Half year results - AggrekoResults presentation . July 2019 10. Group summary Revenue down 4% Good...

1Results presentation July 2019

For the six months ended 30 June 2019

Half year results

30 JULY 2019


IntroductionChris WestonCEO


Headlines

On target to deliver mid-teens ROCE in 2020 Group revenue down 4%, reflecting Winter Olympics in the prior year

Improved profitability resulted in PBT up 9%

Continued discipline on capex and working capital

ROCE up 0.6pp

Interim dividend maintained

Continue to adapt to customer needs as energy markets evolve Successful launch and mobilisation of the Y.Cube Significant pipeline for hybrid thermal-solar opportunities


RentalSolutions

UTILISATIONat 30 June (MW)

53%

1H19

1H18

56%

61%

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

Operating margin improvementStrong performance in NAM driven by sector focus

Adapting to changing marketsMobilising Y.Cube for our hybrid project at Granny Smith mine, Australia

Completed systems rolloutEnabling improvements in efficiency and customer service


Power Solutions Industrial

27%



68%

70%

1H19

1H18

Utilising landfill gas Signed our first NGG projects using landfill gas to deliver cheaper, cleaner power

Revenue growth of 4%, excl. 2018 Winter Olympics Driven by LAM, Africa and Middle East offset by Eurasia

Diversifying in Eurasia35% of new order in-take related to manufacturingsector


Power Solutions Utility

Amazonas (Brazil)First sites now live on this 15-year project, across 26 locations

Operating margin improvementIncreased cost discipline delivering benefits

Cash collectionsGood progress in the period, especially in Africa

20%



66%

65%

1H19

1H18


Continuing to adapt to customer needs

Launch of Y.Cube, our mobile and modular storage system

Mobile and modularSingle units can be easily

combined to deliver the power and energy capacity required

Quick set-up on siteAll-in-one and ready-to-install

storage system reducingfootprint and installation costs

Easy integrationFits perfectly with our thermal

power systems for an optimised hybrid solution

Fast deploymentUp and running in less than 3

months after contract signature

Key benefits


Ramp rate control

Uninterrupted power supply (UPS) / Bridging

power

CONTROL PV PRODUCTION RAMPS

ACTUAL PV PRODUCTION

STEADY FEED-IN WITH Y.CUBE

PROVIDE POWER TO CRITICAL LOADS

GRID OUTAGE

GRID SUPPLY

UPS

Typical applications

Continuing to adapt to customer needs

REDUCE DEMAND AND SHIFT ENERGY

EVENING PEAKNOON

Spinning reservedisplacement

Peak shaving

GEN

E R A

TOR

E FF I

CI E

NCY

REPLACE SPINNING RESERVE100%

WITH Y.CUBE

WITHOUT Y.CUBE

Granny Smith goldmine (Australia):Setting the standard for hybridmicrogrids

Application case study

We are already seeing considerable interest from various sectors for a range of applications


1H19 results reviewHeath DrewettCFO


Group summary

Revenue down 4%

Good underlying profit growth

Operating margin of 10.5%, up 1.5pp on an underlying basis

Effective tax rate of 35%

ROCE of 10.2%, up 0.6pp on an underlying basis

Movement

£m 1H19 1H18 CHANGE

CHANGE excluding

pass-through fuel and currency

Revenue 768 857 (10)% (4)%

Operating profit 81 76 6% 12%

Operating margin 10.5% 8.9% 1.6pp 1.5pp

Net interest expense (21) (17) (21)%

Profit before tax 60 59 2% 9%

Taxation (21) (18) (14)%

Profit after tax 39 41 (3)%

Diluted earnings per share 15.33 15.85 (3)% 4%

Dividend per share 9.38 9.38 -

ROCE 10.2% 10.5% (0.3)pp 0.6pp


Improving cash flow

£m 1H19 1H18EBITDA 247 224Working capital (16) (47)Cash flows relating to fulfilment assets/demob provisions (30) (21)Other 9 4Operating cash flow 210 160Tax (30) (33)Net interest (22) (18)Acquisitions and investments - (33)Purchase of fixed assets (99) (95)Other fixed asset movements 5 -Lease payments (related to IFRS 16) (14) -Free cash flow 50 (19)Dividends (45) (45)Changes in equity - (7)Net cash flow 5 (71)Exchange (1) (18)Movement in lease liability (102) -Movement in net debt (98) (89)Net debt (784) (741)

Mobilisation spend primarily related to the 2020 Tokyo Olympics , PIE A contract in Brazil and Burkina Faso

Reduced fleet capex of £83m including £15m related to 2020 Tokyo Olympics (2018: £87m)

Increased free cash flow of £50m (2018: £(19)m)

Net debt/EBITDA (incl. IFRS 16 leases) 1.5x

Working capital movement£m 1H19 1H18

Trade and other receivables 34 7

Trade and other payables (48) (50)

Inventory (2) (4)

Working capital (16) (47)


Net working capital change

Overall working capital outflow of £16m (2018: £47m outflow)

Slight increase in materials, reflecting timing of in-house build programme

Increase in inventory £(2)m

£61m

Decrease in trade and other receivables £34m

Decrease in trade and other payables £(48)m

1H19 FY18

Strong cash collection in Power Solution Utility Reduced level of unbilled within Rental Solutions

Reflecting a reduction in fuel consumption on contracts in Brazil


0

200

400

600

FY14 FY15 FY16 FY17 1H18 FY18 1H19

GROUP TRADE RECEIVABLES (£m)

RS / PSI trade receivables PSU trade receivables

Good progress on cash collections within Power Solutions Utility

Particular focus during the period in Rental Solutions on reducing the unbilled backlog

Stable performance overall, with a reduction in PSU

Trade receivables


Utility - Invoicing / receipts performance

POWER SOLUTIONS UTILITY ($m)

0

40

80

120

160

200

Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

$m 1H19 2H18 1H18Invoicing 244 351 362

Receipts 295 349 345

Net total 51 (2) (17)

Bad debt provision within PSU broadly unchanged at $84m (Dec 2018: $83m)

Good progress on collections, especially in Africa

Invoicing Receipts


Rental Solutions – Trade receivables

First half focus on the level of unbilled revenue built up through 2H 2018

Decrease in unbilled revenue somewhat offset by an increase in trade receivables

0

50

100

150

200

250

300

1H18 FY18 Jan Feb Mar Apr May Jun2019

Trade receivables Unbilled receivables

2018

TRADE RECEIVABLES – INCLUDING UNBILLED ($m)


Guidance

On track to deliver PBT in line with market expectations− Currency headwinds of c. 2% (see appendix 4)

− IFRS 16 impact of c. £(2)m PBT− Effective tax rate of c. 35%, subject to geographic mix

Confident of achieving 2020 mid-teens ROCE target− Full year fleet capex <£200m, including c. £30m for 2020 Tokyo Olympics− Working capital improvement

Net debt / EBITDA to reduce, despite IFRS 16 impact

17Results presentation July 2019 17Results presentation July 2019

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


Movement

1H19 1H18 CHANGE

CHANGE excluding currency

Revenue (£m) 400 386 4% 1%

Operating profit (£m) 47 40 17% 12%


ROCE (rolling 12 months) 14.3% 15.6% (1.3)pp (1.2)pp

Fleet capital expenditure (£m) 29 26

Appendix 1 - Rental Solutions

Petrochemical & refining

Building services & construction

Oil & Gas

Utilities

Events

Manufacturing

Mining

Other

20%

18%

18%

10%

9%

6%

6%

13%

% Revenue by sector 1H19


Appendix 2 - Power Solutions

Movement

Excluding pass-through fuel 1H19 1H18 CHANGE


Revenue (£m) 150 163 (8)% (7)%

Operating profit (£m) 13 14 (2)% 52%


ROCE (rolling 12 months) 6.0% 6.7% (0.7)pp 0.9pp


45%

15%

12%

7%

6%

5%

2%

8%

Oil & Gas

Mining

Building services & construction

Manufacturing

Events

Utilities

Petrochemical & refining

Other

% Revenue by sector 1H19 This segment includes only Utility customer

projects

Power Solutions Industrial Power Solutions UtilityMovement

Excluding pass-through fuel 1H19 1H18 CHANGE


Revenue (£m) 198 219 (9)% (9)%

Operating profit (£m) 21 23 (8)% (4)%

Operating margin 10.5% 10.5% - 0.6pp

ROCE (rolling 12 months) 10.6% 9.7% 0.9pp 1.6pp



Appendix 3 – Reported to underlying revenue

Movement

£m

1H19 1H18 CHANGECHANGE

%

Reported 768 857 (89) (10)%

Fuel (20) (89)

Excluding fuel 748 768 (20) (3)%

FX¹ 7

Underlying 748 775 (27) (4)%

¹ The currency impact line included in the table above excludes the currency impact on pass through fuel in PSU which in 2019 was £4 million


Appendix 4 - FX impact into 2019

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)

FY18average

June FYF average

FY18 actual

FY18 Restated at

June 2019 FYF average Variance

% Variance

US Dollar 1.34 1.28 805 839 34 4%

Euro 1.13 1.13 256 256 - -

Australian Dollar 1.79 1.82 91 89 (2) (2)%

Argentinian Peso 37.48 53.90 40 28 (12) (30)%

Brazilian Real 4.87 4.91 233 231 (2) (1)%

Canadian Dollar 1.73 1.69 29 29 - -

Russian Rouble 83.70 82.19 73 75 2 2%

Other 233 230 (3) (1)%

Total revenue 1,760 1,777 17 1%

Total operating profit 219 214 (5) (2)%


Appendix 5 - IFRS 16: Lease accounting

Effective from 1 January 2019 with NO prior year restatement

Expected full-year impact:

Income statement− Improvement in operating profit of c. £3m (including c. £30m additional depreciation in lieu of

operating lease rental cost)− Increase in interest costs of c. £5m− Reduction in PBT of c. £2m

Balance sheet− Increase in fixed assets of c. £100m, together with a corresponding liability of c. £100m

Leverage− Increase in Net debt / EBITDA of c. 0.2x (reflecting incremental debt, but also increased EBITDA)

Return on capital − Reduction in the Group’s ROCE of around c. 0.3pp


Appendix 6 - ROCE definition

1H19£m

FY18 £m

1H18 £m

FY17 £m

Operating profit (pre-exceptional items, 2017 only) 2241 219 2211 224

Average net operating assets

1 January 2,074 2,124

30 June 2,123 2,123 2,071 2,071

31 December2 2,263 2,159 2,074 2,074

30 June 2,190 2,123

3-point average 2,192 2,119 2,089 2,090

ROCE3 (operating profit pre-exceptional items divided by average net operating assets) 10.2% 10.3% 10.5% 10.7%

Full year ROCE is calculated by dividing operating profit pre-exceptional items for the year by the average net operating assets at 1 January, 30 June and 31 December. Half year ROCE calculated by taking the underlying operating profit on a rolling 12-month basis and expressing it as a percentage of the average net operating assets at 30 June, 31 December and the previous 30 June.

1 The 1H19 and 1H18 operating profit is calculated on a rolling 12-month basis.2 For the purposes of the 1H19 calculation, the net operating assets at 31 December 2018 have been adjusted by £104m to reflect the initial right of use asset taken to the balance sheet on transition to IFRS 16.3 Prior year ROCE comparatives have not been adjusted for IFRS 16


Disclaimer

The information contained in this presentation has largely been extracted from the results announcement for the six months ended 30 June 2019.

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

Half year results - AggrekoResults presentation . July 2019 10. Group summary Revenue down 4% Good...

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