Full year results For the year ended 31 December 2018 1 Results - PowerPoint PPT Presentation

6 MARCH 2019 Full year results For the year ended 31 December 2018 1 Results Presentation March 2019

Introduction Chris Weston CEO 2 Results Presentation March 2019

Headlines Good results and positive momentum  Group revenue growth of 8%  PBT up 10% and in line with market expectations  ROCE up 0.5pp  Dividend maintained Building on transformed platform to deliver strategy  Strategy to deliver growth and improve returns  Stronger portfolio  Confident we will deliver ROCE in the mid teens in 2020 3 Results Presentation March 2019

2018 full year results review Heath Drewett CFO 4 Results Presentation March 2019

Group summary Results in line with market expectations, despite currency headwinds Movement  Good underlying growth in CHANGE revenue and operating profit excluding pass-through £m fuel and  No exceptional items in 2018 pre-2017 exceptional items FY18 FY17 CHANGE currency (2017: £41m) Revenue 1,760 1,698 4% 8%  Effective tax rate of 31% Operating profit 219 224 (2)% 10% Net interest expense (37) (34) (9)%  ROCE of 10.3%, up 0.5pp on an Profit before tax 182 190 (4)% 10% underlying basis Taxation (57) (56) (2)% Profit after tax 125 134 (6)% Diluted earnings per share 49.2 52.4 (6)% 7% Dividend per share 27.1 27.1 - Operating margin 12.5% 13.2% (0.7)pp 0.2pp ROCE 10.3% 10.7% (0.4)pp 0.5pp 5 Results Presentation March 2019

Rental Solutions Strong growth and improved margin and returns Business Movement performance CHANGE excluding pre-2017 exceptional items FY18 FY17 CHANGE currency Revenue (£m) 822 690 19% 22% REVENUE Operating profit (£m) 105 81 30% 34% (% OF GROUP excl. pass-through fuel) Operating margin 12.9% 11.8% 1.1pp 1.2pp 52 % ROCE 14.7% 12.2% 2.5pp 2.7pp Fleet capital expenditure (£m) 79 55 UTILISATION % REVENUE BY SECTOR at 31 December (MW on hire) Building services & construction 18 % FY18 62% Petrochemical & refining 18 % Oil & Gas 13 % FY17 56% Utilities 12 % Events 10 % Manufacturing 7 % 5 % Mining 17 % Other 6 Results Presentation March 2019

Power Solutions Industrial Good growth and support from the Winter Olympics Business Movement performance CHANGE excluding pre-2017 exceptional items FY18 FY17 CHANGE currency Revenue (£m) 424 429 (1)% 7% REVENUE Operating profit (£m) 71 73 (3)% 10% (% OF GROUP excl. pass-through fuel) Operating margin 16.6% 16.9% (0.3)pp 0.4pp 27 % ROCE 10.7% 11.3% (0.6)pp 0.1pp Fleet capital expenditure (£m) 47 50 UTILISATION % REVENUE BY SECTOR at 31 December (MW on hire) Oil & Gas 39 % FY18 71% Events 13 % 13 % Mining FY17 69% Building services & construction 11 % Manufacturing 8 % Utilities 6 % Petrochemical & refining 2 % 8 % Other 7 Results Presentation March 2019

Power Solutions Utility Performance reflects known contract off-hires Business Movement performance CHANGE excluding pass- pre-2017 exceptional items & through fuel FY18 FY17 CHANGE excluding pass-through fuel and currency Revenue (£m) 342 440 (22)% (14)% REVENUE (% OF GROUP excl. pass-through fuel) Operating profit (£m) 46 73 (37)% (23)% 21 % Operating margin 13.4% 16.4% (3)pp (1.4)pp ROCE 6.2% 9.2% (3.0)pp (1.6)pp Fleet capital expenditure (£m) 70 141 UTILISATION  This segment now includes only Utility customer projects at 31 December (MW on hire) FY18 66% FY17 73% 8 Results Presentation March 2019

Cash flow £m FY18 FY17 EBITDA 517 524 Working capital (56) (53) Working capital movement Cash flows relating to fulfilment assets/demob provisions (48) (22) £m FY18 FY17 Other 10 1 Trade and other receivables (10) (163) Operating cash flow 423 450 Trade and other payables (60) 111 Tax (61) (69) Inventory 14 (1) Net interest (32) (34) Working capital (56) (53) Acquisitions and investments (33) (73)  Mobilisation spend primarily in Purchase of fixed assets (216) (272) Bangladesh, Brazil and St Croix Other fixed asset movements 5 9 Free cash flow 86 11  Reduced fleet capex £196m Dividends (69) (69) (2017: £246m), to drive improved Changes in equity (12) - utilisation Net cash flow 5 (58)  Increased free cash flow £86m Exchange (39) 55 (2017: £11m) Movement in net debt (34) (3) Net debt (686) (652)  Net debt/EBITDA 1.3x 9 Results Presentation March 2019

Net working capital change £61m Main drivers of £14 m Decrease in inventory working capital  Detailed initiatives delivering in 2018 £(10) m Increase in trade and other receivables Overall working capital outflow of  Increased volume of activity in North America £56m (2017: £53m)  Power Solutions Utility debtors stabilising £(60) m Decrease in trade and other payables  Increased capital discipline resulting in reduced manufacturing and overall capex  Release of deferred revenue associated with the Winter Olympics in South Korea  Timing of some contract payments in Power Solutions Utility 10 Results Presentation March 2019

Inventory Improving efficiency as detailed plans implemented Power Solutions INVENTORY (£m) 20%  Central team established to review all orders 250 and set safety stock levels 16%  Movement of excess inventory across regions 200  Buy-back procedure with key suppliers 12% 150  Consignment stock arrangements with key suppliers 8% 100 Rental Solutions 4% 50  System automation of stock categorisation  Virtual stock sharing warehouse 0 0% FY14 FY15 FY16 FY17 FY18  Buy-back procedure with key suppliers Inventory % of revenue 11 Results Presentation March 2019

Trade receivables Performance stabilising Actions continue to take effect 50% GROUP TRADE RECEIVABLES (£m)  Monthly cash collection targets by region 600 (and customer on major projects) with 40% structured stakeholder engagement  Regular review of top debtors and unbilled 30% accounts to agree remedial actions 400  Temporary resources added to clear 20% unbilled backlog and support collections 200  New regional senior positions increase focus 10% and provide escalation path  Tighter enforcement of contract provisions 0 0% FY14 FY15 FY16 FY17 FY18 % of revenue RS / PSI trade receivables PSU trade receivables 12 Results Presentation March 2019

Invoicing/receipts performance - Utility Improved performance through significant focus POWER SOLUTIONS UTILITY ($m) 200 $m 2018 2017 713 750 Invoicing 160 694 637 Receipts Net total (19) (113) 120 80 Bad debt provision broadly unchanged at $83 million 40 0 Q1 Q2 Q3 Q4 FY 2018 Invoicing Receipts 13 Results Presentation March 2019

Improving Group returns Drivers of ROCE Confident in generating Operating profit mid-teens returns  Revenue growth: sector focus, specialisation, new system investment and Olympics in 2020 contribution  Margin improvement: higher value contracts Mid-teens % and cost management Working capital 10.3%  Receivables: legacy debt collection and billing / collections process improvements  Payables: improved supplier management and payment terms  Inventory: detailed plans across the Group 2018 2020 Fixed assets Operating Working Fixed  Disciplined capex and higher utilisation profit capital assets  Selective asset disposal programme 14 Results Presentation March 2019

IFRS 16 – Lease accounting Effective from 1 January 2019 with NO prior year restatement Expected 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. 0.1x (reflecting incremental debt, but also increased EBITDA)  Return on capital − Reduction in the Group’s ROCE of around c. 0.3pp 15 Results Presentation March 2019

Guidance  On track to deliver PBT in line with market expectations − Currency headwinds of c. 4% (see appendix 1) − IFRS 16 impact of c. £(2)m PBT − Effective tax rate of c. 35%, subject to geographic mix − Greater weighting to H2 than 2018  Confident of achieving 2020 mid-teens ROCE target − Full year fleet capex <£200m − Working capital improvement  Net debt / EBITDA to reduce, despite IFRS 16 impact 16 Results Presentation March 2019

Developing our customer focus Chris Weston CEO 17 Results Presentation March 2019

Our strategy Four clear strategic priorities to drive growth Customer focus Technology investment Capital efficiency Expert people Being particular about the sectors we target Developing competitive configurable products Being mobile & modular Living Always Orange Offering specialist solutions Smarter use of connected systems & data analytics Getting the very maximum out of our assets Nurturing our full potential Being simple to do business with Integrating renewable & storage technology Striving for the most competitive cost base Staying safe and professional at all times 18 Results Presentation March 2019