1 London 10 August 2006 Interim Results 6 months ended 30 June 2006

2 Philip Cox Chief Executive Officer

3 Highlights  Strong financial performance –profit from operations of £392m up 69% (H1 2005: £232m) –EPS of 11.9p - up 83% (H1 2005: 6.5p)  Significant growth in European earnings –key drivers - Saltend (acquired in H2 2005) –higher earnings at First Hydro, Rugeley & IPO (Czech Republic)  Continued improvement in US earnings – particularly Texas  Free cash flow doubled –£268m up from £134m in H  Coleto Creek acquisition (Texas) complete  Expect 2006 to be a year of strong growth

4 Mark Williamson Chief Financial Officer Financial Review

5 All numbers exclude exceptional items and specific IAS39 mark to market movements Income statement Six months ended 30 June £m Year ended 31 December 2005 PBIT from subsidiaries PAT from JVs and associates Profit from operations Interest PBT Tax Minority interest Profit for the period EPS (basic, pre-exceptional) (89) 143 (30) (17) p (202) 334 (68) (52) p (112) 280 (64) (40) p

6 Effective tax rate and interest cover Six months ended 30 June £m Year ended 31 December 2005 PBIT from subsidiaries PBIT from JVs and associates PBIT Total interest* Interest cover Profit before total tax Total tax* Effective tax rate* (140) 2.2x 169 (55) 33% (299) 2.3x 388 (121) 31% (156) 3.0x 310 (94) 30% *Includes tax and interest charges for subsidiaries and JVs and associates

7 Income statement All numbers exclude exceptional items and specific IAS39 mark to market movements Six months ended 30 June £m Year ended 31 December 2005 PBIT from subsidiaries PAT from JVs and associates Profit from operations Interest PBT Tax Minority interest Profit for the period EPS (basic, pre-exceptional) (89) 143 (30) (17) p (202) 334 (68) (52) p (112) 280 (64) (40) p

8 Geographic analysis Six months ended 30 June £m Year ended 31 December 2005 North America Europe Middle East Australia Asia Regional total Corporate costs Profit from operations (21) (59) (22) 392 Note: Profit from operations = PBIT from subsidiaries plus PAT from JVs and Associates All numbers exclude exceptional items and specific IAS39 mark to market movements Profit from operations

North America  Market responding to tightening reserve margin  Improvement in off peak spreads and load factors in both markets  Hays returned to service May 2005 H1 2006H Profit from operations up 250% £m Achieved spark spread ($/MWh) Load factor New England H $8 60% $8 30% H Achieved spark spread ($/MWh) Load factor Texas - Midlothian H $12 55% $8 40% H Achieved spark spread ($/MWh) Load factor Texas - Hays H $12 55% n/a H Merchant markets

10 Europe Profit from operations up 109% £m Achieved dark spread (£/MWh) Load factor Rugeley H £20 60% £13 60% H Achieved spark spread (£/MWh) Load factor Deeside H £17 25% £8 60% H UK merchant markets* * Spreads exclude the cost of CO 2  Strong performance from all plants  Full six month contribution from Saltend  First Hydro – high demand for reserve and response capacity  Saltend has major planned outage in Q H1 2006H1 2005

11 Middle East Profit from operations up 85% £m  First time contributions from: –Tihama – two sites of four operational in H1 –Ras Laffan B – two units operational in H1 –Hidd – acquired in January  Development fee received for Hidd acquisition H1 2006H1 2005

12 Australia Profit from operations down 9% £m Achieved price (A$/MWh) Load factor Hazelwood H A$33 75% A$36 80% H Merchant markets  Higher availability at Loy Yang B  Hazelwood contracts placed in prior years roll off  Loy Yang B refinancing improves debt amortisation profile H1 2006H1 2005

13 Asia £m Profit from operations up 22%  Strong performance from all assets  Increased payments under PPA due to higher availability at Paiton  KAPCO – tax holiday expires June 2006 H1 2006H1 2005

14 Free cash flow Six months ended 30 June £m Year ended 31 December 2005 Operating cash flow from subsidiaries Dividends - JV’s and associates Capex - maintenance Cash generated from operations Net interest paid Tax paid Free cash flow (23) 233 (91) (8) (72) 512 (196) (31) (58) 395 (109) (18) 268

15 Movement in net debt Six months ended 30 June £m Year ended 31 December 2005 Free cash flow Growth capex Acquisitions, disposals & investments TXU recovery - exceptional Receipt of compensation - exceptional Refinancing costs - exceptional Funding from minorities, FX & other Decrease/(increase) in net debt Opening external debt Transitional IAS32/39 adjustment Acquired cash Closing net debt 134 (95) (115) 70 (2,745) 44 - (2,631) 285 (188) (360) 58 - (5) (95) (305) (2,745) (2,979) 268 (52) (10) (2,979) - (2,703)

16 Balance sheet Fixed assets Intangible and tangibles Investments Other long-term assets Net current liabilities Provisions and creditors > 1 year Net debt Net assets Gearing Debt capitalisation Net debt of Associates and JVs 4,214 1, ,426 (212) (921) (2,703) 2, % 51% (1,386) 4,590 1, ,592 (327) (911) (2,979) 2, % 56% (1,625) 2006 £m December30 June  Proforma debt capitalisation post Coleto Creek acquisition at 56%

17 Net debt structure Cash and cash equivalents Recourse debt Convertible bond (2023) Non recourse debt IPM - acquisition debt IPM - Mitsui preferred equity North America Europe Middle East Australia Asia Total net cash/(debt) 729 (117) (279) (161) (481) (1,159) (286) (917) (32) (3,315) (2,703) Total £m IPR Corporat e * Project debt is secured solely on the assets and cash flow of the project concerned (non recourse) As at 30 June 2006 Project cash (debt)* 313 (117) (279) (161) (481) (1,159) (286) (917) (32) (3,315) (2,899) JVs / Associates off-balance sheet net debt* - (194) (221) (400) (53) (518) (1,386) Maturity

18 Corporate liquidity - proforma Cash and cash equivalents Recourse debt Convertible bond (2023) Convertible bond (2013) Non recourse debt IPM - acquisition debt IPM - Mitsui preferred equity North America Europe Middle East Australia Asia Corporate net cash/ (debt) £m Convertibl e Bond IPR Corporate 30 June (117) - (117) Coleto Creek Proforma (159) - - (160) - (160) 312 (117) (159) (276) - 36  Maintains liquidity at Corporate post Coleto Creek  Accesses convertible market at opportune time  Achieved low coupon (3.25%) and high conversion price (391p/share) Issue of Convertible bond

19 Financing activity  Loy Yang B refinancing (March 2006) –replaced amortising tranche with a bullet repayment, improving project distributions –decrease in margins –A$617m, 6 year term  Hidd financing (April 2006) –acquisition and construction facility –US$990m, 20 year term  Pego refinancing (June 2006) –eliminates cash sweep and extends term, improving project distributions –FGD construction facility included –€646m, 14 year term  Coleto Creek financing (July 2006) –acquisition facility - US$935m, 7 year term –also US$230m letter of credit/working capital facilities  Convertible bond (July 2006) –replenished corporate funds following acquisition of Coleto Creek –Coupon rate of 3.25% and conversion price of 391p –€230m, 7 year term

20 Financial summary  Strong financial performance in H1 –profit from operations of £392m, up 69% –EPS of 11.9p, up 83%  Strong positive cash flow in H1 –free cash flow of £268m, up 100%  Key H2 drivers –first time contribution from Coleto Creek –major planned outage at Saltend –First Hydro performance depends on market volatility  Continue to expect strong growth in full year 2006

21 Philip Cox Chief Executive Officer

22 Texas Commercial update  Strong demand growth –new peak demand of 62,396 MW – up 3.5% on 2005  5,500 MW of mothballed capacity unlikely to return –1,100 MW of mothballed plant recently approved for retirement  New proposed capacity –required to maintain sufficient reserve margin –will offset retirement of mothballed units  We remain confident of market recovery Achieved spark spread ($/MWh) Load factor Forward contracted Texas - North Zone % n/a 16 55% 85% 2006 Achieved spark spread ($/MWh) Load factor Forward contracted Texas - South Zone % n/a 14 50% 85% 2006 (1) IPR forecast % of anticipated output for the full year Hays was mothballed till May 2005 (2) (3) (1) (2) Full Year (3) (1)

23 Texas Reserve margin analysis ERCOT reserve margin analysis Reserve Margin % 15% Reserve margin (1) Adjusted for low wind load factor and non load-serving cogen 2006 peak demand: Demand growth: 2006 installed capacity: Capacity under construction: New build announcements: Mothballed: 62,396 MW 2.7% 80,998 MW (1) 3,142 MW operational by 2010 –phased build out of all known projects 14,200 MW – TXU, NRG, other 5,174 MW progressively retired by 2010 Assumptions

24 Coleto Creek Acquisition highlights  Acquisition successfully completed in July  632 MW Pulverized Coal Unit –located in ERCOT – South Zone  Purchase price $1.14 billion –75:25 debt equity ratio –financing package supports favourable equity return –includes significant collateral support  Attractive long-term return and immediately earnings and free cash flow enhancing  Earnings and cash flow secured through long-term contracts –90% contracted through to 2009 –75% contracted in 2010 –50% contracted from 2011 to mid 2013

25  Access to low cost and low sulphur coal from Powder River Basin (PRB) –a clear economic advantage –coal transportation agreement in place till 2012  Investing in emission control system to enable 100% use of PRB coal –good for compliance under future mercury emission standards  Acquisition provides fuel diversity and expanded presence in Texas –immediate access to Texas market recovery  Option to expand –site designed to accommodate a second 600 MW plant Coleto Creek Acquisition highlights

26 New England Commercial update  Strong load growth in 2006 –new peak demand of 27,971 MW – up 4.2% on 2005  Forward Capacity Market Settlement approved by FERC in June  Defined capacity payments during a transition period from December 2006 to mid 2010  Annual bidding for capacity beyond 2010 –pricing signal for new plant IPR forecast % of anticipated output for the full year Achieved spark spread ($/MWh) Load factor Forward contracted % n/a 12 55% 95% 2006 New England (2) Full Year December 2006 to May 2008 June 2008 to May 2009 June 2009 to May Forward Capacity Market ($/kW month) Period (1) (2) (1)

27 Europe  Excellent growth in earnings  UK merchant portfolio delivering a robust performance –earnings driven by Saltend, First Hydro and Rugeley –spark spreads for merchant gas generation (Deeside) below new entrant level - calendar 2006 baseload spread at £9/MWh*  Contracted assets performing well –Turbogás continues to deliver a good financial performance –FGD equipment being installed at Pego *pre cost of CO 2

28 UK - key contributors  High quality asset –indexed gas contract with BP through to 2015 –base load operation with H1 load factor 92% –high availability - 94% in H1 –good health and safety record  Major planned outage in Q3 –major overhaul on all 3 units –major outages undertaken once every six years  2006 –90% of anticipated output contracted –H2 expected load factor of 75%* * Takes Q3 outage into account  Ancillary Services and Balancing Mechanism –strong demand for reserve and response capacity –increased utilisation and margins driven by tight system conditions and unpredictable weather  Trading revenue (short term contracts) –driven by market volatility and wide peak/off-peak pricing differential SaltendFirst Hydro

29 Europe UK Spread Load factor Forward contracted 16 40% 45% 12 60% n/a RugeleyDeeside % 95% 15 60% n/a 2006 (1)  Phase I CO 2 trading at €16.50/t –price relatively stable  Phase II –CO 2 allowances currently estimated at 75%- 80% of Phase I (for IPR portfolio) –current price circa €18.50/t (1) % of anticipated output for the full year (2) (3) Full Year (2) Pre cost of CO 2 (1) IPR forecast (3)

30 Middle East  Construction programme on plan –600 MW operational at Ras Laffan B, Qatar –616 MW in operation at Tihama Power –UAN extension to commence operation in Q –Hidd desalination expansion on track  Continue to see pipeline of further projects –2 bids currently under evaluation (decisions expected Q3 2006) - 2,000 MW Mesaieed IPP, Qatar - 2,500 MW, 185 MIGD Marafiq IWPP, Saudi Arabia - future pipeline remains strong

31  4 cogeneration facilities supplying power and steam to Saudi Aramco –under 20 year Build Own Operate Transfer, Energy Conversion Agreement  Major construction management project for IPR –single turnkey Engineer Procure Construct (EPC) contract with Mitsui for all four plants –3,000 people at work during peak construction period  International Power - value addition through an active role –led $640 million project financing –O&M service provider + 20 year technical services agreement - generating additional revenue –recruited and trained operational staff from the Middle East and Asia  Tihama Power - a solid platform for future growth in Saudi Arabia Middle East Tihama - a successful launch in Saudi Arabia

32 Australia  Financial performance in line with expectations  Strong operational performance by Loy Yang B –forced outage rate less than 0.5% –$617m of debt refinanced in March 2006  All consents secured for next phase of Hazelwood mine development  Retail partnership continues to grow Achieved price (A$/MWh) Victoria Hazelwood 2006 (1) Load factor Forward contracted 2006 (1) 80% n/a 80% 65% (1) 95% n/a 90% 80% 2005 HazelwoodLoy Yang B 2006 (1) 35% n/a 40% 70% 2005 Pelican Point Full Year (1) IPR forecast (1) IPR forecast

33 Australia  Base-load (and peak) prices show modest increases  Recent rise predominantly driven by robust winter demand during A$/MWh January 2006 Q Calendar 2007 Victoria Baseload Power FebruaryMarchAprilMayJuneJuly

34 Asia  Strong operational performance at Paiton –high availability triggered incentive payments  TNP (Thailand) - 23 MW - plant expansion on track for completion in Q  High levels of generation at IPR’s assets in Pakistan –driven by high demand and low availability of hydro –Hubco - direct transmission connection to Karachi load centre operational since May 2006  Malakoff – update –MMC offer - opportunity to monetise investment –offer at RM10.35 per share equates to £250m for IPR –completion expected in Q subject to shareholder, regulatory and other approvals

35 Summary and outlook  Portfolio performing well  Improving returns in key merchant markets of the US and the UK  Coleto Creek acquired and integrated  Earnings underpinned by free cash flow  We expect 2006 to be a year of strong growth

36 Interim Results 6 months ended 30 June 2006

37 Appendix

38 Updated Asset List

39 IAS 39 regional analysis Six months ended 30 June £m Year ended 31 December 2005 North America Europe Middle East Australia Asia Specific IAS39 impact on PFO - (4) (3) 1 (23) - (15) 2 (35) (2) IAS 39 impact  Specific IAS39 mark to market movements on economic hedge contracts are presented separately to allow an understanding of the underlying business performance  Specific IAS39 movements are presented separately where own use treatment could not be applied, cash flow hedging could not be achieved or has not been applied  Mark to Market movements relating to proprietary trading activities continue to be included within the underlying business results.