ISSN - ARSEAM · 2018-02-26 · International Journal of Marketing & Financial Management, Volume 2, issue 3, April-2014 Page 1 of 58 International Journal of Marketing & Financial

International Journal of Marketing & Financial Management, Volume 2, issue 3, April-2014

Page 1 of 58

International Journal of

Marketing & Financial

Management (IJMFM)

Volume 2, Issue 3, April-2014

ISSN: 2348 –3954 (Online)

ISSN: 2349 –2546 (Print)

Instructions for authors and subscription

information:

http://www.arseam.com/

A Research Report

on

Financial & Risk Analysis of AGGREKO PLC Company

Shazila Andleeb

Research Student (Student Id: SM13-ES-0001)

Mohammad Ali Jinnah University, Karachi, Pakistan.

Sir Jamil Ahmed,

Instructor,

Mohammad Ali Jinnah University, Karachi, Pakistan

http://www.arseam.com/


Page 2 of 58

SHAZILA ANDLEEB

s..............................

.....

SM13-ES-0001

SIR JAMIL AHMED

SABRI

AAAAASSABRIAHMSSABRI

JAA................................

..

SUNDAY, 28th

JULY, 2013

Course Title: MSC 102 - Strategic Finance

Assignment Title: Financial & Risk Analysis of

AGGREKO PLC Company

Student Name: SHAZILA ANDLEEB

Student ID:

Instructor:

Submission Date:

Word Count: 5000+ Words except

Appendices

Student Declaration:


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This is to certify that the attached work is my own. All external

references and sources are clearly acknowledged and identified

within the contents. I am aware of the University regulations

concerning plagiarism.

Student Signature: ......................................

Date: SUNDAY, 28th JULY, 2013


Page 4 of 58

Marker’s general view of the work:

Mark:

Assessment Criteria Excellen

t good

Satisfactor

y

Needs

some

more

work

Needs

much

more

work

Part 1 30%

Introduction to company. Historical

overview and past strategy. Size, market

share, segmental analysis etc.

Statistical information to include

Financials, share price graph, foreign

sales and markets.

Benchmarking against industry average

and FTSE (or equivalent). Min 5 years

data.

Analysis using charts, graphs.

30%

Part 2 50%

Critical analysis of statistical information

and management of risk.

Foreign exchange risk

Country/political risk/financial

Other risks

WACC and beta etc-30%


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Excel spreadsheets-20%

Part 3 10%

Review of future strategy and the impact

on risk assessment-critical appraisal

Presentation (quality) 10%

Logical development & structure

Referencing 10%

-incorporated into Parts 1 & 2

SPECIFIC aspects of your assignment

.... that the marker likes:

SPECIFIC aspects of your assignment

.... that need more work:

Tutor Signature: ...................................... Date: ..................

Moderators Comments

Moderators Signature: .................................. Date: ..................


Page 6 of 58

TABLE OF CONTENT

A Research Report .................................................................................................................................. 1

Financial & Risk Analysis of AGGREKO PLC Company ............................................................. 1

INTRODUCTION OF AGGGREKO PUBLIC LIMITED COMPANY MOTO: ............................ 13

HISTORICAL OVERVIEW : ............................................................................................................. 13

HISTORY MILESTONES: ................................................................................................................. 14

AGGREKO VISION, MISSION AND VALUES : ............................................................................. 14

AGGREKO PLC GROUP STRATEGY : ......................................................................................... 14

MARKET SHARE AND SIZE OF AGGREKO PLC: ....................................................................... 15

THE MARKET: .................................................................................................................................... 15

THE SHARE: ....................................................................................................................................... 15

THE GROWTH SIZE: ........................................................................................................................ 16

SEGMENTAL ANALYSIS: .................................................................................................................... 18

BUSINESS SEGMENT : ................................................................................................................... 18

GEOGRAPHIC SEGMENT: ............................................................................................................. 19

FIRMS BETA :......................................................................................................................................... 20

COVARIANCE OF FORMULA : ...................................................................................................... 20

SLOPE: .................................................................................................................................................. 21

COMBINED BETA GRAPH: ............................................................................................................ 22

SHARE PRICE GRAPH : ...................................................................................................................... 22

INTERPRETATION OF RATIOS AND INDUSTRIAL NORMS OF THE COMPANY : ........... 23

FINANCIAL STRENGTH: ................................................................................................................. 24

CURRENT RATIO: ............................................................................................................................. 24

31ST DEC-2012 .................................................................................................................................. 24

31ST DEC-2011 .................................................................................................................................. 24

31ST DEC-2010 .................................................................................................................................. 24


Page 7 of 58

31ST DEC-2009 .................................................................................................................................. 24

31ST DEC-2008 .................................................................................................................................. 24

1.12 ........................................................................................................................................................ 24

1.22 ........................................................................................................................................................ 24

1.05 ........................................................................................................................................................ 24

1.16 ........................................................................................................................................................ 24

0.80 ........................................................................................................................................................ 24

ASHTEAD GROUP PLC................................................................................................................ 25

EXPERIAN PLC .............................................................................................................................. 25

GENERAL ELECTRIC COMPANY ............................................................................................. 25

JOHN WOOD GROUP PLC ......................................................................................................... 25

ATLAS COPCO AB ......................................................................................................................... 25

0.63 .................................................................................................................................................... 25

0.87 .................................................................................................................................................... 25

1.52 .................................................................................................................................................... 25

2.0 ...................................................................................................................................................... 25


EXPERIAN PLC .............................................................................................................................. 26



ATLAS COPCO AB ......................................................................................................................... 26

0.78 .................................................................................................................................................... 26

0.63 .................................................................................................................................................... 26

0.55 .................................................................................................................................................... 26

1.19 .................................................................................................................................................... 26

1.4 ...................................................................................................................................................... 26

Ashtead Group plc ........................................................................................................................ 28

Experian PLC .................................................................................................................................. 28

General Electric Company ......................................................................................................... 28

John Wood Group plc .................................................................................................................. 28

Atlas Copco AB............................................................................................................................... 28

0.824 ................................................................................................................................................. 28


Page 8 of 58

1.10 .................................................................................................................................................... 28

1.03 .................................................................................................................................................... 28

0.77 .................................................................................................................................................... 28


0.24 .................................................................................................................................................... 30

0.47 .................................................................................................................................................... 30

0.76 .................................................................................................................................................... 30

0.107 ................................................................................................................................................. 30

0.97 .................................................................................................................................................... 30

EFFICIENCY: ...................................................................................................................................... 31

Asset Turnover: .................................................................................................................................. 31

31ST DEC-2012 .................................................................................................................................. 31

31ST DEC-2011 .................................................................................................................................. 31

31ST ........................................................................................................................................................ 31

DEC-2010 ............................................................................................................................................ 31

31ST DEC- 2009 ................................................................................................................................. 31

31ST DEC-2008 .................................................................................................................................. 31

0.81 ........................................................................................................................................................ 32

0.88 ........................................................................................................................................................ 32

0.97 ........................................................................................................................................................ 32

0.88 ........................................................................................................................................................ 32

0.97 ........................................................................................................................................................ 32


EXPERIAN PLC .............................................................................................................................. 32



ATLAS COPCO AB ......................................................................................................................... 32

0.7 ...................................................................................................................................................... 32

0.57 .................................................................................................................................................... 32

0.50 .................................................................................................................................................... 32

0.9 ...................................................................................................................................................... 32

1.1 ...................................................................................................................................................... 32


Page 9 of 58


EXPERIAN PLC .............................................................................................................................. 34



ATLAS COPCO AB ......................................................................................................................... 34

8.2 ...................................................................................................................................................... 34

6.90 .................................................................................................................................................... 34

1.50 .................................................................................................................................................... 34

1.71 .................................................................................................................................................... 34

3.8 ...................................................................................................................................................... 34

Ashtead Group plc ........................................................................................................................ 36

Experian PLC .................................................................................................................................. 36

General Electric Company ......................................................................................................... 36

John Wood Group plc .................................................................................................................. 36

Atlas Copco AB............................................................................................................................... 36

388.30 ............................................................................................................................................... 36

14.37 ................................................................................................................................................. 36

55.09 ................................................................................................................................................. 36

144.69 ............................................................................................................................................... 36

60.99 ................................................................................................................................................. 36

TOTAL INDUSTRY AVERAGE OF 5 COMPETITORS=132.688m ................................... 36

PROFITABILITY: ................................................................................................................................ 38

GROSS MARGIN: ............................................................................................................................... 38

31-Dec-2012 ....................................................................................................................................... 38

31-Dec-2011 ....................................................................................................................................... 38

31-Dec-2010 ....................................................................................................................................... 38

31-Dec-2009 ....................................................................................................................................... 38

31-Dec-2008 ....................................................................................................................................... 38

61.46% .................................................................................................................................................. 38

58.69% .................................................................................................................................................. 38

61.16% .................................................................................................................................................. 38

61.32% .................................................................................................................................................. 38


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56.74% .................................................................................................................................................. 38


94.06% .............................................................................................................................................. 39

52.56% .............................................................................................................................................. 39

41% .................................................................................................................................................... 39

17.62% .............................................................................................................................................. 39

38.59% .............................................................................................................................................. 39


23.89% .............................................................................................................................................. 41

6.90% ................................................................................................................................................ 41

5.12% ................................................................................................................................................ 41

21.30% .............................................................................................................................................. 41

ASHTTEAD GROUP PLC ............................................................................................................. 42

38.13% .............................................................................................................................................. 42

15.07% .............................................................................................................................................. 42

17.5% ................................................................................................................................................ 42

10.37% .............................................................................................................................................. 42

23.60% .............................................................................................................................................. 42

MANAGEMENT EFFECTIVENESS: ............................................................................................. 43

INTERPRETATION: ........................................................................................................................... 43


8.56% ................................................................................................................................................ 44

3.00% ................................................................................................................................................ 44

3.8% ................................................................................................................................................... 44

5.88% ................................................................................................................................................ 44

13.95% .............................................................................................................................................. 44

INTERPRETATION: ........................................................................................................................... 46


22.44% .............................................................................................................................................. 46

8.23% ................................................................................................................................................ 46

9.08% ................................................................................................................................................ 46

11.22% .............................................................................................................................................. 46


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41.00% .............................................................................................................................................. 46

VALUATION: ....................................................................................................................................... 47

FREE CASH FLOW/SHARE: ......................................................................................................... 47

31ST ........................................................................................................................................................ 47

DEC-2012 ............................................................................................................................................ 47

31ST DEC-2011 .................................................................................................................................. 47

31ST ........................................................................................................................................................ 47

DEC-2010 ............................................................................................................................................ 47

31ST ........................................................................................................................................................ 47

DEC-2009 ............................................................................................................................................ 47

31ST ........................................................................................................................................................ 47

DEC-2008 ............................................................................................................................................ 47

-0.25 ...................................................................................................................................................... 47

-0.06 ...................................................................................................................................................... 47

0.46 ........................................................................................................................................................ 47

0.80 ........................................................................................................................................................ 47

-0.11 ...................................................................................................................................................... 47

-19 ...................................................................................................................................................... 48

12.64 ................................................................................................................................................. 48

66.8 .................................................................................................................................................... 48

14.01 ................................................................................................................................................. 48

15.02 ................................................................................................................................................. 48

30........................................................................................................................................................ 50

25.02 ................................................................................................................................................. 50

12.20 ................................................................................................................................................. 50

95.38 ................................................................................................................................................. 50

29.08 ................................................................................................................................................. 50

RISK 1: ...................................................................................................................................................... 51

PRINCIPAL RISKS AND UNCERTAINTIES: ................................................................................... 51

RISK 2: ...................................................................................................................................................... 51

RISK 3: ...................................................................................................................................................... 51

RISK MANAGEMENT: .......................................................................................................................... 51


Page 12 of 58

RISK 4: ...................................................................................................................................................... 51

CORPORATE GOVERNANCE: ........................................................................................................... 52

FUTURE REVIEW AND FORECASTS OF THE MARKET 2017: ............................................. 53

RENTAL POWER MARKET RESEARCH: ....................................................................................... 53

CONCLUSION / RECOMMENDATION: .......................................................................................... 54

REFERENCES: ....................................................................................................................................... 54

Dallas , TX (PRWEB) August o7 ,2012 from rental power forecasts (Accessed Date :

17th june, 2013 ) .................................................................................................................................... 55

Picture from www.aggreko.com and from powerful viewers.zmags.com publication (

Accessed Date : 17th june,2013 )...................................................................................................... 55

aggreko.com. 2013. aggreko plc. [online] Available at:

http://viewer.zmags.com/publication/8d77e0f8#/8d77e0f8/1 [Accessed: 22 Jul

2013]. ........................................................................................................................................................ 55

investing.uk. 2013. businessweek. [online] Available at:

http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=AH

T:LN [Accessed: 26th Jul 2013]. ...................................................................................................... 55

the telegraph. 2013. market. [online] Available at:

http://shares.telegraph.co.uk/fundamentals/?section=financials&epic=WG.

[Accessed: 26 July 2013 ..................................................................................................................... 55

EXPGY KEY STATISTICS. 2013. marketwatch. [online] Available at:

http://www.marketwatch.com/investing/stock/expgy/profile [Accessed: 26th july

2013]. ........................................................................................................................................................ 55


T:LN [Accessed: 22 Jul 2013]............................................................................................................ 55

businessweek bloomberg. 2013. Untitled. [online] Available at:


T:LN [Accessed: 22 Jul 2013]............................................................................................................ 55

google search. 2013. 1. [online] Available at:

http://www.investorwords.com/5849/WACC.html#ixzz2ZnvvFkim ( [Accessed: 22 Jul

2013]. ........................................................................................................................................................ 55

graphs. 2013. financials. [online] Available at:

http://shares.telegraph.co.uk/fundamentals/?section=financials&epic=WG.

[Accessed: 22 Jul 2013]. ..................................................................................................................... 55

viewer.zmags.com. 2013. zmag. [online] Available at:

http://viewer.zmags.com/publication/8d77e0f8#/8d77e0f8/1 [Accessed: 2nd June

2013]. ........................................................................................................................................................ 55

APPENDICES / ANNEXES: ................................................................................................................ 56


Page 13 of 58

APPENDEX A ...................................................................................................................................... 56

APPENDIX B: .......................................................................................................................................... 57

APPENDIX C: ...................................................................................................................................... 57

INTRODUCTION OF AGGGREKO PUBLIC LIMITED

COMPANY MOTO:

Aggreko public limited company is in the rental business for power generator,

as a leader at market place for power generation and controlling temperature.

It has its unique location for the networking of technical equipment and

services. Provides 24/7 services over 148 networking centers in more than 100

countries with an inspirational level of confidence in customer based services

world over and build up relationship with its loyal customers and maintain

data base management system for consumer based plans , also creates new

innovation or invention at marketplace . Aggreko plc win the award for being

the best rental power company of the year in Europe. Different environmental

conditions effects equipment and other concerned systems.

HISTORICAL OVERVIEW :

Aggreko plc came into being in 1962 in the country of Netherlands and

completed its 50 years of success in working at marketplace for 39 countries

.The company is totally commited to provide environmental stability all around

the world and increasing customers data base . Prestigious client of Aggreko

plc includes film being blockbuster named as “ TITANIC ” and also to other

industry related to movies . It’s generator powering plant is also used in “


Page 14 of 58

Olympics Games ” because it is one of the leader in the international world

market as a utility company.

HISTORY MILESTONES:

1962 : company founded year

1973 : established business in UK

1984: expand the business

1990: first business in Middle East

1999: registered on LSE (London Stock Exchange)

2007: contract signed in Yemen

2008: Olympic launching in China

2009: Oman contract

2010: Power support in Bangladesh and FIFA World Cup in Africa

2011: Hire generators in New Zealand

2012: Provides generators to London Olympics more than 600

AGGREKO VISION, MISSION AND VALUES :

“To be the leading global player in the specialist energy at marketplace” and

the mission is “To offer specialist in energy solutions that are delivered by our

high-quality people in such a way that we continually grow global list of

satisfied long-term customers,” Aggreko plc is creating innovation in

temperature and power generation plants in many countries around the world

and that is constant at marketplace for leadership based on global

environmental conditions.

AGGREKO PLC GROUP STRATEGY : Aggreko plc strategy is to categorize its long planned based decision base on

share holder value, services to client, power generating and the control of

generators temporarily as a leader at marketplace globally. Founded the

strategy of being a global leader all around the world, it establishes customer

based service centers in each home country of their businesses which control

power and temperature temporarily. In the field of marketing there is


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competitive advantage of being a literal global building business. The

continuous trading resulted into the evidence for global strategic success

approach around the world.

MARKET SHARE AND SIZE OF AGGREKO PLC:

THE MARKET:

Aggreko event service is conducting by demand of their customers means when

they are in need of power generators, temperature system controlling and other

short time equipments. Large scale events that are highly valued in the

countries like Japan, Bangladesh, Argentina, North America, Iraq, Afghanistan,

Africa etc .

THE SHARE:

Aggreko plc’s local market business segment potential is about £4 billion and

the revenue generated is of £905 million in its estimation and worldwide

demand for share market is 25% and potential market is 20% , in process it’s

the global leader among players as the major region in the global world .Gross


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Domestic Product is growing faster as twice in rate in the local market business

and the Aggreko plc market share is 45% according to its estimated power

projects capacity and power which was 3,794 Mega Watts in 2012 on an

average.

THE GROWTH SIZE:

The three major factors of producing energy which are the base for the

development of Aggreko plc local business is its gross domestic product,

propensity to rent and organizing events. Within five years of work plan real

GDP global is around 1.7% and potential market growth is 3.4% in its real

terms, the revenues in the global market local segment in nominal terms grew

by 15% and in currency terms it’s about 10% constant. As a result of the

market share grew up during the period in emerging market of power projects.

The worldwide demand forecasts that the demand will grow by 4% annually

between the year 2010 till 2020 and over the 10 years generating capacity and

consumption will be for 170 countries.

Rapid growth of industrialization, urbanization the number of consumers are

growing for devices of electricity such as cell phones televisions and

refrigerators. The faster growing per capita income or GDP nearly grown up by

nearly 1 billion to more than 3 billion soul in between the years of 2000 to


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2010 .( source Oxford Economics ) . The world forum of International Energy

Sector Agency says that there are 1.3 billion people without electricity

consumption are available.

In the year of 2015 the situation will be worst in the world power generating

plants by 20% to 25% and capacity will be 40 years old which is for the

permanent power generating plant.

Country revenue

Middle East 12%

Africa 13%

Latin America 14%

Europe 17%

North America 20%

Asia and Australia

24%


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SEGMENTAL ANALYSIS:

BUSINESS SEGMENT :

In two different business lines of operational strategy involves control

systems for temperature and rental power from industry generators to the

small business line of development for providing Aggreko’s plc service center

facilitations . In emerging market segment Aggreko plc is positioning its place

as a major oil mining company which operates business line operation based

on electricity capacity up to utilities.

Aggreko business model is being organized in two different ways as their local

business is running with the high volume which provides power temperature in

need at the time of hurries for the short time span. And in other second way it

provides the power rental generator to the events occurred in different

countries worldwide and almost every business makes it’s strategies in advance

, the Aggreko plc’s 25% revenues are from emergencies .Its business operates

the 194 service support centers and offices in North and Latin America , UAE ,

Europe , Australasia , Asia , Africa that looks after the customer through their

customer support centers of its product and services within the radius of about

200 miles. They also offer their customers complete range of products and

services through their centers world over.

Aggreko plc provide customer driven forces diversification factors both in

geographic and business segment and its total revenue in 2012 as a local

business chain is £905 million that is about 59% of the total excluding fuel

that is pass through .


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GEOGRAPHIC SEGMENT:

Aggreko plc is a local business service based firm that provides the customer

support centers in 47 countries. Its geographical business distribution is based

on the following places such as Europe, South East Europe, North America and

Middle East and other International local power projects. The business worth is

over £1 million annually in most projects and in 2012 the largest customer

service center utility invoiced around £95 million .This standardized business

uses diesel, gas, fuel that are specially designed for easy transportable and

reliable services and in 2013 they announced the Heavy Fuel Oil significantly

cheaper than diesel are available in the business market globally. The number

of stations are working as hub are in Central America, UAE, Europe, Asia that

largely control the equipment and shipped it wherever it is needed or required

to be placed. 84% of revenue generates from its power project utilization in

almost every emerging market and Aggreko plc also serves armed forces,

government bodies and oil, gas and mining companies as well.

Temperature and power technologies control system and equipment provides a

customer based satisfaction that fulfils the industrial and local needs by their choice


Page 20 of 58

to rent , buy ,rent lease or purchase that’s the reason behind that our competitors are

nor in the same line of production but other manufacturers of equipments .We as a

rental business serve in urgency of short duration and largely the rate of investment

and return on it grow significantly as large as compared to other companies in the

same operating and emerging markets.

FIRMS BETA :

COVARIANCE OF FORMULA :

AGGREKO 2012 2011 2010 2009 2008 TOTAL

BETA 1.23 1.10 0.99 0.78 0.65 0.95


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SLOPE:

AGGREKO 2012 2011 2010 2009 2008 TOTAL

SLOPE 1.12 1.10 1.00 0.79 0.66 0.93


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COMBINED BETA GRAPH:

INTERPRETATION OF BETA:

In the case of Aggreko plc the beta measurement as compare to the stock

of the market less than 1, it means that low beta pose less or lower

returns and low risk.

Beta component for the CAPM model is calculated as the cost of equity and

also recalls future cash flows discount rates and the cost of capital. Beta effects

the valuation of the entire company and also known as “beta coefficient,” the

utilities of stock values less than 1 is not high-tech stock because there is more

risk and rate of return is low.

SHARE PRICE GRAPH :

Aggreko plc is the provider of specialist equipments like rental service control

and power and temperature control, it also supplies the oil-free diesel which is

used to eliminate oil based compressors contaminants of food, textile industry

and pharmaceuticals and it operates in approximately in 23 countries and 118

depots and its share price graph trend is in leading position among the market

and as compare to industry its working dynamically.


Page 23 of 58

INTERPRETATION OF RATIOS AND INDUSTRIAL

NORMS OF THE COMPANY :

The most common type of comparing the data of the company’s as compare to

its other competitors while taking out the average of the related industry is

called as industrial norms of same industry. It is good according to the analyst

to utilize the cross sectional analysis that is individual base selected company

that best fits in the same industry will be analyzed.


Page 24 of 58

FINANCIAL STRENGTH:

CURRENT RATIO:

31ST

DEC-2012

31ST

DEC-2011

31ST

DEC-2010

31ST

DEC-2009

31ST

DEC-2008

1.12 1.22 1.05 1.16 0.80

INTERPRETATION :

TREND ANALYSIS :

Currrent ratio of Aggreko plc shows the increasing trend from


Page 25 of 58

2008 till 2011 but it is in good condition in the year 2012 which shows that the firm’s ability to meet its short term goals and

obligations is compatible till 2011 but its declined in 2012 for the short time period within one accounting cycle .

ASHTEAD

GROUP PLC

EXPERIAN

PLC

GENERAL

ELECTRIC COMPANY

JOHN

WOOD GROUP

PLC

ATLAS

COPCO AB

0.82 0.63 0.87 1.52 2.0

TOTAL COMPANY AVERAGE OF 5 YEARS=1.07

TOTAL INDUSTRY AVERAGE OF 5 COMPETITORS=1.168

CROSS SECTIONAL ANALYSIS:

Current ratio of the company as compare to its competitors is low which shows that the Aggreko plc must be more competent to it while considering its short term goals and obligations.

QUICK/ACID TEST RATIO:

31ST 31ST 31ST 31ST 31ST

http://www.energy-business-review.com/archive/4294544660



http://quote.morningstar.com/quote/quote.aspx?ticker=0P00007ODZ&culture=en-US












Page 26 of 58

DEC-

2012

DEC-2011

DEC-

2010

DEC-

2009

DEC-

2008

0.72 0.72 0.58 0.62 0.47

INTERPRETATION : TREND ANALYSIS:

The firm’s ability to pay off its short term debts is consistent in

the year 2011 and 2012 which shows that the stability is more good for company in the recent years but in 2008 till 2010 shows the unmeet able trend for short term debts in relation to its asset.

ASHTEAD

GROUP PLC

EXPERIAN

PLC

GENERAL

ELECTRIC COMPANY

JOHN

WOOD GROUP

PLC

ATLAS

COPCO AB

0.78

0.63 0.55 1.19 1.4



















Page 27 of 58


On an average the competitors are gaining the advantage or an edge over the company.

LONG TERM DEBT/EQUITY:

31ST

DEC-

31ST

DEC-

31ST

DEC-

31ST

DEC-

31ST

DEC-


Page 28 of 58

2012

2011

2010

2009

2008

0.41 0.43 0.14 0.30 0.46

INTERPRETATION: TREND ANALYSIS:

Debt to equity ratio basically means the company is aggressive towards its financial growth which may result into the addition in its

interest expense and in the case of Aggreko plc they are trying to reduce its debts.

Ashtead

Group plc

Experian

PLC

General

Electric Company

John

Wood Group

plc

Atlas

Copco AB

1.516 0.824 1.10 1.03 0.77


TOTAL INDUSTRY AVERAGE OF 5

COMPETITORS=1.0482

















Page 29 of 58


Industry average is more in debt to equity ratio that means the company is having more borrowing capacity than its other

competitors its debts.

LONG TERM DEBT/TOTAL CAPITAL:

31ST DEC-

2012

31ST DEC-

2011

31ST DEC-

2010

31ST DEC-

2009

31ST DEC-2008

0.26 0.29 0.11 0.22 0.25


Page 30 of 58


The upward downward trend in the long term debts as compare to its total capital and the higher ratio the greater the risk is with

relation to its debts.

ASHTEAD GROUP PLC

EXPERIAN PLC

GENERAL ELECTRIC COMPANY

JOHN

WOOD GROUP

PLC

ATLAS COPCO

0.24 0.47 0.76 0.107 0.97




Page 31 of 58

CROSS SECTIONAL ANALYSIS: The company average is better as compare to the industrial average because the higher the ratio the risk is also become higher

and the higher the ratio and more the company exposed to interest rate risk. Therefore the company is in better situation than competitors.

EFFICIENCY:

Asset Turnover:

31ST

DEC-2012

31ST

DEC-2011

31ST

DEC-2010

31ST

DEC- 2009

31ST

DEC-2008


Page 32 of 58

0.81 0.88 0.97 0.88 0.97

INTERPRETATION:

TREND ANALYSIS:

Asset turnover ratio shows that the company sales comparison to its asset pricing and analysis how it is efficiently and successfully the company using assets to grow its revenues.

ASHTEAD GROUP

PLC

EXPERIAN PLC


JOHN WOOD GROUP

PLC

ATLAS COPCO AB

0.7

0.57 0.50 0.9 1.1


















Page 33 of 58


Aggreko plc company average is good while considering upon its comparable assets efficiently as compare to industry competitors and that management is

efficient as compare to industry and company is having borrowing capacity, hence company must borrow and invest in assets so company must get

competitive edge over competitors.

RECEIVABLES TURNOVER:

31ST DEC-

2012

31ST DEC-

2011

31ST DEC-

2010

31ST DEC-

2009

31ST DEC-

2008

4.59 5.38 6.44 5.53 5.52


Page 34 of 58

INTERRETATION:

TREND ANALYSIS:

This ratio of Aggreko plc shows the declining trend mostly and

measures the company efficiency toward the collection period of its

sales credit policy.

ASHTEAD GROUP

PLC

EXPERIAN PLC


JOHN WOOD GROUP

PLC

ATLAS COPCO

AB

8.2 6.90 1.50 1.71 3.8

TOTAL COMPANY AVERAGE OF 5 YEARS =5.492

TOTAL INDUSTRY AVERAGE OF 5 COMPETITORS =4.422

















Page 35 of 58


Company’s receivables are better as compare to industrial average.

EBITDA/EMPLOYEE:


Page 36 of 58

31ST DEC-2012

31ST DEC-2011

31ST DEC-2010

31ST DEC-2009

31ST DEC-2008

111275 124707

128056

114088

100093


It shows the measurement of the related profit of the organization and in the case of Aggreko plc there is the up down trend of the ratio and

its good in 2010.

Ashtead Group plc

Experian PLC

General Electric

Company

John Wood

Group plc

Atlas Copco

AB

388.30

14.37 55.09 144.69 60.99



COMPETITORS=132.688m
















Page 37 of 58


Profit of the competitors are relevantly more good as compare to the company’s case industrial comparison are gain more profits.


Page 38 of 58

PROFITABILITY:

GROSS MARGIN:

31-Dec-

2012

31-

Dec-2011

31-Dec-

2010

31-

Dec-2009

31-

Dec-2008

61.46% 58.69% 61.16% 61.32% 56.74%


Gross margin shows the profitability of the business comparable to its revenue measurement proportionate to


Page 39 of 58

convertible gross profit.

ASHTEA

D GROUP

PLC

EXPERIAN PLC

GENERA

L ELECTRI

C

COMPANY

JOHN

WOOD GROUP PLC

ATLAS

COPCO AB

94.06%

52.56% 41% 17.62

%

38.59

%



COMPETITORS=0.48766


Company is gaining more as compare to the industrial average .

OPERATING MARGIN:


Page 40 of 58

31ST DEC-

2012

31ST DEC-

2011

31ST DEC-

2010

31ST DEC-

2009

31ST DEC-

2008

24.74% 24.53% 25.57% 25.60% 21.64%


It measures the company’s strategies about pricing of the products such as

wages and raw material etc and in the case of Aggreko plc it’s not much variant.

ASHTEAD GROUP

PLC

EXPERIAN PLC

GENERAL ELECTRIC

COMPANY

JOHN WOOD

GROUP PLC

ATLAS COPCO

AB


Page 41 of 58

19.02% 23.89% 6.90% 5.12% 21.30%




Operating margin of the 5 years is better because company is pricing its strategy

in a good way and as compare to industry itsbetter that shows the management controlled its operating expenses in more efficient way as compare to competitors.

EBITDA MARGIN:

31ST DEC-

2012

31ST DEC-

2011

31ST DEC-

2010

31ST DEC-

2009

31ST DEC-

2008

39.96% 38.07% 38.67% 40.34% 34.08%


Page 42 of 58

INTERPREATTION: TREND ANALYSIS:

Shows measurement of the company’s profitability

operations, it excludes depreciation.

ASHTTEAD GROUP

PLC

EXPERIAN PLC

GENERAL

ELECTRIC

COMPANY

JOHN WOOD GROU

P PLC

COPCO AB

ATLAS

38.13%

15.07% 17.5% 10.37% 23.60%




Page 43 of 58


Profitability operations of Aggreko plc is more sufficient as

compare to industrial average.

MANAGEMENT EFFECTIVENESS:

INTERPRETATION:

RETURN ON ASSETS:

31ST

DEC-2012

31ST

DEC-2011

31ST

DEC-2010

31ST

DEC-2009

31ST

DEC-2008

14.17% 16.37% 16.87% 14,41% 12.60%


Page 44 of 58

TREND ANALYSIS:

Return on assets is the ratio of annual net income to its average total assets of a business duration of a financial year or period. It measures efficiency of the business in using its assets to generate its net income

and it shows overall profitability.

ASHTEAD

GROUP PLC

EXPERIAN

PLC GENERAL ELECTRIC

COMPANY

JOHN

WOOD GROUP

PLC

COPCO AB

ATLAS

8.56%

3.00% 3.8% 5.88% 13.95%

TOTAL COMPANY AVERAGE OF 5 YEARS

=0.14884

TOTAL INDUSTRY AVERAGE OF 5 COMPETITORS

=0.07038


Page 45 of 58

CROSS SECTIONAL ANALYSIS: The efficiency of the company business is better to generate its income as compare to its industrial averages RETURN ON EQUITY:

31ST

DEC-2012

31ST

DEC-2011

31ST

DEC-2010

31ST

DEC-2009

31ST

DEC-2008

28.66% 30.68% 30.07% 31.54% 32.37%


Page 46 of 58

INTERPRETATION:

TREND ANALYSIS:

Return on equity measures the profitability of a company as a

whole. The higher values are considerably more favorable for

the company and measure its efficiency in generating income

on new investment and investors should confirm the trend of

return on equity.

ASHTEAD GROUP

PLC

EXPERIAN PLC


JOHN WOOD GROUP

PLC

ATLAS COPCO AB ATLAS

22.44%

8.23% 9.08% 11.22% 41.00%



COMPETITORS=0.18394


Page 47 of 58

CROSS SECTIONAL ANALYSIS: The higher the value the higher the return on equity and in

the case of Aggreko plc is higher than the industrial average.

VALUATION:

FREE CASH FLOW/SHARE:

31ST

DEC-

2012

31ST

DEC-

2011

31ST

DEC-

2010

31ST

DEC-

2009

31ST

DEC-

2008

-0.25 -0.06 0.46 0.80 -0.11


Page 48 of 58


The payments of the company finalized payments related to expenses which also includes the amount of its investment which is called as an operating flow of

cash. ASHTEAD GROUP

PLC

EXPERIAN PLC

GENERAL

ELECTRIC COMPANY

JOHN

WOOD GROUP

PLC

ATLAS

COPCO AB

-19

12.64 66.8 14.01 15.02




Page 49 of 58

CROSS SECTIONAL ANAYSIS:

Industrial average of the industry is more good as compare to the Aggreko plc which shows that the company is not investing in expansion of the market because of not paying its expenses.

OPERATING CASH FLOW/SHARE:

31ST DEC-

2012

31ST DEC-

2011

31ST DEC-

2010

31ST DEC-

2009

31ST DEC-

2008

1.40 1.54 1.50 1.42 0.91


Page 50 of 58

INTERPRETATION:

TREND ANALYSIS:

It is a measurement of the price of cash generated through the business operations. It’s important because it generates the opera table sufficiency to maintain the positivity of its cash flows and to grow its operations that can

require external financing.

ASHTEAD GROUP

PLC

EXPERIAN PLC

GENERAL ELECTRIC

COMPANY

JOHN WOOD

GROUP PLC

ATLAS COPCO

AB

30

25.02 12.20 95.38 29.08



COMPETITORS=38.336


Comparably industry competitors average is more good than 5 year average


Page 51 of 58

of the company.

RISK 1:

PRINCIPAL RISKS AND UNCERTAINTIES:

Uncertainties and risk affect the performance of the company formal risk and

management processes –there are number of things that could be wrong while

operating on large scale of production in energy sector geographical and in

business sector.

RISK 2:

POLITICAL RISK:

The group of Aggreko plc works around 100 countries so the significance risk

of political instability resulted into the unrest existing contracts and

agreements and the tax base policy and restrictions of currencies , changes in

laws damaging the profitability of operations country wide . Risk assessment is

the considerable factor for us in terms of our people , assets and payment

plans and the customer facilitation is the first and foremost important factor to

consider the risk level of uncertainty of declined participation in contracts. In

quantum related to the political risk that business faced in the current years of

expansion in national and international projects are benefiting the risk scale to

become more diversified.

RISK 3:

RISK MANAGEMENT:

Aggreko plc provides the generators of temporary power and control and gives

solution to reduce the level of risks related to business efficiency solutions and

issues of occurrence of the problem in the small and large scale disastrous

responses in terms of planning and execution of solutions like recovery of

temporary power and control of equipment for disasters and contingency of

hurricanes etc. The current market risk adjustment for performance of Aggreko

plc is about 0.4153 among its related companies.

RISK 4:


Page 52 of 58

WEIGHTED AVERAGE COST OF CAPITAL CALCULATION:

WACC = We Ke + Wd Kd + Wp Kp

We= TOTAL EQUITIES/TOTAL ASSETS =1044800/2123400 =0.492

Wd= (1-0.492)=0.507

Wp= SUM OF PREFFERED STOCK / TOTAL ASSETS =0 /2123400=0

Ke= 5.50% (expected rate of return equity)

Kd= 3.40% (expected rate of return bonds)

Kp= 0 (Expected Rate of Return -Cash)

APPLICATION OF FORMULA:

WACC = (0.492*5.5%)+(0.507*3.40%)+(0*0)

WACC =0.02706+0.017238+0

WACC = 0.044298 0r 4.4298%

INTERPRETATION OF WACC:

WACC is used as an investors tool for decision making on investment and it

also represents the rate of return that is of value to the investors while making

a decision. For Aggreko plc produces a return of 4.4% which means for every

dollar the company is investing its capital and in the case of Aggreko plc the

return is less so the investors are investing their money elsewhere because

WACC serves the real usefulness to investors. They see the facts and figures in

the brokerage analysts reports for the judgment of the WACC measurement

and taking out the company details out of that reports of analysts.

CORPORATE GOVERNANCE:

Aggreko works on the basis of transparency, proper balancing, time span

control etc. While putting into practice the governance they work and operate

worldly in safe and healthy environment. Ethically the corporate social

responsibility of Aggreko plc provides the safe, sound, heathier environment in

a manner able and disciplinary way to protect and safeguard their employees

and users or to satisfy its ultimate consumer in the communities in which they


Page 53 of 58

operates. Maintaining the standardization it operates its practices in a

comprehensive way to deal up with global environmental practices in a safe

and sound way through collection of data, maintaining strategies and

objectives, operational situations audit and reporting and ultimately achieving

its goals.

FUTURE REVIEW AND FORECASTS OF THE MARKET 2017:

The report says that power market worth $17 billion in the year of 2017. It

covers all aspects of the geographic and business segments of power generators

rental market which includes the major countries like Australia, Canada ,

China , Argentina , United Arab Emirates , Japan , India , Europe , Africa ,

Brazil , North and Latin America etc . In dealing up with natural gas diesels

and others by its type wise market. It comprises of all types of geographic

regional market by its generators type and application in major countries

mentioned above and others basically it provides end user benefit to industrial

sector and I different market segmentations for power generation world over for

temporary power generation and utilization in events, minning, shipping and

ultimately to industry which increases its market share and revenues. The

main headquarter and service centre for rental power solution in UAE provides

the company terms and conditions in financial dealing of product and services

for strategic managerial strategy making decisions based on immediate action

plans.

RENTAL POWER MARKET RESEARCH:

Globalization is changing the trends of the world national and international

markets , the fast and forward growth of the energy sector depletes sources

which makes the consumption to the low rate for utilizing the energy with the

span of time it has only control over bio-diesels that are used repeatedly .The

rental power market energy based analysis conducts the research on past

reports facts and figures of the global market scenarios and study competitors

profile in order to compete in the globalized huge market in energy sector for

the categorization of particular outlook of the market . Research based analysis

includes consumption rates , segmentation required , controlling of

atmospheric pressures , statistics of sales , project management profile ,

competitors analysis , report writing , trend analysis of industrial power energy

sector , consumption utilization plan at global level , share market and growth

plan and categorization of other considerable factors .


Page 54 of 58

CONCLUSION / RECOMMENDATION:

The Aggreko plc is a strong company financially and its performance is also good in all countries and in nationwide regions. As a company mainly based on

generators Aggreko plc has a good future for its revenue generated through the growth of its sales and it has a large number of customers all over the globe

which supports its revenue and profit margin to grow. They are hedging the dependable risk of related geographic and business segment that is linked up with wide range of customers over the world in power industry nationally and

internationally .The Aggreko plc has a consistent performance of its financial market factors and forces related to power industry and its positioning in the market is growing upward as compare to other related companies in the same

industry .Its revenues being growing with the passage of time from previous years and the increased level of its competition are based on the regulatory

pressures to the business strategic planning and acquisition of new contracts that may help in capturing the market growth and efficiency which might be a gain for new opportunities throughout its business .

REFERENCES:

viewer.zmags.com. 2013. zmag. [online] Available at: http://viewer.zmags.com/publication/8d77e0f8#/8d77e0f8/1 [Accessed: 2nd June 2013].

Unknown. 2013. aggreko plc. [online] Available at:

http://www.aggreko.co.uk/about-aggreko/ [Accessed: 6th June 2013].

AGGREKO PLC. 2013. aggreko plc. [online] Available at: http://www.aggreko.com/about-aggreko/history/ [Accessed: 6th June 2013].

2013. aggreko plc company. [online] Available at: http://www.aggreko.co.uk/about-aggreko/company-information/ [Accessed:

6th June 2013].

Investors information through website http://ir.aggreko.com/investors/business-review/strategy-and-

performance.aspx (Accessed Date: 6th june, 2013 )

Copied from the code that are given publicly on www.frc.org.uk (Accessed date : 16th june, 2013 )

http://ir.aggreko.com/investors/business-review/strategy-and-performance.aspx

http://ir.aggreko.com/investors/business-review/strategy-and-performance.aspx

http://www.frc.org.uk/


Page 55 of 58

Dallas , TX (PRWEB) August o7 ,2012 from rental power forecasts (Accessed Date : 17th june, 2013 ) Picture from www.aggreko.com and from powerful viewers.zmags.com publication ( Accessed Date : 17th june,2013 ) aggreko.com. 2013. aggreko plc. [online] Available at: http://viewer.zmags.com/publication/8d77e0f8#/8d77e0f8/1 [Accessed: 22 Jul 2013]. investing.uk. 2013. businessweek. [online] Available at: http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=AHT:LN [Accessed: 26th Jul 2013]. the telegraph. 2013. market. [online] Available at: http://shares.telegraph.co.uk/fundamentals/?section=financials&epic=WG. [Accessed: 26 July 2013

EXPGY KEY STATISTICS. 2013. marketwatch. [online] Available at: http://www.marketwatch.com/investing/stock/expgy/profile [Accessed: 26th july 2013]. investorwords. 2013. INVESTING. [online] Available at: http://www.investorwords.com/5849/WACC.html#ixzz2ZnvvFkim [Accessed: 26th July 2013]. BIBLIOGRAPHY: http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=AHT:LN [Accessed: 22 Jul 2013]. businessweek bloomberg. 2013. Untitled. [online] Available at: http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=AHT:LN [Accessed: 22 Jul 2013]. google search. 2013. 1. [online] Available at: http://www.investorwords.com/5849/WACC.html#ixzz2ZnvvFkim ( [Accessed: 22 Jul 2013]. graphs. 2013. financials. [online] Available at: http://shares.telegraph.co.uk/fundamentals/?section=financials&epic=WG. [Accessed: 22 Jul 2013]. viewer.zmags.com. 2013. zmag. [online] Available at: http://viewer.zmags.com/publication/8d77e0f8#/8d77e0f8/1 [Accessed: 2nd June 2013].

http://www.aggreko.com/


Page 56 of 58

APPENDICES / ANNEXES:

APPENDEX A

list of financial ratios and industry average

Aggreko plc

Annual Ratios [GBP Thousands]

31-Dec-

2012

31-Dec-

2011

31-Dec-

2010

31-Dec-

2009

31-Dec-

2008

Financial Strength

Current Ratio 1.12 1.22 1.05 1.16 0.80

Quick/Acid Test Ratio 0.72 0.72 0.58 0.62 0.47

Working Capital 68,600.0 105,000.0 21,600.0 45,500.0 -98,100.0

Long Term Debt/Equity 0.41 0.43 0.14 0.30 0.46

Total Debt/Equity 0.59 0.47 0.19 0.33 0.82

Long Term Debt/Total

Capital 0.26 0.29 0.11 0.22 0.25

Total Debt/Total Capital 0.37 0.32 0.16 0.25 0.45

Payout Ratio 22.96% 21.23% 23.32% 20.11% 22.04%

Effective Tax Rate 24.80% 19.65% 29.99% 30.98% 35.42%

Total Capital 1,660,700.0 1,299,000.0 973,000.0 800,800.0 844,100.0

Efficiency

Asset Turnover 0.81 0.88 0.97 0.88 0.97

Inventory Turnover 3.76 4.35 4.68 4.28 5.16

Days In Inventory 97.17 83.92 77.97 85.21 70.68

Receivables Turnover 4.59 5.38 6.44 5.53 5.52

Days Receivables

Outstanding 79.61 67.82 56.67 66.02 66.13

Revenue/Employee 278,487 327,569 331,152 282,845 293,702

Operating Income/Employee 68,901 80,338 84,680 72,403 63,543

EBITDA/Employee 111,275 124,707 128,056 114,088 100,093

Profitability

Gross Margin 61.46% 58.69% 61.16% 61.32% 56.74%

Operating Margin 24.74% 24.53% 25.57% 25.60% 21.64%

EBITDA Margin 39.96% 38.07% 38.67% 40.34% 34.08%

EBIT Margin 24.74% 24.53% 25.57% 25.60% 21.64%

Pretax Margin 23.18% 23.19% 24.75% 23.83% 20.07%

Net Profit Margin 17.43% 18.63% 17.33% 16.45% 12.96%

COGS/Revenue 38.54% 41.31% 38.84% 38.68% 43.26%

SG&A Expense/Revenue 37.13% 34.24% 35.58% 36.40% 35.35%

Management Effectiveness

Return on Assets 14.17% 16.37% 16.87% 14.41% 12.60%


Page 57 of 58

Return on Equity 28.66% 30.68% 30.07% 31.54% 32.37%

Valuation

Free Cash Flow/Share -0.25 -0.06 0.46 0.80 -0.11

Operating Cash Flow/Share 1.40 1.54 1.50 1.42 0.91

Current Market Multiples

Market Cap/Earnings (TTM) 16.14 Market Cap/Equity (MRQ) 4.27

Market Cap/Revenue (TTM) 2.82

Market Cap/EBIT (TTM) 11.63

Market Cap/EBITDA (TTM) 7.14

Enterprise Value/Earnings

(TTM) 18.29

Enterprise Value/Equity

(MRQ) 4.84

Enterprise Value/Revenue

(TTM) 3.19 Enterprise Value/EBIT (TTM) 13.17

Enterprise Value/EBITDA

(TTM) 8.09

APPENDIX B:

Daily share prices of company, FTSE 100 index 2008 to 2012 &

standard deviation

Daily share price and FTSE 100 index market data has been

taken from yahoo finance (http://uk.finance.yahoo.com/)

APPENDIX C:

summary of firm’s beta 2008-2012

COVARIANCE OF FORMULA :

AGGREKO 2012 2011 2010 2009 2008 TOTAL

BETA 1.23 1.10 0.99 0.78 0.65 0.95


Page 58 of 58

SLOPE:

AGGREKO 2012 2011 2010 2009 2008 TOTAL

SLOPE 1.12 1.10 1.00 0.79 0.66 0.93

APPENDIX D:

Beta calculation given in other file as per requirement

Documents

ISSN - ARSEAM · 2018-02-26 · International Journal of Marketing & Financial Management, Volume 2, issue 3, April-2014 Page 1 of 58 International Journal of Marketing & Financial