1 Preliminary Results Year to 31 December 2003

2 Sir Neville Simms Chairman

3 Philip Cox Chief Executive Officer

Group overview  2003 EPS in line with earnings guidance  Earnings underpinned by good performance in all regions outside the US  Impairment in US at £404m is the prudent approach  Free cash flow positive  Balance sheet liquidity  2003 EPS in line with earnings guidance  Earnings underpinned by good performance in all regions outside the US  Impairment in US at £404m is the prudent approach  Free cash flow positive  Balance sheet liquidity EPS PBIT Free cash flow* 15.5p £388m £252m * Free cash flow is defined as operating cash flow, minus interest, tax and maintenance capex, but before growth capex 10.2 p £285m £121m All numbers are before exceptional items

North America

Key highlights 2003  Comprehensive review of options for US business underway  Pre-emptive discussions with bank group to renegotiate non-recourse project debt - $900m  Focussed cost reduction plan implemented – $12m saving in cash operating costs – creation of ‘in house’ outage teams  Hays mothballed in early 2004 for indefinite period  Alstom turbine performance on track – LD ‘buydowns’ £56m in 2003  Comprehensive review of options for US business underway  Pre-emptive discussions with bank group to renegotiate non-recourse project debt - $900m  Focussed cost reduction plan implemented – $12m saving in cash operating costs – creation of ‘in house’ outage teams  Hays mothballed in early 2004 for indefinite period  Alstom turbine performance on track – LD ‘buydowns’ £56m in 2003

ERCOT market background Demand (peak) Capacity Reserve margin Demand growth (2.8%) In construction Mothballed / retired (inc Hays) Controlled by banks / distressed GW > 30 years Distressed GW > 30 years % * GW Demand / Supply $1+$2+$4 Gas price $perBTUm North Zone premium $/MWh * of which 1.9 Reliability Must Run CCGT plant heat rate - calendar average spreads - south zone prices actual 2003 actual 2004 Feb 04 forward curve $MWh Market spark spreads (peak hours)

ERCOT - market update  North Zone redefined - positive for Midlothian – planned move to nodal pricing (a refined zonal system) in 2006, a further positive for Midlothian  Transparent market mechanism required  Plant retirement largest single variable - particularly older high heat rate plant – 8.7 GW mothballed to date - of which 1.9 GW Reliability Must Run  Demand growth 3% pa  North Zone redefined - positive for Midlothian – planned move to nodal pricing (a refined zonal system) in 2006, a further positive for Midlothian  Transparent market mechanism required  Plant retirement largest single variable - particularly older high heat rate plant – 8.7 GW mothballed to date - of which 1.9 GW Reliability Must Run  Demand growth 3% pa Key factors for market recovery

NEPOOL market background Demand (peak) Capacity Reserve margin Demand growth (1.5%) In construction Mothballed / retired Controlled by banks / distressed GW > 30 years Distressed GW > 30 years % GW Market spark spreads* (peak hours) Demand / Supply actual 2003 actual 2004 Feb 04 forward curve Gas price $perBTUm CCGT plant heat rate - calendar average spreads - excludes ICAP / UCAP $MWh $3.70$6.80$ *

NEPOOL - market update  Financial distress of incumbents (40%+) plus low asset prices = opportunities for market consolidation  Age of plant: 30% over 30 years old - key driver for retirement  Planned transmission links into Connecticut (higher prices due to congestion) should help Blackstone / Bellingham / Milford  Environmental pressures - our assets well positioned  Financial distress of incumbents (40%+) plus low asset prices = opportunities for market consolidation  Age of plant: 30% over 30 years old - key driver for retirement  Planned transmission links into Connecticut (higher prices due to congestion) should help Blackstone / Bellingham / Milford  Environmental pressures - our assets well positioned Key factors for market recovery

US strategy  US debt negotiations the clear priority – comprehensive review of options – long term solution required  Operate and trade current portfolio to maximum efficiency  Growth opportunities – low asset prices in ERCOT and NEPOOL create merchant opportunities – contracted assets  US debt negotiations the clear priority – comprehensive review of options – long term solution required  Operate and trade current portfolio to maximum efficiency  Growth opportunities – low asset prices in ERCOT and NEPOOL create merchant opportunities – contracted assets

Europe

Key highlights 2003  Record financial performance at EOP – power, district heating both strong performers - power forward contracted through 2004  Consistent high availability at Pego (Portugal) and Uni-Mar (Turkey) ensured strong financial results  Flexible and responsive UK operations delivered improved H2 performance – successful and quick demothballing of Deeside 250 MW unit  Record financial performance at EOP – power, district heating both strong performers - power forward contracted through 2004  Consistent high availability at Pego (Portugal) and Uni-Mar (Turkey) ensured strong financial results  Flexible and responsive UK operations delivered improved H2 performance – successful and quick demothballing of Deeside 250 MW unit

England & Wales market environment Demand (peak) Capacity Reserve margin Demand growth In construction Mothballed / retired Controlled by bank / distressed GW > 30 years Distressed GW > 30 years % 1.5% GW Demand / Supply (1) (2) (3) (1) (2) (3) NGC Jan 2004 Seven Year Statement Update Includes only Spalding and Immingham CHP Includes High Marnham and Drakelow £MWh £MWh Gas price Baseload power Coal price Baseload Spark Spreads Baseload Power and Fuel Prices Gas Coal

 UK 2005 forward power prices currently £4 MWh up on 2004 – starting to reflect cost of carbon  Carbon allocations announced: – UK targets higher CO 2 emission reductions than EU – power industry bears disproportionate reduction - lobbying continues – gas plants advantaged vs coal - positive for Deeside; uncertainty for Rugeley  Deeside and Rugeley allocations represent load factors of 65% and 47% respectively  Carbon allocation and CO 2 prices also drive FGD decisions at coal fired plants – opt in LCPD = capex – opt out LCPD = lower load factor – decision by June 2004  European assets: – EOP has FGD installed - well positioned – PEGO expects to fit FGD (capex cost recovered through PPA)  UK 2005 forward power prices currently £4 MWh up on 2004 – starting to reflect cost of carbon  Carbon allocations announced: – UK targets higher CO 2 emission reductions than EU – power industry bears disproportionate reduction - lobbying continues – gas plants advantaged vs coal - positive for Deeside; uncertainty for Rugeley  Deeside and Rugeley allocations represent load factors of 65% and 47% respectively  Carbon allocation and CO 2 prices also drive FGD decisions at coal fired plants – opt in LCPD = capex – opt out LCPD = lower load factor – decision by June 2004  European assets: – EOP has FGD installed - well positioned – PEGO expects to fit FGD (capex cost recovered through PPA) Carbon update

European strategy  Support the drive for consolidation in UK power generation  Opportunities in liberalising markets where we already have a presence – Portugal – Czech Republic – Turkey  Support the drive for consolidation in UK power generation  Opportunities in liberalising markets where we already have a presence – Portugal – Czech Republic – Turkey

Middle East

Middle East - highlights in 2003  Umm Al Nar - Abu Dhabi – 2,200 MW, 162 MIGD - brownfield project – bid, won and financed $2.1 bn project – partners - TEPCO and Mitsui – 23 year PPA with ADWEC  Saudi Aramco - Saudi Arabia – 1,075 MW, + steam - 4 plants - greenfield project – bid, won and financed $700m project – partner - Saudi Oger – 20 year ECAs with Saudi Aramco  Shuweihat - Abu Dhabi – 1,500 MW, 100 MIGD - greenfield project – successfully commissioned 2 gas turbines and desalination unit ahead of schedule – 20 year PPA with ADWEC  Strong operational and customer focus to ensure assets perform to contract  Strong growth region for IPR  Umm Al Nar - Abu Dhabi – 2,200 MW, 162 MIGD - brownfield project – bid, won and financed $2.1 bn project – partners - TEPCO and Mitsui – 23 year PPA with ADWEC  Saudi Aramco - Saudi Arabia – 1,075 MW, + steam - 4 plants - greenfield project – bid, won and financed $700m project – partner - Saudi Oger – 20 year ECAs with Saudi Aramco  Shuweihat - Abu Dhabi – 1,500 MW, 100 MIGD - greenfield project – successfully commissioned 2 gas turbines and desalination unit ahead of schedule – 20 year PPA with ADWEC  Strong operational and customer focus to ensure assets perform to contract  Strong growth region for IPR

Middle East strategy  Continue to grow with focus on contracted assets in Gulf states - power and water projects  Significant 2004 opportunities - over 4,000 MW+ desalination  Leverage our development, market, technical and partnership skills - key IPR advantages  Typical project profile – secure, high credit rated, sovereign backed offtakers – US$ denominated contracts – strong partners – significant non-recourse leverage – limited IPR investment - typically £50m - £75m per project  Continue to grow with focus on contracted assets in Gulf states - power and water projects  Significant 2004 opportunities - over 4,000 MW+ desalination  Leverage our development, market, technical and partnership skills - key IPR advantages  Typical project profile – secure, high credit rated, sovereign backed offtakers – US$ denominated contracts – strong partners – significant non-recourse leverage – limited IPR investment - typically £50m - £75m per project

Australia

Australia - achievements 2003  Strong forward contracted position in 2003 underpinned earnings  SEA Gas 687km pipeline – construction completed 1 January on time, and on budget  Hazelwood mine – first coal delivered from new mine extension in early February 04 – long term security of supply  Canunda wind farm (46 MW) – permitted, construction starts Q2 – 10 year offtake with AGL – commercial operation planned Q  Strong forward contracted position in 2003 underpinned earnings  SEA Gas 687km pipeline – construction completed 1 January on time, and on budget  Hazelwood mine – first coal delivered from new mine extension in early February 04 – long term security of supply  Canunda wind farm (46 MW) – permitted, construction starts Q2 – 10 year offtake with AGL – commercial operation planned Q2 2005

Australia market background Demand GW (peak) Capacity GW * Reserve margin % Demand growth Demand GW (peak) Capacity GW * Reserve margin % Demand growth Victoria S Australia % 3.0%  Reserve margin tightening in Victoria and SA but not yet reflected in forward curve  2004 and 2005 forward prices show progressive recovery from 2003 – but not yet to 2001 and 2002 levels  Reserve margin tightening in Victoria and SA but not yet reflected in forward curve  2004 and 2005 forward prices show progressive recovery from 2003 – but not yet to 2001 and 2002 levels % 3.0% * Includes average interconnector availability of 50%

Australia strategy  Scale - largest privately owned generator  Optimise forward contracted position  Preserve position as low cost producer in both Victoria and South Australia  Growth through acquisition – principal targets are contracted assets  Scale - largest privately owned generator  Optimise forward contracted position  Preserve position as low cost producer in both Victoria and South Australia  Growth through acquisition – principal targets are contracted assets

Rest of the World

 Long term contracted assets – solid earnings and cash flow - HUBCO(Pakistan) - KAPCO (Pakistan) - Malakoff (Malaysia) - TNP (Thailand)  Customer focus - all contractual agreements remain firm  Monetise investments when appropriate – 5% HUBCO in 2003 realised £21m cash  Long term contracted assets – solid earnings and cash flow - HUBCO(Pakistan) - KAPCO (Pakistan) - Malakoff (Malaysia) - TNP (Thailand)  Customer focus - all contractual agreements remain firm  Monetise investments when appropriate – 5% HUBCO in 2003 realised £21m cash

26 Mark Williamson Chief Financial Officer

Group Profit and Loss Account 1,1291,273Turnover - gross PBT Year ended 31 December 15.5p 173 (6) 31% (77) 2.6x (132) (7)Minority interest 30%Effective tax rate 2.9xInterest cover 10.2pEPS (basic) 113Retained profit (54)Tax (111)Interest 285PBIT 2003£m Note: All numbers are pre-exceptional

Exceptional items - (16)Capitalised financing charges write off -(404)US impairment -3China exit -7Czech Republic (sale of shares) HUBCO - sale of share - impairment reversal Year ended 31 December (60) 1 (61) 42 (58) (45) 2002 (332) 26 (358) Tax effect Net Total KAPCO dividend Rugeley impairment Deeside impairment £m

US Impairment Key assumptions:  Whole life cash flow used  Current forward curve in short term  New entrant pricing assumed at market equilibrium for long term  Discounted at WACC of the US business Key assumptions:  Whole life cash flow used  Current forward curve in short term  New entrant pricing assumed at market equilibrium for long term  Discounted at WACC of the US business Current carrying value US installed merchant capacity is 4,050 MW (178) 443 $/kW (404)Impairment 1,004Book value of US assets pre impairment £m

Geographic analysis Turnover and PBIT Year ended 31 December 4171, ,273Regional total * Pre-exceptional items. Pakistan is now included in Rest of the World 3881, ,273Total (29)-(28)-Corporate costs Rest of the World Australia Middle East Europe North America PBIT*TurnoverPBIT*Turnover£m

Geographic analysis Turnover and PBIT Year ended 31 December 4171, ,273Regional total 3881, ,273Total (29)-(28)-Corporate costs Rest of the World Australia Middle East Europe North America PBIT*TurnoverPBIT*Turnover£m * Pre-exceptional items. Pakistan is now included in Rest of the World

Geographic analysis Turnover and PBIT Year ended 31 December 4171, ,273Regional total 3881, ,273Total (29)-(28)-Corporate costs Rest of the World Australia Middle East Europe North America PBIT*TurnoverPBIT*Turnover£m * Pre-exceptional items. Pakistan is now included in Rest of the World

Geographic analysis Turnover and PBIT Year ended 31 December 4171, ,273Regional total 3881, ,273Total (29)-(28)-Corporate costs Rest of the World Australia Middle East Europe North America PBIT*TurnoverPBIT*Turnover£m * Pre-exceptional items. Pakistan is now included in Rest of the World

Geographic analysis Turnover and PBIT Year ended 31 December 4171, ,273Regional total 3881, ,273Total (29)-(28)-Corporate costs Australia Middle East Europe North America PBIT*TurnoverPBIT*Turnover£m Rest of the World * Pre-exceptional items. Pakistan is now included in Rest of the World

Geographic analysis Turnover and PBIT Year ended 31 December 4171, ,273Regional total 3881, ,273Total (29)-(28)-Corporate costs Rest of the World Australia Middle East Europe North America PBIT*TurnoverPBIT*Turnover£m * Pre-exceptional items. Pakistan is now included in Rest of the World

Geographic analysis Turnover and PBIT Year ended 31 December 4171, ,273Regional total 3881, ,273Total (29)-(28)-Corporate costs Australia Middle East Europe North America PBIT*TurnoverPBIT*Turnover£m Rest of the World * Pre-exceptional items. Pakistan is now included in Rest of the World

Group operating cash flow 42 (25) ---- Exceptional items - KAPCO dividend - Hazelwood refinancing Year ended 31 December 252 (108) (48) Free cash flow (100)Interest and tax (64)Capex - maintenance 285 Operating cash flow 101Dividends – JV’s, associates and investments 184Operating cash flow from subsidiaries 2003£m

Group net cash flow Year ended 31 December (812) (897) (144) - (98) Acquisitions and greenfield developments (692) Closing external debt (812)Opening external debt 120 Net cash flow (35)Other (FX and share buy-back) 35Disposal of investments 56LD buy-downs (57)Capex – growth 121 Free cash flow 2003£m

Balance sheet 31% Debt capitalisation (504)(712) Associates and JVs net debt As at 31 December 2,9812,587 1,7691,562 Net assets 2,4742,049 Intangible & tangibles Investments 46%44% Gearing (812)(692) Net debt (262)(243) Provisions and creditors > 1 year (138)(90) Net current liabilities Fixed assets £m

Hedging strategy Foreign Exchange Balance sheet – translation exposure mitigated by matching currency profile of assets and debt Profit and loss account – 2003 PBT at 2002 FX rates would decrease PBT by £5m – 2003 PBT at $1.80 would decrease PBT by only £4m – transaction hedged on commitment (contractual) Interest Profit and loss account – target 40% to 75% of debt at fixed rate for medium to long term Foreign Exchange Balance sheet – translation exposure mitigated by matching currency profile of assets and debt Profit and loss account – 2003 PBT at 2002 FX rates would decrease PBT by £5m – 2003 PBT at $1.80 would decrease PBT by only £4m – transaction hedged on commitment (contractual) Interest Profit and loss account – target 40% to 75% of debt at fixed rate for medium to long term

Financing accomplishments  US$1.8 billion Umm Al Nar financing  Issue of US$ 252 million senior convertible bonds  Rugeley restructuring  New US$450 million corporate revolver put in place  US$510 million, 17 year term Saudi Aramco financing  US$1.8 billion Umm Al Nar financing  Issue of US$ 252 million senior convertible bonds  Rugeley restructuring  New US$450 million corporate revolver put in place  US$510 million, 17 year term Saudi Aramco financing September July October February

Net debt structure (1,026)334(692)Total net debt /current 2012/ * n/a Maturity (712) (110) (271) (198) - (52) (81) JV’s / Associates non-recourse off-balance sheet net debt (1,235) (25) (51) (44) (83) (531) (501) Subsidiaries -(1,235) (25) (51) (44) (83) (531) (501) (200) (138) (62) 743 Total - Europe - Middle East - RoW (200) (138) (62) 534 IPR Corporate Australia UK * Reported as current debt US Non recourse debt Convertible bond (new) Convertible bond (old) Recourse debt Cash + liquid resources £m

In summary:  Low spark spreads in the US  US assets written down  Europe performed well  Highly contracted in all other regions  Cash flow positive  Strong corporate liquidity  Low spark spreads in the US  US assets written down  Europe performed well  Highly contracted in all other regions  Cash flow positive  Strong corporate liquidity

44 Philip Cox Chief Executive Officer

IPR’s strategy remains...  Focus on wholesale power generation - our core skill – plus complementary activities - desalination in ME and SEA Gas pipeline  Strength and balance through geographic diversity - concentrated portfolio in 4 key regions; US, Europe, ME and Australia  Growth in core regions – contracted assets - security of offtake and financial returns are the key priorities – existing merchant markets - heavily discounted asset prices - diversity in merit order and / or fuel - scale – acquisition and greenfield opportunities  Focus on wholesale power generation - our core skill – plus complementary activities - desalination in ME and SEA Gas pipeline  Strength and balance through geographic diversity - concentrated portfolio in 4 key regions; US, Europe, ME and Australia  Growth in core regions – contracted assets - security of offtake and financial returns are the key priorities – existing merchant markets - heavily discounted asset prices - diversity in merit order and / or fuel - scale – acquisition and greenfield opportunities

Outlook  Clear strategy  US restructuring number 1 priority  Growth opportunities in our core regions  Confirm 2004 earnings guidance of 7 - 9p EPS  Clear strategy  US restructuring number 1 priority  Growth opportunities in our core regions  Confirm 2004 earnings guidance of 7 - 9p EPS

47 Preliminary Results Year to 31 December 2003