18 Mar 2002 – UK independent power producer International Power today posted improved results and announced that it had £1bn ($1.42bn) available for attractive acquisitions.

Group profits before tax for 2001 were up 48 per cent to £326m from £221m in 2000 and earnings per share climbed 75 per cent to 12.8p compared to a forecast range of 12.0-14.3p.

Announcing the results, International power chairman Sir Neville Simms said, “I am pleased to report that we had a year of significant earnings growth in 2001, despite the turmoil in the power industry ranging from the California energy crisis in January to the Enron collapse in December. The quality of our operating assets, our prospects for growth in our core markets and our healthy balance sheet and liquidity, position us well for investment in our business and the creation of additional shareholder value.”

In a conference call to reporters, Peter Giller, chief executive, said that measures taken during the year had left the group’s balance sheet with £1bn, which was available to buy power plants.

A number of the US-based global power producers have struggled in the wake of Enron’s collapse and may be forced to put foreign assets up for sale. Enron assets are themselves being sold and the pressure on companies such as Calpine, NRG and AES has been increased by weak electricity prices in the US.

Although investors often bracket International Power with these companies its share price has benefited from not having exposures in Latin America and California.

Giller said that the group was looking at a couple of potential targets in the Middle East to complement its projects in Abu Dhabi and Oman.

Giller also said that the group might consider buying AES’s interest in Drax, the UK’s largest power station, “if the price was right”.

An issue of equity to fund purchases was a possibility, though the likelihood was “not better than 50-50 this year.”

The 2001 results have benefited from 1950 MW of new operating capacity in the US as well as a strong operating performance and record output from its Hazelwood, Australia and Deeside. UK plants.

Corporate costs have been reduced by 35 per cent to £28m.

The company warned that it was now operating in a weak pricing environment particularly in Texas and the UK. It expects market conditions to improve with increasing sign of an economic recovery and the substantial reduction in project development and new construction activity.

International Power has cut back its new plant construction plans in the US in the face of weak prices there and Giller said that US growth would be “modest” this year. “It is self evident that the US has enough capacity right now and I can’t see us adding more than 1000-1500 MW to our portfolio,” he said.

International Power is a spin-off from the former integrated power utility National Power. It focuses on growth and does not pay a dividend.