I am pleased to report a strong performance from the Group in 2008 where Profit From Operations* (PFO) rose 16% to £1,050 million and Earnings Per Share* (EPS) increased 20% to 32.4 pence from 27.1 pence in 2007.

2008 again demonstrated the strength of our portfolio. PFO was up in all regions with particularly strong growth in Australia and North America. Good performance from the European assets, principally First Hydro, helped to offset the impact of the unplanned outage at Rugeley. Our plants in the Middle East and Asia operated well delivering a consistent performance.

We also achieved further growth across the portfolio with the acquisition of 2,437MW (net) of capacity in the US, Europe and Asia and the announcement of future greenfield capacity additions in Europe of 555MW (net). Four out of the five of these new investment opportunities arose from our existing assets and these four all have long-term power offtake contracts. These developments are particularly noteworthy as they were achieved against a backdrop of the credit crisis and a tight equipment supply market.

The turmoil in global financial markets and economic slowdown in major economies has, in one way or another, impacted the demand for many products and affected many businesses around the world. At International Power we deliver a service that remains key to the normal functioning of every economy and every household. Electricity is and will remain essential day and night. The need for our service, together with our international footprint, diversified fuel base and the balance of contract types (long-term and short-term), across developed and developing markets, offers good security for our business and its future in these uncertain times.

International Power’s financial position remains strong, with good liquidity, committed corporate bank facilities and strong free cash flow generation. Our business is capital-intensive but we have a robust capital structure and one that, through the use of non-recourse debt, allows us to maintain appropriate levels of debt in a relatively low risk manner. Through our broad geographic spread and our regional knowledge, we continue to have access to good growth opportunities. However, the value of financial prudence in the current economic environment is clear and accordingly we will invest our capital very carefully.

During 2008 we welcomed Ranald Spiers to the Board as the Executive Director responsible for the Middle East and Asia. Ranald has led the growth that has been achieved in our Middle East region over the last eight years, and his project development skills will be important as we seek to grow our business further, particularly in Asia.

I am pleased to report that the Board has established a Health, Safety and Environment (HS&E) Committee under the Chairmanship of Non-Executive Director, Struan Robertson. The Committee meets at least twice a year, at different power stations across the portfolio and, through its advisory role, reinforces the fact that these matters are as important to the Board as they are to our staff at power plants, development sites and offices around the world.

Staff commitment to our in-house behavioural safety programme, known as ‘Fresh Eyes’, along with improved management of health and safety issues, particularly during maintenance outages at our plants, delivered a further 25% reduction in the Group’s Accident Frequency Rate (AFR).

On the environmental front we track very carefully proposed legislation which targets reduced Carbon Dioxide (CO2) emissions in our markets. We support these initiatives in principle, and we are actively involved in dialogue with governments and regulators to ensure a balanced outcome for our business. We will apply the experience gained from operating within the European Union Emissions Trading Scheme (EUETS) to any new scheme in our other markets, and will invest in renewables and other economically viable opportunities aimed at reducing carbon emissions from our plants.

Aside from managing carbon emissions, the installation of Flue Gas Desulphurisation (FGD) equipment at Rugeley in the UK, and at our Pego plant in Portugal, where Selective Catalytic Reduction (SCR) technology has also been fitted, will make a significant contribution to reducing atmospheric emissions.

In August last year, the Board announced an interim dividend of 3.56 pence per share (35% of the previous year’s full-year dividend). The Board is proposing a final dividend of 8.59 pence per share for the year which, including the interim dividend, will take the total for 2008 to 12.15 pence per share. This represents an increase of 20% on 2007 and an EPS* pay-out ratio of 37.5%.

We were able to deliver growth in earnings and generating capacity around the world in 2008, despite some challenges. The dedication displayed by our teams across the business was a key factor in our success, which would not have been possible without their commitment. On behalf of the Board, I would like to thank all our staff for the vital role that they play in the growth of our Company.

Looking forward to 2009, we have a well established portfolio of long-term contracted assets which continues to perform well. We are also well positioned in our key merchant markets, although forward pricing in the UK and the US does not reflect the attractive long-term market fundamentals. In the absence of a significant improvement in pricing in these two markets, it is likely that Group profitability in 2009 will be lower than in 2008. However, our assets are well placed to capture value, from both market recovery and short-term pricing volatility.

The financial position of the Group remains strong, with good corporate liquidity and no material refinancings in 2009. We expect to continue to deliver strong free cash flow in 2009.

_{* All references to PFO and EPS in the Chairman's statement are before exceptional items and specific IAS 39 mark to market movements.}