INTERNATIONAL POWER PLC

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INTERNATIONAL POWER PLC

• Prepared by
• Burakova Anna
• Kukina Elizaveta
• Kush Konstantin
• Smirnova Evgenia

Moscow 2009
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Summary

• Buy!
• International Power PLC presents an effective
  object for shareholder investments.
• The company has a great potential in value
  creation for investors.

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Contents

• Description of the company
• Financial policy analysis
• Operational efficiency
• Investment efficiency
• Market performance
• Expectations

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International Power PLC is an international
energy company

• It operates in 34 countries. The main region of
  its presence is Europe.
• Activities
• Electricity generation from traditional and
  inexhaustible resources
• Mining coal
• Transporting gas.
• In 2004 it made investments in additional
  capacity by making acquisitions in core regions
  of its operations

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Financial policy company saves tries to have
stable capital structure
In 2004 company financed its investments with
both debt and additional shares. High portion of
debt belongs to the acquired company.
At the same time the other part of debt is
restructured and secured by operations of the
company Dynamics of interest coverage ratio
presents strong position in the costs of
debt Risks are under control!
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Operational efficiency

• Company controls its liquidity
• Operational indicators
• Positive tendencies in Holding except USs
  capacities
• We believe, that companys expectations will come
  true by 2009-2010 years
• Otherwise the debt is non-recourse and the
  company will continue without US portfolio
• Assume clients equity position will allow him to
  influence such decisions
• Existing investments are managed effectively!

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Investments of 2004 will improve efficiently
Sales/Capacity, F000/MW
2001
2004
Company changed its area of allocation Deals in
2004 will improve its investments
efficiently North America is still a problem
region and presents a risk for the company. Its
future stability is secured by the long
contractors and recourse long term debt. New
investments are being chosen thoroughly!
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Multiples dynamics shows that Markets already
takes into accountchanges in 2004 but financial
statements do not.
Market prices include investors expectations
connected with acquired targets in 2004
Market anticipates changes positively!
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Expectations based on Simple Valuation Model show
that P2005 19.5

• Assumptions
• Risk free rate5
• Beta0.9
• Risk premium4
• Cost of capital8.6
• Sales in 20052060m
• Net margin12
• Dividend repayment40
• Expected growth rate5.16

Base scenario (the highest probability)
P19.55 by the end of 2005
Market Value will anticipate future success!
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Attachment 1.Sensetivity analysis