Shareholder Information
INTERNATIONAL POWER PLC
ANNUAL GENERAL MEETING
15 MAY 2007
CHAIRMAN'S SPEECH
SLIDE: LOGO/INTERNATIONAL POWER/ANNUAL GENERAL
MEETING
SLIDE: SIR NEVILLE SIMMS, CHAIRMAN
Good morning ladies and gentlemen and welcome to ExCeL London for International Power plc's Annual General Meeting.
Please allow me a few moments to inform you of the order for today's proceedings.
After a few words from me, your CEO, Phil Cox will give a short presentation to you about the business. Following his presentation we will proceed directly to the formal business of the Meeting.
Before Phil's presentation, I want to comment briefly on our performance during the period to which the Accounts relate, and update you on progress this year so far.
SLIDE: 2006 REVIEW
Last year I said we expected 2006 to be a year of further growth. I'm glad to report that it was.
Profit from operations increased significantly to £773 million from £536 million, an improvement of 44%.
Earnings per share increased from 14.6 pence to 22.4 pence, an improvement of 53%, and free cash flow increased from £285 million to £456 million, an improvement of 60%.
SLIDE: 2006 REVIEW (2)
GOOD OPERATIONAL PERFORMANCE
IMPROVEMENT IN UK AND US MERCHANT MARKETS
CONTINUED GROWTH OF BUSINESS
These results reflect the good operational performance of our assets, the improvement in the UK and US merchant markets and the continued growth of the business as demonstrated by:
SLIDE: GROWTH IN 2006
40% of Hidd power and water plant – Bahrain (910 MW and 30
MIGD)
Coleto Creek – Texas (632 MW)
Levanto wind portfolio – (France and Germany) 436 MW)
Indian Queens – UK (140 MW peaking plant)
the acquisition of 40% of the Hidd power and water plant in Bahrain, the Coleto Creek plant in Texas, the Levanto onshore wind portfolio in Germany and France, and the Indian Queens peaking plant in UK.
Regional highlights during 2006 included:
SLIDE: NORTH AMERICA
North America reporting a profit of £101 million for 2006
against a profit of £48 million in 2005.
This increase was driven by an improved performance from the
merchant assets and a first time contribution from Coleto Creek
which was acquired in July.
EcoEléctrica and the other contracted assets, Hartwell and Oyster Creek, also performed well, delivering consistent financial performance.
SLIDE: EUROPE
In Europe profit for 2006 before exceptionals was £450 million, against £283 million in 2005, reflecting strong contributions from our UK assets and International Power Opatovice in the Czech Republic.
Additionally our contracted assets in Iberia, Italy and Turkey continue to deliver good operational and financial performance.
SLIDE: MIDDLE EAST
In the Middle East, profits increased from £24 million to £52 million, principally through new capacity coming on stream at Tihama in Saudi Arabia, Ras Laffan B in Qatar and a first time contribution from Hidd in Bahrain. Other assets in the region also delivered a good performance.
SLIDE: AUSTRALIA
Profits fell from £140 million to £124 million in Australia, primarily due to the expected reduction in achieved prices at Hazelwood and also as a result of the regulator enforced sale of Valley Power in 2005.
SLIDE: ASIA
In Asia profits decreased to £91 million from £100 million. Whilst performance was characterised by high plant availability, good underlying profitability and cash flow and a full year's contribution from Uch in Pakistan, these factors were more than offset by a decrease in KAPCO's earnings as it became a full tax payer.
Additionally earnings at Malakoff were down on 2005 due to lower output levels in 2006.
DIVIDEND 2007
In 2004, when we announced our first dividend, we said that our policy was to make a distribution representing 30% of pre-exceptional EPS, progressing towards a pay-out of 40% in the medium term.
This year we are proposing a dividend of 7.9 pence per share, which is an increase of 75% over last year and represents a distribution ratio of 35%. This dividend, if approved, will be paid to you towards the end of June. Looking forward, it remains our intention to progressively grow the dividend over the medium term towards a pay-out ratio of 40%.
SLIDE: SHARE PRICE
I'm also pleased to report that the share price performed extremely well throughout 2006, closing at 381.75 pence at the end of 2006, against 239.5 pence at the end of 2005. On Friday's close, International Power's shares were trading at 448.25 pence per share.
SLIDE: Q1 2007 HIGHLIGHTS
Turning to the first quarter of this year, we released the results for the period from 1 January 2007 to 31 March 2007 to the London Stock Exchange, last week, on 10 May.
Over the quarter, profit from operations increased to £228 million from £217 million, an increase of 5%. EPS was 7.1 pence, an increase of 8%. over Q1 2006. Free cash flow was up 37% to £174 million from £127 million.
Regional highlights included:
SLIDE: NORTH AMERICA
Profit in North America improving to £12 million against £4 million in Q1 2006, principally driven by the contribution from Coleto Creek.
For 2007 we have forward contracted 70% of our expected merchant CCGT output in Texas and 75% in New England. 95% of the expected output at Coleto Creek has also been forward contracted for 2007
SLIDE: EUROPE
Profits in Europe increased marginally to £159 million from £158 million. Earnings at Rugeley and Deeside were significantly up and First Hydro performed well. The earnings at Deeside and Rugeley were partially offset by Saltend, where we have accelerated the amortisation of its gas contract. We expect the full year charge to be approximately £65 million, of which £58 million has been charged in Q1 to reflect the fall in forward gas prices in the first quarter of this year.
Elsewhere in Europe, earnings in the Czech Republic were lower due to the mild weather. Our contracted assets continue to deliver good performance. Indian Queens and Levanto are both performing well. We now have a total of 386 MW of wind farms in operation at Levanto.
SLIDE: MIDDLE EAST
In the Middle East profits increased to £14 million against £5 million in 2006 principally reflecting a full first time contribution from Tihama and additional capacity coming on line in the region.
SLIDE: AUSTRALIA
In Australia profits decreased to £26 million from £33 million in 2006. Profit was impacted by a transmission constraint, principally in Victoria, caused by a bush fire
SLIDE: ASIA
In Asia, profits increased to £29 million from £28 million. The lower earnings at KAPCO were offset by increased earnings at Thai National Power, HUBCO and Uch.
The sale of Malakoff's wholesale generation business to MMC Corporation was completed on 30 April. We expect to receive proceeds of approximately £245 million later this month.
SLIDE: INTERNATIONAL POWER MITSUI PARTNERSHIP
In March we announced that we had signed an agreement with Mitsui to create a common ownership platform for our UK assets and to equalise our returns from Paiton with those of Mitsui. Following completion, International Power will hold 75% of Rugeley, Deeside, First Hydro, Saltend and Indian Queens and Mitsui will hold 25% of these assets. This agreement also involves Mitsui providing a £200 million credit facility to support the trading activities of our UK assets.
SLIDE: INTERNATIONAL POWER MITSUI PARTNERSHIP (2)
The transaction is expected to be earnings enhancing in its first full year, however it is still subject to shareholder approval and competition clearance. Consequently I will be writing to you shortly providing full details of this transaction and requesting that your approval be given at an Extraordinary General Meeting to be held in June this year.
SLIDE: OUTLOOK
Our business is well positioned and continues to perform in line with our expectations. Given our largely forward contracted merchant position and planned growth in capacity in the Middle East, we remain confident that 2007, particularly the second half, will deliver further growth.
SLIDE: PHIL COX PRESENTATION
Thank you very much ladies and gentlemen. Now, as I said earlier, your CEO will make a short presentation to you.
Phil Cox – Thank you Neville.
Phil Cox - Thank you very much indeed ladies and Gentlemen, I now pass you back to Neville for the formal business of the Meeting.
SLIDE: ANNUAL GENERAL MEETING
Sir Neville Simms - Thank you Phil.
Ladies and Gentlemen, there are 12 separate resolutions being put forward for your consideration today.
SLIDE: QUESTION PROCEDURE
As the various resolutions are put to you, you will of course want to ask questions. However it will help me greatly and will ensure that the meeting moves ahead smoothly if I take questions that relate specifically to each individual resolution at the time that I put the resolution to the meeting.
If you wish to ask a question I would be grateful if you could wait until the appropriate resolution is being put to the Meeting and then raise your hand. A steward will then come to you with a roving microphone.
When asking a question please could you state your name clearly for the record. That will enable us to get back to you if any follow up is necessary, and can I remind the Meeting that only shareholders are able to ask questions.
Finally, any questions that relate specifically to your personal shareholding should be addressed to Lloyds TSB Registrars, representatives of whom are present here today and who will be available after the Meeting has ended.
Thank you.
SLIDE: NOTICE OF ANNUAL GENERAL MEETING
The Notice of the Annual General Meeting for 2007 was circulated to all shareholders during April of this year together with the Annual Report and the Summary Annual Report for the financial period ended 31 December 2006.
With your consent, I would like to take the Notice of Meeting as read.
Thank you very much.
SLIDE: RESOLUTION 1
The first resolution is to receive the Accounts for the financial period ended 31 December 2006. The auditors' report on the Accounts is set out on page 78 of the Annual Report. No issues have been raised for your attention. Therefore, can we also please take the auditors' statement as read?
Thank you.
I now propose the first Resolution:
"To receive the Accounts for the financial period ended 31 December 2006 and the Report of the Directors, the Directors' remuneration report and the report of the auditors on those Accounts and on the auditable part of the Directors' remuneration report."
I will now take questions on this resolution. Can I take the first question please.
[Questions]
If those are all the questions, I will now put resolution 1 to the vote. Please indicate your vote by holding up your white voting card. Those in favour? Those against? Thank you. I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 99.67% of the proxy votes cast were in favour of the resolution.
SLIDE: APPOINTMENT OF DIRECTORS
Resolutions two to five are for the re-appointment of Directors of the Company.
John Roberts is automatically put forward for re-appointment as a Director, having been appointed a Director since the last Annual General Meeting. Additionally, in accordance with best practice and the Company's Articles of Association, myself, Tony Concannon and Steve Riley are also put forward for re-appointment this year.
SLIDE: TO RE-APPOINT SIR NEVILLE SIMMS
Resolution 2 is for my own re-appointment. Accordingly, I will ask Tony Isaac our Senior Independent Director to propose the Resolution.
[Tony Isaac to Stand]
Tony Isaac: Thank you Neville.
Resolution 2 is for the re-appointment of Sir Neville Simms. Sir Neville was appointed Chairman of International Power in October 2000.
I propose the re-appointment of Sir Neville Simms as a Director. Are there any questions on Sir Neville's re-appointment?
I now put the Resolution to the Vote. Those in favour? Those against? Thank you. I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 98.7% of the proxy votes cast were in favour of the resolution.
Thank you Ladies and Gentlemen, I now return the Chair to Sir Neville.
[Tony Isaac to sit]
SLIDE: TO RE-APPOINT TONY CONCANNON
Resolution 3 is for the re-appointment of Tony Concannon as a Director. Tony is Executive Director, Australia and is responsible for managing our Australian business. He was first appointed to the Board in January 2004.
I propose the re-appointment of Tony Concannon as a Director. Are there any questions on Tony's re-appointment?
I now put the Resolution to the Vote. Those in favour? Those against? Thank you. I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 95.81% of the proxy votes cast were in favour of the resolution.
SLIDE: TO RE-APPOINT STEVE RILEY
Resolution 4 is for the re-appointment of Steve Riley as a Director. Steve is Executive Director, Europe and is responsible for managing our European operations. Steve was originally appointed to the Board in January 2004.
I propose the re-appointment of Steve Riley as a Director. Are there any questions on Steve's re-appointment?
I now put the Resolution to the Vote. Those in favour? Those against? Thank you. I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 98.49% of the proxy votes cast were in favour of the resolution.
SLIDE: TO RE-APPOINT JOHN ROBERTS
Resolution 5 is for the re-appointment of John Roberts as a Director. John became a Non-Executive Director of the Company on 18 May 2006. He was previously Chief Executive of United Utilities and before that he was Chief Executive of Hyder Utilities and Manweb. He is a Fellow of the Royal Academy of Engineering, the Institution of Engineering and Technology and the Association of Chartered Certified Accountants. He is also a Non-Executive Director of Royal Bank of Canada (Europe) Limited.
I propose the re-appointment of John Roberts as a Director. Are there any questions on John's re-appointment?
I now put the Resolution to the Vote. Those in favour? Those against? Thank you. I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 98.99% of the proxy votes cast were in favour of the resolution.
SLIDE: TO DECLARE A FINAL DIVIDEND
Resolution 6 which is an Ordinary Resolution, is to declare a final dividend of 7.9 pence per share. Are there any questions on this resolution?
I now put the Resolution to the Vote.
Those in favour? Those against? Thank you.
I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 99.84% of the proxy votes cast were in favour of the resolution.
SLIDE: RE-APPOINTMENT OF AUDITORS
Resolution 7 is for the re-appointment of KPMG Audit Plc as auditors of the Company. KPMG Audit Plc have indicated their willingness to continue as auditors for International Power plc. Are there any questions on this resolution?
Accordingly I propose:
"To re-appoint KPMG Audit Plc as auditors of the Company to hold office from the conclusion of the AGM to the conclusion of the next meeting at which accounts are laid before the Company and to authorise the Directors to set their remuneration."
I now put the Resolution to the Vote. Those in favour? Those against? Thank you. I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 99.56% of the proxy votes cast were in favour of the resolution.
We now move to those items described as special business.
SLIDE: DIRECTORS' REMUNERATION REPORT
Resolution 8 is an Ordinary Resolution requesting your approval of the Directors' remuneration report. Are there any questions on this resolution?
I propose:
"That the Directors' remuneration report for the year ended 31 December 2006 as set out on pages 64 to 75 of the Annual Report and Accounts is approved."
I now put the Resolution to the Vote. Those in favour? Those against? Thank you. I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 96.41% of the proxy votes cast were in favour of the resolution.
SLIDE: GENERAL AUTHORITY TO ALLOT SHARES
Resolution 9 is an Ordinary Resolution requesting shareholders to give general authority to the Directors to allot Ordinary shares up to about one-third of the issued share capital as at 31 December 2006. The renewed authority, if given, will last until the 2008 Annual General Meeting of the Company, or 15 August 2008, whichever is the earlier. Are there any questions on this resolution?
I now put the Resolution to the Vote. Those in favour? Those against? I declare the Resolution carried.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 98.41% of the proxy votes cast were in favour of the resolution.
SLIDE: DISAPPLICATION OF PRE-EMPTION RIGHTS
Resolution 10, which is a Special Resolution, renews the authority given annually to the Directors to disapply shareholders existing pre-emption rights in respect of a proportion of the unissued shares of the Company. The number of unissued shares over which we are requesting you to disapply these pre-emption rights represents just under 5% of the issued share capital as at 6 March 2007. Are there any questions on this resolution?
I now put the Resolution to the Vote. Those in favour? Those against? I declare the Resolution carried as a Special resolution.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 99.25% of the proxy votes cast were in favour of the resolution.
SLIDE: AUTHORITY TO PURCHASE OF OWN SHARES
Resolution 11, which is a Special Resolution, renews the authority given annually to the Directors to purchase up to a maximum of 10% of the shares of the Company on the London Stock Exchange. We ask you for this authority each year to provide us with the flexibility of undertaking such purchases should market conditions be such that it would be prudent for us to do so. This ability benefits all shareholders equally by increasing their stake in the company and also by increasing earnings per share. Are there any questions on this resolution?
I now put the Resolution to the Vote. Those in favour? Those against? I declare the Resolution carried as a Special resolution.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 99.75% of the proxy votes cast were in favour of the resolution.
SLIDE: AMENDMENT TO ARTICLES OF ASSOCIATION
Resolution 12, which is a Special Resolution, is to amend the Articles of Association of the Company to take advantage of changes recently made by the Companies Act 2006. These amendments will allow the Company to:
- benefit from broader powers in relation to the sending or supplying of notices, documents or information by the Company in electronic form (including via the Company's website);
- remove the provision prohibiting the appointment of a director aged 70 or over and also the provision that existing directors retire at age 70; and,
- update provisions reflecting the repeal or re-enactment of provisions regarding disclosure of directors' interests and the Company's power to investigate holdings of its shares.
Are there any questions on this resolution?
I now put the Resolution to the Vote.
Those in favour? Those against? I declare the Resolution carried as a Special Resolution.
SLIDE SHOWING PROXY VOTING FIGURES TO BE SHOWN AFTER THE VOTE IS DECLARED
Proxy votes are shown on the slide behind me. 99.42% of the proxy votes cast were in favour of the resolution.
SLIDE: HOLDING/CLOSING SLIDE
That concludes the business of the Meeting Ladies and Gentlemen. Could I thank you all for your attendance and wish you a safe journey home.
