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Preliminary Results
Year ended 31 December 2007
Preliminary Results March 2008 International Power
Disclaimer
This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or
dispose of any International Power plc shares.
This presentation contains certain forward-looking statements with respect to the financial condition,
results, operations and businesses of International Power plc. These statements and forecasts involve risk
and uncertainty because they relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results or developments to differ materially from
those expressed or implied by these forward-looking statements and forecasts.
Past performance is no guide to future performance and persons wishing to invest in International Power
should consult an independent financial advisor before doing so.
Preliminary Results March 2008 International Power
Philip Cox
Chief Executive Officer
Preliminary Results March 2008 International Power
Highlights
Good financial performance
– profit from operations of £904 million - up 17%
– EPS of 27.1p - up 21%
– strong free cash flow of £653 million - up 43%
– 29% increase in full year dividend recommended from 7.9p to 10.16p
Regional headlines
– strong performance in Europe
– disappointing performance in Australia
– cool US summer
– good performance in Middle East and Asia
Portfolio growth continues
– Maestrale, Fujairah F2, Elecgas and Uch
Active portfolio management
– Malakoff disposal and common ownership platform for UK assets
Expect 2008 to be another year of growth
Preliminary Results March 2008 International Power
All numbers in this presentation exclude exceptional items and specific IAS39 mark to market
movements, unless stated otherwise
Financial Review
Mark Williamson, CFO
Preliminary Results March 2008 International Power
Income statement
2007 2006
Year ended 31 December £m £m change
North America 136 101 35%
Europe 574 450 28%
Middle East 68 52 31%
Australia 82 124 (34%)
Asia 96 91 5%
Corporate costs (52) (45)
Profit from operations 904 773 17%
Interest (308) (248)
PBT 596 525 14%
Tax (113) (122)
Minority interest (77) (71)
Profit for the year 406 332 22%
EPS 27.1p 22.4p 21%
Total DPS 10.16p 7.9p 29%
Dividend payout ratio 37.5% 35%
Preliminary Results March 2008 International Power
Profit from operations up 17%
£m
1,000
£16m
£124m
£5m £904m
900
(£42m) (£7m)
£35m
800 £773m
700
600
500
2006 North Europe Middle Australia Asia Corporate 2007
PFO America East Costs PFO
Preliminary Results March 2008 International Power
North America
Profit from operations Texas
up 35%
Full year contribution from Coleto Creek
£136m – dust emissions control installation complete
£101m Mild weather
£108m Hays extended outage complete
£73m
New England
£28m £28m Forward capacity market
2006 2007
PAT of JVs and associates
PBIT of subsidiaries
Preliminary Results March 2008 International Power
Europe
Profit from operations Strong contribution from Deeside, Rugeley and
up 28% First Hydro
£574m First full year contributions from Levanto and
£450m Indian Queens
£521m Four month contribution from Maestrale in
£381m 2007
ISAB impacted by change of fuel indexation
and planned outage
£69m £53m
2006 2007
PAT of JVs and associates
PBIT of subsidiaries
Preliminary Results March 2008 International Power
First Hydro performance
(1) Another excellent year
PFO
up 12% 2006 benefited from:
£133m – high gas prices
£119m – high power price volatility
– unreliable capacity from coal and nuclear
2007 benefited from:
– fewer coal plants to provide frequency response
– increased water availability
– gas and power price volatility
– 2007 peak/off peak differential helped by low phase
2006 2007 1 CO2 prices
(1) First Hydro Company reported
results are under UK GAAP
Preliminary Results March 2008 International Power
Middle East
Profit from operations Additional capacity on-line at Tihama, Ras Laffan B and
up 31% Umm Al Nar
£68m Hidd development fee in H1 2006
£52m £44m Fujairah F2 development fee in H2 2007
£32m
£20m £24m
2006 2007
PAT of JVs and associates
PBIT of subsidiaries
Preliminary Results March 2008 International Power
Australia
Profit from operations Planned outages at Pelican Point and Hazelwood
down 34%
Unplanned outages at Loy Yang B and Hazelwood
£124m
Interconnector constraint due to bushfire
Inter-regional pricing differences
£82m
£121m 2008 pricing significantly stronger
£83m
2006 2007
PAT of JVs and associates
PBIT of subsidiaries
Preliminary Results March 2008 International Power
Asia
Profit from operations KAPCO impacted by end of tax holiday
up 5%
Strong operational performances and high load factors
£91m
£96m led to generation and availability bonuses
£3m £14m
Completed sale of Malakoff
£88m
£82m
2006 2007
PAT of JVs and Associates
PBIT of subsidiaries
Preliminary Results March 2008 International Power
Effective tax rate and interest cover
2007 2006
Year ended 31 December £m £m
PFO 904 773
JVs and associates
Interest 91 99
Tax 60 55
Minority interest - 1
151 155
PBIT 1,055 928
Total interest
Subsidiaries (308) (248)
JVs and associates (91) (99)
(399) (347)
Interest cover 2.6x 2.7x
Profit before total tax 656 581
Total tax
Subsidiaries (113) (122)
JVs and associates (60) (55)
(173) (177)
Effective tax rate 26% 30%
Preliminary Results March 2008 International Power
Exceptional items
2007 2006
Year ended 31 December £m £m
Profit on disposal of Malakoff 115 -
Profit on partial disposal of UK subsidiaries 174 -
Impairment of Saltend gas contract (47) -
Provision against investment in Biox (9) -
Impairment reversal of Deeside - 36
Compensation in respect of TXU tolling contract - 14
Compensation for breach of contract - 5
Exceptional gain – pre tax 233 55
Remeasurement of net deferred tax liabilities of Maestrale 49 -
Taxation on impairment of Saltend gas contract 14 -
Taxation on Deeside impairment reversal - (11)
Taxation on compensation from TXU - (4)
Exceptional gain – post tax 296 40
Preliminary Results March 2008 International Power
Free cash flow
2007 2006
Year ended 31 December £m £m % change
Operating cash flow from subsidiaries 992 784
Dividends - JVs and associates 145 113
Capex - maintenance (71) (128)
Cash generated from operations 1,066 769 39%
Interest paid (312) (256)
Tax paid (101) (57)
Free cash flow 653 456 43%
2007 free cash flow enhanced by:
Working capital reductions, including reduced margining and investment deposits with counter
parties
Lower than average maintenance capital expenditure in 2007
Preliminary Results March 2008 International Power
Capital expenditure - maintenance
Maintenance capex Includes only subsidiaries
£128m c£130m Intervals between major maintenance varies between
three and four years. 2007 was a year of low spend
Average annual cost of current portfolio c.£120m
£72m £71m
2005 2006 2007 2008e
Preliminary Results March 2008 International Power
Movement in net debt
2007 2006
Year ended 31 December £m £m
Free cash flow 653 456
Growth capex (160) (142)
Acquisitions and investments (842) (818)
Disposals 418 1
Exceptional receipts
- TXU and contract compensation - 19
Dividend paid (160) (67)
FX & other (250) 271
Dividends paid to minorities (35) (54)
Increase in net debt (376) (334)
Opening net debt (3,575) (3,060)
Acquired net debt (711) (181)
Closing net debt (4,662) (3,575)
Preliminary Results March 2008 International Power
Balance sheet
2007 2006
As at 31 December £m £m
Non-current assets
Goodwill and intangibles 901 425
PP&E 5,721 4,435
Investments 1,292 1,290
Other long-term assets 1,530 1,270
9,444 7,420
Net current (liabilities)/assets (355) 14
Non-current liabilities (1,420) (1,119)
Net debt (4,662) (3,575)
Net assets 3,007 2,740
Gearing 155% 130%
Debt capitalisation 61% 57%
Net debt of JVs and associates (1,297) (1,524)
Preliminary Results March 2008 International Power
Capital structure and funding
Robust capital structure
Non recourse debt markets open for business
– project refinancing
– new project financing
Fixed interest rate is a significant portion of gross debt
Preliminary Results March 2008 International Power
Net debt structure
JVs and associates
Project cash IPR off-balance sheet
/(debt) (1) Corporate Total Maturity net debt(1) Maturity
As at 31 December 2007 £m £m £m £m
Cash and cash equivalents 871 290 1,161
Recourse debt
Convertible bond (2023)(2) - (115) (115) 2023
Convertible bond (2013)(2) - (140) (140) 2013
- (255) (255)
Non recourse debt
IPM - acquisition debt (243) - (243) 2012 -
IPM - Mitsui preferred equity (151) - (151) 2008 -
North America (876) - (876) 2010-2013 (158) 2013-2019
Europe (2,913) - (2,913) 2010-2026 (195) 2009-2020
Middle East (315) - (315) 2016-2025 (612) 2021-2030
Australia (1,035) - (1,035) 2008-2019 (62) 2009 -2012
Asia (35) - (35) 2020 (270) 2008-2018
(5,568) - (5,568) (1,297)
Total net cash/(debt) (4,697) 35 (4,662) (1,297)
(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
Preliminary Results March 2008 International Power
Debt market update
Pre credit crunch Post credit crunch
Umm Al Nar (June 2003) Fujairah F2 (December 2007)
Amount US$1,330m US$2,140m
Tenor 20 year term 23 year term
Margin 110-165bp 65-110bp
Pelican Point (May 1999) Pelican Point (February 2008)
Amount A$240m A$190m
Tenor TrA: 15 year term/TrB 9 year term 10 year term
Margin 120-180bp 115 – 140bp
Tejo (June 2006) Elecgas (March 2008)
Amount €420m €494m
Tenor 14 year term 27 year term
Margin 50 – 65bp 65-100bp
Corporate revolver Initial facility (June 2005) Extended facility (October 2007)
Amount US$640m US$850m
Tenor 2008 (later extended to 2009) 2010
Margin Confidential Pricing reduced by 25bp
Preliminary Results March 2008 International Power
Interest rate exposure
% of Debt Fixed
100
80
60
40
20
0
2007 2008 2009 2010 2011 2012
Policy is to keep fixed interest rate on approximately 70% of gross debt
Cash on deposit is held at variable interest rates
At 70% fixed, a 100 basis points change in interest rates equates to approximately a 0.3p change in
EPS
Preliminary Results March 2008 International Power
Financial summary
PFO (£m) £904m Free cash flow (£m) £653m
£773m
£456m
£536m
£285m
£222m
£104m
2004 2005 2006 2007 2004 2005 2006 2007
Earnings per share (pence) Dividend per share (pence)
27.1p 10.16p (1)
22.4p 7.9p
14.6p
4.5p
8.6p 2.5p
2004 2005 2006 2007 2004 2005 2006 2007
(1)
Recommended dividend
Preliminary Results March 2008 International Power
Philip Cox
Chief Executive Officer
Preliminary Results March 2008 International Power
US
Texas
Market fundamentals remain strong
ERCOT Reserve Margin
Steady growth in demand %
Natural gas price firming – positive for wholesale power 16
14
prices 12
Target Reserve Margin
Q1 2008 Projection
2007 summer was cooler than average year 10
Q4 2007 Projection
8
– lower peak demand / market
6
heat rates 4
2008 2009 2010 2011 2012 2013
– lower fuel demand also
softened prices
Notes:
‘Normal’ summer weather will bring increased market heat • Oak Grove 1,634 MW brought forward to 2010
rates • 293 MW of net new capacity additions
• Wind generation assumed at 8.7% of installed capacity
Margins for coal remain good
– Powder River Basin coal price attractive for Coleto
Preliminary Results March 2008 International Power
US
New England
Market fundamentals are good New England Reserve Margin
Forward Capacity Market %
With new demand-side
- first auction in February 20
resources
– auction oversubscribed 16
Target Reserve Margin
- capacity price $4.25/kW month 12
(2010/2011) 8
Without new
demand-side resources
– capacity requirements to be met 4
mainly through demand side 0
2008 2010 2012 2014 2016
management Notes:
IPR’s modern efficient CCGTs well positioned • First FCM auction for 2010/2011 resulted in
- 1,188 MW of new demand side resources
– no significant new build - 626 MW of new supply additions
– demand side management initiatives add uncertainty
– more reliance on existing higher heat rate plant
RGGI emissions trading system planned to commence in January 2009
– timetable and structure uncertain
– IPR CCGTs highly efficient compared to average plant
– lightly contracted for 2009
Preliminary Results March 2008 International Power
US
Commercial summary
Full Year 2008 (1) 2007 Full Year
(3)
New England 2008 (1) 2007
Coleto Creek (3)
Achieved spark spread ($/MWh) 18 16
(4)
Achieved dark spread ($/MWh) 29 29 Load factor 55% 60%
Load factor 90% 75% Forward contracted (2)
90% n/a
(2)
Forward contracted 95% n/a
Midlothian
Achieved spark spread ($/MWh) 15 14
Load factor 55% 55%
(2)
Forward contracted 70% n/a
Hays
Achieved spark spread ($/MWh) 14 10
(1)
IPR forecast
Load factor 55% 45% (2)
% of anticipated output for the full year
(3) Includes FCM receipts
(2)
Forward contracted 70% n/a (4) Excludes SO2 costs
Preliminary Results March 2008 International Power
Europe
UK market fundamentals
Long-term fundamentals remain attractive UK Reserve Margin
Uncertainty on available capacity Reserve margin without early
– restricted running of opted-out coal plant and % 30 Reserve margin LCPD retirements
with early LCPD
potential closure before 2015 25
20
retirements
– further pressure on coal capacity due to rising 15
coal price and carbon costs 10
Target Reserve
– ongoing retirement of nuclear 5
0
– potential unreliability of plant approaching 2008 2010 2012 2014 2016
closure
– wind generation – unpredictable load factors / Notes:
availability • Peak demand estimate updated for lower winter 2007 demand
• Includes impact of 5,912 MW of Nuclear capacity lifetime extensions
Forward gas prices have strengthened • Wind generation assumed at 35% of installed capacity
– maintains upward pressure on UK wholesale
prices
Preliminary Results March 2008 International Power
Europe
UK commercial summary
Rugeley Deeside Saltend
Full Year 2008 (1) 2007 2008 (1) 2007 2008 (1) 2007
(2)
Spread £/MWh 27 34 23 23 n/a n/a
Load factor 55% 65% 70% 50% 90% 90%
(3)
Forward contracted 85% n/a 60% n/a 95% n/a
(1) (2) (3)
IPR forecast Pre cost of CO2 % of anticipated output for the full year
Reduced output and lower margins at Rugeley
– FGD installation in 2008 – together with planned outage, Rugeley will be off for 4 months
– insulated from higher coal costs due to forward contracting
– higher CO2 costs in Phase II
Deeside - relatively light contracted position provides upside from improved market conditions
– recent (2008) contracting has locked in improved spreads
– high coal price may result in switching from coal to gas
First Hydro
– reduction in peak / off peak differential driven by higher overnight prices
– continued strong performance from both ancillary and balancing mechanism markets
Preliminary Results March 2008 International Power
Europe
Elecgas, Portugal
830 MW CCGT, Portugal
IPR and Endesa 50:50 partnership
– 25 year tolling contract with Endesa
£443m financing complete
– IPR equity investment £34m
EPC contractor – Siemens
Commissioning in 2011 Existing
New plant Plant
Located adjacent to existing Tejo coal plant
– benefits from shared services
Excellent organic growth opportunity from:
– existing market presence
– available site
– access to finance
Preliminary Results March 2008 International Power
Europe
Strong growth in renewables
Significant scale in wind generation
– 1,199 MW now operational worldwide
- 660 MW of operational wind capacity acquired in 2007
- 132 MW under construction brought online
– IPR now a leading global wind generator
Established market positions provide strong platform for growth
– improved access to developers
and turbine manufacturers Wind generation
year-on-year growth
Current focus
– growth opportunities across 2006 407
our core markets
– balanced portfolio March 2008 1,199
approach
0 300 600 900 1,200
Canunda Maestrale Schkortleben Kardstadt 11
Levanto DZ1 DZ11 Horn
Preliminary Results March 2008 International Power
Middle East
Strong operational performance with high plant availability
Umm Al Nar all new capacity on line
– current total capacity 2,450 MW, 143 MIGD
– decommissioning date for original capacity (795 MW) extended to 2010
Ras Laffan B – 920 MW, 30 MIGD operational
– 135 MW, 30 MIGD expected Middle East
in H1 2008 Gross MW
year-on-year gross capacity growth
Hidd desalination extension 2005 2,817
– 12 MIGD operational
– 48 MIGD expected 2006 5,540
in H1 2008
2007 7,300
Fujairah F2 2,000 MW, 130 MIGD
1,000 2,000 3,000 4,000 5,000 6,000 7,000
As at 31 December each year
Al Kamil Shuweihat Ras Laffan B
Umm Al Nar Tihama Hidd
Preliminary Results March 2008 International Power
Middle East
Fujairah F2, UAE
Awarded Fujairah F2 greenfield IWPP - 2,000 MW and 130 MIGD water
– IPR 20%, Marubeni 20%, ADWEA 60%
Successful signing of EPC contract and project financing on attractive terms
– 20 year Power and Water Purchase Agreement (PWPA)
Close relationships with technology providers – Alstom and SIDEM
Full commercial operation expected by in 2010
Key project to help Abu Dhabi meet growing power demand
– forecast average demand growth 8.1% per annum
– demand growth driven by over $170 billion* of major residential, commercial and industrial projects over
the next 6-8 years
* Abu Dhabi Water and Electricity Company (ADWEC) estimate
Preliminary Results March 2008 International Power
Australia
Forward market still good Victoria and South Australia Reserve Margin
– recent rainfall resulted in some
reduction in 2008 forward prices % 25
- but low liquidity 20
– but key hydro reservoirs remain at 15
low levels 10
Target Reserve Margin
Portfolio largely contracted for 2008
5
0
Australia ratified the Kyoto Protocol in 07/08 09/10 11/12 13/14 15/16
December 2007
– emission trading scheme expected to commence in 2010 Notes:
• Planned capacity additions 1,153 MW by 2011/12
– design details expected by end of 2008 • Inter-connector assumed at 85% of total capacity
• Wind generation assumed at 10%
Hazelwood low emissions project
– key government grant contracts signed
– turbine efficiency upgrade / coal drying
– pilot CO2 capture plant
Preliminary Results March 2008 International Power
Australia
Commercial summary
Full Year
Victoria, Hazelwood 2008 (1) 2007
Achieved average price ($/MWh) 45 32
Hazelwood Loy Yang B Pelican Point
Full Year 2008 (1) 2007 2008 (1) 2007 2008 (1) 2007
(1)
Load factor 80% 80% 95% 95% 75% 75% IPR forecast
(2) % of anticipated
(2)
Forward contracted 80% n/a 85% n/a 95% n/a output for the full year
Preliminary Results March 2008 International Power
Asia
Strong growth in power demand
– Pakistan > 10%
– Indonesia 5%
– Thailand 6%
Robust commercial and technical
performance
Focus on high availability
– bonus at Paiton - availability 93%
High load factors - record generation
in Pakistan
– generation bonus at HUBCO - load factor 72%
Preliminary Results March 2008 International Power
Asia
Uch, Pakistan
In-principle agreement to acquire
additional 31% of Uch
– total IPR shareholding 71%
– acquisition price £44m
– 572 MW plant, PPA till 2023
– strengthens long-term contracted
earnings and cash flow
– strong positioning using indigenous Pakistan gas
Power demand growing strongly
in Pakistan
– over 10% per annum
– shortage of capacity
Pakistan economy growing at 7% per annum
Preliminary Results March 2008 International Power
Delivering growth
IPR well positioned
Opportunity flow
Significant opportunities in existing markets
– driven by demand growth and capacity retirements
– greenfield development and acquisitions
New markets subject to detailed analysis
Rising EPC costs
Industry wide development – not a competitive disadvantage
Good long-term relationships with key EPC suppliers
Return levels maintained – evidenced by recent projects
Positive read across for IPR’s existing assets
Availability of finance
Project finance available
Continue to execute major projects on attractive terms
Preliminary Results March 2008 International Power
Multiple growth opportunities
North America
650 MW Coleto Creek plant expansion
New England peaking units for FCM bids
Acquisition opportunities
– over 6,000 MW of existing capacity currently on the market
Europe
840 MW Eneco CCGT in Netherlands
Acquisition opportunities
100 MW expansion at Opatovice, Czech Republic
Renewables
Opportunities in new markets
Preliminary Results March 2008 International Power
Multiple growth opportunities
Middle East Asia
Bids due in 2008 800 MW Paiton III, Indonesia
– 1,600 MW, 100 MIGD Shuweihat S2, UAE 1,320 MW West Java, Indonesia
– 400 MW, 15 MIGD Salalah, Oman 450 MW KAPCO expansion, Pakistan
– 1,200 MW, 50 MIGD Ad Dur 1, Bahrain 225 MW HUBCO expansion, Pakistan
– 400 MW, Al Qatrana, Jordan 400 MW Uch expansion, Pakistan
– 1,000 MW 220 MIGD Raz az Zawr, Saudi Arabia 100 MW Thailand
Strong medium and longer term project pipeline Opportunities in new markets
Australia Africa
12,500 MW NSW privatisation Up to 2,500 MW (Phase I) Mmamabula, Botswana
350 MW peaker, NSW Opportunities in new markets
Renewable opportunities
Preliminary Results March 2008 International Power
Summary
Good financial performance with strong free cash flow
– performance in 2007 reflects portfolio strength
Expect 2008 to be a year of growth
– reduced output at Rugeley and lower coal spreads
– subdued summer spreads in the US
Continued access to finance and EPC contractors/turbines
IPR well positioned to grow the portfolio
– multiple opportunities
– greenfield development and acquisitions
Preliminary Results March 2008 International Power
Appendix
Preliminary Results March 2008 International Power
Exceptional items and specific IAS 39 MTM
Year ended 31 December 2007 2006
Specific Exceptional Specific Exceptional
IAS 39 MTM Items Total IAS 39 MTM Items Total
£m £m £m £m £m £m
North America (21) - (21) 10 - 10
Europe (135) (56) (191) 110 55 165
Middle East - - - - - -
Australia (173) - (173) (50) - (50)
Asia (1) - (1) - - -
Regional total (330) (56) (386) 70 55 125
Corporate - - - - - -
PFO (330) (56) (386) 70 55 125
Disposals (see below)
- Malakoff sale - 115 115 - - -
- Disposal to Mitsui - 174 174 - - -
Net finance expense (16) - (16) (26) - (26)
(Loss)/profit before tax (346) 233 (113) 44 55 99
Income tax credit/(expense) 96 63 159 (10) (15) (25)
(Loss)/profit for the year (250) 296 46 34 40 74
Preliminary Results March 2008 International Power
Geographic analysis
Quarterly breakdown
Q1 Q2 Q3 Q4
2007 2006 2007 2006 2007 2006 2007 2006
Profit from operations £m £m £m £m £m £m £m £m
North America 12 4 30 24 62 50 32 23
Europe 159 158 109 84 109 66 197 142
Middle East 14 5 15 19 17 13 22 15
Australia 26 33 20 31 20 36 16 24
Asia 29 28 26 28 22 19 19 16
Regional total 240 228 200 186 230 184 286 220
Corporate costs (12) (11) (12) (11) (12) (12) (16) (11)
Profit from operations 228 217 188 175 218 172 270 209
Preliminary Results March 2008 International Power
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