Results Presentation/media/Files/A/Aggreko/... · 2018-03-06 · Results Presentation March 2018 4 Group summary Group revenue up 4%, 9% excluding Argentina Exceptional charge of

1Results Presentation March 2018

For the year ended 31 December 2017

ResultsPresentation

6 MARCH 2018


IntroductionChris WestonCEO


Operating & financial review

Heath DrewettCFO


Group summary

Group revenue up 4%, 9% excluding Argentina

Exceptional charge of £41 million relating to investment in our business priorities programme

Tax rate of 29%

Recommended final dividend in line with 2016

PBT in line with market expectations

Movement

£m pre-exceptional items FY17 FY16 CHANGE

CHANGE excluding

pass-through fuel and currency

Revenue 1,730 1,515 14% 4%

Operating profit 229 248 (8)% (10)%

Net interest expense (34) (27) (28)%

Profit before tax 195 221 (12)%

Taxation (57) (63) 9%

Profit after tax 138 158 (13)%

Diluted earnings per share 53.9p 61.9p (13)%

Dividend per share 27.1p 27.1p -

Operating margin 13% 16% (3)pp

ROCE 11% 13% (2)pp


Movement

pre-exceptional items FY17 FY16 CHANGE

CHANGE excluding currency

Revenue (£m) 720 629 15% 9%

Operating profit (£m) 81 52 57% 49%

Operating margin 11% 8%

ROCE 12% 8%

Fleet capital expenditure (£m) 55 68

Business performance

RENTAL SOLUTIONS

FY17

DIESEL

2,396

GAS UTILISATION

56%

FY16

2,255

52%

% REVENUE BY SECTOR FY17

Business services & construction

Petrochemical & refining

Utilities

Events

Oil & gas

Manufacturing

Mining

Other

21%

17%

11%

10%

9%

8%

5%

19%

FLEETat 31 December (MW)

45%

REVENUE(% OF GROUP excl. pass-through fuel)


68%


POWER SOLUTIONS INDUSTRIAL

Movement

pre-exceptional items FY17 FY16 CHANGE

CHANGE excluding currency

Revenue (£m) 340 262 30% 20%

Operating profit (£m) 55 32 71% 53%


ROCE 11% 7%


FY17

DIESEL

2,521

GAS

FY16

2,46563%

UTILISATION


Oil & Gas

Business services & construction

Events

Manufacturing

Utilities

Mining

Petrochemical & refining

Other

39%

17%

11%

8%

7%

7%

2%

9%


21%




Movement

pre-exceptional items & excluding pass-through fuel FY17 FY16 CHANGE

CHANGE excluding pass-

through fuel and currency

Revenue (£m) 531 564 (6)% (9)%

Operating profit (£m) 96 164 (42)% (42)%


ROCE 10% 19%


POWER SOLUTIONS UTILITY

34%

FY17

DIESEL

5,004

GAS


74% FY16

4,947

79%

HFO UTILISATION

Utilities

Oil & gas

Mining

Manufacturing

Other

83%

7%

6%

3%


1%



Cash flow

Capital expenditure of £272 million

− Fleet capex of £246 million

Three acquisitions completed in year

− Younicos £45m

− KBT £25m

− TuCo £3m

Net debt to EBITDA of 1.2 times, unchanged

£m FY17 FY16

EBITDA 529 533

Working capital (51) (119)

Cash flows relating to exceptional items (30) (23)

Other 2 (3)

Operating cash flow 450 388

Tax (69) (64)

Net interest (34) (26)

Acquisitions (73) (22)

Purchase of fixed assets (272) (263)

Other fixed asset movements 9 18

Free cash flow 11 31

Dividends (69) (69)

Changes in equity - (8)

Net cash flow (58) (46)

Exchange 55 (114)

Movement in net debt (3) (160)

Net debt (652) (649)


Working capital

INVENTORY

NET POSITION

PAYABLES

RECEIVABLES

-163

+113

Inventory

Increased activity driven by major events and growth in Eurasia, offset by improved inventory management

Payables

Improvement in supplier terms; best practice employed to leverage scale

Receivables

Revenue growth drove £90 million outflow

£36 million outflow as a result of payment delays in Africa

Power Solutions Utility provision increased $23 million

2016

2017

-81

-17

-21

-1

2016

2017

2016

2017


Reporting changes

Reflecting the changes in our business

− focusing on what matters

More emphasis on average MW on hire, reduced prominence of order intake

− no longer routinely announcing large individual contract wins

Increased customer sector focus

− re-assign non utility work out of Power Solutions Utility into Industrial

No future Q1 trading updates


Outlook

Continued growth expected in Rental Solutions and Power Solutions Industrial

− further benefits of the business priorities programme

− leveraging operational gearing

Off-hires in Japan and discounted pricing in Argentina remain headwinds for Power Solutions Utility

Recent strengthening of Sterling creates adverse translation effects

− continuation of current rates would drive a c. 8% adverse profit impact

Overall, excluding currency effects, 2018 profit before tax expected to be in line with 2017


Making a massive differencefor our customers

Chris WestonCEO


How we see our business today

Making a massive difference for our customers and the communities we serve

People & Always Orange


Technology EfficiencyCustomer

Aggreko is a customer focused specialist provider of power, temperature control and energy services on a

global basis


Rental Solutions

Introduced sector focus

− 387 dedicated sales employees across the business

Reorganised business operations

£27 million cost removed across Rental

Rebuilt customer journey

− significant investment in new systems

Selective acquisitions

What we’ve done

+9%

2016 2017 2016 2017 Results Presentation March 2018 14

RESULTS TO DATE

Revenue growing ROCE growing Utilisation improving

Continued sector focus and specialisation

Use new back office systems, remote monitoring and data analytics to drive efficiency

Drive to higher value, complex solutions

Increase utilisation to >60% via fleet management systems

Introduce e-commerce

Going forwardMarket drivers

56%

UTILISATION

12%

8%

GDP growth in developed markets 2017 - 2021

1.7

2.2

2.0

1.8

1.7


Power Solutions Industrial

Sector focus

− Closed 20 depots; remaining around key sector locations

− 130 sector specialists employed

Removed £25m of costs

Fleet rationalization and redeployment to improve utilisation

What we’ve done

2016 2017

68%

UTILISATION Results Presentation March 2018 15

RESULTS TO DATE

Revenue growing ROCE growing Utilisation improving

Continued sector focus and specialisation

Deploy systems proven in Rental Solutions

− Use new back office systems and remote monitoring to drive efficiency

Drive to higher value, complex solutions

Increase utilisation to over 70% via fleet management systems

Going forwardMarket drivers

2016 2017

11%

7%

+20%

Copper price forecast $/mt 2018-2021

Oil price forecast $/BBL 2018-2021

60

60

62

61

6,700

6,800

6,719

7,050


Power Solutions Utility

Market Intelligence Platform improves market understanding & customer insight

58 dedicated regional specialists

Removed £44 million of cost

New products designed to meet customer needs

Deployed CRM system

Enhanced sales discipline and focus

What we’ve done

74%

UTILISATION Results Presentation March 2018 16

RESULTS TO DATE IMPACTED BY LEGACY CONTRACTS

Utilisation down

Use new back office systems, remote monitoring and data analytics to drive efficiency

Continued drive to reduce receivables and inventory

Continue to develop sales discipline

Improve utilisation to above 80%

− particular focus on HFO & NGG sales

Market drivers Going forward

GDP growth & commodities

Transmission & distribution

Renewables penetration

Total market conversion 2 – 2.5GW

2016 2017

Revenue down ROCE decline

2016 2017

8%

(9)%

11%

Argentina

8%

2%


The future: energy markets are transforming

Our digitalisation

Opportunity as we digitalise Aggreko

Operating data collection via the ROC

Data analytics to benefit maintenance costs and customer focused product development

Y.Q system significantly enhances our ability to understand customer profiles and tailor solutions

Cloud based data analytics

Energy market interface (where applicable)


\\\\\\\\

Added capabilities to enhance our skills

− Younicos brings software to smoothly manage integration of thermal, renewable and storage

Opportunity as renewables grow and need to be integrated

− Off grid & microgrid

− Commercial & Industrial behind the meter

− Improve efficiency: driving down cost for customers, and through own use

The future: energy markets are transforming

Decarbonisation, decentralisation and digitalisation are changing the ways we generate and consume energy, globally


The group has been through significant, and necessary changes

Rental Solutions & Power Solutions Industrial are performing well

Utility is not where it needs to be

− Legacy issues now clearing

Team and plan in place to deliver

Summary



Aggreko is a customer focused specialist provider of power, temperature control and energy services on a global basis. These services are based on modular and mobile equipment operated on a digital platform with a market leading integration capability.



Appendix


Revenue mix

1 Excluding revenue from pass–through fuel and currency.

Revenue % of Revenue mix (excl. fuel)

FY17£m

FY16£m

Underlying1

changeFY17

%FY16

%Change

pp

Power 1,010 966 (1)% 64% 66% (2)

Temperature control 182 161 7% 11% 11% -

Oil-free air 31 28 6% 2% 2% -

Total rental 1,223 1,155 1% 77% 79% (2)

Service revenue 368 300 16% 23% 21% 2

Revenue excl. pass-through fuel 1,591 1,455 4% 100% 100%

Pass-through fuel 139 60 n/a

Total revenue 1,730 1,515 4%


Balance sheet

£m FY17 FY16

Intangible assets / goodwill 215 183

Tangible fixed assets 1,214 1,309

Working capital 586 603

Retirement benefit obligation (25) (30)

Derivative financial instruments (3) (6)

Provisions for taxes (18) (42)

Net debt (652) (649)

Net assets 1,317 1,368


Foreign exchange impact

Note: UAE Dirhams included within US Dollar as it is pegged to the US dollar; Argentinian Peso includes Power Solutions Utility contracts which are pegged to the US Dollar but paid and reported in Argentinian Pesos.

FX RATES REVENUE (£m)

FY17average

February2018 closing

FY17 actual

FY17 Restated at February

2018 closing rates Variance % Variance

US Dollar 1.29 1.39 834 771 (63) (8)%

Euro 1.14 1.13 213 214 1 1%

Australian Dollar 1.68 1.78 78 74 (4) (5)%

Argentinian Peso 21.36 27.77 64 49 (15) (23)%

Brazilian Real 4.12 4.54 217 197 (20) (9)%

Canadian Dollar 1.67 1.77 24 22 (2) (6)%

Russian Rouble 75.19 78.95 76 73 (3) (5)%

Other 224 216 (8) (4)%

Total revenue 1,730 1,616 (114) (7)%

Total operating profit 229 211 (18) (8)%


IFRS 15 impact

Effective from 1 January 2018

Revenue is recognised when we transfer control of goods/services to the customer

The costs to fulfil the service to the customer (including mob/demob) will be amortised over the period of the initial contract

In 2017, the effect of this would have been immaterial:

− revenue increase of £2m

− operating cost increase of £5m

− PBT reduction of £3m

We will restate 2017 numbers as part of our 2018 reporting

Further detail is included in the notes to the accounts in the Annual Report


Impact of US tax reforms

Aggreko’s US business accounted for 17% of Group PBT and 10% of Group tax charge in 2017 so overall impact is limited

We benefitted from a one off reduction in tax rate of c.5pp in 2017 due to the revaluation of deferred tax liabilities as a result of the permanent reduction in the US statutory corporate income tax rate from 35% to 21% (24.75% including state tax)

Assuming no change to the relative proportion of business from the US, based on 2017 pre-exceptional PBT, the impact for Group is:

− Reduction in the Group’s ETR of c.1.5pp

− Assuming no increase in the current level of debt in our US business, we do not anticipate that there will be a material restriction on the level of deductible interest

− We do not anticipate that the Base Erosion & Anti Avoidance Tax (“BEAT”) will impact Aggreko assuming that the current levels of annual gross receipts remain as now

Note: ETR is effective tax rate


Disclaimer

The information contained in this presentation has largely been extracted from the Results Announcement for the year ended 31December 2017.

This presentation may contain certain “forward-looking” statements. By their nature, forward-looking statements involve risk anduncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from anyoutcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf ofAggreko speak only as of the date they are made and no representation or warranty is given in relation to them, including as to theircompleteness or accuracy or the basis on which they were prepared.

This presentation is published solely for information purposes.

The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who aresubject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements.

All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere.

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Results Presentation/media/Files/A/Aggreko/... · 2018-03-06 · Results Presentation March 2018 4 Group summary Group revenue up 4%, 9% excluding Argentina Exceptional charge of