REG - Aggreko PLC - Half Yearly Report

Thu Aug 2, 2012 2:01am EDT

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RNS Number : 1134J
Aggreko PLC
02 August 2012
 



2 August 2012

 

Aggreko plc

 

INTERIM RESULTS

FOR THE SIX MONTHS TO 30 JUNE 2012

 

Aggreko plc, the world leader in the supply of temporary power and temperature control, announces its interim results for the six months to 30 June 2012. 

 



 

As



2012 (1)

2011 (1)

reported (1)

Underlying (1)(2)






Group revenue

£734m

£637m

15%

16%






Group revenue excl pass through fuel

£714m

£584m

22%







Trading profit (3)

£159m

£127m

25%

23%






Profit before tax

£148m

£121m

23%







Diluted earnings per share

41.48p

32.03p

30%







Dividend per share

8.28p

7.20p

15%


 
Highlights:

 

·     Strong performance in the first half; reported revenue and trading profit increased by 15% and 25% respectively; underlying revenue and trading profit up by 16% and 23% respectively.  Earnings per share up 30%.

 

·     Both International Power Projects and the Local business grew trading profits by over 20%.

 

·     International Power Projects underlying revenue grew 17% and trading profit by 22%

669 MW of new work won: 196 MW in Asia, 116 MW in Latin America; and 357 MW in Africa & Middle East

Record order book up 16% on prior year; 14 months' revenue at current run rate

Doubled amount of gas-fired capacity on rent.

 

·     Local business underlying revenue grew 15% and trading profit by 24%

Increases in power volumes and rates in North America drive a strong first half; continued growth expected in second half

Europe & Middle East will have strong year, helped by the Olympics.  Underlying growth is patchy

Aggreko International's Local business underlying revenue and trading profit grew 27% and 34% respectively in first half; further strong growth expected in second half.

 

·     Successful start to London Olympics with over 550 generators and 1,500 kilometres of cable deployed on 44 sites; contract will be worth around £55 million.

 

·     Poit Energia acquisition completed and performing in line with our expectations.

 

·     Interim dividend to increase by 15%.

 

Rupert Soames, Chief Executive, commented:

 

"Aggreko delivered another strong performance in the first half of 2012 with underlying growth of 16% in revenue and 23% in trading profit."

 

"It's been a very successful six months. We substantially expanded our Latin American business with the acquisition of Poit Energia in Brazil; we have built a new temporary power plant in Mozambique, which, uniquely, is providing power both to both the South African and Mozambique utilities, and which will deliver revenues of over $200 million over the next two years;  our order-book is at record levels; we have opened our new manufacturing facility in Scotland; and we have delivered what will be the world's largest contract for temporary power for a major sporting event, in the form of our work as the exclusive supplier of temporary power for the London Olympics."

 

"Looking ahead, we continue to believe that we will deliver another year of good growth in 2012, and we reiterate our previous guidance of fleet capital expenditure of around £415m."

 

Regional performance metrics:

 


Revenue millions

Underlying

Trading Profit millions

Underlying


2012

2011

%

2012

2011

%

North America

$208

$185

12%

$33

$28

20%

Europe & Middle East

£165

£132

10%

£14

£10

20%

International Local business

£107

£78

27%

£19

£15

 34%

International Power Projects excl fuel

$490

$419

17%

$166

$137

22%

 

(1)

All figures are before amortisation of intangible assets arising from business combinations (2012: £2m pre-tax, £1m post-tax; 2011: £2m pre-tax, £1m post-tax).  On a statutory basis, post amortisation trading profit was £157m (2011: £125m), post amortisation profit before tax was £146m (2011: £119m) and post amortisation diluted earnings per share were 40.91p (2011: 31.58p).

(2)

"Underlying" is defined as: adjusted for currency movements, pass-through fuel, the Poit Energia acquisition, the London Olympics and the Asian Games.

(3)

Trading profit represents operating profit before gain on sale of property, plant and equipment.

 

- ENDS -

 

Enquiries to:

 

Rupert Soames / Angus Cockburn

Aggreko plc

Tel. 0141 225 5900


Neil Bennett / Tom Eckersley

Maitland

Tel:  020 7379 5151

 

Interim management report

 

Group Trading Performance

 

Aggreko delivered another strong performance in the first half of 2012.  Reported revenue and trading profit1 increased by 15% and 25% respectively, while underlying2 revenue grew 16% and trading profit by 23%.

 


2012

2011

Movement


£m

£m

As reported

Underlying





change






Revenue

734

637

15%

16%

Revenue excl pass-through fuel

714

584

22%


Trading profit

157

125

25%

23%

Operating profit

158

127

24%


Net interest expense

(12)

(8)

(45)%


Profit before tax

146

119

23%


Taxation

(38)

(34)

(12)%


Profit after tax

108

85

27%


Diluted earnings per share (pence)

40.91

31.58

30%


 

Group revenue, as reported, increased by 15% to £734 million (2011: £637 million), while trading profit of £157 million (2011: £125 million) increased by 25%. Group trading margin was 21% (2011: 20%). Underlying revenue and trading profit increased by 16% and 23% respectively. On the same basis trading margin was 23% (2011: 21%).

 

Group profit before tax increased by 23% to £146 million (2011: £119 million) and profit after tax increased by 27% to £108 million (2011: £85 million), reflecting the reduction in the tax rate from 28.5% to 26.0%. Group return on capital employed (ROCE)3, measured on a rolling 12-month basis, was 26.2% (2011: 28.5%).  This decrease was driven by the Local business with the 2011 comparative including the favourable impact from major events in the second half of 2010, as well as the year one impact of the Poit Energia acquisition, where the assets are included in the calculation, but only two months trading is reflected.  International Power Projects return on capital employed was flat year-on-year.  The ratio of revenue (excluding pass-through fuel4) to average gross rental assets decreased marginally from 72% to 71%.

 

The movement in exchange rates in the period had the effect of increasing revenue by £7 million and trading profit by £3 million, mainly as a result of the slight weakening of sterling against the US dollar.  Pass-through fuel accounted for £20 million (2011: £53 million) of reported revenue of £734 million.

 

Fleet capital expenditure for the period was £220 million, £50 million higher than the prior year, and 213% of the depreciation charge in the period; a large part of the year-on-year increase was accounted for by equipment purchased to serve the London Olympics contract, which, following the Games, will be put to use in the wider business.  The Aggreko International business accounted for 54% of fleet investment. In addition, we acquired £48 million of property, plant and equipment as part of the Poit Energia acquisition. The total cash paid in the period for this acquisition was £130 million. 

 

1

Trading profit represents operating profit before gain on sale of property, plant and equipment.

2

A bridge between reported and underlying revenue and trading profits is provided at page 8 of the Interim management report

3

ROCE is calculated by taking the 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

4

Pass-through fuel relates to two contracts in our International Power Projects business where we provide fuel on a pass-through basis.

 

Net debt of £678 million at 30 June 2012 was £421 million higher than the same period last year driven by: the return of capital to shareholders (£149 million); the acquisition of Poit Energia (£130 million); higher capital expenditure in the 12 months to June 2012 compared to the 12 months to June 2011; and increased levels of working capital in International Power Projects.  These increased outflows were in part offset by higher EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation).

 

Acquisition of Poit Energia

 

On 16 April 2012 we completed the acquisition of the entire share capital of Companhia Brasileira de Locacoes ("Poit Energia"), a leading provider of temporary power solutions in South America.  The initial transaction price of £138 million (R$404 million) was made up of £105 million consideration payable to the owners of Poit Energia plus £33 million of debt, to be paid off by Aggreko on behalf of Poit Energia. In addition to the initial transaction price of £138 million, there is a further amount of up to £20 million conditional on the business achieving stretching performance targets for the year to 31 December 2012. 

 

The acquisition of Poit Energia supports Aggreko's strategy of expanding its Local businesses in fast growing economies; it strengthens Aggreko's business in South America, both in terms of geographic footprint and access to sectors which Aggreko is currently not in or to which it has limited exposure. The business is performing in line with our expectations.

 

Regional Trading Performance as reported in £ million

 



Revenue



Trading







Profit



2012

2011

Change

2012

2011

Change


£ million

£ million

%

£ million

£ million

%








Local business

 

North America

132

115

15%

20

16

25%








Europe (Note 1)

95

76

24%

2

-

615%

Middle East & Developing Europe (Note 1)

70

56

27%

12

10

21%

Sub-total Europe & Middle East

 

165

132

25%

14

10

50%

Aggreko International  Local Business 

 

107

78

37%

18

14

25%

Sub-total Local business

 

404

325

24%

52

40

31%

International Power Projects (IPP)

 

IPP excl. pass-through fuel

310

259

      20%

105

84

24%

IPP pass-through fuel

20

53

(64)%

-

1

(151)%

Sub-total International Power Projects

330

312

6%

105

85

22%

Group

734

637

15%

157

125

25%








Group excluding pass-through fuel

 

714

584

22%

157

124

27%

 

1

As a result of a change in how management monitor the business, the Russian business, which was previously reported as part of Europe, is now reported as part of the Middle East segment which has been renamed as Middle East & Developing Europe.

2

"-"  in the table above indicate values less than £1 million.

 

The performance of each of these regions in the first half is described below:

 

Local business: North America

 



2012

2011

Underlying

change



$ million

$ million

%

Revenue


208

185

12%

Trading profit


31

26

22%

Trading margin


15%

14%


 

Our North American business delivered a strong performance in the first half.  Underlying revenue, which for North America adjusts only for the impact of currency, increased by 12% to $208 million and trading profit by 22% to $31 million. Trading margin improved from 14% to 15%.

 

Rental revenue was up 10% and services revenue was up 19%. Revenue growth was driven by power rental revenue, which increased by 27%; much of this growth came from the oil and gas sector.  Power volumes grew significantly and rates were also up on the prior period. Temperature control revenue was down 10% largely due to lower volumes in our Cooling Towers business; historically this has been a feast-or-famine business, with revenues varying by as much as $10 million between good years and poor years.  So far, 2012 has been a lean year.  Oil-free compressed air revenue was down 2%. 

 

The North American business has taken significant steps in upgrading its diesel generator fleet with the latest emissions technology.  The next stage of this has begun and we started taking delivery of the first Tier 4 interim engines this year.  By the end of 2013, almost 50% of the fleet will be either Tier 3 or Tier 4 compliant.

 

The growth rate in North America was slower in the second quarter than in the first, in large part due to the absence in 2012 of several large emergency jobs which benefited temperature control revenues in 2011.  The business has had a strong start to the second half, with volumes in power well ahead of the prior year, and we expect good growth in the second half, and for the year as a whole.

 

Local business: Europe & Middle East 

 



2012

2011

Underlying

Change



£ million

£ million

%

Revenue


165

132

10%

Trading profit


14

10

20%

Trading margin


9%

7%


 

Europe

 



2012

2011

Underlying change



£ million

£ million

%

Revenue


95

76

-%

Trading profit


2

-

31%

Trading margin


2%

-%


 

Middle East & Developing Europe

 



2012

2011

Underlying

change



AED million

AED million

%

Revenue


405

328

25%

Trading profit


70

60

20%

Trading margin


17%

18%


 

Our Europe & Middle East business had a good first half in 2012; on an underlying basis (i.e. excluding London Olympics and the impact of currency) revenue increased 10% and trading profit increased 20%. On the same basis trading margin increased to 9% from 8%.  Reported performance was stronger, with over £21 million of Olympics revenue being recognised in the first half.  At the time of publishing this report we are providing over 550 generators and 1,500 kilometres of cable across 44 sites for the Olympics, and we now expect that the total contract will be worth around £55 million. 

 

Revenue in Europe, on an underlying basis, was in line with the prior period, reflecting the generally poor economic environment. Rental revenue decreased 2% while services revenue increased 2%. Within rental revenue, power increased by 1% but temperature control decreased by 9%.  Geographic area performance continued to be mixed with increases in Scotland, Norway and Spain offset by decreases in other parts of the UK, Germany and Italy.  

 

Underlying revenue in our Middle East & Developing Europe business grew by 25% with an increase of 20% in rental revenue and a 39% increase in lower margin services revenue. Within rental revenue, power increased 23%; temperature control revenue, however, decreased by 18%, albeit off a small base.  In geographic terms, our business in Russia continued to grow with 150 MW on rent at the end of the first half. Elsewhere we had good growth in Oman, Saudi Arabia and Abu Dhabi as well as benefitting from an emergency contract in Cyprus.

 

Across Europe & Middle East power rates increased year-on-year but we have seen a decline in temperature control rates. 

 

For the year as a whole we expect Europe & Middle East to deliver strong growth on a reported basis, which includes the Olympics.  While we are seeing pockets of strong growth in some of our new markets and in parts of the Middle East, the overall weakness of the economies of Europe makes it difficult to achieve anything other than modest underlying growth for the region as a whole.

 

Local business: Aggreko International

 



2012

2011

Underlying

Change



£ million

£ million

%

Revenue


107

78

27%

Trading profit


18

14

31%

Trading margin


17%

18%


 

Aggreko International's Local business operates in the Australia Pacific region, China, India and South East Asia, throughout Latin America, South Africa and most recently, Kenya.  This business had a strong first half with underlying revenue (excluding currency, Asian Games in 2011 and the Poit Energia acquisition in 2012) increasing by 27% and trading profit by 31%. On the same underlying basis trading margin increased from 16% to 17%.

 

On an underlying basis rental revenue increased 29% and services revenue increased 20%. Within rental revenue power increased 30% and temperature control increased 24%. Revenue in nearly all geographies increased as compared with the same period last year, most notably in our more mature business in Australia Pacific where revenue increased 18%, driven by a strong performance in the mining sector and Brazil (excluding the Poit Energia acquisition) where revenue increased 33% driven by the mining, utilities and events sectors.  We also opened new locations in the first half in Cape Town and Nairobi as part of the continued expansion of our Local business service centre network in faster growing economies.

 

On a reported basis growth in Aggreko International's Local business is expected to be higher in the second half than the first, due to the impact of the Poit Energia acquisition.  On an underlying basis, we expect the rate of growth to slow somewhat in the second half as comparatives become more challenging.  However, we still expect to deliver a strong rate of underlying growth for the year as a whole.

 

International Power Projects: Aggreko International

 




Underlying


2012

2011

Change


$ million

$ million

%





Revenue (excluding pass-through fuel)

490

419

17%

Trading profit (excluding pass-through fuel)

166

137

22%

Trading margin

34%

33%


 

Our International Power Projects business delivered a strong performance in the period with revenue, in constant currency and excluding pass-through fuel, growing by 17% to $490 million and trading profits increasing by 22% to $166 million. Trading margin increased to 34% (2011: 33%) notwithstanding a $25 million increase in our bad debt provision, similar to the $23 million of the first half of 2011. Revenue from our gas-powered units grew strongly and the average MW on rent has increased by around 100% year-on-year. 

 

Demand has been strong during the first half: we secured 24 new contracts and 669 MW of new work, 196 MW in Asia, 116 MW in Latin America and 357 MW in Africa & Middle East.  At the end of the period, our order book was over 39,000 MW months, the equivalent of 14 months' revenue at the current run-rate, and an increase of 16% over the prior year. These numbers do not include our project in the Dominican Republic; at the time we announced this project, we said that it was subject to the customer completing a number of conditions precedent; largely as a result of recent elections and the subsequent change in administration, this process is taking longer than we anticipated, and we now think it unlikely that we will be earning revenue from the project this year.  In Mozambique, on the other hand, we have completed all the conditions precedent with ESKOM and EDM, and the 107 MW site went into production on 18th July. 

 

The record level of the order book means that we expect our International Power Projects business to have a strong second half and full year in terms of revenue growth.  Whilst we anticipate that margins in the second half will be higher than in the first, they will be noticeably lower than the prior year, as we are currently assuming that we do not see a repeat of the $18 million release of bad debt provision which benefited the second half of 2011.  We have also incurred very high mobilisation costs on the Mozambique project, which will be recovered over the next two years.

 

Outlook

 

We expect to report strong growth in revenue and profit in the Local business both in the second half and for the year as a whole, supported by the London Olympics and the Poit Energia acquisition.  We anticipate underlying growth will be lower in the second half than in the first, in part because of tougher comparators, and in part because of continued macro-economic weakness in some of our larger mature markets.  Margins on both an underlying and reported basis for both the second half and the full year are forecast to be better than last year.

 

In International Power Projects, the record level of the order book means that we expect that the business will have a strong year in terms of revenue growth.  We anticipate that margins and returns will be lower than 2011 mainly as a result of our assumed increase in bad debt provisions and unusually high mobilisation costs.

 

We expect that Group margins for the year as a whole, both on a reported and underlying basis, will be at similar levels to last year as stronger margins in our Local business and favourable mix offset lower margins in International Power Projects.

 

Overall, we continue to believe that we will deliver another year of good growth in 2012, and we reiterate our previous guidance of fleet capital expenditure of around £415 million.

 

Financial Review

 

The movement in exchange rates during the period increased revenue and trading profit by £7 million and £3 million respectively, with the weakening of sterling against the US dollar having the greatest impact.  Currency translation also gave rise to a £25 million decrease in net assets from December 2011 to June 2012. Set out in the table below are the principal exchange rates affecting the Group's overseas profits and net assets:

 

(per £ sterling)

June 2012

June 2011

Dec-11


Average

Period End

Average

Period End

Average

Period End

Principal Exchange Rates







United States dollar

1.58

1.56

1.62

1.60

1.60

1.54

Euro

1.22

1.24

1.15

1.11

1.15

1.19

Other Operational Exchange







Rates



UAE Dirhams

5.79

5.73

5.94

5.88

5.89

5.66

Australian dollar

1.53

1.53

1.57

1.50

1.55

1.52

(Source:  Bloomberg)







 

Reconciliation of underlying growth to reported growth 

 

The table below reconciles the reported and underlying revenue and trading profit growth rates:

 




Revenue

Trading profit




 £ million

£ million

2011



637

125

Currency



7

3

2011 pass-through fuel



(53)

(1)

2012 pass-through fuel



20

-

Poit Energia acquisition



11

2

Underlying growth including events



112

28

2012



734

157

2011 revenue from Asian Games



(2)


2012 revenue from London Olympics



21


As reported growth



15%

25%

Underlying growth



16%

23%

 

Interest

 

The net interest charge for the first half of 2012 was £12 million, an increase of £4 million on 2011 reflecting the higher level of average net debt, driven by the return of capital to shareholders, the Poit Energia acquisition, higher levels of capital expenditure and higher levels of working capital.  Interest cover, measured against rolling 12-month EBITDA, remains strong at 26.3 times (June 2011: 36.2 times) relative to the financial covenant attached to our borrowing facilities that EBITDA should be no less than 4 times interest.

 

Effective Tax Rate

 

The current forecast of the effective tax rate for the full year, which has been used in the interim accounts is 26.0% as compared with 28.5% in the same period last year.  The reduction is principally driven by the impact of the application of the UK branch profits election to our International Power Projects business. 

 

Dividends

 

The Board has decided to pay an interim dividend of 8.28 pence per ordinary share which represents an increase of 15% compared with the same period in 2011; dividend cover is 5.0 times (30 June 2011: 4.4 times). This interim dividend will be paid on 5 October 2012 to shareholders on the register at 7 September 2012, with an ex-dividend date of 5 September 2012.

 

Cashflow

 

EBITDA for the period amounted to £270 million, up 26% on 2011. The net cash inflow from operations during the first six months of 2012 totalled £134 million (2011: £155 million).  The reduction in cash inflow from operations was caused by working capital movements, in particular an increase in debtor days in our International Power Projects business and less of an increase in creditors year-on-year. In terms of the increase in debtor days, a small number  of our customers had significant overdue balances at the period end, and this had a material impact on our working capital.  None of the customers are disputing the payment liability and we are hopeful that we will see some improvement in this position during the second half. 

 

Capital expenditure of £233 million in the 6 months to June 2012 was up £52 million on the same period in 2011 reflecting continued investment in our International Power Projects and Local business fleet. Capital expenditure in the 12 months to June 2012 increased by £123 million compared to the 12 months to June 2011. The Aggreko International business accounted for the majority of this spend reflecting the expansion of our Local business in Asia, Latin America and Africa.

 

This increase in total capital expenditure, the cash outflow related to the Poit Energia acquisition, the £149 million return of capital to shareholders (£148 million in July 2011 and £1 million in May 2012) and higher working capital requirements were the main drivers in net debt at 30 June 2012 being £421 million higher than the same period last year. On a rolling 12-month basis, net debt to EBITDA was 1.2 times compared with 0.5 times for the same period in 2011.

 

Financial Resources

 

The Group maintains sufficient facilities to meet its normal funding requirements over the medium term.  At 30 June 2012, these facilities totalled £868 million in the form of committed bank facilities arranged on a bilateral basis with a number of international banks and private placement notes. Since the start of 2012, we have put in place £205 million of new facilities. The financial covenants attached to these facilities are that EBITDA should be no less than 4 times interest and net debt should be no more than 3 times EBITDA; at 30 June 2012, these stood at 26.3 times and 1.2 times respectively. The Group does not consider that these covenants are restrictive to its operations.  The maturity profile of the borrowings is detailed in Note 13 in the Accounts.  In addition, since 30 June 2012 we have put in place a new committed bank facility of £77 million with a maturity of four years.

 

Net debt amounted to £678 million at 30 June 2012 and, at that date, un-drawn committed facilities were £230 million.

 

Net Operating Assets

 

The net operating assets of the Group at 30 June 2012 totalled £1,667 million, up £415 million on the same period in 2011.  The main components of net operating assets are:

 




Movement


£ million

2012

2011

Headline

Const Curr.(1).

Rental fleet

1,155

876

32%

32%

Property and plant

80

63

26%

29%

Inventory

174

145

20%

20%

Net trade debtors

345

267

29%

29%

 

(1)

Constant currency takes account of the impact of translational exchange movements in respect of our businesses which operate in currency other than sterling.

 

A key measure of Aggreko's performance is Return on Capital Employed (ROCE) (expressed as operating profit as a percentage of average net operating assets).  For each first half we calculate ROCE by taking the 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.  For the full year, we state the year's operating profit as a percentage of the average net operating assets as at 31 December, the previous 30 June and 31 December.  The average net operating assets for the 12 months to 30 June 2012 were £1,424 million, up 30% on the same period in 2011; operating profit for the same period was £373 million.  In the first half of 2012 the ROCE decreased to 26.2% compared with 28.5% for the same period in 2011. This decrease is driven by the Local business with the 2011 comparative including the favourable impact from major events in the second half of 2010, as well as the impact of the Poit Energia acquisition, for which the assets are included, but only two months of trading is reflected.  International Power Projects return on capital employed is flat year-on-year.

 

Acquisitions

 

On 16 April 2012 we completed the acquisition of the entire share capital of Companhia Brasileira de Locacoes ("Poit Energia"), a leading provider of temporary power solutions in South America.  The  initial transaction price of £138 million (R$404 million)  was made up of £105 million consideration payable to the owners of Poit Energia  (£103 million paid at 30 June 2012) plus £33 million of debt, to be paid off by Aggreko on behalf of Poit Energia.  Of the £33 million of debt, £27 million was settled by the half year and the remaining amount will be settled in the normal course of business as it falls due. In addition to the initial transaction price of £138 million, there is a further amount of up to £20 million conditional on the business achieving stretching performance targets for the year to 31 December 2012. 

 

The total purchase consideration for accounting purposes was £125 million comprising the £105 million cash consideration plus the deferred consideration of £20 million. The fair value of net assets acquired was £38 million resulting in goodwill of £87 million. For accounting purposes the £33 million of debt does not form part of the purchase consideration. The detailed acquisition note is contained in Note 18 in the Accounts.

 

Shareholders' Equity

 

Shareholders' equity increased by £46 million to £927 million in the six months ended 30 June 2012, represented by the net assets of the Group of £1,605 million before net debt of £678 million.  The movements in shareholders' equity are analysed in the table below:

 

Movements in Shareholders' Equity

£ million

£ million




As at 1 January 2012


881

Profit for the financial period

108


Dividend (1)

(36)


Retained earnings


72

New share capital subscribed


2

Return of value to shareholders


(2)

Purchase of own shares held under trust


(11)

Credit in respect of employee share awards


8

Actuarial gains on retirement benefits


4

Currency translation difference


 (25)

Movement in hedging reserve


-

Other (2)


(2)

As at 30 June 2012


927

 

(1)

Reflects the dividend of 13.59 pence per share (2011: 12.35 pence) that was paid during the period.

(2)

Other includes tax on items taken directly to reserves.

 

Principal Risks and Uncertainties

 

In the day to day operations of the Group, we face risks and uncertainties. Our job is to mitigate and manage these risks and to aid this the Board has developed a formal risk management process which is described on page 59 of the 2011 Annual Report and Accounts.  Also set out on pages 29 to 33 of that report are the principal risks and uncertainties which we believe could potentially impact the Group, and these are summarised below:

 

·      Economic conditions;

·      Political risk;

·      Failure to collect payments or to recover assets;

·      Events;

·      Failure to conduct business dealings with integrity and honesty;

·      Safety;

·      Competition;

·      Product technology and emissions regulation; and

·      People.

 

We do not believe that the principal risks and uncertainties facing the business have changed materially since the publication of the Annual Report and we believe these will continue to be the same in the second half of the year.

 

Shareholder information

 

Our website can be accessed at www.aggreko.com. This contains a large amount of information about our business, including a range of charts and data, which can be downloaded for easy analysis. The website also carries copies of recent investor presentations, as well as Stock Exchange announcements.

 

Rupert Soames

Angus Cockburn

Chief Executive

Finance Director



2 August 2012


 

 

Group Income Statement

For the six months ended 30 June 2012 (unaudited)

 



6 months

6 months

Year



ended

ended

ended



30 Jun

30 Jun

31 Dec



2012

2011

2011


Notes

£ million

£ million

£ million






Revenue

6

733.7

637.2

1,396.1

Cost of sales


(285.4)

(268.2)

(576.7)

Gross profit


448.3

369.0

819.4

Distribution costs


(201.9)

(160.3)

(313.9)

Administrative expenses


(89.9)

(83.3)

(167.7)

Other income

 


     1.6

     1.8

      4.6

Operating profit

6

158.1

127.2

342.4

Net finance costs





- Finance cost


(12.0)

(8.4)

(19.7)

- Finance income


     0.2

     0.2

     1.0

Profit before taxation


 146.3

119.0

323.7

Taxation

9

(38.0)

(33.9)

(92.2)

Taxation - exceptional

9

        -

        -

   28.6



(38.0)

(33.9)

 (63.6)

Profit for the period - pre-exceptional items


 108.3

  85.1

 231.5

Profit for the period - post-exceptional items


 108.3

  85.1

 260.1






The above results relate to continuing operations and all profit for the period is attributable to equity shareholders of the Company.

 

Basic earnings per share (pence)





Pre-exceptional items

8

41.03

31.69

87.14

Post-exceptional items

8

41.03

31.69

97.91






Diluted earnings per share (pence)





Pre-exceptional items

8

40.91

31.58

86.76

Post-exceptional items

8

40.91

31.58

97.49






 

Group Statement of Comprehensive Income

For the six months ended 30 June 2012 (unaudited)

 


6 months

6 months

Year


ended

ended

ended


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





Profit for the period

108.3

  85.1

260.1

Other comprehensive income




Actuarial gains/(losses) on retirement benefits (net of tax)

3.3

0.1

(3.8)

Cashflow hedges (net of tax)

-

1.2

(2.8)

Net exchange losses offset in reserves (net of tax)

(25.3)

(14.4)

(10.9)

Other comprehensive loss for the period (net of tax)

(22.0)

(13.1)

(17.5)

Total comprehensive income for the period

   86.3

   72.0

242.6

 

Group Balance Sheet (Company Number: SC177553)

As at 30 June 2012 (unaudited)

 













30 Jun

30 Jun

31 Dec



2012

2011

2011


Notes

£ million

£ million

£ million






Non-current assets





Goodwill

10

151.2

64.8

65.0

Other intangible assets


29.2

16.9

16.3

Property, plant and equipment

11

1,235.3

939.4

1,087.0

Deferred tax asset


     15.7

     11.6

       15.7



1,431.4

1,032.7

1,184.0






Current assets





Inventories


174.4

145.0

147.4

Trade and other receivables

12

508.2

409.9

382.8

Cash and cash equivalents

5

22.5

63.0

53.2

Derivative financial instruments


0.4

0.2

0.2

Current tax assets


       4.6

       6.9

       4.8



   710.1

   625.0

   588.4

Total assets


2,141.5

1,657.7

1,772.4






Current liabilities





Borrowings

13

(63.1)

(39.1)

(36.9)

Derivative financial instruments


-

(1.1)

(0.4)

Trade and other payables


(429.1)

(372.5)

(381.7)

Current tax liabilities


  (36.7)

  (49.0)

  (64.4)



(528.9)

(461.7)

(483.4)






Non-current liabilities





Borrowings

13

(637.7)

(281.1)

(380.8)

Derivative financial instruments


(13.9)

(8.2)

(13.5)

Deferred tax liabilities


(33.5)

(31.4)

(7.6)

Retirement benefit obligation

15

(0.6)

(0.6)

(5.5)

Provisions


     (0.2)

    (0.2)

    (0.3)



 (685.9)

(321.5)

(407.7)






Total liabilities


(1,214.8)

(783.2)

(891.1)






Net assets


   926.7

  874.5

  881.3






Shareholders' equity





Share capital


49.3

55.1

49.3

Share premium


18.2

15.8

16.2

Treasury shares


(34.3)

(38.8)

(48.9)

Capital redemption reserve


6.1

0.1

5.9

Hedging reserve (net of deferred tax)


(10.2)

(6.2)

(10.2)

Foreign exchange reserve


47.5

69.3

72.8

Retained earnings


  850.1

  779.2

  796.2

Total shareholders' equity


  926.7

  874.5

  881.3

 

Group Cash Flow Statement

For the six months ended 30 June 2012 (unaudited)

 



6 months

6 months

Year



ended

ended

ended



30 Jun

30 Jun

31 Dec



2012

2011

2011


Notes

£ million

£ million

£ million






Cash flows from operating activities





Cash generated from operations

4

133.7

155.2

508.8

Tax paid


(43.6)

  (52.6)

 (89.1)

Interest received


0.2

0.2

1.0

Interest paid


(11.6)

   (6.1)

  (17.4)

Net cash generated from operating activities


   78.7

   96.7

   403.3






Cash flows from investing activities





Acquisitions (net of cash acquired)

18

(99.7)

(14.2)

(14.2)

Acquisitions: repayment of loans and financing

18

(22.2)

-

-

Purchases of property, plant and equipment (PPE)


(232.6)

(181.0)

(418.2)

Proceeds from sale of PPE


      5.0

      5.5

     12.6

Net cash used in investing activities


(349.5)

(189.7)

 (419.8)






Cash flows from financing activities





Net proceeds from issue of ordinary shares


2.2

1.2

1.6

Increase in long-term loans


489.2

283.3

697.3

Repayment of long-term loans


(238.4)

(119.8)

(450.0)

Net movement in short-term loans


26.4

(3.7)

2.4

Dividends paid to shareholders


(36.2)

(33.2)

(52.1)

Return of capital to shareholders


(1.6)

-

(147.7)

Purchase of treasury shares


(11.1)

         -

  (10.1)

Net cash generated from financing activities


 230.5

 127.8

    41.4






Net (decrease)/increase in cash and cash equivalents


(40.3)

34.8

24.9

Cash and cash equivalents at beginning of the period


34.5

10.2

10.2

Exchange loss on cash and cash equivalents


  (0.2)

   (0.2)

    (0.6)






Cash and cash equivalents at end of the period

5

  (6.0)

   44.8

    34.5

 

Reconciliation of net cash flow to movement in net debt

For the six months ended 30 June 2011 (unaudited)

 



6 months

6 months

Year



ended

ended

ended



30 Jun

30 Jun

31 Dec



2012

2011

2011


Notes

£ million

£ million

£ million






(Decrease)/increase in cash and cash equivalents


(40.3)

34.8

24.9

Cash inflow from movement in debt


(277.2)

(159.8)

(249.7)






Changes in net debt arising from cash flows


(317.5)

(125.0)

(224.8)






Exchange gain/(loss)


      3.7

        -

    (7.5)






Movement in net debt in period


(313.8)

(125.0)

(232.3)

Net debt at beginning of period


(364.5)

(132.2)

(132.2)






Net debt at end of period

13

(678.3)

(257.2)

(364.5)

 

Group Statement of Changes in Equity

For the six months ended 30 June 2012 (unaudited)

 

As at 30 June 2012


Attributable to equity holders of the Company







Foreign




Ordinary

Share


Capital


exchange




share

premium

Treasury

redemption

Hedging

reserve

Retained

Total


capital

account

shares

reserve

reserve

(translation)

earnings

equity


£ million

£ million

£ million

£ million

£ million

£ million

£ million

£ million










Balance at 1 January 2012

49.3

16.2

(48.9)

5.9

(10.2)

72.8

796.2

881.3

Profit for the period

-

-

-

-

-

-

108.3

108.3

Other comprehensive income:









Fair value gains on foreign currency cash flow hedge

 

-

 

-

 

-

 

-

 

0.9

 

-

 

-

 

0.9

Transfers from hedging reserve to property, plant and equipment

 

-

 

-

 

-

 

-

 

(0.2)

 

-

 

-

 

(0.2)

Fair value losses on interest rate swaps

-

-

-

-

(0.4)

-

-

(0.4)

Currency translation differences

-

-

-

-

-

(25.3)

-

(25.3)

Deferred tax on items taken to or transferred from equity

 

-

 

-

 

-

 

-

 

(0.3)

 

-

 

-

 

(0.3)

Actuarial gains on retirement benefits(net of tax)

 

     -

 

     -

 

     -

 

     -

 

     -

 

    -

 

  3.3

 

  3.3

Total comprehensive income for the period ended 30 June 2012

 

     -

 

      -

 

     -

 

     -

 

     -

 

(25.3)

 

111.6

 

86.3

Transactions with owners:









Purchase of treasury shares (Note (i))

-

-

(11.1)

-

-

-

-

(11.1)

Credit in respect of employee share awards

-

-

-

-

-

-

8.2

8.2

Issue of ordinary shares to employees under share option schemes

 

-

 

-

 

25.7

 

-

 

-

 

-

 

(25.7)

 

-

Current tax on items taken to or transferred from equity

 

-

 

-

 

-

 

-

 

-

 

-

 

15.9

 

15.9

Deferred tax on items taken to or transferred from equity

 

-

 

-

 

-

 

-

 

-

 

-

 

(18.3)

 

(18.3)

Return of capital to shareholders (Note (ii))

-

-

-

-

-

-

(1.6)

(1.6)

Capital redemption reserve (Note (ii))

(0.2)

-

-

0.2

-

-

-

-

New share capital subscribed (Note (iii))

0.2

2.0

-

-

-

-

-

2.2

Dividends paid during the period

      -

      -

        -

     -

        -

      -

(36.2)

(36.2)


      -

  2.0

  14.6

 0.2

        -

      -

(57.7)

(40.9)

Balance at 30 June 2012

49.3

18.2

(34.3)

 6.1

(10.2)

47.5

850.1

926.7

 

(i)

During the period 508,162 Ordinary shares of 13 549/775 pence each were acquired in the open market at a price of £21.64 by the Aggreko Employee Benefit Trust. These shares were acquired using funds provided by Aggreko plc to meet its obligations under the Long-term Incentive Arrangements.

(ii)

2,947,585 B shares were bought back in May 2012 at a price of 55.5 pence per share. As a result of this transaction £0.2 million was transferred from ordinary share capital to capital redemption reserve being 2,947,585 shares at par value 6 18/25.

(iii)

During the period 574,015 Ordinary shares of 13 549/775 pence each have been issued at prices ranging from £2.82 to £16.90 to satisfy the exercise of options under the Sharesave Schemes by eligible employees.  In addition 1,028,222 shares were allotted at par to US participants in the Long-Term Incentive Plan.

 

As at 30 June 2011


Attributable to equity holders of the Company







Foreign




Ordinary

Share


Capital


exchange




share

premium

Treasury

redemption

Hedging

reserve

Retained

Total


capital

account

shares

reserve

reserve

(translation)

earnings

equity


£ million

£ million

£ million

£ million

£ million

£ million

£ million

£ million










Balance at 1 January 2011

       54.9

      14.8

    (49.6)

     0.1

    (7.4)

        83.7

   717.9

    814.4

Profit for the period

-

-

-

-

-

-

85.1

85.1

Other comprehensive income:









Fair value gains on foreign currency cash flow hedge

 

-

 

-

 

-

 

-

 

1.5

 

-

 

-

 

1.5

Transfers from hedging reserve to property, plant and equipment

 

-

 

-

 

-

 

-

 

(1.2)

 

-

 

-

 

(1.2)

Fair value gains on interest rate swaps

-

-

-

-

1.0

-

-

1.0

Currency translation differences

-

-

-

-

-

(14.4)

-

(14.4)

Deferred tax on items taken to or transferred from equity

 

-

 

-

 

-

 

-

 

(0.1)

 

-

 

-

 

(0.1)

Actuarial gains on retirement benefits(net of tax)

 

         -

 

         -

 

         -

 

         -

 

         -

 

         -

 

     0.1

 

      0.1

Total comprehensive income for the period ended 30 June 2011

 

         -

 

        -

 

         -

 

        -

 

    1.2

 

   (14.4)

 

  85.2

 

   72.0

Transactions with owners:









Credit in respect of employee share awards

-

-

-

-

-

-

10.7

10.7

Issue of ordinary shares to employees under share option schemes

 

-

 

-

 

10.8

 

-

 

-

 

-

 

(10.8)

 

-

Current tax on items taken to or transferred from equity

 

-

 

-

 

-

 

-

 

-

 

-

 

7.8

 

7.8

Deferred tax on items taken to or transferred from equity

 

-

 

-

 

-

 

-

 

-

 

-

 

1.6

 

1.6

New share capital subscribed (Note (i))

0.2

1.0

-

-

-

-

-

1.2

Dividends paid during the period

         -

         -

         -

         -

         -

         -

  (33.2)

 (33.2)


     0.2

    1.0

   10.8

         -

         -

         -

  (23.9)

 (11.9)

Balance at 30 June 2011

    55.1

    15.8

  (38.8)

      0.1 

  (6.2)

    69.3

  779.2

   874.5

 

(i)

During the period 275,862 Ordinary shares of 20 pence each have been issued at prices ranging from £1.89 to £14.32 to satisfy the exercise of options under the Sharesave Schemes by eligible employees.  In addition 666,562 shares were allotted at par to US participants in the Long-Term Incentive Plan.

 

Notes to the Interim Accounts

For the six months ended 30 June 2012 (unaudited)

 

1  General information

 

The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is 120 Bothwell Street, Glasgow, G2 7JS, UK.

 

This condensed interim financial information was approved for issue on 2 August 2012.

 

This condensed consolidated interim financial information does not comprise Statutory Accounts within the meaning of Section 434 of the Companies Act 2006. Statutory Accounts for the year ended 31 December 2011 were approved by the Board on 9 March 2012 and delivered to the Registrar of Companies. The report of the auditors on those Accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

 

The condensed consolidated interim financial information is unaudited but has been reviewed by the Group's auditors, whose report is on page 26.

 

2  Basis of preparation

 

This condensed consolidated interim financial information for the six months ended 30 June 2012 has been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Services Authority and IAS 34 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with IFRSs as adopted by the European Union.

 

Going-concern basis 

 

The Group's banking facilities are primarily in the form of committed bank facilities arranged on a bilateral basis with a number of international banks and private placement notes; facilities totalled £868 million at 30 June 2012.  The financial covenants attached to these facilities are that EBITDA should be no less than 4 times interest (30 June 2012: 26.3 times) and net debt should be no more than 3 times EBITDA (30 June 2012: 1.2 times). The Group does not consider that these covenants are restrictive to its operations.  The maturity profile of the borrowings is detailed in Note 13 to the Accounts. The Group's forecasts and projections show that the facilities in place are currently anticipated to be ample for meeting the Group's operational requirements for the foreseeable future.  The Group therefore continues to adopt the going concern basis in preparing its consolidated interim financial statements.

 

3  Accounting policies

 

The accounting policies are consistent with those of the annual financial statements for the year ended 31 December 2011, as described in those annual financial statements.

 

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 

New and amended standards and interpretations need to be adopted in the first interim financial statements issued after their effective date (or date of early adoption). There are no new IFRSs or IFRICs that are effective for the first time for this interim period that would be expected to have a material impact on the Group.

 

4  Cashflow from operating activities

 


6 months

6 months

Year


ended

ended

ended


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





Profit for the period

108.3

85.1

260.1

Adjustments for:




Tax

38.0

33.9

63.6

Depreciation

110.2

86.5

185.5

Amortisation of intangibles

2.1

1.7

3.6

Finance income

(0.2)

(0.2)

(1.0)

Finance cost

12.0

8.4

19.7

Profit on sale of PPE

(1.6)

(1.8)

(4.6)

Share based payments

8.2

10.7

19.8

Changes in working capital (excluding the effects of exchange differences on


consolidation):


Increase in inventories

(26.2)

(28.6)

(29.3)

Increase in trade and other receivables

(124.7)

(102.3)

(74.4)

Increase in trade and other payables

7.6

61.8

65.8


_____

  _____

_____

Cash generated from operations

 133.7

 155.2

 508.8

 

5  Cash and cash equivalents

 


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





Cash at bank and in hand

21.5

33.0

16.8

Short-term bank deposits

  1.0

 30.0

36.4


22.5

 63.0

53.2





Cash and bank overdrafts include the following for the purposes of the cashflow statement:







30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





Cash and cash equivalents

22.5

63.0

53.2

Bank overdrafts (Note 13)

(28.5)

(18.2)

(18.7)


  (6.0)

   44.8

  34.5

 

6  Segmental reporting

 

(a) Revenue by segment

 


Total revenue

Inter-segment revenue

External revenue


6 months

6 months

Year

6 months

6 months

Year

6 months

6 months

Year


ended

ended

ended

ended

ended

ended

ended

ended

ended


30 Jun

30 Jun

31 Dec

30 Jun

30 Jun

31 Dec

30 Jun

30 Jun

31 Dec


2012

2011

2011

2012

2011

2011

2012

2011

2011


£ million

£ million

£ million

£ million

£ million

£ million

£ million

£ million

£ million

Middle East &

  Developing Europe

70.0

55.8

133.8

-

-

0.1

70.0

55.8

133.7

Europe

94.8

76.4

168.9

-

0.1

0.1

94.8

76.3

168.8

North America

131.8

114.6

258.8

0.1

-

0.1

131.7

114.6

258.7

International Local

107.3

78.5

173.5

0.3

0.3

0.6

107.0

78.2

172.9











Local business

403.9

325.3

735.0

0.4

0.4

0.9

403.5

324.9

734.1

International Power

  Projects

330.5

312.7

662.8

0.3

0.4

0.8

330.2

312.3

662.0

Eliminations

(0.7)

(0.8)

(1.7)

(0.7)

(0.8)

(1.7)

       -

       -

       -











Group

733.7

637.2

1,396.1

      -

      -

      -

733.7

637.2

1,396.1

 

(i)

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.

(ii)

International Power Projects (IPP) is a global segment administered from Dubai. At the end of the period and previous periods the assets of the IPP segment are predominantly located in the Middle East, Asia-Pacific, Latin America and Africa.

(iii)

In accordance with how management monitors the business the results and net assets of the Russia business are now included in the Middle East & Developing segment instead of the Europe segment as previously reported.

Comparative figures have been restated but the effect is not considered material. As a consequence of this the Middle East & South East Europe segment has been renamed the Middle East & Developing Europe segment.

 

(b) Profit by segment

 


Trading profit/(loss) pre intangible

Amortisation of intangible assets



asset amortisation

arising from business

Trading profit/(loss)



combinations



6 months

6 months

Year

6 months

6 months

Year

6 months

6 months

Year


ended

ended

ended

ended

ended

ended

ended

ended

ended


30 Jun

30 Jun

31 Dec

30 Jun

30 Jun

31 Dec

30 Jun

30 Jun

31 Dec


2012

2011

2011

2012

2011

2011

2012

2011

2011


£ million

£ million

£ million

£ million

£ million

£ million

£ million

£ million

£ million

Middle East &

  Developing Europe

12.1

10.0

11.7

-

-

(0.1)

12.1

10.0

11.6

Europe

2.4

(0.3)

30.0

(0.1)

(0.1)

(0.1)

2.3

(0.4)

29.9

North America

21.0

17.0

51.8

(1.2)

(1.2)

(2.5)

19.8

15.8

49.3

International Local

18.5

14.6

30.7

(0.8)

(0.4)

(0.7)

17.7

14.2

30.0











Local business

54.0

41.3

124.2

(2.1)

(1.7)

(3.4)

51.9

39.6

120.8

International Power

  Projects

104.6

85.8

217.1

      -

      -

(0.1)

104.6

85.8

217.0

Group

158.6

127.1

341.3

(2.1)

(1.7)

(3.5)

156.5

125.4

337.8

 


Gain/(loss) on sale of PPE

Operating profit/(loss)


6 months

6 months

Year

6 months

6 months

Year


ended

ended

ended

ended

ended

ended


30 Jun

30 Jun

31 Dec

30 Jun

30 Jun

31 Dec


2012

2011

2011

2012

2011

2011


£ million

£ million

£ million

£ million

£ million

£ million

Middle East & Developing Europe

-

(0.2)

(0.3)

12.1

9.8

11.3

Europe

0.1

-

(0.1)

2.4

(0.4)

29.8

North America

0.9

1.2

2.7

20.7

17.0

52.0

International Local

0.2

0.3

0.7

 17.9

  14.5

   30.7








Local business

1.2

1.3

3.0

53.1

40.9

123.8

International Power Projects

0.4

0.5

1.6

105.0

  86.3

 218.6








Group

1.6

1.8

4.6

158.1

127.2

342.4








Finance costs - net




(11.8)

  (8.2)

 (18.7)








Profit before taxation




146.3

119.0

323.7








Taxation




(38.0)

(33.9)

(63.6)








Profit for the period




108.3

  85.1

  260.1

 

(c) Depreciation and amortisation by segment

 





6 months

6 months

Year





ended

ended

ended





30 Jun

30 Jun

31 Dec





2012

2011

2011





£ million

£ million

£ million

Middle East & Developing Europe




13.5

11.3

24.0

Europe




8.7

9.0

17.3

North America




19.2

15.3

33.3

International Local




 17.3

 11.2

  24.1








Local business




58.7

46.8

98.7

International Power Projects




  53.6

 41.4

  90.4

Group




112.3

 88.2

189.1

 

(d) Capital expenditure on property, plant & equipment and intangible assets by segment

 


6 months

6 months

Year


ended

ended

ended


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million

Middle East & Developing Europe

25.5

18.0

29.5

Europe

41.0

13.7

25.3

North America

35.5

28.9

67.6

International Local

106.0

  59.6

  74.2





Local business

208.0

120.2

196.6

International Power Projects

  89.0

  69.0

229.5

Group

297.0

189.2

426.1

 

(i)

Capital expenditure comprises additions of property, plant and equipment (PPE) of £232.6 million (30 June 2011: £181.0 million, 31 December 2011: £418.2 million), acquisitions of PPE of £47.9 million (30 June 2011: £6.4 million, 31 December 2011: £4.8 million) and acquisitions of other intangible assets of £16.5 million (30 June 2011: £1.8 million, 31 December 2011: £3.1 million).



(ii)

The net book value of total Group disposals of PPE during the period were £3.4 million (30 June 2011: £3.7 million, 31 December 2011: £8.0 million).

 

(e) Total assets by segment

 


6 months

6 months

Year


ended

ended

ended


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million

Middle East & Developing Europe

193.7

181.2

173.0

Europe

226.3

156.1

147.9

North America

321.7

294.4

310.4

International Local

   433.8

   213.0

   243.7





Local business

1,175.5

844.7

875.0

International Power Projects

   945.3

  794.3

   876.7


2,120.8

1,639.0

1,751.7

Deferred and current tax asset

20.3

18.5

20.5

Derivative financial instruments

       0.4

       0.2

       0.2

Total assets per balance sheet

2,141.5

1,657.7

1,772.4

 

7  Dividends

 

The dividends paid in the period were:

 


6 months

6 months

Year


ended

ended

ended


30 Jun

30 Jun

31 Dec


2012

2011

2011





Total dividend (£ million)

36.2

33.2

52.1

Dividend per share (pence)

13.59

12.35

19.55

 

An interim dividend in respect of 2012 of 8.28 pence (2011: 7.20 pence), amounting to a total dividend of £22.0 million (2011: £18.9 million) was proposed during the period. This interim dividend will be paid on 5 October 2012 to shareholders on the register at 7 September 2012, with an ex-dividend date of 5 September 2012.

 

8  Earnings per share

 

Basic earnings per share have been calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares in issue during the period, excluding shares held by the Employee Share Ownership Trusts which are treated as cancelled.

 


30 Jun

30 Jun

31 Dec


2012

2011

2011





Profit for the period (£ million)

108.3

  85.1

260.1





Weighted average number of ordinary shares in issue (million)

263.8

268.5

265.6





Basic earnings per share (pence)

41.03

31.69

97.91

 

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares.  These represent share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period.  The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

 


30 Jun

30 Jun

31 Dec


2012

2011

2011





Profit for the period (£ million)

108.3

  85.1

260.1





Weighted average number of ordinary shares in issue (million)

263.8

268.5

265.6

Adjustment for share options (million)

    0.8

    1.0

    1.1

Diluted weighted average number of ordinary shares in issue (million)

264.6

269.5

266.7





Diluted earnings per share (pence)

40.91

31.58

97.49

 

Aggreko plc assesses the performance of the group by adjusting earnings per share, calculated in accordance with IAS 33, to exclude items it considers to be non-recurring and believes that the exclusion of such items provides a better comparison of business performance. The calculation of earnings per ordinary share on a basis which excludes exceptional items is based on the following adjusted earnings:

 


30 Jun

30 Jun

31 Dec


2012

2011

2011





Profit for the year

108.3

85.1

260.1

Exclude exceptional items

        -

       -

(28.6)

Adjusted earnings

108.3

 85.1

231.5





An adjusted earnings per share figure is presented below.

 




Basic earnings per share pre-exceptional items (pence)

41.03

31.69

87.14

Dilutes earnings per share pre-exceptional items (pence)

40.91

31.58

86.76

 

9  Taxation

 

The taxation charge for the period is based on an estimate of the Group's expected annual effective rate of tax for 2012 based on prevailing tax legislation at 30 June 2012.  This is currently estimated to be 26.0% (2011: 28.5%).

 

10  Goodwill

 


30 Jun

30 Jun

31 Dec


2012

2011

2011

Cost

£ million

£ million

£ million

Balance at beginning of period

65.0

60.4

60.4

Acquisition (Note 18)

86.9

4.7

4.8

Exchange adjustments

   (0.7)

  (0.3)

  (0.2)

At end of period

 151.2

  64.8

  65.0


_____

____

____

Accumulated impairment losses

         -

        -

        -


_____

____

____

Net book value at end of period

 151.2

  64.8

  65.0

 

11  Property, plant and equipment

Six months ended 30 June 2012



Short


Vehicles,



Freehold

leasehold

Rental

plant &



properties

properties

fleet

equipment

Total


£ million

£ million

£ million

£ million

£ million

Cost






At 1 January 2012

58.3

16.7

2,012.6

78.9

2,166.5

Exchange adjustments

(0.7)

(0.4)

(33.1)

(1.5)

(35.7)

Additions

0.6

1.1

219.6

11.3

232.6

Acquisitions (Note 18)

-

0.1

44.8

3.0

47.9

Disposals

(0.4)

(0.4)

  (22.4)

(1.4)

  (24.6)

At 30 June 2012

57.8

17.1

2,221.5

90.3

2,386.7







Accumulated depreciation






At 1 January 2012

16.7

9.0

997.8

56.0

1,079.5

Exchange adjustments

(0.4)

(0.2)

(15.7)

(0.8)

(17.1)

Charge for the period

0.9

0.9

103.4

5.0

110.2

Disposals

(0.4)

(0.4)

  (19.2)

(1.2)

  (21.2)

At 30 June 2012

16.8

  9.3

1,066.3

59.0

1,151.4







Net book values






At 30 June 2012

41.0

 7.8

1,155.2

31.3

1,235.3

At 31 December 2011

41.6

 7.7

1,014.8

22.9

1,087.0

 

Six months ended 30 June 2011

 



Short


Vehicles,



Freehold

leasehold

Rental

plant &



properties

properties

fleet

equipment

Total


£ million

£ million

£ million

£ million

£ million

Cost






At 1 January 2011

46.2

15.8

1,659.8

71.4

1,793.2

Exchange adjustments

(0.1)

-

(31.5)

-

(31.6)

Additions

-

1.1

169.4

10.5

181.0

Acquisitions

-

-

6.4

-

6.4

Disposals

         -

  (0.1)

  (23.0)

 (0.5)

  (23.6)

At 30 June 2011

   46.1

   16.8

1,781.1

 81.4

1,925.4







Accumulated depreciation






At 1 January 2011

15.3

8.1

858.1

52.9

934.4

Exchange adjustments

(0.1)

-

(14.9)

-

(15.0)

Charge for the period

0.6

0.8

81.3

3.8

86.5

Disposals

         -

 (0.1)

 (19.4)

 (0.4)

(19.9)

At 30 June 2011

   15.8

    8.8

  905.1

 56.3

 986.0







Net book values






At 30 June 2011

   30.3

   8.0

 876.0

 25.1

 939.4

At 31 December 2010

   30.9

   7.7

 801.7

 18.5

 858.8

 

12  Trade and other receivables

 


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





Trade receivables

398.1

312.9

300.5

Less: provision for impairment of receivables

 (53.6)

 (45.7)

(36.3)

Trade receivables - net

344.5

267.2

264.2

Prepayments and accrued income

126.8

103.8

89.0

Other receivables

   36.9

   38.9

  29.6

Total receivables

 508.2

 409.9

 382.8





Provision for impairment of receivables





30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million

Middle East & Developing Europe

2.2

1.8

1.8

Europe

2.6

2.7

2.8

North America

1.8

1.3

1.4

International Local

   2.6

   0.9

   1.6

Local Business

9.2

6.7

7.6

International Power Projects

 44.4

  39.0

 28.7

Group

 53.6

  45.7

 36.3

 

13  Borrowings

 


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





Non-current




Bank borrowings

397.3

281.1

202.5

Private placement notes

 240.4

        -

178.3


 637.7

281.1

380.8

Current




Bank overdrafts

28.5

18.2

18.7

Bank borrowings

  34.6

  20.9

  18.2


  63.1

  39.1

  36.9





Total borrowings

700.8

320.2

417.7





Short-term deposits

(1.0)

(30.0)

(36.4)

Cash at bank and in hand

(21.5)

(33.0)

(16.8)





Net borrowings

678.3

257.2

364.5





Overdrafts and borrowings are unsecured.








The maturity of financial liabilities




The maturity profile of the borrowings was as follows:





30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





Within 1 year, or on demand

63.1

39.1

36.9

Between 1 and 2 years

233.8

10.1

170.0

Between 2 and 3 years

-

80.5

-

Between 3 and 4 years

163.5

-

32.5

Between 4 and 5 years

-

  18.7

-

Greater than 5 years

 240.4

 171.8

178.3


 700.8

 320.2

417.7





Since 30 June 2012 we have put in place a new committed bank facility of £77 million with a maturity of four years.

 

14  Capital commitments

 


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





Contracted but not provided for (property, plant and equipment)

  44.5

  38.4

  21.0

 

15  Pension commitments

 

Analysis of movement in retirement benefit obligation in the period:

 


30 Jun

30 Jun

31 Dec


2012

2011

2011


£ million

£ million

£ million





At start of period

(5.5)

(3.2)

(3.2)

Income statement expense

(1.2)

(0.9)

(1.7)

Contributions

1.7

3.4

4.4

Net actuarial gain/(loss)

    4.4

     0.1

  (5.0)

At end of period

  (0.6)

   (0.6)

  (5.5)

 

16  Related party transactions

 

Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.  There were no other related party transactions in the period.

 

17  Seasonality

 

The Group is subject to seasonality with the third quarter of the year being our peak demand period, accordingly revenue and profits have historically been higher in the second half of the year.

 

18   Acquisitions

 

On 16 April 2012 the Group completed the acquisition of the entire share capital of Companhia Brasileira de Locacoes ("Poit Energia"), a leading provider of temporary power solutions in South America. The acquisition of Poit Energia supports Aggreko's strategy of expanding its Local businesses in fast growing economies; it strengthens Aggreko's business in South America, both in terms of geographical footprint and access to sectors which Aggreko is currently not in or has limited exposure.

 

The purchase consideration, paid in cash, comprises a fixed element of £104.7 million (£103.1 million of which has been paid at the half year and £1.6 million of which is payable in half two 2012) and further payments up to a maximum of £20.4 million if performance targets for the year to 31 December 2012 are met. The total £20.4 million has been accrued. This gives a total maximum cash consideration of £125.1 million.

 

The initial transaction price of £137.5 million (R$404 million) disclosed at the time of the acquisition was made up of £104.7 million consideration payable to the owners of Poit Energia plus £32.8 million of debt (including loans and financing) to be paid off by Aggreko on behalf of Poit Energia. Of the £137.5 million, £130.3 million was settled by the half year comprising £103.1 million of the fixed consideration and £27.2 million of debt (£22.2 million of loans and financing and £5.0 million of working capital payments). The remaining consideration of £1.6 million will be paid in half two 2012 and the remaining debt amount of £5.6 million will be settled in the normal course of business as it falls due.

 

The revenue and operating profit included in the consolidated income statement from 16 April 2012 to 30 June 2012 contributed by Poit Energia was £10.9 million and £1.6 million respectively. Had Poit Energia been consolidated from 1 January 2012, the consolidated income statement for the six months ended 30 June 2012 would show revenue and operating profit of £26.2 million and £2.4 million respectively.

 

The acquisition method of accounting has been adopted and the goodwill arising on the purchase has been capitalised. Acquisition related costs of £1.6 million have been expensed in the period within Administrative expenses in the income statement. The details of the transaction and fair value of assets acquired are shown below:

 


Fair value


£ million

Intangible assets

16.5

Property, plant & equipment

47.9

Inventories

2.8

Trade and other receivables

10.2

Deferred tax asset

5.9

Cash & Cash equivalents

3.4

Trade and other payables

(19.4)

Deferred tax liability

(5.6)

Loans & financing

 (23.5)

Net assets acquired

38.2

Goodwill

   86.9

Consideration

125.1

Less contingent consideration 

 (20.4)

Less consideration payable in half two 2012

(1.6)

Less cash and cash equivalents acquired

  (3.4)

Net cash outflow

  99.7

 

Reconciliation to cash flow statement

 


£ million

Acquisitions (net of cash acquired) per cash flow statement

99.7

Add back cash acquired

   3.4

Total fixed consideration  paid out at 30 June 2012

103.1

Acquisitions : repayment of loans & financing per cash flow statement

22.2

Working capital movements (included as part of working capital movements in Note 4)

   5.0

Total cash outflow in the period

130.3

 

The fair value adjustments contain some provisional amounts which will be finalised in the 2012 Annual Report & Accounts. These include estimated values for inventory as well as the physical condition of fleet assets which have still to be finally assessed.

 

Intangible assets represent customer relationships and a non-compete agreement. Goodwill represents the value of synergies arising from the integration of the acquired business. Synergies include direct cost savings and the reduction of overheads as well as the ability to leverage Aggreko systems and access to assets.

 

Statement of Directors' Responsibilities

 

The Directors confirm that to the best of their knowledge, these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

·    An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

 

·    Material related party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

 

The Directors of Aggreko plc are listed in the Aggreko plc Annual Report for 31 December 2011 with the exception of the following changes in the period: Philip Rogerson retired on 25 April 2012 and Diana Layfield was appointed on 1 May 2012.

 

By order of the Board

 

Rupert Soames

Chief Executive

 

Angus Cockburn

Finance Director

 

2 August 2012

 

Independent Review Report to Aggreko plc

 

Introduction

 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012, which comprises the Group income statement, Group statement of comprehensive income, Group Balance sheet, Group cash flow statement, Group statement of changes in equity and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

Directors' responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our responsibility

 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

PricewaterhouseCoopers LLP

Chartered Accountants

Glasgow

 

2 August 2012

 


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