International powers up divi policy

SHAREHOLDERS in International Power are to get their first dividend since the company's demerger from National Power. The company, which returned to the FTSE 100 index in yesterday's quarterly reshuffle, is paying investors 2.5p a share, around 30% of earnings.

Chairman Sir Neville Simms said the company was adopting a progressive dividend policy and would propose an annual dividend alongside the full-year results but it is expected that dividend payments will rise to 40% of earnings over the next five years. News of International Power's full-year dividend came as it unveiled annual profits of £164m, up from £148m last year.

The company replaces oil firm Cairn Energy in the FTSE. Cairn has seen its shares retreat from highs last September after oil finds in India failed to live up to expectations. The changes take effect on 18 March.

International Power said today that its main priority in 2005 was to complete the integration of major acquisitions agreed last year. These include Edison Mission Energy (EME), for which it paid $2bn (£1.04bn) in a 70/30 partnership with Mitsui & Co of Japan. EME has assets around the world, including the US, Australia and Indonesia. Simms said that integration of the businesses was progressing in line with targets.

The size of the acquisitions has transformed International Power's balance sheet with fixed assets and investments almost doubled in size. Fixed assets at the year end stood at £3.6bn, up from £2.0bn and investments jumped from £536m to £2.1bn.

Following the acquisitions last year International Power has 34 plants in operation or under construction in 17 countries. Elsewhere in the US, the group's activities saw a reduction in turnover from £414m to £260m, mainly due to the mothballing of a plant in Texas. The company said other plants had performed in line with expectations and that overcapacity in Texas was being tackled by competitors who were also reducing the number of inefficient plants in the market.

In Europe turnover jumped from £474m to £520m and the company said it expected to see continued benefits from the increase in forward power prices.