RNS Number : 3119C
International Power PLC
11 November 2009
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 last year."
Europe and Australia ahead of expectations; US markets remain challenging
Excellent free cash flow driving strong corporate liquidity
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 expectations.
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 shortly.
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 million.
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 December 2009.
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 debt.
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 year.
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:
+44 (0)20 7320 8839
+44 (0)20 7320 8622
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: www.ipplc.com
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