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Preliminary Results

Preliminary Results. Year ended 31 December 2007. This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any International Power plc shares.

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Preliminary Results

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  1. Preliminary Results Year ended 31 December 2007

  2. 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. Disclaimer

  3. Philip Cox Chief Executive Officer

  4. 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

  5. Financial Review All numbers in this presentation exclude exceptional items and specific IAS39 mark to market movements, unless stated otherwise Mark Williamson, CFO

  6. Income statement 2007 2006 £m £m change Year ended 31 December North America Europe Middle East Australia Asia Corporate costs Profit from operations Interest PBT Tax Minority interest Profit for the year EPS Total DPS Dividend payout ratio 136 574 68 82 96 (52) 904 (308) 596 (113) (77) 406 27.1p 10.16p 37.5% 101 450 52 124 91 (45) 773 (248) 525 (122) (71) 332 22.4p 7.9p 35% 35% 28% 31% (34%) 5% 17% 14% 22% 21% 29%

  7. Profit from operations up 17% £m 1,000 £16m £124m £5m £904m 900 (£7m) (£42m) £35m 800 £773m 700 600 500 2006PFO NorthAmerica Europe MiddleEast Australia Asia CorporateCosts 2007PFO

  8. North America Texas • Full year contribution from Coleto Creek • dust emissions control installation complete • Mild weather • Hays extended outage complete New England • Forward capacity market Profit from operationsup 35% £136m £101m £108m £73m £28m £28m 2006 2007 PAT of JVs and associates PBIT of subsidiaries

  9. Europe • Strong contribution from Deeside, Rugeley and First Hydro • First full year contributions from Levanto and Indian Queens • Four month contribution from Maestrale in 2007 • ISAB impacted by change of fuel indexation and planned outage Profit from operationsup 28% £574m £450m £521m £381m £69m £53m 2006 2007 PAT of JVs and associates PBIT of subsidiaries

  10. First Hydro performance Another excellent year • 2006 benefited from: • high gas prices • 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 1 CO2 prices (1) PFOup 12% £133m £119m 2006 2007 (1) First Hydro Company reported results are under UK GAAP

  11. Middle East • Additional capacity on-line at Tihama, Ras Laffan B and Umm Al Nar • Hidd development fee in H1 2006 • Fujairah F2 development fee in H2 2007 Profit from operationsup 31% £68m £52m £44m £32m £24m £20m 2006 2007 PAT of JVs and associates PBIT of subsidiaries

  12. Australia • Planned outages at Pelican Point and Hazelwood • Unplanned outages at Loy Yang B and Hazelwood • Interconnector constraint due to bushfire • Inter-regional pricing differences • 2008 pricing significantly stronger Profit from operationsdown 34% £124m £82m £121m £83m 2006 2007 PAT of JVs and associates PBIT of subsidiaries

  13. Asia • KAPCO impacted by end of tax holiday • Strong operational performances and high load factors led to generation and availability bonuses • Completed sale of Malakoff Profit from operationsup 5% £96m £91m £14m £3m £88m £82m 2006 2007 PAT of JVs and Associates PBIT of subsidiaries

  14. Effective tax rate and interest cover 2007 2006 £m £m Year ended 31 December PFO JVs and associates Interest Tax Minority interest PBIT Total interest Subsidiaries JVs and associates Interest cover Profit before total tax Total tax Subsidiaries JVs and associates Effective tax rate 904 91 60 - 151 1,055 (308) (91) (399) 656 (113) (60) (173)26% 773 99 55 1 155 928 (248) (99) (347) 581 (122) (55) (177)30% 2.6x 2.7x

  15. Exceptional items 2007 2006 £m £m Year ended 31 December 115 174 (47) (9) - - - 233 49 14 - - 296 Profit on disposal of Malakoff Profit on partial disposal of UK subsidiaries Impairment of Saltend gas contract Provision against investment in Biox Impairment reversal of Deeside Compensation in respect of TXU tolling contract Compensation for breach of contract Exceptional gain – pre tax Remeasurement of net deferred tax liabilities of Maestrale Taxation on impairment of Saltend gas contract Taxation on Deeside impairment reversal Taxation on compensation from TXU Exceptional gain – post tax - - - - 36 14 5 55 - - (11) (4) 40

  16. Free cash flow 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 2007 2006 £m £m % change Year ended 31 December Operating cash flow from subsidiaries Dividends - JVs and associates Capex - maintenance Cash generated from operations Interest paid Tax paid Free cash flow 992 145 (71) 1,066 (312) (101) 653 784 113 (128) 769 (256) (57) 456 39% 43%

  17. Capital expenditure - maintenance • Includes only subsidiaries • 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 Maintenance capex c£130m £128m £72m £71m 2005 2006 2007 2008e

  18. Movement in net debt 2007 2006 £m £m Year ended 31 December • Free cash flow • Growth capex • Acquisitions and investments • Disposals • Exceptional receipts • TXU and contract compensation • Dividend paid • FX & other • Dividends paid to minorities • Increase in net debt • Opening net debt • Acquired net debt • Closing net debt 653 (160) (842) 418 - (160) (250) (35) (376) (3,575) (711) (4,662) 456 (142) (818) 1 19 (67) 271 (54) (334) (3,060) (181) (3,575)

  19. Balance sheet 2007 2006 £m £m As at 31 December Non-current assets Goodwill and intangibles PP&E Investments Other long-term assets Net current (liabilities)/assets Non-current liabilities Net debt Net assetsGearing Debt capitalisationNet debt of JVs and associates 901 5,721 1,292 1,530 9,444 (355) (1,420) (4,662) 3,007 155% 61%(1,297) 425 4,435 1,290 1,270 7,420 14 (1,119) (3,575) 2,740 130% 57%(1,524)

  20. 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

  21. Net debt structure JVs and associatesoff-balance sheetnet debt(1) Project cash/(debt) (1) IPRCorporate Total Maturity Maturity As at 31 December 2007 £m £m £m £m Cash and cash equivalents Recourse debt Convertible bond (2023)(2) Convertible bond (2013)(2) Non recourse debt IPM - acquisition debt IPM - Mitsui preferred equity North America Europe Middle East Australia Asia Total net cash/(debt) 871 - - - (243) (151) (876) (2,913) (315) (1,035) (35) (5,568) (4,697) 290 (115) (140) (255) - - - - - - - - 35 1,161 (115) (140) (255) (243) (151) (876) (2,913) (315) (1,035) (35) (5,568) (4,662) 2023 2013 2012 2008 2010-2013 2010-2026 2016-2025 2008-2019 2020 - - (158) (195) (612) (62) (270) (1,297) (1,297) 2013-2019 2009-2020 2021-2030 2009 -2012 2008-2018 (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

  22. 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

  23. 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

  24. Financial summary Free cash flow (£m) PFO (£m) £904m £653m £773m £456m £536m £285m £222m £104m 2004 2005 2004 2005 2006 2007 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 2007 2004 2005 2006 2004 2005 2006 2007 (1) Recommended dividend

  25. Philip Cox Chief Executive Officer

  26. US Texas • Market fundamentals remain strong • Steady growth in demand • Natural gas price firming – positive for wholesale power prices • 2007 summer was cooler than average year • lower peak demand / market heat rates • lower fuel demand also softened prices • ‘Normal’ summer weather will bring increased market heat rates • Margins for coal remain good • Powder River Basin coal price attractive for Coleto ERCOT Reserve Margin % 16 14 Target Reserve Margin 12 Q1 2008 Projection 10 Q4 2007 Projection 8 6 4 2008 2009 2010 2011 2012 2013 • Notes: • Oak Grove 1,634 MW brought forward to 2010 • 293 MW of net new capacity additions • Wind generation assumed at 8.7% of installed capacity

  27. US New England • Market fundamentals are good • Forward Capacity Market - first auction in February • auction oversubscribed - capacity price $4.25/kW month (2010/2011) • capacity requirements to be met mainly through demand side management New England Reserve Margin % With new demand-side resources 20 16 Target Reserve Margin 12 8 Without new demand-side resources 4 0 2008 2010 2012 2014 2016 • Notes: • First FCM auction for 2010/2011 resulted in - 1,188 MW of new demand side resources - 626 MW of new supply additions • IPR’s modern efficient CCGTs well positioned • no significant new build • 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

  28. US Commercial summary Full Year (1) 2008 2007 Full Year (3) (1) 2008 2007 New England Coleto Creek (3) Achieved spark spread ($/MWh) Load factor Forward contracted 18 55% 90% 16 60% n/a (4) Achieved dark spread ($/MWh) Load factor Forward contracted 29 90% 95% 29 75% n/a (2) (2) Midlothian Achieved spark spread ($/MWh) Load factor Forward contracted 15 55% 70% 14 55% n/a (2) Hays Achieved spark spread ($/MWh) Load factor Forward contracted 14 55% 70% 10 45% n/a (1) IPR forecast % of anticipated output for the full year Includes FCM receipts Excludes SO2 costs (2) (3) (2) (4)

  29. Europe Long-term fundamentals remain attractive Uncertainty on available capacity restricted running of opted-out coal plant and potential closure before 2015 further pressure on coal capacity due to rising coal price and carbon costs ongoing retirement of nuclear potential unreliability of plant approaching closure wind generation – unpredictable load factors / availability Forward gas prices have strengthened maintains upward pressure on UK wholesale prices UK market fundamentals UK Reserve Margin Reserve margin without earlyLCPD retirements 30 % Reserve marginwith early LCPD retirements 25 20 15 Target Reserve 10 5 0 2008 2010 2012 2014 2016 • Notes: • Peak demand estimate updated for lower winter 2007 demand • Includes impact of 5,912 MW of Nuclear capacity lifetime extensions • Wind generation assumed at 35% of installed capacity

  30. Europe UK commercial summary • 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 Rugeley Deeside Saltend (1) (1) (1) 2008 2007 2008 2007 2008 2007 Full Year (2) Spread £/MWh Load factor Forward contracted 27 55% 85% 34 65% n/a 23 70% 60% 23 50% n/a n/a 90% 95% n/a 90% n/a (3) (1) (2) (3) IPR forecast Pre cost of CO2 % of anticipated output for the full year

  31. Europe 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 Located adjacent to existing Tejo coal plant benefits from shared services Excellent organic growth opportunity from: existing market presence available site access to finance Elecgas, Portugal ExistingPlant New plant

  32. 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 • Current focus • growth opportunities across our core markets • balanced portfolio approach Wind generationyear-on-year growth 407 2006 1,199 March 2008 0 300 600 900 1,200 Canunda Maestrale Schkortleben Kardstadt 11 Levanto DZ1 DZ11 Horn

  33. 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 expectedin H1 2008 • Hidd desalination extension – 12 MIGD operational • 48 MIGD expected in H1 2008 • Fujairah F2 2,000 MW, 130 MIGD Middle Eastyear-on-year gross capacity growth Gross MW 2005 2,817 5,540 2006 7,300 2007 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

  34. 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

  35. Australia • Forward market still good • recent rainfall resulted in some reduction in 2008 forward prices - but low liquidity • but key hydro reservoirs remain at low levels • Portfolio largely contracted for 2008 • Australia ratified the Kyoto Protocol in December 2007 • emission trading scheme expected to commence in 2010 • design details expected by end of 2008 • Hazelwood low emissions project • key government grant contracts signed • turbine efficiency upgrade / coal drying • pilot CO2 capture plant Victoria and South Australia Reserve Margin % 25 20 15 Target Reserve Margin 10 5 0 07/08 09/10 11/12 13/14 15/16 • Notes: • Planned capacity additions 1,153 MW by 2011/12 • Inter-connector assumed at 85% of total capacity • Wind generation assumed at 10%

  36. Australia Commercial summary Full Year (1) 2008 2007 Victoria, Hazelwood Achieved average price ($/MWh) 45 32 Hazelwood Loy Yang B Pelican Point (1) (1) (1) 2008 2007 2008 2007 2008 2007 Full Year (1) IPR forecast % of anticipatedoutput for the full year Load factor Forward contracted 80% 80% 80% n/a 95% 85% 95% n/a 75% 95% 75% n/a (2) (2)

  37. 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%

  38. 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

  39. 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

  40. 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

  41. Multiple growth opportunities Middle East • Bids due in 2008 • 1,600 MW, 100 MIGD Shuweihat S2, UAE • 400 MW, 15 MIGD Salalah, Oman • 1,200 MW, 50 MIGD Ad Dur 1, Bahrain • 400 MW, Al Qatrana, Jordan • 1,000 MW 220 MIGD Raz az Zawr, Saudi Arabia • Strong medium and longer term project pipeline Australia • 12,500 MW NSW privatisation • 350 MW peaker, NSW • Renewable opportunities Asia • 800 MW Paiton III, Indonesia • 1,320 MW West Java, Indonesia • 450 MW KAPCO expansion, Pakistan • 225 MW HUBCO expansion, Pakistan • 400 MW Uch expansion, Pakistan • 100 MW Thailand • Opportunities in new markets Africa • Up to 2,500 MW (Phase I) Mmamabula, Botswana • Opportunities in new markets

  42. 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

  43. Appendix

  44. Exceptional items and specific IAS 39 MTM Year ended 31 December 2007 2006 Exceptional Items Exceptional Items SpecificIAS 39 MTM SpecificIAS 39 MTM Total Total £m £m £m £m £m £m North America Europe Middle East Australia Asia Regional total Corporate PFO Disposals (see below) - Malakoff sale - Disposal to Mitsui Net finance expense (Loss)/profit before tax Income tax credit/(expense) (Loss)/profit for the year (21) (135) - (173) (1) (330) - (330) - - (16) (346) 96 (250) - (56) - - - (56) - (56) 115 174 - 233 63 296 (21) (191) - (173) (1) (386) - (386) 115 174 (16) (113) 159 46 10 110 - (50) - 70 - 70 - - (26) 44 (10) 34 - 55 - - - 55 - 55 - - - 55 (15) 40 10 165 - (50) - 125 - 125 - - (26) 99 (25) 74

  45. Geographic analysis Quarterly breakdown Q1 Q2 Q3 Q4 2007 2006 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m £m £m Profit from operations North America Europe Middle East Australia Asia Regional total Corporate costs Profit from operations 12 159 14 26 29 240 (12) 228 4 158 5 33 28 228 (11) 217 30 109 15 20 26 200 (12) 188 24 84 19 31 28 186 (11) 175 62 109 17 20 22 230 (12) 218 50 66 13 36 19 184 (12) 172 32 197 22 16 19 286 (16) 270 23 142 15 24 16 220 (11) 209

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