Half year results For the six months ended 30 June 2019 Results - - PowerPoint PPT Presentation

1 Results presentation July 2019

For the six months ended 30 June 2019

Half year results

30 JULY 2019

2 Results presentation July 2019

Introduction

Chris Weston CEO

3 Results presentation July 2019

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

4 Results presentation July 2019

Rental Solutions

UTILISATION

at 30 June (MW)

53%

1H19 1H18 56% 61%

REVENUE

(% OF GROUP excl. pass-through fuel)

Operating margin improvement Strong performance in NAM driven by sector focus Adapting to changing markets Mobilising Y.Cube for

• ur hybrid project at

Granny Smith mine, Australia Completed systems rollout Enabling improvements in efficiency and customer service

5 Results presentation July 2019

Power Solutions Industrial

27%

REVENUE

(% OF GROUP excl. pass-through fuel)

UTILISATION

at 30 June (MW) 68% 70% 1H19 1H18

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

• f 4%, excl. 2018

Winter Olympics Driven by LAM, Africa and Middle East offset by Eurasia Diversifying in Eurasia 35% of new order in-take related to manufacturing sector

6 Results presentation July 2019

Power Solutions Utility

Amazonas (Brazil) First sites now live

• n this 15-year

project, across 26 locations Operating margin improvement Increased cost discipline delivering benefits Cash collections Good progress in the period, especially in Africa

20%

REVENUE

(% OF GROUP excl. pass-through fuel)

UTILISATION

at 30 June (MW) 66% 65% 1H19 1H18

7 Results presentation July 2019

Continuing to adapt to customer needs

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

Mobile and modular Single units can be easily combined to deliver the power and energy capacity required Quick set-up on site All-in-one and ready-to-install storage system reducing footprint and installation costs Easy integration Fits perfectly with our thermal power systems for an optimised hybrid solution Fast deployment Up and running in less than 3 months after contract signature

Key benefits

8 Results presentation July 2019

Ramp rate control Uninterrupted power supply (UPS) / Bridging power

CONTROL PV PRODUCTION RAMPS

ACTUAL PVPRODUCTION STEADY FEED-IN WITH Y.CUBE

PROVIDE POWER TO CRITICAL LOADS

GRIDOUTAG E GRIDSUPPLY UPS

Typical applications

Continuing to adapt to customer needs

REDUCE DEMAND AND SHIFT ENERGY

EVENING PEAK NOON

Spinning reserve displacement Peak shaving

GENE R ATOR E FF I CI E NCY

REPLACE SPINNING RESERVE

100% WITH Y.CUBE WITHOUT Y.CUBE

Granny Smith goldmine (Australia): Setting the standard for hybrid microgrids

Application case study

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

9 Results presentation July 2019

1H19 results review

Heath Drewett CFO

10 Results presentation July 2019

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

11 Results presentation July 2019

Improving cash flow

£m 1H19 1H18 EBITDA 247 224 Working capital (16) (47) Cash flows relating to fulfilment assets/demob provisions (30) (21) Other 9 4 Operating cash flow 210 160 Tax (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)

12 Results presentation July 2019

Net working capital change

Overall working capital outflow

• f £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

13 Results presentation July 2019

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

14 Results presentation July 2019

Utility - Invoicing / receipts performance

POWER SOLUTIONS UTILITY ($m)

40 80 120 160 200

Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 $m 1H19 2H18 1H18 Invoicing 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

15 Results presentation July 2019

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

50 100 150 200 250 300

1H18 FY18 Jan Feb Mar Apr May Jun

2019

Trade receivables Unbilled receivables

2018 TRADE RECEIVABLES – INCLUDING UNBILLED ($m)

16 Results presentation July 2019

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

17 Results presentation July 2019 17 Results 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

• perated on a digital platform with a market leading

integration capability.

18 Results presentation July 2019

Appendix

19 Results presentation July 2019

Movement 1H19 1H18 CHANGE CHANGE

excluding currency

Revenue (£m) 400 386 4% 1% Operating profit (£m) 47 40 17% 12% Operating margin 11.8% 10.5% 1.3pp 1.1pp 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

20 Results presentation July 2019

Appendix 2 - Power Solutions

Movement Excluding pass-through fuel 1H19 1H18 CHANGE CHANGE

excluding currency

Revenue (£m) 150 163 (8)% (7)% Operating profit (£m) 13 14 (2)% 52% Operating margin 8.9% 8.3% 0.6pp 3.5pp ROCE (rolling 12 months) 6.0% 6.7% (0.7)pp 0.9pp Fleet capital expenditure (£m) 30 34

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 Utility

Movement Excluding pass-through fuel 1H19 1H18 CHANGE CHANGE

excluding currency

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 Fleet capital expenditure (£m) 24 27

21 Results presentation July 2019

Appendix 3 – Reported to underlying revenue

Movement £m 1H19 1H18 CHANGE CHANGE % Reported 768 857 (89) (10)% Fuel (20) (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

22 Results presentation July 2019

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)

FY18 average 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)%

23 Results presentation July 2019

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

• perating 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

24 Results presentation July 2019

Appendix 6 - ROCE definition

1H19 £m FY18 £m 1H18 £m FY17 £m Operating profit (pre-exceptional items, 2017

• nly)

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

• n transition to IFRS 16.

3 Prior year ROCE comparatives have not been adjusted for IFRS 16

25 Results presentation July 2019

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

• bserve, any applicable requirements.

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