INTERNATIONAL POWER PLC

Prepared by:Burakova Anna

Kukina ElizavetaKush Konstantin

Smirnova Evgenia

Moscow 2009

2

Summary

Buy!

International Power PLC presents an effective object for shareholder investments.

The company has a great potential in value creation for investors.

Contents

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

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

Financial policy: company saves tries to have stable capital structure

D/E dynamics

0,00%

20,00%

40,00%

60,00%

80,00%

100,00%

120,00%

140,00%

160,00%

180,00%

200,00%

Dec-04Dec-03Dec-02Dec-01Dec-00

D/E

% D/E

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 companyDynamics of interest coverage ratio presents strong position in the costs of debt

Risks are under control!

Interest covered ratio dynamics

0,000

0,500

1,000

1,500

2,000

2,500

Dec-04Dec-03Dec-02Dec-01Dec-00

po

ints

Operational efficiency

Company controls its liquidity; Operational indicators

Positive tendencies in Holding except US’s capacities We believe, that company’s expectations will come

true by 2009-2010 years Otherwise the debt is non-recourse and the company

will continue without US portfolio

Assume client’s equity position will allow him to influence such decisions

Existing investments are managed effectively!

Investments of 2004 will improve efficiently

North America;

77,7

Europe & Middle

East; 118,4Australia;

83,8

Asia;

Rest of world; 106,3

Asia; 98,7

Rest of world;

North America;

56,5

Europe & Middle

East; 99,6Australia; 70,5

Sales/Capacity, F’000/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!

Multiples dynamics shows that Markets already takes into accountchanges in 2004 but financial statements do not.

Multiples dynamics

0

0,5

1

1,5

2

2,5

3

3,5

4

20042003200220012000

P/B

, P

/S,

po

ints

-15,00

-10,00

-5,00

0,00

5,00

10,00

15,00

20,00

25,00

P/E

, p

oim

ts

P/B P/S P/E

Market prices include investors’ expectations connected with acquired targets in 2004

Market anticipates changes positively!

Expectations based on Simple Valuation Model show that P2005 =19.5$

Assumptions Risk free rate=5% Beta=0.9 Risk premium=4% Cost of capital=8.6% Sales in 2005=$2060m Net margin=12% Dividend repayment=40% Expected growth

rate=5.16%

gk

DivEP

2005

%payoutDivginmarNetSalesDivE

P=$19.55 by the end of 2005

Base scenario (the highest probability)

Market Value will anticipate future success!

Attachment 1.Sensetivity analysis

######## -2% 0% 2% 4.00% 5.0% 5.2% 6.0% 6.5%

11% 5.17 6.11 7.47 9.61 11.21 11.62 13.45 14.9410% 5.60 6.72 8.41 11.21 13.45 14.05 16.81 19.219% 6.11 7.47 9.61 13.45 16.81 17.77 22.42 26.908.6% 6.34 7.82 10.19 14.62 18.68 19.87 25.86 32.028% 6.72 8.41 11.21 16.81 22.42 24.15 33.62 44.837% 7.47 9.61 13.45 22.42 33.62 37.67 67.25 134.49

Growth Rate

Re