Results Presentation For the year ended 31 December 2017 1 - - PowerPoint PPT Presentation

1 Results Presentation March 2018

For the year ended 31 December 2017

Results Presentation

6 MARCH 2018

2 Results Presentation March 2018

Introduction Chris Weston CEO

3 Results Presentation March 2018

Operating & financial review

Heath Drewett CFO

4 Results Presentation March 2018

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

5 Results Presentation March 2018

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%

FLEET

at 31 December (MW)

45%

REVENUE

(% OF GROUP excl. pass-through fuel)

6 Results Presentation March 2018

68%

Business performance

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% Operating margin 16% 12% ROCE 11% 7% Fleet capital expenditure (£m) 43 37

FY17

DIESEL

2,521

GAS

FY16

2,465

63%

UTILISATION

% REVENUE BY SECTOR FY17

Oil & Gas Business services & construction Events Manufacturing Utilities Mining Petrochemical & refining Other

39% 17% 11% 8% 7% 7% 2% 9%

FLEET

at 31 December (MW)

21%

REVENUE

(% OF GROUP excl. pass-through fuel)

7 Results Presentation March 2018

Business performance

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)% Operating margin 18% 29% ROCE 10% 19% Fleet capital expenditure (£m) 148 136

POWER SOLUTIONS UTILITY

34%

FY17

DIESEL

5,004

GAS

FLEET

at 31 December (MW) 74% FY16

4,947

79%

HFO UTILISATION

Utilities Oil & gas Mining Manufacturing Other

83% 7% 6% 3%

% REVENUE BY SECTOR FY17

1%

REVENUE

(% OF GROUP excl. pass-through fuel)

8 Results Presentation March 2018

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)

9 Results Presentation March 2018

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

10 Results Presentation March 2018

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

11 Results Presentation March 2018

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

12 Results Presentation March 2018

Making a massive difference for our customers

Chris Weston CEO

13 Results Presentation March 2018

How we see our business today

Making a massive difference for our customers and the communities we serve People & Always Orange

13 Results Presentation March 2018

Technology Efficiency Customer Aggreko is a customer focused specialist provider of power, temperature control and energy services on a global basis

14 Results Presentation March 2018

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 forward Market drivers

56%

UTILISATION

12% 8%

GDP growth in developed markets 2017 - 2021

1.7 2.2 2.0 1.8 1.7

15 Results Presentation March 2018

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 forward Market 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

16 Results Presentation March 2018

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%

17 Results Presentation March 2018

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)

18 Results Presentation March 2018

\\\\\\\\

 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

19 Results Presentation March 2018

 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

19 Results Presentation March 2018

20 Results Presentation March 2018

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.

20 Results Presentation March 2018

21 Results Presentation March 2018

Appendix

22 Results Presentation March 2018

Revenue mix

1 Excluding revenue from pass–through fuel and currency.

Revenue % of Revenue mix (excl. fuel) FY17 £m FY16 £m Underlying

1

change FY17 % 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%

23 Results Presentation March 2018

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

24 Results Presentation March 2018

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)

FY17 average February 2018 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)%

25 Results Presentation March 2018

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

26 Results Presentation March 2018

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

27 Results Presentation March 2018

Disclaimer

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

• utcomes 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.