2012 Results Balance Sheet 2012 2011 m m Intangible assets/goodwill 169 81 Tangible fixed assets 1,278 1,087 Working capital 262 150 Provisions for liabilities & charges (6) - Retirement benefit obligation (4) (6) Derivative…
2012 Results Financial Indicators 2012 2011 EBITDA(1) 626m 531m Capital investment 440m 418m Net borrowings 593m 365m Interest cover EBITDA basis(1) 25 times 28 times Net debt to EBITDA(1) 0.9 times 0.7 times Effective tax…
2012 Results Cash Flow from Operating Activities (m) 2012 2011 Operating profit pre exceptional items(1) 390 345 Exceptional items 7 - Depreciation & amortisation(1) 236 186 Changes in working capital (169) (38) Net movement in…
2012 Results Cash Flow Statement (m) 2012 2011 Net cash inflow from operating activities 479 509 Net interest paid (23) (17) Taxation paid (83) (89) Acquisitions(1) (127) (14) Purchase of fixed assets (440) (418) Proceeds from…
Another strong performance Highlights Both business grew revenues in difficult economic environment Power Projects revenues +15%, Local +23%; 20% increase in average MW power on rent Power Projects benefitting from key strategic…
Underlying vs Reported Growth 2012 2011 Revenues as reported (excl pass 20% 11% through fuel) Revenues underlying (1) (2) 14% 22% Trading Profit as reported 14% 8% (excluding pass through fuel) Trading Profit underlying (1)…
Segmental performance as reported(1) REVENUE TRADING PROFIT 2012 2011 Constant 2012 2011 Constant m m Curr % m m Curr % Local Business 905 734 25% 175 124 41% Trading Margin: 19% 17% Rolling 12-month ROCE: 21% 19% Power Projects…
Segmental performance underlying(1) REVENUE TRADING PROFIT 2012 2011 Underlying 2012 2011 Underlying m m % m m % Local Business 812 721 13% 144 120 20% Trading Margin: 18% 17% ROCE: 19% 19% Power Projects 638 554 15% 212 214 (1)%…
Revenue Mix (m) REVENUE % OF REVENUE EXCL PASS- THROUGH FUEL 2012 2011 Underlying(1) 2012 2011 Change % pp Power 1,109 899 16% 72% 70% 2 Temperature Control 114 116 -% 7% 9% (2) Oil-Free Air 28 27 2% 2% 2% - Total Rental 1,251…
Local Business North America REVENUE TRADING PROFIT(1) 2012 2011 Underlying 2012 2011 Underlying m m Change m m Change % % Full year 482 415 16% 108 83 31% Trading Margin 23% 20% Second half 274 230 20% 75 55 34% Trading…
Local Business Europe & Middle East REVENUE TRADING PROFIT(1) 2012 2011 Underlying 2012 2011 Underlying m m Change m m Change % % Full year 367 302 5% 68 42 4% Trading Margin 19% 14% Second half 202 170 2% 54 32 (1)% Trading…
Local Business Aggreko International REVENUE TRADING PROFIT(1) 2012 2011 Underlying 2012 2011 Underlying m m Change m m Change % % Full year 234 173 20% 38 31 22% Trading Margin 16% 18% Second half 127 95 13% 19 16 12%…
Power Projects Excluding pass-through fuel REVENUE TRADING PROFIT(1) 2012 2011 Underlying 2012 2011 Underlying m m Change m m Change % % Full year 1,012 888 15% 335 344 (1)% Trading Margin 33% 39% Second half 522 469 14% 169…
Outlook Local business had very strong start 20% more power on rent year-on-year; helped in part by Poit acquisition in April 2012 Power Projects signs 140 MW of new orders year to date; including 56 MW for our new HFO engine and…
Strategy Review Rupert Soames CEO
2x5 Review of last 5 year strategy cycle
Strategy cycle 08-12: what we said vs what we did We said: we would grow revenues over 5 years at double-digit rates Revenues up 2.4x, CAGR 20% We said: we expected some margin dilution as Military reduced Trading margin +4pp to 25%;…
Strategy cycle 08-12: what we said vs what we did We said: we would fund our growth and spend around 1bn on new fleet without recourse to shareholders Fleet capex 1.5bn, average age of fleet reduced 4.4 3.9 years 350m cash paid to…
Strong operational performance Highlights Increased scale and operating efficiency More than doubled size of power fleet to 9,200 MW Trading margin +4pp; improved customer satisfaction: 10pp improvement in Net Promoter Score Grew…
Local + Power Projects = a strong business Trading Profit m 450 Group Two business models 400 386m Both large, and growing fast Sharing fleet, expertise and infrastructure 350 Both subject to short-term variation, but together they…
Very attractive returns on capital Return on Capital Employed % 45.0% Returns are very attractive, and 40.0% reflect relative risk profiles 35.0% Power Projects peak returns 09-11 2012 Power Projects driven by Japan & Military.…
Attractive mix of emerging & mature markets Revenues excl fuel m 2012 900 Emerging 853m Emerging markets 55% of 2012 800 revenues, vs 40% in 2007 700 Mature 690m CAGR 07-12 600 Emerging 27% 500 Mature 13% 400 2009…
Sales growth vs GDP growth 07-12 40% CAGR 07-12 World GDP: 3% nominal 35% Aggreko revenue 20% 30% When World GDP goes negative in 09 25% Revenue impact:- 20% Local -6% Power Projects +26% in US 15% But: order intake in Power…
The Local Business
Business definition The provision of power & temperature control when the need is either urgent for a short period of time Customer base is highly diversified: anyone who uses power or temperature control in their business Average…
Local Business revenue analysis 2012 Local revenue by sector Local business revenue m Utilities 10% Events 13% 700 2012 Mature Shipping 3% 600 Markets 578m Manufacturing Construction 500 8% 7% 400 Emerging 300 Markets Contracting…
Emerging markets driving growth in Local Local Power MW on hire 3,000 Market growing at estimated at CAGR 07-12 2x GDP; real world GDP growth 2,500 Total Local 1.7% 07-12 11% 2,000 Local business has been growing penetration and…
Our strategy over the last five years Focus on Expanding depot network into emerging markets 1,300 MW on rent in emerging markets; up 169% over last 5 years Poit, Cummins India acquisitions service centre network expansion Growing…
Local business emerging markets 2006: 11 service centres 36
Local business emerging markets 2012 75 service centres and offices Unrivalled global distribution network: 194 service centres and offices in 47 countries 37
A new driver of growth: mini projects Fertile segment protecting business from power shortages industry has a greater need and capacity to pay than Utilities As Local business grows its reach, it is doing contracts which would…
Local business strategy Market growing at an estimated 2 x GDP growing propensity to rent; better availability & service Our GDP mix is favourable: 50% of MW on hire in economies with average GDP growth 6% We will continue to grow…
Local business Looking ahead Local business revenues and returns will continue to be variable year-on- year Economic cycle; major events; bubbles such as wind, telecoms, oil & gas Over next five years, we expect on average from the…
Power Projects
Business definition Provision and operation of utility grade power plants for initial terms of 3 years or less designed for rapid deployment; ownership and operation of plant stays with vendor Customer-base almost exclusively…
Power Projects trends YoY Revenue growth % (LHS) MW on rent (RHS) Revenue Growth % vs Increase in MW on rent % 70% 4,000 70% 60% 3,500 60% 3,000 50% 50% 2,500 40% 40% 2,000 30% 30% 1,500 20% 20% 1,000 10% 500 10% 0% - 0% 2007…
Rate and mix have been key factors Revenue Growth m (LHS) vs Revenue / MW k (RHS) Gas & Diesel rental revenue m 200 280 1,000 180 900 270 160 800 140 260 700 120 250 600 100 500 80 240 400 60 230 300 40 200 220 20 100 - 210 -…
Impact of Military & Japan Japan & Military Revenue m (LHS) Proportion of Power Projects Revenue ex fuel (RHS) 180 25% Military & Japan are not mainstream 160 Power Projects markets. 140 20% Japan a black swan event; major 120…
On-and-off hire rates highly variable Quarterly on-and-off hire rates MW Annual on-off hire rates % of opening on hire 800 80% 600 59% 56% 60% 51% 44% 400 37% 40% 37% 200 20% 20% - 14% 10% 9% 0% (200) 2008 2009 2010 2011 2012…
Prudent approach to debtors mitigates risk Trading Margin % (LHS) Debtor and Revenue Provision m (RHS) Debtor days (LHS) Provision movement m (RHS) 90 130 30 39% 25 120 80 37% 20 110 70 15 35% 100 10 60 90 5 33% 50 80 0 31%…
Estimated market size & share 07-12 Total Market MW +/-10% 2007 2012 CAGR 07-12 Movement No significant new entrants in last 5 years Diesel 3,300 7,500 18% 4,200 Aggreko has retained market share Gas 100 900 55% 800 Aggreko 5x…
Supply Demand Shortfall Health warning: Aggregated analysis is not helpful; shortfall in one country cannot generally be mitigated by surplus in another Very sensitive to rate of net additions; gross additions data is reliable,…
Our models of demand have performed well We said in 2009 update: Latest data Electricity demand would grow 4% Electricity demand growing at 4% Net additions would grow 3% Net Additions 3% excl China; 4% incl China 2012 projections…
World consumption of electricity to 2020 Electricity Consumption Growth Rates 3-year rolling average to 2010; 10 year average = 2020 10 8 6 Forecast World: % 4 Average 4.1% CAGR 3.8% 2 0 1995 2000 2005 2010 2015 2020 -2…
Non-OECD ex China is our core market Electricity Consumption Growth Rates 3-year rolling average to 2010; 10 year average = 2020 10 9 8 7 6 Forecast Non-OECD 5 ex China % Average: 4.8% 4 CAGR: 4.6% 3 2 1 0 1995 2000 2005…
Installed base is ageing fast Operating Capacity (GW) reaching 40 years old in period 2005 -2010 2010-2015 Movement 1,000 GW of world generating capacity 40 AFRICA 6 9 47% years old by 2015 ANZ-OCEANIA 5 7 29% In next 10 years North…
Power outages are becoming less acceptable Vast majority of shortfall is managed by mitigation Delays to maintenance; rationing; delays in new connections; blackouts In non-OECD countries between 1990 and 2010 Population +36%…
Projections for non-OECD ex China 80% of world shortfall is in non-OECD ex China in 2015 The amount of plant 40 years old will rise by 163% 2010-2015 155 GW = 255 GW We expect rapid increase in rate of ageing will lead to more plant…
Latest forecasts Power Projects market Shortfall non-OECD ex China 2012 70 GW Has been growing at 13% CAGR; projected to continue at same rate Estimate of 2012 temporary power projects market 8.4 GW Implied conversion rate of…
Power Projects Product Strategy
Drivers of our product strategy Drive down delivered cost / kwh Capital cost Fuel cost: type & consumption Operating costs Focus on mobility & standardisation Design in flexibility & granularity; plug-and-play Reinforce our…
Current product range utility grade Combined Power Projects and Local fleet Diesel fleet Units MW* Cummins KTA 50G3: 4,478 4,478 Cummins QSK50 Tier 2: 858 1,030 5,336 5,508 Gas fleet Cummins QSK60 1,133 1,246 6,469 6,754 We…
Investment in gas has been a big success Power Projects gas rental revenue m 300 Proprietary Aggreko product, launched in 06 250 250m of revenues in 2012; expect to be 40% of Power Projects revenues in 2013 200 63% CAGR 07-12 150…
Challenge of 2009 review: how to expand the market 2009 Interim Strategy Review determined that the best way to expand the market was to make temporary power cost-competitive with permanent power Key to lower cost per KWh is fuel…
Project Banksia Our first project to develop engine, rather than package, technology 3-year, 6m, development programme with Ricardo plc, with Cummins support Challenge: develop an engine which can run on HFO Challenge: develop the…
Announcing our new products The Aggreko G3+ HFO 1MW continuous 20ft containerised genset running on HFO Cost / MW less than half that of new product from leading manufacturers The Aggreko G3+ Produces 14% more power than a standard…
G3+ HFO in build 65
Completed G3+ HFO 66
Aggreko now is:- The only operator able to offer customers choice of diesel, HFO and gas The only operator who has a significant amount of gas on rent By the end of 2013, will have 150 MW HFO rental fleet: 70 MW already contracted…
To turbine or not to turbine Aggreko considerations Reasons not to offer turbines Reasons to offer turbines Space not a major consideration for most Use less space / MW customers Good emissions performance Emissions can be matched…
Weve been here before Aggreko could get left behind if it does not start investing in a gas turbine fleet July 2003 69
Power Projects product range is extremely competitive Aggreko is the only operator who: Can offer customers choice of diesel, HFO and gas; low emissions or fuel optimised Has developed gas into a volume rental product Has developed…
Power Projects strategy Market will grow at an average of 10%-15%, but subject to year-on-year variation Continue to focus on non-OECD ex China, but be ready to react to black swans Continue to invest in product development programme…
Power Projects looking ahead Gas and HFO will grow faster than diesel Diesel rates will soften, but higher HFO and gas rates should mitigate The Local business will serve an increasing proportion of smaller projects Japan & Military…
What we are beginning to think about 73
Long-term aspiration for Power Projects Permanent Power Temporary Power Takes many years to finance and build Available in weeks Means taking 20-year bets in countries Does not require financing or long-term where political /…
Long-term aspiration for Power Projects Stiff Power Flexible Power Takes many years to finance and build Available in weeks Means taking 20-year bets in countries Does not require financing or long-term where political / economic…
Summary
Strategic initiatives of last 5 years have worked well Investment in building Local business into emerging markets Both businesses capable of attractive growth Positioning as an Independent Power Producer Development of gas as a…
Aggreko has hard-to-match competitive advantages Economies of scale: lower capital cost / MW & lower operating costs We can deliver superior returns and respond to new challenges We make market-leading ROCE with revenue / MW…
Our markets are set for continued growth Local business Market growing at 2x GDP: we should do better Further market share gains in mature markets Exploiting new depots in emerging markets Power Projects Structural drivers of…
Group strategy for the next 5 years Implement business-line strategies for Local & Power Projects Build strength and depth in management team Keep looking for bolt-on acquisitions Build synergies between Local and Power Projects…
Our expectations for the next 5 years Averages over 5 years: there will be year-to-year volatility and not all years will be within the ranges Local Power Projects Group Revenue Growth 8-12% 10-15% underlying 10%+ Margin 17-20%…
What this means for investors As we gain scale, growth-rates will be somewhat slower than seen in last five years, but still double-digit Margins and returns remain strong Over the next five years the business will become more cash…
Our expectations for the next 5 years We are confident that we have: The right strategy The management team to execute it Sustainable competitive advantages Clear leadership in fast-growing markets A lot of opportunity and…
Strategy 2003 -2007 80x08 Double Operating Profit from 40 million to 80 million by 2008 84
Strategy 2008 -2012 2x5 Double Revenues, Trading Profit, Fleet and Headcount by 2012 85
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