Results presentation For the year ended 31 December 2019 Results - - PowerPoint PPT Presentation

1 Results presentation March 2020

For the year ended 31 December 2019

Results presentation

3 MARCH 2020

2 Results presentation March 2020

Introduction

Chris Weston CEO

3 Results presentation March 2020

Headlines

Strong profit growth and cash generation, on track to deliver mid-teens ROCE in 2020 and beyond

 Strong underlying profit growth of 13%  Significant working capital inflow of £107m  ROCE increased 1.1pp to 11.2%  Final dividend increased 3% to 18.3 pence  Tokyo 2020 preparations progressing as expected  Monitoring the potential impact of coronavirus

4 Results presentation March 2020

Rental Solutions

UTILISATION

based on average MW on hire

53%

58% 62%

REVENUE

(% OF GROUP excl. pass-through fuel)

22% underlying

• perating profit growth

Driven by a strong performance in North America Granny Smith

• perational

More than 20,000 solar panels and two Y.Cubes deployed Good growth in North America Revenue up 5%, supported by key sectors

FY19 FY18

15.9% (FY18: 12.9%)

OPERATING MARGIN

Photo: 8MW solar array at Granny Smith gold mine, Australia

5 Results presentation March 2020

Tokyo 2020 Olympics Preparations to deliver the contract are progressing as expected Underlying profit down 7% Driven by Eurasia, with slower order intake and rate pressure

Power Solutions Industrial

68% 71%

Revenue up 6% excl.

Winter Olympics & Tokyo 2020 Olympics

Growth in Africa, Middle East and LAM offset by Eurasia and Asia UTILISATION

based on average MW on hire FY19 FY18

Photo: Delivering the 2019 Rugby World Cup in Japan

27%

REVENUE

(% OF GROUP excl. pass-through fuel)

14.8% (FY18: 16.6%)

OPERATING MARGIN

6 Results presentation March 2020

New contracts and extensions Major contract wins to be fully mobilised from 2021, Ivory Coast extension agreed Strong cash collection performance Significant progress in reducing overdue balances

Power Solutions Utility

21% underlying

• perating profit growth

Reduced costs and improved operational performance

65% 66%

20%

REVENUE

(% OF GROUP excl. pass-through fuel)

13.3% (FY18: 13.4%)

OPERATING MARGIN UTILISATION

based on average MW on hire FY19 FY18

Photo: Our operations in Ivory Coast

7 Results presentation March 2020

Well-positioned as energy markets change

Continuing to adapt to customers’ evolving needs

With growing interest in lower carbon technology and our new battery storage product

 185MW of hybrid work secured  30 Y.Cubes now under contract

8 Results presentation March 2020

Continued focus on our four strategic priorities

Being particular about the sectors we target Offering specialist solutions Being simple to do business with Developing competitive configurable products Smarter use of connected systems & data analytics Integrating renewable & storage technology Being mobile & modular Getting the very most out of our assets Striving for the most competitive cost base Living Always Orange Nurturing our full potential Staying safe and professional at all times

Customer focus Technology investment Capital efficiency Expert people

Update on strategic priorities

August 2020

 Drivers of growth and returns  Capital allocation policy  The opportunity presented by the energy transition

9 Results presentation March 2020

2019 full year results review

Heath Drewett CFO

10 Results presentation March 2020

Group summary

 Good underlying profit growth,

up 13%

 Operating margin of 14.9%, up

1.8pp on an underlying basis

 Effective tax rate of 35%  ROCE of 11.2%, up 1.1pp on an

underlying basis

 Final dividend up 3% to

18.3 pence

Movement £m FY19 FY18 CHANGE CHANGE

excluding pass-through fuel and currency

Revenue 1,613 1,760 (8)% (1)% Operating profit 241 219 10% 13% Operating margin 14.9% 12.5% 2.4pp 1.8pp Net interest expense (42) (37) (13)% Profit before tax 199 182 9% 13% Taxation (70) (57) (23)% Profit after tax 129 125 3% Diluted earnings per share 50.7 49.2 3% 6% Final dividend per share 18.3 17.7 3% Full year dividend per share 27.7 27.1 2% ROCE 11.2% 10.3% 0.9pp 1.1pp

11 Results presentation March 2020

Strong cash flow

£m FY19 FY18 EBITDA 564 517 Working capital 107 (56) Cash flows relating to fulfilment assets (66) (44) Cash flows relating to demob provisions (6) (4) Other 29 10 Operating cash flow 628 423 Tax (76) (61) Net interest (42) (32) Acquisitions and investments

• (33)

Purchase of fixed assets (230) (216) Other fixed asset movements/Lease payments (18) 5 Free cash flow 262 86 Dividends (69) (69) Changes in equity (4) (12) Net cash flow 189 5 Exchange 16 (39) Movement in lease liability (net of exchange) (103)

• Movement in net debt

102 (34) Net debt (584) (686)

 Fulfilment assets spend increase driven by

Tokyo 2020

 Fleet capex of £189m (2018: £196m)

includes £26m related to Tokyo 2020

 Free cash flow increase of £176m  Net debt/EBITDA (incl. IFRS 16 leases) down

to 1.0x

Working capital inflow of £107m

£m FY19 FY18 Trade and other receivables 78 (10) Trade and other payables 21 (60) Inventory 8 14 Working capital 107 (56)

12 Results presentation March 2020

Significant progress on working capital

Overall working capital inflow

• f £107m

(2018: £56m outflow)

 Decrease driven by ongoing inventory initiatives across

the Group

Decrease in inventory

£8m

£61m

Decrease in trade and other receivables

£78m

Increase in trade and other payables

£21m

FY19 FY18

 Strong cash collection in Power Solutions Utility  Reduced level of unbilled within Rental Solutions  Increase driven by deferred revenue for Tokyo 2020 (£52m)  Partially offset by a reduction in fuel creditors due to off-hiring

• f major contracts in Brazil

13 Results presentation March 2020

200 400 600

FY15 FY16 FY17 FY18 FY19

GROUP TRADE RECEIVABLES (£m)

RS / PSI trade receivables PSU trade receivables

 Good progress on cash collections within

Power Solutions Utility

 Reduction in the level of Rental Solutions

unbilled, with focus now increasing on collections

Reduction of £58m, after five years of increases

Trade receivables

14 Results presentation March 2020

Utility - Invoicing / receipts performance

40 80 120 160 200

Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 $m 2H19 1H19 2H18 1H18 Invoicing 240 244 351 362 Receipts 289 295 349 345 Net total 49 51 (2) (17)

Bad debt provision within PSU broadly unchanged at $81m (Dec 2018: $83m)

Good progress on collections, especially in Africa and LAM

Invoicing Receipts

POWER SOLUTIONS UTILITY ($m)

15 Results presentation March 2020

IFRS 15 - Fulfilment asset progression

8 44 (12) 4 44 66 (24) 86 20 40 60 80 100 120

Capitalised in the period £m 2019 2018 Burkina Faso 10

• PIE-A

5 14 Granny Smith 3

• Bangladesh
• 11

Other 30 19 Sub total 48 44 Tokyo 2020 18

• Net total

66 44

Current year increase driven by Tokyo 2020

BALANCE SHEET MOVEMENTS (£m)

Balance at 1 Jan 2018 Balance at 31 Dec 2019 Balance at 31 Dec 2018

Capitalised in period Amortised to the income statement Other Capitalised in period Amortised to the income statement

16 Results presentation March 2020

Outlook

 PBT in line with current expectations

− Currency headwinds of c. 8% (see appendix 4) − Effective tax rate of c. 35%, subject to geographic mix

 Confident of achieving mid-teens ROCE target in 2020 and beyond

− Full year fleet capex £200-£250m − Further progress on working capital − Monitoring the potential impact of Coronavirus

 Expect another year of good cash generation  Update on our strategic priorities alongside interim results in August

17 Results presentation March 2020

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 March 2020

Movement FY19 FY18 CHANGE CHANGE

excluding currency

Revenue (£m) 833 822 1% (1)% Operating profit (£m) 133 105 25% 22% Operating margin 15.9% 12.9% 3.0pp 2.9pp ROCE 16.7% 14.7% 2.0pp 1.7pp Fleet capital expenditure (£m) 71 79

Appendix 1 – Rental Solutions

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

19% 18% 18% 10% 9% 7% 6% 13%

% Revenue by sector FY19

19 Results presentation March 2020

Appendix 2 – Power Solutions

Movement Excluding pass-through fuel FY19 FY18 CHANGE CHANGE

excluding currency

Revenue (£m) 319 342 (7)% (5)% Operating profit (£m) 43 46 (7)% 21% Operating margin 13.3% 13.4% (0.1)p 2.9pp ROCE 5.8% 6.2% (0.4)pp 1.1pp Fleet capital expenditure (£m) 49 70

41% 15% 10% 7% 13% 4% 2% 8%

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

% Revenue by sector FY19

 This segment includes only Utility customer

projects

Power Solutions Industrial Power Solutions Utility

Movement FY19 FY18 CHANGE CHANGE

excluding currency

Revenue (£m) 434 424 3% 2% Operating profit (£m) 64 71 (9)% (7)% Operating margin 14.8% 16.6% (1.8)pp (1.4)pp ROCE 10.4% 10.7% (0.3)pp (0.2)pp Fleet capital expenditure (£m) 69 47

20 Results presentation March 2020

Movement £m FY19 FY18 CHANGE % CHANGE Reported 1,613 1,760 (147) (8)% Fuel (27) (172) Excluding fuel 1,586 1,588 (2)

• %

FX¹ 11 Underlying 1,586 1,599 (13) (1)%

¹ The currency impact line included in the table above excludes the currency impact on pass through fuel in PSU, which in 2019 was £5 million

Appendix 3 – Reported to underlying revenue

21 Results presentation March 2020

Appendix 4 – FX impact into 2020

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)

FY19 average February 2020 closing FY19 actual FY19 restated at February 2020 closing rates Variance % Variance US Dollar 1.28 1.30 831 817 (14) (2)% Euro 1.14 1.20 240 228 (12) (5)% Australian Dollar 1.83 1.94 72 68 (4) (6)% Argentinian Peso 61.10 80.09 36 27 (9) (24)% Brazilian Real 5.03 5.68 86 76 (10) (11)% Canadian Dollar 1.69 1.72 35 34 (1) (1)% Russian Rouble 82.61 82.55 70 70

• Other

243 234 (9) (4)% Total revenue 1,613 1,554 (59) (4)% Total operating profit 241 222 (19) (8)%

22 Results presentation March 2020

Appendix 5 – ROCE definition

FY19 £m FY18 £m FY17 £m Operating profit (pre-exceptional items, 2017 only)

241 219 224

Average net operating assets 1 January1

2,263 2,074 2,124

30 June

2,190 2,123 2,071

31 December

1,997 2,159 2,074

3-point average

2,150 2,119 2,090

ROCE2 (operating profit pre-exceptional items divided by average net operating assets)

11.2% 10.3% 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.

1 Includes c. £104 million of right of use assets on adoption of IFRS 16 ‘Leases’ from 1 January 2019 2 Prior year ROCE comparatives have not been adjusted for IFRS 16

23 Results presentation March 2020

Appendix 6 – IFRS 16: Lease accounting

Effective from 1 January 2019 with NO prior year restatement 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 £98m, together with a corresponding liability of £101m

 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 c. 0.4pp

24 Results presentation March 2020

Appendix 7 – Tokyo 2020

What we are providing

~ 100MW

• f capacity

~ 5,400

distribution panels

~ 2,800

transformers

~ 2,500km

• f cable

44 Sports venues International broadcast centre (IBC) Athletes’ village

What are we supporting? Numbers & timeline

Mobilise & install Operate Design: Four iterations 2019-2020 2020 2019-2020 2020 Demobilise & redeploy

15 JUNE

‘POWER ON’ 25 AUGUST – 6 SEPT PARALYMPIC GAMES 24 JULY – 9 AUGUST OLYMPIC GAMES

550+

engineers & staff

~ $250m*

contracted revenue

£26m

Capex in 2019

~ £20m

Expected capex in 2020

*Includes revenue earned in 2019 Note: For further reference, please see the October 2019 Aggreko events services presentation on the investor relations website

25 Results presentation March 2020

Disclaimer

The information contained in this presentation has largely been extracted from the results announcement for the twelve months ended 31 December 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.