interim Announcement is the geographical
segmental analysis in both the current and proposed formats, together with
details of the composition of the current and proposed segments by plants in
operation.
For further information please contact:
Media contact:
Aarti Singhal
+44 (0)20-7320-8681
Investor contact:
Grant Jones
+ 44 (0)20-7320-8619
About International Power:
International Power plc is a global independent power producer with 10,990MW
(net) in operation and 610MW (net) under construction. Among the countries where
International Power has facilities in operation are Australia, the United
States, the United Kingdom, the Czech Republic, Oman, the UAE, Portugal, Turkey,
Malaysia, Pakistan, and Thailand. International Power was created in October
2000 and its shares are traded on the London Stock Exchange, and as ADRs on the
New York Stock Exchange under the ticker symbol "IPR".
International Power plc
Consolidated Profit and Loss Account
For the six months ended 30 June 2003
Six months ended 30 June Six months ended 30 June
Excluding Exceptional Including Excluding Exceptional Including
exceptional items exceptional exceptional items exceptional
items items items items
2003 2003 2003 2002 2002 2002
Note #m #m #m #m #m #m
Turnover: Group and 2 639 - 639 568 - 568
share of joint
ventures and
associates
Less: share of (74) - (74) (63) - (63)
joint ventures'
turnover
Less: share of (145) - (145) (161) - (161)
associates'
turnover
------ ------ ------ ------ ------ ------
Group turnover 420 - 420 344 - 344
Net operating costs 3 (369) - (369) (213) (45) (258)
------ ------ ------ ------ ------ ------
Operating profit 51 - 51 131 (45) 86
Share of operating
profit of:
Joint ventures 19 - 19 18 - 18
Associates 50 - 50 63 - 63
Income from fixed 18 - 18 17 24 41
asset investments
------ ------ ------ ------ ------ ------
Operating profit 138 - 138 229 (21) 208
and investment
income
Non operating 3 - 8 8 - - -
exceptional items
------ ------ ------ ------ ------ ------
Profit on ordinary 2 138 8 146 229 (21) 208
activities before
interest and
taxation
------ ------ ------ ------ ------ ------
Net interest and
similar charges
Group (32) - (32) (50) - (50)
Joint ventures and (18) - (18) (17) - (17)
associates
------ ------ ------ ------ ------ ------
(50) - (50) (67) - (67)
------ ------ ------ ------ ------ ------
Profit on ordinary 88 8 96 162 (21) 141
activities before
taxation
Taxation (28) - (28) (48) 6 (42)
------ ------ ------ ------ ------ ------
Profit on ordinary 60 8 68 114 (15) 99
activities after
taxation
Minority interests (3) - (3) (3) - (3)
- equity
------ ------ ------ ------ ------ ------
Profit for the 57 8 65 111 (15) 96
financial period
====== ====== ====== ====== ====== ======
Earnings per share
Basic 5.1p 0.7p 5.8p 9.9p (1.3)p 8.6p
====== ====== ====== ====== ====== ======
Diluted 5.1p 0.7p 5.8p 9.6p (1.3)p 8.3p
====== ====== ====== ====== ====== ======
Consolidated Profit and Loss Account
For the year ended 31 December 2002
Year ended 31 December
Excluding Exceptional Including
exceptional items exceptional
items items
2002 2002 2002
Note #m #m #m
Turnover: Group and share of joint ventures and 2 1,129 - 1,129
associates
Less: share of joint ventures' turnover (122) - (122)
Less: share of associates' turnover (290) - (290)
------ ------ ------
Group turnover 717 - 717
Net operating costs 3 (509) (103) (612)
------ ------ ------
Operating profit 208 (103) 105
Share of operating profit of:
Joint ventures 26 - 26
Associates 123 - 123
Income from fixed asset investments 31 42 73
------ ------ ------
Operating profit and investment income 388 (61) 327
Non operating exceptional items 3 - - -
Profit on ordinary activities before interest 2 388 (61) 327
and taxation
Net interest and similar charges
------ ------ ------
Group (97) - (97)
Joint ventures and associates (35) - (35)
------ ------ ------
(132) - (132)
------ ------ ------
Profit on ordinary activities before taxation 256 (61) 195
Taxation (77) 1 (76)
------ ------ ------
Profit on ordinary activities after taxation 179 (60) 119
Minority interests - equity (6) - (6)
------ ------ ------
Profit for the financial year 173 (60) 113
====== ====== ======
Earnings per share
Basic 15.5p (5.4)p 10.1p
====== ====== ======
Diluted 15.5p (5.4)p 10.1p
====== ====== ======
Consolidated Balance Sheet
As at 30 June 2003
30 June 30 June 31 December
2003 2002 2002
Note #m #m #m
Fixed assets
Intangible assets 2 (1) 1
Tangible assets 2,560 2,634 2,473
Investments 500 513 507
------ ------ ------
Total fixed assets 3,062 3,146 2,981
------ ------ ------
Current assets
Stocks 61 30 55
Debtors 153 159 134
Investments 63 71 43
Cash at bank and in hand 796 734 799
------ ------ ------
Total current assets 1,073 994 1,031
Creditors: amounts falling due within one year
------ ------ ------
Secured loans without recourse 4 (225) (87) (810)
Other current liabilities (559) (334) (595)
------ ------ ------
Creditors: amounts falling due within one year (784) (421) (1,405)
------ ------ ------
Net current assets/ (liabilities) 289 573 (374)
------ ------ ------
Total assets less current liabilities 3,351 3,719 2,607
Creditors: amounts falling due after more than (1,209) (1,647) (583)
one year
Provisions for liabilities and charges (273) (263) (255)
------ ------ ------
Net assets employed 1,869 1,809 1,769
====== ====== ======
Capital and reserves
Shareholders' funds - equity 1,834 1,780 1,740
Minority interests - equity 35 29 29
------ ------ ------
Total equity 1,869 1,809 1,769
====== ====== ======
Net debt (834) (921) (812)
Gearing 44.6% 50.9% 45.9%
Debt capitalisation 30.9% 33.7% 31.5%
The gearing percentage represents net debt as a proportion of net assets
employed. The debt capitalisation percentage represents net debt as a percentage
of net assets employed plus net debt.
Consolidated Cash Flow Statement
For the six months ended 30 June 2003
Six months ended Six months Year
ended ended
30 June 30 June 31 December
2003 2002 2002
Note #m #m #m
Net cash inflow from operating activities 5 71 142 276
Dividends received from joint ventures and 42 62 84
associates
Dividends received from fixed asset investments 18 17 31
Ordinary
------ ------ ------
Cashflow from ordinary operating activities 131 221 391
Dividends received from fixed asset investments - 24 42
Exceptional
------ ------ ------
Returns on investments and servicing of finance
Ordinary (37) (46) (88)
Exceptional - (25) (25)
------ ------ ------
(37) (71) (113)
Taxation (10) (12) (20)
Capital expenditure and financial investment (79) (89) (159)
Acquisitions and disposals 21 (133) (144)
------ ------ ------
Net cash inflow/ (outflow) before management of 26 (60) (3)
liquid resources and financing activities
Management of liquid resources (14) (21) -
------ ------ ------
Financing activities
Share buy back (6) - -
Debt financing (21) 206 210
------ ------ ------
(27) 206 210
------ ------ ------
(Decrease)/ increase in cash in period (15) 125 207
====== ====== ======
Consolidated Reconciliation of Net Cash Flow to Movement in Net Debt
For the six months ended 30 June 2003
#m #m #m
(Decrease)/ increase in cash in period (15) 125 207
Cash outflow/ (inflow) from decrease/ (increase) in 21 (206) (210)
debt financing
Cash outflow from increase in liquid resources 14 21 -
------ ------ ------
Change in net debt resulting from cash flows 20 (60) (3)
Translation differences (35) 38 98
Other non-cash movements (7) (2) (10)
------ ------ ------
Movement in net debt in the period (22) (24) 85
Net debt at the start of the period (812) (897) (897)
------ ------ ------
Net debt at the end of the period (834) (921) (812)
====== ====== ======
Consolidated Statement of Total Recognised Gains and Losses
For the six months ended 30 June 2003
Six months ended Six months Year
ended ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Profit for the financial period 65 96 113
Exchange differences on the retranslation of net 35 14 (42)
investments and borrowings
Share of recognised loss of associated undertaking - - (1)
------ ------ ------
Total recognised gains and losses for the period 100 110 70
====== ====== ======
Reconciliation of Movements in Shareholders' Funds - Equity
For the six months ended 30 June 2003
Six months ended Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Profit for the financial period 65 96 113
Other recognised gains and losses relating to 35 14 (43)
the period (net)
Share buy back (6) - -
------ ------ ------
Net addition to shareholders' funds 94 110 70
Opening shareholders' funds 1,740 1,670 1,670
------ ------ ------
Closing shareholders' funds 1,834 1,780 1,740
====== ====== ======
Notes to the Accounts
For the six months ended 30 June 2003
1. Basis of preparation
The accounts for the six months ended 30 June 2003 have been prepared under the
historical cost convention and in accordance with applicable Accounting
Standards, using the same accounting policies as those adopted for the year
ended 31 December 2002. Minor adjustments have been made to comparative figures
to make them consistent with the current period.
The financial statements are unaudited but have been reviewed by the auditors
and their report is set out on page 16. These statements do not constitute
statutory accounts of the group within the meaning of Section 240 of the
Companies Act 1985. Statutory accounts for the year ended 31 December 2002 have
been filed with the Registrar of Companies. The auditor's report on those
accounts was unqualified and did not contain statements under Section 237 of the
Companies Act 1985.
2. Geographical segmental analysis
Current segmentation
Six months ended Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Group turnover
North America 224 130 315
Europe and Middle East 229 242 440
Australia 116 110 226
Rest of World 70 86 148
------ ------ ------
639 568 1,129
Less: turnover of joint ventures (74) (63) (122)
Less: turnover of associates (145) (161) (290)
------ ------ ------
420 344 717
====== ====== ======
Profit before interest and taxation
(excluding exceptional items)
North America 1 59 99
Europe and Middle East 49 77 109
Australia 55 49 101
Rest of World 46 56 108
------ ------ ------
151 241 417
Corporate costs (13) (12) (29)
------ ------ ------
138 229 388
====== ====== ======
Notes
1. North America profit before interest and taxation includes other
income in respect of the late commissioning and performance recovery
of new power plants amounting to #14 million (six months ended
30 June 2002: #61 million; year ended 31 December 2002: #102 million).
2. During the six months ended 30 June 2003, we also received #34 million
(US$52 million) from contractors in relation to compensation for
plants not achieving the long-term performance levels specified in the
original contracts. These amounts have been recorded as a reduction in
the cost of the plant and therefore not included in income.
2. Geographical segmental analysis (continued)
With effect from 1 July 2003, we will change the geographical segmental analysis
to better represent how we manage our business following a reallocation of the
responsibilities between our regional teams. The table below presents our
results under the proposed segmentation, our Q3 results will be presented in
this regional grouping. Appendix II details the composition of the current and
proposed segments by operating plant.
Proposed segmentation
Six months ended Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Group turnover
North America 224 130 315
Europe 219 242 440
Middle East 38 40 63
Australia 116 110 226
Rest of World 42 46 85
------ ------ ------
639 568 1,129
Less: turnover of joint ventures (74) (63) (122)
Less: turnover of associates (145) (161) (290)
------ ------ ------
420 344 717
====== ====== ======
Profit before interest and taxation
(excluding exceptional items)
North America 1 59 99
Europe 43 67 100
Middle East 36 49 86
Australia 55 49 101
Rest of World 16 17 31
------ ------ ------
151 241 417
Corporate costs (13) (12) (29)
------ ------ ------
138 229 388
====== ====== =====
Notes
1. North America profit before interest and taxation includes other income
in respect of the late commissioning and performance recovery of new
power plants amounting to #14 million (six months ended 30 June 2002:
#61 million; year ended 31 December 2002: #102 million).
2. During the six months ended 30 June 2003, we also received #34 million
(US$52 million) from contractors in relation to compensation for plants
not achieving the long-term performance levels specified in the original
contracts. These amounts have been recorded as a reduction in the cost of
the plant and therefore not included in income.
3. Exceptional items
Six months ended Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Net operating exceptional items charged
Deeside impairment - (45) (45)
Rugeley impairment - - (58)
------ ------ ------
Net operating exceptional items - (45) (103)
====== ====== ======
Exceptional income from investments
Backlog dividend received from Kapco - 24 42
====== ====== ======
Non-operating exceptional items credited
Profit on disposal of a 5% holding in Hubco 8 - -
------ ------ ------
Non-operating exceptional items 8 - -
====== ====== ======
Total exceptional items before attributable 8 (21) (61)
taxation
Taxation on exceptional items - 6 1
------ ------ ------
Total exceptional items after attributable 8 (15) (60)
taxation
====== ====== ======
4. Secured bank loans without recourse
Secured bank loans without recourse are those where the obligation to repay lies
solely with the subsidiary and are secured solely on the assets of the
subsidiary concerned.
At 31 December 2002, we were in discussions with bank groups in relation to non-
recourse debt for Rugeley and the US merchant asset portfolio. As these issues
were not formally resolved and documented at 31 December 2002, the debt at
Rugeley and ANP was reported as current non-recourse debt in our accounts.
In May 2003, our US bank group waived all claimed technical defaults on our US
non-recourse financing and therefore this debt has now been redesignated to its
original maturity.
As previously reported, the termination of the tolling contract between Rugeley
and TXU Europe triggered an event of default under the terms of our non-recourse
term debt facility of #160 million. On 29 August 2003, we reached formal
agreement with our bank group resolving these issues and therefore the debt at
Rugeley will be redesignated to its contractual maturity at our next reporting
date.
5. Reconciliation of operating profit to net cash inflow from
operating activities
Six months ended Six months ended Year ended
30 June 30 June 31 December
2003 2002 2002
#m #m #m
Operating profit 51 86 105
Impairment - 45 103
------ ------ ------
51 131 208
Depreciation and amortisation 54 46 112
Movement in working capital (31) (36) (47)
Movement in provisions (3) 1 3
------ ------ ------
Net cash inflow from operating activities 71 142 276
====== ====== ======
6. Annual Report and Accounts
Copies of the full Annual Report and Accounts for the year ended 31 December
2002 are available from the company's website www.ipplc.com or by calling or
writing to International Power plc, Senator House, 85 Queen Victoria Street,
London EC4V 4DP or sending an e-mail to ir@ipplc.com. Telephone: 020 7320 8600.
Independent review report by KPMG Audit Plc to International Power plc
Introduction
We have been engaged by the company to review the financial information set out
on pages 7 to 15 and we have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
KPMG Audit Plc
Chartered Accountants
8 Salisbury Square
London EC4Y 8BB
3 September 2003
International Power plc
Consolidated Profit and Loss Account
For the quarter ended 30 June 2003
Quarter to 30 June Quarter to 30 June
Excluding Exceptional Including Excluding Exceptional Including
exceptional items exceptional exceptional items exceptional
items items items items
2003 2003 2003 2002 2002 2002
Note #m #m #m #m #m #m
Turnover: Group and 2 308 - 308 298 - 298
share of joint
ventures and
associates
Less: share of (31) - (31) (25) - (25)
joint ventures'
turnover
Less: share of (71) - (71) (87) - (87)
associates'
turnover
------ ------ ------ ------ ------ ------
Group turnover 206 - 206 186 - 186
Net operating costs 3 (189) - (189) (124) (45) (169)
------ ------ ------ ------ ------ ------
Operating profit 17 - 17 62 (45) 17
Share of operating
profit of:
Joint ventures 6 - 6 6 - 6
Associates 23 - 23 37 - 37
Income from fixed 17 - 17 17 24 41
asset investments
------ ------ ------ ------ ------ ------
Operating profit 63 - 63 122 (21) 101
and investment
income
Non operating 3 - 8 8 - - -
exceptional items
------ ------ ------ ------ ------ ------
Profit on ordinary 2 63 8 71 122 (21) 101
activities before
interest and
taxation
Net interest and
similar charges
------ ------ ------ ------ ------ ------
Group (13) - (13) (28) - (28)
Joint ventures and (10) - (10) (8) - (8)
associates
------ ------ ------ ------ ------ ------
(23) - (23) (36) - (36)
------ ------ ------ ------ ------ ------
Profit on ordinary 40 8 48 86 (21) 65
activities before
taxation
Taxation (13) - (13) (25) 6 (19)
------ ------ ------ ------ ------ ------
Profit on ordinary 27 8 35 61 (15) 46
activities after
taxation
Minority interests (1) - (1) (1) - (1)
- equity
------ ------ ------ ------ ------ ------
Profit for the 26 8 34 60 (15) 45
financial period
====== ====== ====== ====== ====== ======
Earnings per share
Basic 2.3p 0.7p 3.0p 5.3p (1.3)p 4.0p
====== ====== ====== ====== ====== ======
Diluted 2.3p 0.7p 3.0p 5.2p (1.3)p 3.9p
====== ====== ====== ====== ====== ======
Consolidated Balance Sheet
As at 30 June 2003
30 June 30 June
2003 2002
#m #m
Fixed assets
Intangible assets 2 (1)
Tangible assets 2,560 2,634
Investments 500 513
------ ------
Total fixed assets 3,062 3,146
------ ------
Current assets
Stocks 61 30
Debtors 153 159
Investments 63 71
Cash at bank and in hand 796 734
------ ------
Total current assets 1,073 994
Creditors: amounts falling due within one year
------ ------
Secured loans without recourse (225) (87)
Other liabilities (559) (334)
------ ------
Creditors: amounts falling due within one year (784) (421)
------ ------
Net current assets 289 573
------ ------
Total assets less current liabilities 3,351 3,719
Creditors: amounts falling due after more than one year (1,209) (1,647)
Provisions for liabilities and charges (273) (263)
------ ------
Net assets employed 1,869 1,809
====== =======
Capital and reserves
Shareholders' funds - equity 1,834 1,780
Minority interests - equity 35 29
------ ------
Total equity 1,869 1,809
====== ======
Net debt (834) (921)
Gearing 44.6% 50.9%
Debt capitalisation 30.9% 33.7%
The gearing percentage represents net debt as a proportion of net assets
employed. The debt capitalisation percentage represents net debt as a percentage
of net assets employed plus net debt.
Consolidated Cash Flow Statement
For the quarter ended 30 June 2003
Quarter to Quarter to
30 June 30 June
2003 2002
#m #m
Net cash inflow from operating activities 40 68
Dividends received from joint ventures and associates 21 30
Dividends received from fixed asset investments - ordinary 17 17
------ ------
Cashflow from ordinary operating activities 78 115
Dividends received from fixed asset investments - exceptional - 24
Returns on investments and servicing of finance (18) (24)
Taxation (5) (10)
Capital expenditure and financial investment (41) (48)
Acquisitions and disposals 21 -
------ ------
Net cash inflow before management of liquid resources and 35 57
financing activities
Management of liquid resources 12 22
------ ------
Financing activities
Share buy back (6) -
Debt financing 29 167
------ ------
23 167
------ ------
Increase in cash in period 70 246
====== ======
Consolidated Reconciliation of Net Cash Flow to Movement in Net Debt
For the quarter ended 30 June 2003
#m #m
Increase in cash in period 70 246
Cash inflow from increase in debt financing (29) (167)
Cash inflow from decrease in liquid resources (12) (22)
------ ------
Change in net debt resulting from cash flows 29 57
Translation differences (3) 86
Other non-cash movements (4) (5)
------ ------
Movement in net debt in the period 22 138
Net debt at the start of the period (856) (1,059)
------ ------
Net debt at the end of the period (834) (921)
====== ======
Consolidated Statement of Total Recognised Gains and Losses
For the quarter ended 30 June 2003
Quarter to Quarter to
30 June 30 June
2003 2002
#m #m
Profit for the financial period 34 45
Exchange differences on the retranslation of net investments (18) (27)
and borrowings
Share of recognised loss of associated undertaking - -
------ ------
Total recognised gains and losses for the period 16 18
====== ======
Reconciliation of Movements in Shareholders' Funds - Equity
For the quarter ended 30 June 2003
Quarter to Quarter to
30 June 30 June
2003 2002
#m #m
Profit for the financial period 34 45
Other recognised gains and losses relating to the period (net) (18) (27)
Share buy back (6) -
------ ------
Net addition to shareholders' funds 10 18
Opening shareholders' funds 1,824 1,762
------ ------
Closing shareholders' funds 1,834 1,780
====== ======
Notes to the Accounts
For the quarter ended 30 June 2003
1. Basis of preparation
The accounts for the three months ended 30 June 2003 have been prepared under
the historical cost convention and in accordance with applicable Accounting
Standards, using the same accounting policies as those adopted for the year
ended 31 December 2002. Minor adjustments have been made to comparative figures
to make them consistent with the current period.
2. Geographical segmental analysis
Quarter to Quarter to
30 June 30 June
2003 2002
#m #m
Group turnover
North America 120 78
Europe and Middle East 100 117
Australia 54 55
Rest of World 34 48
------ ------
308 298
Less: turnover of joint ventures (31) (25)
Less: turnover of associates (71) (87)
------ ------
206 186
====== ======
Profit before interest and taxation (excluding exceptional
items)
North America 6 28
Europe and Middle East 11 36
Australia 21 20
Rest of World 31 43
------ ------
69 127
Corporate costs (6) (5)
------ ------
63 122
====== ======
Notes
1. North America profit before interest and taxation includes other income
in respect of the late commissioning and performance recovery of new
power plants amounting to #5 million (quarter ended 30 June 2002:
#29 million).
With effect from 1 July 2003, we will change the geographical segmental analysis
to better represent how we manage our business following a reallocation of the
responsibilities between our regional teams. The table below presents our
results under the proposed segmentation, our Q3 results will be presented in
this regional grouping. Appendix II details the composition of the current and
proposed segments by operating plant.
Proposed segmentation
Quarter ended Quarter ended
30 June 30 June
2003 2002
#m #m
Group turnover
North America 120 78
Europe 97 117
Middle East 16 23
Australia 54 55
Rest of World 21 25
------ ------
308 298
Less: turnover of joint ventures (31) (25)
Less: turnover of associates (71) (87)
------ ------
206 186
====== ======
Profit before interest and taxation (excluding exceptional
items)
North America 6 28
Europe 11 26
Middle East 23 43
Australia 21 20
Rest of World 8 10
------ ------
69 127
Corporate costs (6) (5)
------ ------
63 122
====== ======
Notes
1. North America profit before interest and taxation includes other income
in respect of the late commissioning and performance recovery of new
power plants amounting to #5 million (quarter ended 30 June 2002:
#29 million).
3. Exceptional items
Quarter to Quarter to
30 June 30 June
2003 2002
#m #m
Net operating exceptional items charged
Deeside impairment - (45)
------ ------
Net operating exceptional items - (45)
====== ======
Exceptional income from investments
Backlog dividend received from Kapco - 24
====== ======
Non-operating exceptional items credited
Profit on disposal of a 5% holding in Hubco 8 -
------ ------
Non-operating exceptional items 8 -
====== ======
Total exceptional items before attributable taxation 8 (21)
Taxation on exceptional items - 6
------ ------
Total exceptional items after attributable taxation 8 (15)
====== ======
4. Annual Report and Accounts
Copies of the full Annual Report and Accounts for the year ended 31 December
2002 are available from the company's website www.ipplc.com or by calling or
writing to International Power plc, Senator House, 85 Queen Victoria Street,
London EC4V 4DP or by sending an e-mail to ir@ipplc.com. Telephone: 020 7320
8600.
Current segmentation Proposed segmentation
Composition of segment by operating plant: Composition of segment by operating plant:
North America North America
Hartwell, Georgia, USA Hartwell, Georgia, USA
Oyster Creek, Texas, USA Oyster Creek, Texas, USA
Hays, Texas, USA Hays, Texas, USA
Midlothian I and II, Texas, USA Midlothian I and II, Texas, USA
Blackstone, Massachusetts, USA Blackstone, Massachusetts, USA
Milford, Massachusetts, USA Milford, Massachusetts, USA
Bellingham, Massachusetts, USA Bellingham, Massachusetts, USA
Australia Australia
Hazelwood, Victoria Hazelwood, Victoria
Synergen, South Australia Synergen, South Australia
Pelican Point, South Australia Pelican Point, South Australia
Europe and Middle East Europe
EOP, the Czech Republic EOP, the Czech Republic
Deeside, United Kingdom Deeside, United Kingdom
Rugeley, United Kingdom Rugeley, United Kingdom
Elcogas, Spain Elcogas, Spain
Pego, Portugal Pego, Portugal
Marmara, Turkey Marmara, Turkey
Al Kamil, Oman
Umm Al Nar, UAE
Shuweihat S1, UAE
Middle East
Al Kamil, Oman
Umm Al Nar, UAE
Shuweihat S1, UAE
Hubco, Pakistan
Kapco, Pakistan
Rest of World Rest of World
Hubco, Pakistan Malakoff, Malaysia
Kapco, Pakistan Pluak Daeng, Thailand
Malakoff, Malaysia
Pluak Daeng, Thailand
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR IFFELAVIVIIV
