Post on 29-Sep-2020
1Results Presentation March 2018
For the year ended 31 December 2017
ResultsPresentation
6 MARCH 2018
2Results Presentation March 2018
IntroductionChris WestonCEO
3Results Presentation March 2018
Operating & financial review
Heath DrewettCFO
4Results Presentation March 2018
Group summary
Group revenue up 4%, 9% excluding Argentina
Exceptional charge of £41 million relating to investment in our business priorities programme
Tax rate of 29%
Recommended final dividend in line with 2016
PBT in line with market expectations
Movement
£m pre-exceptional items FY17 FY16 CHANGE
CHANGE excluding
pass-through fuel and currency
Revenue 1,730 1,515 14% 4%
Operating profit 229 248 (8)% (10)%
Net interest expense (34) (27) (28)%
Profit before tax 195 221 (12)%
Taxation (57) (63) 9%
Profit after tax 138 158 (13)%
Diluted earnings per share 53.9p 61.9p (13)%
Dividend per share 27.1p 27.1p -
Operating margin 13% 16% (3)pp
ROCE 11% 13% (2)pp
5Results Presentation March 2018
Movement
pre-exceptional items FY17 FY16 CHANGE
CHANGE excluding currency
Revenue (£m) 720 629 15% 9%
Operating profit (£m) 81 52 57% 49%
Operating margin 11% 8%
ROCE 12% 8%
Fleet capital expenditure (£m) 55 68
Business performance
RENTAL SOLUTIONS
FY17
DIESEL
2,396
GAS UTILISATION
56%
FY16
2,255
52%
% REVENUE BY SECTOR FY17
Business services & construction
Petrochemical & refining
Utilities
Events
Oil & gas
Manufacturing
Mining
Other
21%
17%
11%
10%
9%
8%
5%
19%
FLEETat 31 December (MW)
45%
REVENUE(% OF GROUP excl. pass-through fuel)
6Results Presentation March 2018
68%
Business performance
POWER SOLUTIONS INDUSTRIAL
Movement
pre-exceptional items FY17 FY16 CHANGE
CHANGE excluding currency
Revenue (£m) 340 262 30% 20%
Operating profit (£m) 55 32 71% 53%
Operating margin 16% 12%
ROCE 11% 7%
Fleet capital expenditure (£m) 43 37
FY17
DIESEL
2,521
GAS
FY16
2,46563%
UTILISATION
% REVENUE BY SECTOR FY17
Oil & Gas
Business services & construction
Events
Manufacturing
Utilities
Mining
Petrochemical & refining
Other
39%
17%
11%
8%
7%
7%
2%
9%
FLEETat 31 December (MW)
21%
REVENUE(% OF GROUP excl. pass-through fuel)
7Results Presentation March 2018
Business performance
Movement
pre-exceptional items & excluding pass-through fuel FY17 FY16 CHANGE
CHANGE excluding pass-
through fuel and currency
Revenue (£m) 531 564 (6)% (9)%
Operating profit (£m) 96 164 (42)% (42)%
Operating margin 18% 29%
ROCE 10% 19%
Fleet capital expenditure (£m) 148 136
POWER SOLUTIONS UTILITY
34%
FY17
DIESEL
5,004
GAS
FLEETat 31 December (MW)
74% FY16
4,947
79%
HFO UTILISATION
Utilities
Oil & gas
Mining
Manufacturing
Other
83%
7%
6%
3%
% REVENUE BY SECTOR FY17
1%
REVENUE(% OF GROUP excl. pass-through fuel)
8Results Presentation March 2018
Cash flow
Capital expenditure of £272 million
− Fleet capex of £246 million
Three acquisitions completed in year
− Younicos £45m
− KBT £25m
− TuCo £3m
Net debt to EBITDA of 1.2 times, unchanged
£m FY17 FY16
EBITDA 529 533
Working capital (51) (119)
Cash flows relating to exceptional items (30) (23)
Other 2 (3)
Operating cash flow 450 388
Tax (69) (64)
Net interest (34) (26)
Acquisitions (73) (22)
Purchase of fixed assets (272) (263)
Other fixed asset movements 9 18
Free cash flow 11 31
Dividends (69) (69)
Changes in equity - (8)
Net cash flow (58) (46)
Exchange 55 (114)
Movement in net debt (3) (160)
Net debt (652) (649)
9Results Presentation March 2018
Working capital
INVENTORY
NET POSITION
PAYABLES
RECEIVABLES
-163
+113
Inventory
Increased activity driven by major events and growth in Eurasia, offset by improved inventory management
Payables
Improvement in supplier terms; best practice employed to leverage scale
Receivables
Revenue growth drove £90 million outflow
£36 million outflow as a result of payment delays in Africa
Power Solutions Utility provision increased $23 million
2016
2017
-81
-17
-21
-1
2016
2017
2016
2017
10Results Presentation March 2018
Reporting changes
Reflecting the changes in our business
− focusing on what matters
More emphasis on average MW on hire, reduced prominence of order intake
− no longer routinely announcing large individual contract wins
Increased customer sector focus
− re-assign non utility work out of Power Solutions Utility into Industrial
No future Q1 trading updates
11Results Presentation March 2018
Outlook
Continued growth expected in Rental Solutions and Power Solutions Industrial
− further benefits of the business priorities programme
− leveraging operational gearing
Off-hires in Japan and discounted pricing in Argentina remain headwinds for Power Solutions Utility
Recent strengthening of Sterling creates adverse translation effects
− continuation of current rates would drive a c. 8% adverse profit impact
Overall, excluding currency effects, 2018 profit before tax expected to be in line with 2017
12Results Presentation March 2018
Making a massive differencefor our customers
Chris WestonCEO
13Results Presentation March 2018
How we see our business today
Making a massive difference for our customers and the communities we serve
People & Always Orange
13Results Presentation March 2018
Technology EfficiencyCustomer
Aggreko is a customer focused specialist provider of power, temperature control and energy services on a
global basis
14Results Presentation March 2018
Rental Solutions
Introduced sector focus
− 387 dedicated sales employees across the business
Reorganised business operations
£27 million cost removed across Rental
Rebuilt customer journey
− significant investment in new systems
Selective acquisitions
What we’ve done
+9%
2016 2017 2016 2017 Results Presentation March 2018 14
RESULTS TO DATE
Revenue growing ROCE growing Utilisation improving
Continued sector focus and specialisation
Use new back office systems, remote monitoring and data analytics to drive efficiency
Drive to higher value, complex solutions
Increase utilisation to >60% via fleet management systems
Introduce e-commerce
Going forwardMarket drivers
56%
UTILISATION
12%
8%
GDP growth in developed markets 2017 - 2021
1.7
2.2
2.0
1.8
1.7
15Results Presentation March 2018
Power Solutions Industrial
Sector focus
− Closed 20 depots; remaining around key sector locations
− 130 sector specialists employed
Removed £25m of costs
Fleet rationalization and redeployment to improve utilisation
What we’ve done
2016 2017
68%
UTILISATION Results Presentation March 2018 15
RESULTS TO DATE
Revenue growing ROCE growing Utilisation improving
Continued sector focus and specialisation
Deploy systems proven in Rental Solutions
− Use new back office systems and remote monitoring to drive efficiency
Drive to higher value, complex solutions
Increase utilisation to over 70% via fleet management systems
Going forwardMarket drivers
2016 2017
11%
7%
+20%
Copper price forecast $/mt 2018-2021
Oil price forecast $/BBL 2018-2021
60
60
62
61
6,700
6,800
6,719
7,050
16Results Presentation March 2018
Power Solutions Utility
Market Intelligence Platform improves market understanding & customer insight
58 dedicated regional specialists
Removed £44 million of cost
New products designed to meet customer needs
Deployed CRM system
Enhanced sales discipline and focus
What we’ve done
74%
UTILISATION Results Presentation March 2018 16
RESULTS TO DATE IMPACTED BY LEGACY CONTRACTS
Utilisation down
Use new back office systems, remote monitoring and data analytics to drive efficiency
Continued drive to reduce receivables and inventory
Continue to develop sales discipline
Improve utilisation to above 80%
− particular focus on HFO & NGG sales
Market drivers Going forward
GDP growth & commodities
Transmission & distribution
Renewables penetration
Total market conversion 2 – 2.5GW
2016 2017
Revenue down ROCE decline
2016 2017
8%
(9)%
11%
Argentina
8%
2%
17Results Presentation March 2018
The future: energy markets are transforming
Our digitalisation
Opportunity as we digitalise Aggreko
Operating data collection via the ROC
Data analytics to benefit maintenance costs and customer focused product development
Y.Q system significantly enhances our ability to understand customer profiles and tailor solutions
Cloud based data analytics
Energy market interface (where applicable)
18Results Presentation March 2018
\\\\\\\\
Added capabilities to enhance our skills
− Younicos brings software to smoothly manage integration of thermal, renewable and storage
Opportunity as renewables grow and need to be integrated
− Off grid & microgrid
− Commercial & Industrial behind the meter
− Improve efficiency: driving down cost for customers, and through own use
The future: energy markets are transforming
Decarbonisation, decentralisation and digitalisation are changing the ways we generate and consume energy, globally
19Results Presentation March 2018
The group has been through significant, and necessary changes
Rental Solutions & Power Solutions Industrial are performing well
Utility is not where it needs to be
− Legacy issues now clearing
Team and plan in place to deliver
Summary
19Results Presentation March 2018
20Results Presentation March 2018
Aggreko is a customer focused specialist provider of power, temperature control and energy services on a global basis. These services are based on modular and mobile equipment operated on a digital platform with a market leading integration capability.
20Results Presentation March 2018
21Results Presentation March 2018
Appendix
22Results Presentation March 2018
Revenue mix
1 Excluding revenue from pass–through fuel and currency.
Revenue % of Revenue mix (excl. fuel)
FY17£m
FY16£m
Underlying1
changeFY17
%FY16
%Change
pp
Power 1,010 966 (1)% 64% 66% (2)
Temperature control 182 161 7% 11% 11% -
Oil-free air 31 28 6% 2% 2% -
Total rental 1,223 1,155 1% 77% 79% (2)
Service revenue 368 300 16% 23% 21% 2
Revenue excl. pass-through fuel 1,591 1,455 4% 100% 100%
Pass-through fuel 139 60 n/a
Total revenue 1,730 1,515 4%
23Results Presentation March 2018
Balance sheet
£m FY17 FY16
Intangible assets / goodwill 215 183
Tangible fixed assets 1,214 1,309
Working capital 586 603
Retirement benefit obligation (25) (30)
Derivative financial instruments (3) (6)
Provisions for taxes (18) (42)
Net debt (652) (649)
Net assets 1,317 1,368
24Results Presentation March 2018
Foreign exchange impact
Note: UAE Dirhams included within US Dollar as it is pegged to the US dollar; Argentinian Peso includes Power Solutions Utility contracts which are pegged to the US Dollar but paid and reported in Argentinian Pesos.
FX RATES REVENUE (£m)
FY17average
February2018 closing
FY17 actual
FY17 Restated at February
2018 closing rates Variance % Variance
US Dollar 1.29 1.39 834 771 (63) (8)%
Euro 1.14 1.13 213 214 1 1%
Australian Dollar 1.68 1.78 78 74 (4) (5)%
Argentinian Peso 21.36 27.77 64 49 (15) (23)%
Brazilian Real 4.12 4.54 217 197 (20) (9)%
Canadian Dollar 1.67 1.77 24 22 (2) (6)%
Russian Rouble 75.19 78.95 76 73 (3) (5)%
Other 224 216 (8) (4)%
Total revenue 1,730 1,616 (114) (7)%
Total operating profit 229 211 (18) (8)%
25Results Presentation March 2018
IFRS 15 impact
Effective from 1 January 2018
Revenue is recognised when we transfer control of goods/services to the customer
The costs to fulfil the service to the customer (including mob/demob) will be amortised over the period of the initial contract
In 2017, the effect of this would have been immaterial:
− revenue increase of £2m
− operating cost increase of £5m
− PBT reduction of £3m
We will restate 2017 numbers as part of our 2018 reporting
Further detail is included in the notes to the accounts in the Annual Report
26Results Presentation March 2018
Impact of US tax reforms
Aggreko’s US business accounted for 17% of Group PBT and 10% of Group tax charge in 2017 so overall impact is limited
We benefitted from a one off reduction in tax rate of c.5pp in 2017 due to the revaluation of deferred tax liabilities as a result of the permanent reduction in the US statutory corporate income tax rate from 35% to 21% (24.75% including state tax)
Assuming no change to the relative proportion of business from the US, based on 2017 pre-exceptional PBT, the impact for Group is:
− Reduction in the Group’s ETR of c.1.5pp
− Assuming no increase in the current level of debt in our US business, we do not anticipate that there will be a material restriction on the level of deductible interest
− We do not anticipate that the Base Erosion & Anti Avoidance Tax (“BEAT”) will impact Aggreko assuming that the current levels of annual gross receipts remain as now
Note: ETR is effective tax rate
27Results Presentation March 2018
Disclaimer
The information contained in this presentation has largely been extracted from the Results Announcement for the year ended 31December 2017.
This presentation may contain certain “forward-looking” statements. By their nature, forward-looking statements involve risk anduncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from anyoutcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf ofAggreko speak only as of the date they are made and no representation or warranty is given in relation to them, including as to theircompleteness 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 aresubject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements.
All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere.