Results presentation For the year ending 31 December 2016 Results - - PowerPoint PPT Presentation

1 Results Presentation March 2017

Results presentation

For the year ending 31 December 2016

2 Results Presentation March 2017

Chris Weston, CEO 1

3 Results Presentation March 2017

Agenda

Carole Cran, CFO FY16 Operating & Financial Review 1 Chris Weston, CEO Business Priorities and 2017 Outlook 2

4 Results Presentation March 2017

A challenging year for the business

4

Overview

• Number of significant issues to manage

− North American oil & gas − Venezuela debtors − Argentina contract extensions

• A number of achievements in year

− New HFO, gas and solar diesel products − 1.3GW order intake − Commonwealth Games & Winter Olympic wins − Significant cost base reduction on track − Implemented a CRM system; digital platform progressing well

• Taking the right actions and making progress

− Excluding Argentina impact business set to grow in 2017

5 Results Presentation March 2017

Carole Cran, CFO FY16 Operating & Financial Review 2

6 Results Presentation March 2017

PBT in line with market expectations

Group summary

• Group margins & returns

slightly down; impacted by lower oil price

• Exceptional charge to deliver

Business Priorities & NAM asset impairment

• Tax rate of 28%
• Dividend maintained

Movement £m pre-exceptional items 2016 2015 Change Change excl pass- through fuel and currency Revenues 1,515 1,561 (3)% (10)% Operating profit 248 275 (10)% (11%) Net interest expense (27) (23) (17)% Profit before tax 221 252 (12)% Taxation (63) (69) 8% Profit after tax 158 183 (13)% Diluted earnings per share 61.9p 71.7p (14)% Operating margin 16% 18% (2)pp ROCE 13% 16% (3)pp

7 Results Presentation March 2017

Business performance

Revenue by sector FY16

18 18% 11 11% 11 11% 11 11% 8%

Services Construction Quarrying & Mining Other

6% 5% 13 13% 8%

Contracting Petrochemical & Refining Oil & Gas Utilities Events

9%

Manufacturing 43%

Rental Solutions

Group revenue

(ex pass through fuel)

£m pre-exceptional items FY16 FY15 Change Change excluding currency Revenue 629 618 2% (8)% Operating profit 52 102 (50)% (55)% Operating margin 8% 16% ROCE 8% 19%

8 Results Presentation March 2017

Business performance

32 32% 12 12% 9% 8% 5%

Utilities Shipping Contracting Other

5% 5% 10 10% 7%

Quarrying & Mining Oil & Gas Construction Services Manufacturing

7%

Events 18%

Power Solutions Industrial

Group revenue

(ex pass through fuel)

Revenue by sector FY16

£m pre-exceptional items FY16 FY15 Change Change excluding currency Revenue 262 267 (2)% (9)% Operating profit 32 41 (21)% (28)% Operating margin 12% 15% ROCE 7% 10%

9 Results Presentation March 2017

Business performance

85 85% 6% 6% 3%

Utilities Quarrying & Mining Oil & Gas Other 39% Group revenue

(ex pass through fuel)

Power Solutions Utility

£m pre-exceptional items & excluding pass-through fuel FY16 FY15 Change Change excluding currency & pass- through fuel Revenue 564 616 (9)% (13)% Operating profit 164 133 23% 37% Operating margin 29% 22% ROCE 19% 18%

Revenue by sector FY16

10 Results Presentation March 2017

Gearing in line with strategic range

• Working capital increase; driven by

receivables & inventory

• Progress with Venezuela means debt

provision at similar levels to 2015

• Working capital initiative underway
• Net debt/EBITDA: 1.2x, mainly FX

related

£m FY16 FY15 Operating Profit 248 275 Depreciation & Amortisation 285 281 EBITDA 533 556 Working Capital (119) (80) Cashflows relating to exceptional items (23) (16) Other (3) 1 Operating Cash Flow 388 461 Tax (64) (91) Net Interest (26) (24) Purchase of Fixed Assets (263) (254) Purchase of other intangible assets (5)

• Proceeds from Fixed Asset Disposals

23 17 Acquisitions (22) (18) Free Cash Flow 31 91 Dividends (69) (69) Changes in Equity (8) 1 Net Cash Flow (46) 23 Exchange (114) (18) Movement in Net Debt (160) 5

11 Results Presentation March 2017

Capital allocation discipline maintained

Power Solutions Industrial Power Solutions Utility Rental Solutions FY16 FY15 FY16 FY15 FY16 FY15 Average utilisation 63% 65% 79% 77% 52% 55% Fleet Capex / Fleet Depreciation 64% 78% 112% 93% 82% 96% Fleet Capex £37m £43m £136m £121m £68m £73m

2015 2016

Power Solutions (Utility) Fleet

at 31 Dec (MW)

Power Solutions (Industrial) Fleet

at 31 Dec (MW)

Rental Solutions Fleet

at 31 Dec (MW) 2015 2016 2015 2016 2016 2015 4,946 5,194 2016 2015 2,465 2,399 2016 2015 2,255 2,225 Diesel Gas

12 Results Presentation March 2017

Chris Weston, CEO Business Priorities and 2017 Outlook 3

13 Results Presentation March 2017

Rental Solutions

MARKET PLACE

Oil & Gas Petrochemical & Refining

• Immediate outlook is more positive
• Turnarounds forecast to increase

Utilities Events Mining

• North American oil & gas sector looking more positive

− E&P capex forecasts increased − Activity remains focused on grid − Improvements in volume & price over last few months

• Hold strong position and strengthening focus
• Support for renewables and distributed generation

an opportunity

• Outlook varies by commodity

14 Results Presentation March 2017

BUSINESS PRIORITIES

14

Rental Solutions

Customer  Surveyed over 1000 customers in key sectors  Mapped customer journey; re-worked processes and sourced most appropriate systems  Implementing new CRM Efficiency  Wider digitisation of organisation  Remote monitoring across whole Rental fleet Bolt-on acquisitions  Acquisition of Dryco Customer

• Key sector focus
• Develop digital offering

Efficiency

• Deploy new systems and

automation in the field

• Streamline back office processes

Bolt-on acquisitions

What we’ve done What we said

15 Results Presentation March 2017

Power Solutions

Industrial

• Operates in local markets of developing countries
• Expect good progress in Eurasia and growth in

Middle East & Africa

• Challenging in Asia & Latin America

Utility

• Structural power deficit drives demand
• Pricing stabilised and utilisation improved in industry
• Competition stable

MARKET PLACE

2016 2017 150 GW

8.5GW

currently addressed by Aggreko and competitors

115 GW 2020 forecast

£m Middle East 113 Latin America 51 Eurasia 41 Asia 32 Other 25 Total 262

Global power deficit Industrial revenues

16 Results Presentation March 2017

Power Solutions

BUSINESS PRIORITIES

Efficiency  Removed £80 million in costs to date  Plans to right-size or close a third of depots  Review of overhead and functional structures Technology  5 year technology road map, supported by suppliers  Upgraded around 300 G3 diesel engines to G3+, upgrade path to next generation of this engine progressing  Investment in new gas engine, upgrade path to next generation of this engine progressing  First 16 medium speed HFO engines built during 2016 and under trial  Solar diesel solution available to market Customer  Work to understand customers by country & type  Recruiting new sales force; upskilling existing team  CRM introduced across the business

What we’ve done

Efficiency

• Reduce the cost base
• Optimise the depot

footprint Technology

• Improve cost of power
• Leverage strategic supplier

relationships

• Explore options in

renewables Customer

• Improve sales expertise &

customer service

• Global account

management

What we said

17 Results Presentation March 2017

Growth offset by Argentina reprice

17

Outlook

• Power Solutions Utility

− Significant impact from Argentina repricing − Order intake 81MW, lower than this time last year − Expected off-hire rate of 25 to 30%

• Power Solutions Industrial

− Eurasia, Africa & Middle East expected to drive performance

• Rental Solutions

− North America: Most sectors up on last year − Cautiously optimistic

• Reducing cost base, annualised incremental savings of £25m with similar one off charge

− Total cash saving now increased from £80m to around £100m

• Fleet capex expected of £300m
• Growth and incremental savings will be more than offset by Argentina repricing; profit before tax

to be lower than 2016

18 Results Presentation March 2017

Group margins and returns of around 20%

18

Medium term targets

20% Returns and Margins

Cost savings Pricing & utilisation Benefits of new engines Working capital focus Investment in new technology & systems Repricing of legacy contracts

19 Results Presentation March 2017

Appendix

20 Results Presentation March 2017

Progressing well

Business priorities

CUSTOMER TECHNOLOGY EFFICIENCY

• Tailor sales and service channels
• Focus on key sectors
• Pursue adjacencies
• Evaluate bolt-on M&A opportunities

Priority

• Work with our strategic partners to develop market

leading products

• Strengthen and expand strategic partnerships
• Reduce the overall cost of power for our customers

Priority

• Streamlining our cost base
• Optimising deployment of resources
• Improving processes and systems

Priority

21 Results Presentation March 2017 21

Revenue mix

Revenue % of Revenue (ex fuel) FY16 £m FY15 £m Underlying1 % FY16 % FY15 % Change pp Power 966 1,036 (13)% 66% 69% (3) Temperature Control 161 135 8% 11% 9% 2 Oil-Free Air 28 28 (12)% 2% 2%

• Total Rental

1,155 1,199 (10)% 79% 80% (1) Service Revenue 300 302 (9)% 21% 20% 1 Revenue excl pass-through fuel 1,455 1,501 (10)% 100% 100%

• Pass-through fuel

60 60 NA Total Revenue 1,515 1,561 (10)%

1 Excluding revenue from pass–through fuel and currency.

22 Results Presentation March 2017 22

Balance sheet

£m FY16 FY15 Intangible assets / goodwill 183 134 Tangible fixed assets 1,309 1,139 Working capital 603 398 Retirement benefit obligation (30) (2) Derivative financial instruments (6) (6) Provisions for taxes (42) (59) Net borrowings (649) (489) Net assets 1,368 1,115

23 Results Presentation March 2017 23

Power fleet stable

MW in fleet Power Solutions Rental Solutions FY16 FY15 FY16 FY15 Diesel 5,736 6,101 1,982 1,973 Gas 1,675 1,492 273 252 Total 7,411 7,593 2,255 2,225

24 Results Presentation March 2017 24

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) FY16 Average January 2017 Closing FY16 Actual FY16 Actual at January 2017 Closing Rates Variance % Variance US Dollar 1.36 1.26 789 850 61 8% Euro 1.22 1.18 166 172 6 4% Australian Dollar 1.83 1.67 68 74 6 9% Argentinian Peso 20.00 20.05 130 130

• Brazilian Real

4.74 4.02 111 131 20 18% Canadian Dollar 1.80 1.65 24 26 2 9% Russian Rouble 91.04 75.98 39 47 8 20% Other 188 195 7 4% Total Revenue 1,515 1,625 110 7% Total Operating Profit 248 262 14 6%

25 Results Presentation March 2017

Disclaimer

The information contained in this presentation has largely been extracted from the Results Announcement for the year ended 31 December 2016. 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.