Final Results

Aggreko plc

RESULTS FOR THE TWELVE MONTHS TO 31 DECEMBER 2010

EARNINGS PER SHARE UP 27%; DIVIDEND UP 50%; £150 MILLION RETURN OF CAPITAL

Aggreko plc, the world leader in the supply of temporary power and temperature control, announces its results for the twelve months to 31 December 2010.

·; Another record performance, with revenue increasing 20% and earnings per share up 27%; highest-ever levels of margin, earnings and return on capital employed

·; Strong performance by Local businesses; revenues up 24% and trading profit up 45%

− Outstanding year for major events: £87m of revenue from Vancouver Winter Olympics, FIFA World Cup and Asian Games. Selected to be exclusive supplier of Temporary Energy Services for London 2012

·; International Power Projects; revenues up 8% and trading profit up 5%

− Record 1,300 MW of new work secured in 25 countries; over 50% of International Power Projects fleet now on rent in Asia and Central & South America; 2010 closing order book up 60% on prior year

− Strong momentum; 14% year-on-year increase in MW on rent at start of 2011

·; Record fleet capex of £320m planned for 2011; £30m invested in bolt-on acquisitions in last three months.

·; Substantial increase in returns to shareholders

− Dividend up by 50%

− Plan to move from Net Debt to EBITDA of 0.3 times to around 1 times in next 2-3 years; an initial return of capital to shareholders of £150m proposed for 2011

− Demonstrates continued strength of operating cashflows and confidence in business model

Philip Rogerson, Chairman, commented:

"I am pleased to report that Aggreko has produced another strong set of results, and that we are in a position to increase returns to shareholders substantially, while continuing to invest at record levels in growing the business."

"The current instability in some countries in the Middle East and Africa makes the task of predicting the outcome for the year more than normally difficult. Our global scale and diversification of risk exposures will be helpful as we manage through this period of uncertainty, and we anticipate that for the year as a whole trading profit in 2011 will be at a similar level to 2010. Allowing for currency movements and the £87 million of major events revenue in 2010 which will not recur in 2011, this would represent underlying growth of around 15%."

Rupert Soames, Chief Executive, commented:

"2010 demonstrated the strength of Aggreko's business model. A hat-trick of major events has allowed us to deliver strong earnings growth while our International Power Projects business completely re-structured its order book and delivered the key strategic objective of improving the regional balance of business between Africa, the Americas and Asia. We go into 2011 with strong momentum, a record order book in International Power Projects, and continued strong demand driven by the world-wide shortage of power."

"We expect both International Power Projects and our Local businesses to deliver good growth on an underlying basis in 2011, and to support this, fleet capital investment in 2011 is expected to increase by 26% to a record £320 million."

Regional performance metrics:

- ENDS -

Enquiries to:

Angus Cockburn / Rupert Soames

Aggreko plc

0141 225 5900

Neil Bennett / George Hudson

Maitland

020 7379 5151

CHAIRMAN'S STATEMENT

Introduction

I am pleased to report that Aggreko has delivered another strong set of results. Reported revenue in 2010 grew by 20% to £1,230 million (2009: £1,024 million) and trading profit (1) grew by 23% to £312 million (2009: £252 million). Trading margin (2)increased to 25.4% (2009: 24.7%), while profit before tax increased by 25% to £304 million (2009: £244 million) and earnings per share increased by 27% to 79.37 pence (2009: 62.67 pence). Return on average capital employed improved by 3.4pp to 32.4%.

Amongst our businesses, International Power Projects grew revenue in constant currency and excluding pass-through fuel (3) by 8%, and recorded the highest level of order intake in its history. Our Local business saw revenue grow by 24% on a constant currency basis over 2009, helped by three major sporting events (the Vancouver Winter Olympics, FIFA World Cup and the Asian Games). Excluding revenues from these events, and in constant currency, Local business revenues grew by 11%.

Strategy

Aggreko's strategy has remained broadly unchanged since it was developed in 2003. Our goal is to deliver attractive and growing returns to shareholders, excellent service to customers, and rewarding careers to our employees by being the leading global provider of temporary power and temperature control. We focus on growing our business organically, supported by fleet investment and geographic expansion, but we will also make acquisitions where they can add value. We continued to invest heavily in the business in 2010, with fleet capital expenditure increasing by £105 million to £254 million, which is 1.7 times depreciation. In addition, on 3 December 2010 we completed the acquisition of Northland Power Services, a leading provider of power solutions for the oil and gas exploration and production market in the Rocky Mountains region of North America, for a maximum consideration of £16.7 million; and on 7 March 2011 we announced an agreement to acquire N.Z. Generator Hire Limited in New Zealand for £12.7 million.

In March 2010 we reported on the result of our biennial strategy update. In this update we reiterated our belief that the business could deliver, on average, double-digit revenue and earnings growth over the period 2007-2012, with fleet capital expenditure expected to be around £1 billion over the same period. I am pleased to report that we are ahead of plan, having delivered compound annual growth over the first three years, in constant currency, of 13% in revenue and 20% in operating profit. Fleet capital expenditure over the period has averaged £220 million per annum - which is slightly above our original forecast; in 2011 we expect to invest around £320 million, due to an increase in the rate of investment in our gas fleet and in the expansion of our Local business service centre network. We believe that our strategies for both the Local and International Power Projects businesses are working well, and that our aspiration of delivering double-digit revenue and earnings growth on average over the five years to 2012 remains achievable, although, as we have repeatedly said, there may be peaks and troughs along the way.

Funding

The business delivered a strong cash performance in the year. Net cash inflow from operations during the year increased by 9% to £468 million (2009: £431 million). This funded capital expenditure of £269 million, which was £108 million higher than in 2009. The strong cashflow resulted in a reduction of net debt during the year of £43 million, to stand at £132 million at 31 December 2010.

Our financial position continues to be very strong with net debt to EBITDA (Earnings before Interest Tax Depreciation & Amortisation) of 0.3 times (2009: 0.4 times) at 31 December 2010 compared to our bank covenant of 3 times. Interest cover, measured on an EBITDA basis, is at 47.1 times (2009: 22.8 times), far ahead of our covenant of 4 times. Towards the end of 2010, we refinanced £459 million of bank facilities, putting in place new facilities with maturities of 3 and 5 years. In addition, since the year end, we have for the first time raised funding in the US private placement market, securing US$275 million (£177 million), with maturities ranging between 7 and 10 years and with the same financial covenants as our banking facilities. Drawdown of these funds will take place in mid March 2011.

Dividend

In view of the strong performance of the business, and as announced at the time of the Interim results, the Board is recommending a 50% increase in the dividend for the year as a whole; this will comprise a final dividend of 12.35 pence per ordinary share which, when added to the interim dividend of 6.55 pence, gives a total for the year of 18.90 pence (2009: 12.60 pence). At this level, the dividend would be covered 4.20 times. Subject to approval by shareholders, the final dividend will be paid on 19 May 2011 to ordinary shareholders on the register as at 15 April 2011, with an ex-dividend date of 13 April 2011.

Return to shareholders

The Board has carried out a review of the Group's balance sheet structure, and I am pleased to say that, in addition to the 50% increase in the dividend referred to above, we plan to make a return of capital to shareholders.

The review of the balance sheet structure concluded that our strong trading performance and confidence in the outlook allows us to increase the returns which the Group makes to its shareholders, while sustaining investment in the long-term growth of the business. The Board believes gearing of around 1 times net debt to EBITDA, which is close to the average level the Group has had since demerger, is an appropriate level for the business. Absent some particularly large demand on our resources (such as a major acquisition or investment in a new product line), such a level will allow us to support our strategic priority of investing as fast as we prudently can in the organic growth of the business, while at the same time continuing to grow the ordinary dividend appropriately.

The current level of net debt to EBITDA is 0.3 times, and we plan to move back to a level of around 1 times net debt to EBITDA over the next two to three years. Subject to shareholder approval, we propose to start this process with an initial return to ordinary shareholders of approximately £150 million, to be effected by way of a return of value of around 55 pence in respect of each existing ordinary share in issue at the relevant record date (which is likely to be in early July 2011). The return will be made by way of a B share scheme, which will give shareholders some choice as to when, and in what form, they receive their proceeds from the return of value. Notably, it should allow most individual UK taxpayers to receive the return in the form of a capital receipt, if they so wish. The B share scheme will be accompanied by a share consolidation designed to maintain comparability of share price and return per share of the ordinary shares before and after the creation of the B shares.

A circular will be sent to shareholders setting out the details of these proposals in early May 2011.

Employees

On behalf of the Board, I wish to express my sincere thanks to all our colleagues across the Group for their commitment and support throughout another very busy year.

Ethics Committee

Integrity and honesty in all our business dealings are central to Aggreko's reputation and long term success. For many years the Group has had a clear and robust ethics policy, and strong related procedures; the Board has now taken the further step of establishing a committee chaired by myself along with David Hamill and Ken Hanna, whose principal tasks are to advise the Board on the development of strategy and policy on ethical matters, and to oversee Aggreko's policies and procedures for the identification, assessment, management and reporting of ethical risk. The Ethics Committee had its first meeting in February 2011 and I look forward to including a full report on its activities in our 2011 Annual Report.

Board changes

Nigel Northridge retired as a director on 31 August 2010. Nigel joined the Board in February 2002, and we have benefitted enormously from his advice and experience. David Hamill has now succeeded him as Senior Independent Director, and Russell King as Chairman of the Remuneration Committee.

On 21 October 2010 we were delighted to announce the appointment of Ken Hanna as a Non-executive Director. Ken is Chairman of Inchcape plc and a Non-executive Director of Tesco plc. A Chartered Accountant, during his career he has worked in a number of general management and financial roles, including Chief Financial Officer of Cadbury plc from 2004 to 2009. His significant international experience and financial expertise will add further strength to the Board.

Outlook for 2011

The current instability in some countries in the Middle East and Africa makes the task of predicting the outcome for the year more than normally difficult; our global scale and diversification of risk exposures will be helpful as we manage through this period of uncertainty. We currently anticipate that for the year as a whole trading profit in 2011 will be at a similar level to 2010. Allowing for currency movements and the £87 million of major events revenue in 2010 which will not recur in 2011, this would represent underlying growth of around 15%. We expect both International Power Projects and our Local businesses to deliver good growth on an underlying basis in 2011, and to support this, fleet capital investment is expected to increase by 26% to a record £320 million.

In International Power Projects, the business will benefit from the strong order-intake seen in 2010, and the order book is now some 60% higher than the prior year as a consequence of signing several large multi-year contracts. The off-hire rate has fallen sharply in recent months, and the business started the year with nearly 14% more capacity on rent than at the beginning of 2010; as a consequence we expect the business to deliver strong growth in 2011.

Amongst the Local businesses, we are expecting all of our businesses to deliver underlying growth. In North America, we expect the recovery seen in the second half of 2010 to continue into 2011. In Europe and the Middle East, we also expect to see growth in 2011, albeit at more modest levels than North America. In Aggreko International's Local business, we are continuing our programme of geographic expansion, and expect to open several new service centres during the year; we expect this business to deliver strong underlying revenue growth in 2011.

Philip G Rogerson

Chairman

10 March 2011

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

(2) Trading margin represents trading profit over reported revenue.

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

Review of Trading

Group Trading Performance

These results are for the 52 weeks ended 31 December 2010. In the last full financial year (2009) we reported a 53-week period.

Aggreko delivered another strong trading performance in 2010, with reported revenues growing by 20% and earnings per share growing by 27%. Our International Power Projects business won a record level of new orders and, in the Local business, trading profit grew by 53%, helped by an "annus mirabilis" in our events business where we provided power to the Vancouver Winter Olympics (VANOC), the FIFA World Cup in South Africa and the Asian Games in Guangzhou.

As reported, Group revenue at £1,229.9 million (2009: £1,023.9 million) was 20% higher than 2009, while Group trading profit of £311.8 million (2009: £252.5 million) was 23% ahead of 2009. This delivered an increase in Group trading margin from 24.7% in 2009 to 25.4% in 2010. Return on capital employed, measured as operating profit divided by average net operating assets, improved by 3.4pp to 32.4% (2009: 29.0%). The weakening of Sterling during the year, particularly against the US Dollar and the Australian Dollar, had the effect of increasing reported revenue by £23.4 million and trading profit by £6.5 million.

Group profit before tax increased by 25% to £304.4 million (2009: £244.0 million), and profit after tax increased by 27% to £213.1 million (2009: £168.4 million). Earnings per share grew 27% to 79.37 pence (2009: 62.67 pence). The effective tax rate for the full year is 30.0% compared to 31.0% in the prior year.

As mentioned above, 2010 was an exceptional year for major sporting events; among them, the FIFA World Cup, the Vancouver Winter Olympics and the Asian Games accounted for £87 million of revenue in 2010. 2009, on the other hand, had the benefit of a 53rd week. To give investors a better understanding of the performance of the business without these one-off events, we also report movements in "underlying" revenue and profit. This is defined as revenue and profit adjusted, where appropriate, for currency movements, pass-through fuel and the impact of both the 53rd week in 2009 and of the three major sporting events (VANOC, FIFA World Cup and Asian Games). On this basis, underlying revenue and trading profit both increased by 11% on the prior year. On the same basis trading margin was 25.4% (2009: 25.4%).

Fleet capital expenditure for the year was £254.4 million (2009: £149.7 million) which represented 95% of total capital expenditure. This fleet spend was 173% of the depreciation charge in the period, reflecting the continued expansion of our rental fleet; our International business accounted for 64% of this investment. In addition, we acquired £5.6 million of property, plant and equipment as part of the acquisition of Northland Power Services, a power rental business based in Wyoming, which was acquired in December 2010. Capital productivity - expressed as the ratio of revenue (excluding pass-through fuel) to average gross rental assets - increased from 71% to 76%, driven by improved utilisation and rates in the Local business and the exceptional level of major sporting events, which are generally less capital intensive than the rest of the business.

The Group delivered another strong performance on cash. EBITDA (earnings before interest, taxes, depreciation and amortisation) increased 15% to £475.6 million. This was a material factor in the decrease in net debt of £43.3 million to £132.2 million despite a 67% increase in total capital expenditure.

Corporate Activity

On 3 December 2010 we completed the acquisition of Northland Power Services, a leading provider of temporary power solutions for the oil and gas exploration and production market in the Rocky Mountains region of North America, for a maximum consideration of $25.7 million (£16.7 million). The oil and gas market is a key focus for Aggreko, both in North America and worldwide, and the Northland acquisition strengthens Aggreko's position in the market as a whole and in the particular segment of supporting the extraction of coal-bed methane and shale oil and gas resources. On 7 March 2011 we also entered into an agreement to acquire N.Z. Generator Hire Limited, a leading provider of temporary power solutions in New Zealand and the Pacific Islands. The total consideration is NZ$27.5 million (£12.7 million).

Regional Trading Performance

The performance of each of our regional businesses is described below. 2010 was a year in which the usual order of things in Aggreko was reversed. In recent years, it has been the International Power Projects business which has been the main driver of growth but, in 2010, it was the Local business which grew trading profit by 53%, while International Power Projects delivered an uncharacteristically modest 7% growth in reported trading profit, mainly due to an unusually high level of on- and off-hires in the contract base.

Regional Trading Performance as reported in £ million

Local business: North America

After a difficult year in 2009, our North American business recovered strongly in 2010, in part due to revenues from the Vancouver Winter Olympics in the first half. More importantly, the business saw an improvement in underlying trading (ie adjusting for currency, Vancouver, and the 53 week in 2009) in the second half, with underlying revenues and trading profit up 35% and 51% respectively. For the year as a whole, revenue in constant currency increased by 21% to $380.1 million and trading profit increased by 29% to $69.7 million; trading margin increased to 18.3% (2009: 17.2%). On an underlying basis, revenues for the year as a whole increased 19%.

Revenue recognised in the year from VANOC amounted to $30 million, bringing the total contract value to $45 million including the revenue that was recognised in the second half of 2009. This was the largest project ever undertaken by our North American business, and our team performed extremely well, installing over 1,800 electrical distribution panels, 750 transformers and 500 miles of cable servicing 52 venues and other sites.

Excluding VANOC, rental revenue grew by 16% and services revenue was up 23%. Power rental revenue was up 11% whilst temperature control revenue increased by 22%. Oil-free compressed air rental revenues grew by 15%.

It should be noted that the sharp recovery in the North American business - and particularly in temperature control - was helped by the comparison between a particularly cool summer season in 2009 and a particularly hot one in 2010. Revenue in nearly all the business units increased on prior year; Canada saw a sharp recovery as work in the Alberta Oil Sands resumed, and the acquisition of Power Plus in 2008 really proved its worth in 2010. The Southern Business Unit had a particularly strong year, aided by the clean-up work associated with the Nashville floods and the BP oil spill in the Gulf of Mexico. Underlying volumes and rates improved on prior year helped by growth in the petrochemical & refining, contracting and manufacturing sectors.

In the first few months following the acquisition of Northland, the new business has performed satisfactorily. This acquisition, along with the opening of new service centres in Shreveport, Minneapolis St Paul, Seattle, Ft St John, Minot and Roosevelt has significantly extended the footprint of our North American business.

We expect that the recovery in trading we have seen in the second half of 2010 will continue into 2011, aided by our recent acquisition and continued geographic and sector infill in other parts of North America. 2011 is also an important year for North America as we are in the process of investing in excess of $120 million in new fleet which will deliver significantly better emissions performance.

Local business: Europe & Middle East

Europe

Middle East & SEE

The Europe & Middle East business made progress in the year, with revenue increasing on a constant currency basis by 5% to £261.8 million; trading margin increased to 15.9% (2009: 14.1%) and trading profit increased on a constant currency basis by 17% to £41.6 million. Revenue excluding the 53rd week in 2009 increased by 7%.

Revenue in Europe of £164.2 million was 5% ahead of the prior year on a constant currency basis with most areas growing compared to the prior year. Rental revenue increased by 2%, with power decreasing by 1% but temperature control increasing by 12% aided by a warm summer in Continental Europe. Services revenue, which mainly comprises fuel and transport, increased by 9%. Our business in Russia, which was only fully established in 2008, is performing very well, and by the end of the year we had over 70MW on rent (Dec 2009: 24MW on rent). Trading profit in Europe increased by 47% helped by the release of two accruals, established in 2009, following the favourable resolution of the issues.

Revenue in the Middle East of AED554.1 million (£97.6 million) was 6% ahead of the prior year on a constant currency basis. Rental revenue increased by 2% in the Middle East, with power increasing by 4%, but temperature control decreasing by 16%. Services revenue, which mainly comprises fuel and transport and generates much lower margins than rental, increased by 25%. Within the region, the adverse economic conditions experienced in Dubai in 2009 have continued to have an impact in 2010 with revenue falling significantly again. This decrease has been offset, however, by continued growth in other markets in the Middle East. On a sector basis we had good growth in utilities, oil and gas, and construction, but weaker demand in shipping and manufacturing. Margins decreased slightly to 23.5% (2009: 24.7%), reflecting the higher proportion of services revenues.

The recovery in Europe and Middle East has been less pronounced than in North America, reflecting the generally slower rate of economic recovery. The 11% underlying growth (ie excluding the 53rd week in 2009) in the second half was an improvement on the 4% seen in the first half, and the business starts 2011 with some large contracts secured in the Middle East and Russia. We are cautiously optimistic that we will see further improvement in the region in 2011.

Local business: Aggreko International

Aggreko International's Local businesses operate in Australia, New Zealand, Brazil, Mexico, Argentina, Chile, Singapore, China, India and South Africa. For this reporting period, Aggreko International's Local businesses also include the revenues from the FIFA World Cup and Asian Games contracts.

The FIFA World Cup contract was the largest events contract by value ever performed by Aggreko with 259 generators and chillers, 525 kilometres of cable and over 1,200 electrical distribution panels on 11 sites. Revenue from the FIFA World Cup in the year amounted to £48 million. The Asian Games was attended by over 9,700 athletes from 45 nations competing in 42 events, and Aggreko provided 100MW of power generation and over 150 kilometres of cable; revenue from the event in the year amounted to £20 million. Both of these contracts helped to drive an increase of 71% in the total revenues of Aggreko International's Local business. Trading margin increased to 29.4% from 24.4% in the prior year. Excluding both of these contracts, as well as the impact of the 53 week in 2009, revenue increased 11% over prior year.

Excluding the major events, rental revenue was up 9%, with power up 9% and temperature control up 10%. Services revenue increased by 10%. Revenue in the majority of Aggreko International's Local businesses increased as compared to last year.

We expect Aggreko International's Local businesses to grow on an underlying basis in 2011; we are continuing our rapid expansion of our service centre network. In the last two years, we have opened new service centres in Adelaide, Geraldton, Gladstone, Buenos Aires, Concepcion, Monterrey, Villahermosa, Recife and Parauapebas and we expect several new sites to be commissioned in 2011.

International Power Projects: Aggreko International

Our International Power Projects business had a difficult year, but one in which it made important progress in achieving its strategic objectives. It was difficult, because the business saw unprecedented levels of on- and off-hires as the geographic balance of the business shifted. As a result of this change in the contract base, the business now has a record order-book and has achieved one of our strategic objectives, which is to improve the regional balance, which had been heavily weighted towards Africa, and establish operations of real scale in Asia and South America. At the beginning of 2010, the business had 1,586 MW on hire in Africa and the Middle East, 191 MW in Asia, and 387 MW in Central and South America; by the end of the year, the numbers were 1,025 MW in Africa and the Middle East, 833 MW in Asia and 657 MW in Central and South America.

Demand was very strong during 2010. We secured 49 new contracts in 25 countries and a record 1,300MW of new work; the previous highest number was 630MW in 2009. 730MW of the new work was in Asia, and 270MW in Central and South America. At the start of 2011, our order book stood at almost 30,000 MW-months, an increase of 60% over the prior year, and the equivalent of 14 months' revenue at the current run-rate. This order intake coincided with record levels of off-hires, which totalled about 1,000MW during the year. The timing of these off-hires was fortuitous, as we would certainly not have been able to cater for the record level of new orders had we not had large amounts of fleet coming off-hire elsewhere. But the effect of large amounts of fleet being de-commissioned on one continent and then re-commissioned on another, via several thousand miles of ocean and at least two sets of customs authorities, meant that an abnormal proportion of the fleet was costing, rather than earning, money during 2010, and utilisation over the year averaged 80% - well below the levels we have achieved in previous years in International Power Projects.

In terms of trading performance, revenue and profits (excluding pass-through fuel) increased by 8% and 5% respectively. Excluding the 53rd week in 2009, revenue increased by 10%. Trading margin was slightly down on prior year at 36.5% (2009: 37.4%) reflecting the very high levels of off-hires during the year. Revenue from our gas-powered units grew strongly with the number of MW of gas on rent increasing on average by 30% year-on-year.

On an area basis, revenue increased in Asia, Central America and South America but decreased in South and East Africa, North & West Africa and Military. Around 75% of International Power Projects' revenue in 2010 came from utilities; military projects represented about 16%, and oil & gas, mining and manufacturing together contributed about 9%. At the start of the new year, the International Power Projects fleet, at over 3,600 MW, is 19% larger than 12 months earlier, including a gas fleet which is 30% larger.

International Power Projects started the year with nearly 14% more capacity on rent than a year ago and a very strong order book. We also expect the level of off-hires to be lower in 2011, and as a consequence we expect this business to grow at a faster rate in 2011 than in 2010.

Critical Accounting Policies

The Group's significant accounting policies are set out in Note 1 to the Group's Annual Report & Accounts.

Preparation of the consolidated financial statements requires Directors to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual outcomes could differ from those estimated.

The Directors believe that the accounting policies discussed below represent those which require the greatest exercise of judgement. The Directors have used their best judgement in determining the estimates and assumptions used in these areas but a different set of judgements could result in material changes to our reported results. The discussion below should be read in conjunction with the full statement of accounting policies, set out in Note 1 to the Group's Annual Report & Accounts.

Property, plant and equipment

Rental fleet accounts for £801.7 million, or around 93%, of the net book value of property, plant and equipment used in our business; the great majority of equipment in the rental fleet is depreciated on a straight-line basis to a residual value of zero over 8 years, although we do have some classes which we depreciate over 10 years. The annual fleet depreciation charge of £146.8 million (2009: £138.1 million) relates to the estimated service lives allocated to each class of fleet asset. Asset lives are reviewed regularly and changed if necessary to reflect current thinking on their remaining lives in light of technological change, prospective economic utilisation and the physical condition of the assets.

Intangible assets

In accordance with IFRS 3 (revised) 'Business Combinations', goodwill arising on acquisition of assets and subsidiaries is capitalised and included in intangible assets. IFRS 3 (revised) also requires the identification of other acquired intangible assets. The techniques used to value these intangible assets are in line with internationally used models but do require the use of estimates and forecasts which may differ from actual outcomes. Future results are impacted by the amortisation period adopted for these items and, potentially, by any differences between forecast and actual outcomes related to individual intangible assets. The amortisation charge for intangible assets in 2010 was £2.8 million (2009: £2.7 million). Included in this charge was £2.7 million related to the amortisation of intangible assets arising from business combinations (2009: £2.5 million).

Goodwill of £60.4 million (2009: £51.3 million) is not amortised, but is tested annually for impairment and carried at cost less accumulated impairment losses. The impairment review calculations require the use of forecasts related to the future profitability and cash generating ability of the acquired assets.

Pensions

Pension arrangements for our employees vary depending on best practice and regulation in each country. The Group operates a defined benefit scheme for UK employees, which was closed to new employees joining the Group after 1 April 2002; most of the other schemes in operation around the world are varieties of defined contribution schemes.

Under IAS 19: 'Employee Benefits', Aggreko has recognised a pre tax pension deficit of £3.2 million at 31 December 2010 (2009: £5.8 million) which is determined using actuarial assumptions. The decrease in the pension deficit is a result of the additional contributions made by the Company during the year over and above the cost of accrual of benefits. The Company paid £3.5 million in January 2010 in line with the Recovery Plan agreed for the Scheme following the actuarial valuation at 31 December 2008. In addition higher-than-expected returns were achieved on Scheme assets over the year. The additional contributions and investment returns have been offset by lower net interest rates used to value the liabilities.

The main assumptions used in the IAS 19 valuation for the previous two years are shown in Note 25 of the Annual Report & Accounts. The sensitivities regarding these assumptions are shown in the table below.

Taxation

Aggreko's tax charge of 30% is based on the profit for the year and tax rates in force at the balance sheet date. In addition to corporation tax, Aggreko is subject to indirect taxes such as sales and employment taxes across various tax jurisdictions in the approximate 100 countries in which the Group operates. The varying nature and complexity of tax law requires the Group to review its tax positions and make appropriate judgements at the balance sheet date. Further detail, including a detailed tax reconciliation, is shown at Note 9 to the Annual Report and Accounts.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost. An impairment is recorded for the difference between the carrying amount and the recoverable amount where there is objective evidence that the Group may not be able to collect all amounts due. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default, or large and old outstanding balances, particularly in countries where the legal system is not easily used to enforce recovery, are considered indicators that the trade receivable is impaired.

The majority of the contracts into which the Group enters are small relative to the size of the Group and, if a customer fails to pay a debt, this is dealt with in the normal course of business. However, some of the contracts the Group undertakes in developing countries are substantial, and are in jurisdictions where payment practices can be unpredictable. The Group monitors the risk profile and debtor position of all such contracts regularly, and deploys a variety of techniques to mitigate the risks of delayed or non-payment; these include securing advance payments and guarantees. As a result of this rigorous approach to risk management, the Group has historically had a low level of bad debt. When a trade receivable is uncollectable it is written off against the provision for impairment of trade receivables account. At 31 December 2010 the provision for impairment of trade receivables in the balance sheet was £33.4 million (2009: £26.2 million).

Currency Translation

The volatility of exchange rates during the year increased revenue and trading profit by £23.4 million and £6.5 million respectively as a result of currency movement. Currency translation also gave rise to a £39.1 million increase in net assets as a result of year-on-year movements in the exchange rates. Set out in the table below are the principal exchange rates affecting the Group's overseas profits and net assets.

Interest

The net interest charge was £10.1 million, a decrease of £8.0 million on 2009, reflecting the lower level of average net debt during the year and the £3.3 million cost in 2009 of terminating some interest rate swaps. Interest cover, measured on an EBITDA basis, remains very strong and increased to 47.1 times from 22.8 times in 2009.

Effective Tax Rate

The effective tax rate for the full year is 30.0% compared to 31.0% in the prior year reflecting the geographic mix of profits.

Dividends

If the proposed final dividend of 12.35 pence is approved by shareholders, it will result in a full year dividend of 18.90 pence per ordinary share, giving dividend cover of 4.20 times (2009: 4.97 times).

Cashflow

The net cash inflow from operations during the year totalled £467.9 million (2009: £430.8 million). This funded capital expenditure of £268.8 million, which was £107.9 million higher than in 2009. Net debt at 31 December 2010 was £43.3 million lower than the previous year mainly as a result of the strong cashflow from operating activities. As a result of the decrease in net debt, gearing (net debt as a percentage of equity) at 31 December 2010 decreased to 16% from 29% at 31 December 2009 while net debt to EBITDA decreased to 0.3x (2009: 0.4x).

There was a £23.7 million working capital outflow in the year which, in general terms, reflected increased activity levels across the business. More specifically, Aggreko's working capital position tends to be heavily influenced by our International Power Projects business and also activity levels at our manufacturing operation. In International Power Projects, we saw an increase in all elements of working capital with higher levels of activity driving this. We also saw an increase in International Power Projects' debtor days caused largely by a small number of countries where payments were slower than usual. Since year end, we have received payments from most of these countries, however, this movement underlines the challenge of collecting debt from some of the countries in which our International Power Projects business operates. However, there were no material bad debt write-offs in the year. Our manufacturing operation saw increases in inventory and accounts payable reflecting the increased level of activity in 2010 and early 2011.

Net Operating Assets

The net operating assets of the Group (including goodwill) at 31 December 2010 totalled £1,065.8 million, £182.0 million higher than 2009. The main components of net operating assets are:-

A key measure of Aggreko's performance is the return (expressed as operating profit) generated from average net operating assets (ROCE). We calculate the average net operating assets for a period by taking the average of the net operating assets as at 1 January, 30 June and 31 December; this is the basis on which we report our calculations of ROCE. The average net operating assets in 2010 were £969.9 million, up 7.4% on 2009. In 2010 the ROCE increased to 32.4% compared with 29.0% in 2009.

Acquisition of Northland Power Services

On 3 December 2010, the Group acquired the assets and business of Northland Power Services. The purchase consideration, paid in cash, comprises a fixed element of $23.7 million (£15.4 million) and further payments of up to a maximum of $2.0 million (£1.3 million) dependent on financial performance during 2011. The fair value of net assets acquired was £9.5 million resulting in goodwill of £7.2 million.

Shareholders' Equity

Shareholders' equity increased by £211.3 million to £814.4 million, represented by the net assets of the Group of £946.6 million before net debt of £132.2 million. The movements in shareholders' equity are analysed in the table below:

The £213.1 million of post-tax profit in the year represents a return of 26.2% on shareholders' equity (2009: 27.9%).

Treasury

The Group's operations expose it to a variety of financial risks that include liquidity, the effects of changes in foreign currency exchange rates, interest rates, and credit risk. The Group has a centralised treasury operation whose primary role is to ensure that adequate liquidity is available to meet the Group's funding requirements as they arise, and that financial risk arising from the Group's underlying operations is effectively identified and managed.

The treasury operations are conducted in accordance with policies and procedures approved by the Board and are reviewed annually. Financial instruments are only executed for hedging purposes, and transactions that are speculative in nature are expressly forbidden. Monthly reports are provided to senior management and treasury operations are subject to periodic internal and external review.

The Group's objective with respect to managing capital is to maintain a balance sheet structure that safeguards the Group's financial position through economic cycles and one that is efficient in terms of providing long term returns to shareholders. If appropriate, the Group can choose to adjust its capital structure by varying the amount of dividend paid to shareholders, by returning capital to shareholders, by issuing new shares, or by adjusting the level of capital expenditure. As discussed above gearing at 31 December 2010 decreased to 16% from 29% at 31 December 2009. Total capital is equity as shown in the Group balance sheet.

Liquidity and funding

The Group maintains sufficient facilities to meet its normal funding requirements over the medium term. At 31 December 2010 these facilities are primarily in the form of committed bank facilities totalling £604.1 million, arranged on a bilateral basis with a number of international banks. 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. The Group does not consider that these covenants are restrictive to its operations. The maturity profile of the borrowings is detailed in Note 17 in the Annual Report & Accounts.

Net debt amounted to £132.2 million at 31 December 2010 and, at that date, un-drawn committed facilities were £470.1 million.

Towards the end of 2010, we refinanced £459 million of bank facilities, putting in place new facilities with maturities of 3 and 5 years. In addition, since the year end, we have for the first time raised funding in the US private placement market, securing US$275 million (£177 million), with maturities ranging between 7 and 10 years and with financial covenants the same as our banking facilities. Drawdown of these funds will take place in mid March 2011.

The Group's policy is to minimise the exposure to interest rates by ensuring an appropriate balance of fixed and floating rates. The Group's primary funding is at floating rates through its bank facilities. In order to manage the associated interest rate risk, the Group uses interest rate swaps to vary the mix of fixed and floating rates. At 31 December 2010, £110.9 million of the net debt of £132.2 million was at fixed rates of interest resulting in a fixed to floating rate net debt ratio of 84:16 (2009: 61:39) (1).

The Group is subject to currency exposure on the translation into Sterling of its net investments in overseas subsidiaries. In order to reduce the currency risk arising, the Group uses direct borrowings in the same currency as those investments. Group borrowings are predominantly drawn down in the principal currencies used by the Group, namely US Dollar, Euro and Sterling.

The Group manages its currency flows to minimise foreign exchange risk arising on transactions denominated in foreign currencies and uses forward contracts, where appropriate, in order to hedge net currency flows.

Cash deposits and other financial instruments give rise to credit risk on amounts due from counterparties. The Group manages this risk by limiting the aggregate amounts and their duration depending on external credit ratings of the relevant counterparty. In the case of financial assets exposed to credit risk, the carrying amount in the balance sheet, net of any applicable provision for loss, represents the amount exposed to credit risk.

Insurance

The Group operates a policy of buying cover against the material risks which the business faces, where it is possible to purchase such cover on reasonable terms. Where this is not possible, or where the risks would not have a material impact on the Group as a whole, we self-insure.

(1) The increase in this ratio is driven by a decrease in Group net debt rather than an increase in the absolute value of fixed rate debt.

Principal risks and uncertainties

In the day-to-day operations of the Group we face many risks and uncertainties. Our job is to mitigate and manage these risks, and the Board has developed a formal risk management process to support this. Set out below are the principal risks and uncertainties which we believe could adversely affect us, potentially impacting the employees, operations, revenue, profits, cash flows or assets of the Group. This list is not exhaustive - there are many things that could go wrong in an operation as large and geographically diverse as ours - and the list might change as something that seems immaterial today assumes greater importance tomorrow.

Economic conditions

There is a link in our business between demand for our services and levels of economic activity; this link is particularly evident in the Local business. If GDP growth goes negative, demand for rental equipment is likely to shrink even faster and this impact is likely to be multiplied by pricing weakness at times of low demand. As we have experienced in recent years, the operational gearing inherent in our business models means that variations in demand can lead to much larger variations in profitability. We also have some businesses which, by their nature, are exposed to particular sectors - for instance, our Australian business is highly dependent on mining activity, our Singapore business has a high proportion of shipping activity, and a large proportion of our Norwegian business comes from North Sea oil & gas.

We mitigate this risk in a number of ways. First, having a global footprint is a great advantage because we can move rental fleet from low-growth economies to higher-growth environments; for example, in 2008 and 2009 we moved considerable quantities of fleet from Europe to the Middle East. Secondly, we try to ensure that, as they grow, our businesses build a customer-base which is as diverse as possible, to reduce sectoral exposure. In the Middle East, for instance, we are investing in our temperature control business which, in time, will reduce our relative exposure to construction; in North America we have special initiatives in place to develop our business in under-penetrated sectors. Thirdly, in the event of a more generalised downturn in demand, as we experienced in 2009, we can quickly reduce capital expenditure which was demonstrated by our new fleet investment being £106.7 million lower in 2009 than 2008. Given the large depreciation element in the business' cost base (£158 million in 2010), reducing capital expenditure to a level close to depreciation makes the business very cash generative which, in turn, reduces debt and interest cost.

Another economic factor to consider is the price of fuel, which is usually the single greatest element in the cost of running a generator. Over the last few years, the price of fuel has been extremely volatile, but this does not seem to have any noticeable impact on people's willingness to rent; people rent generators because they need power, not because it is a cheap way of generating electricity. The major impact of the oil-price on our business is that, at times when it has been high it has produced huge wealth in oil-producing countries which has been re-cycled into infrastructure investment which has, in turn, stimulated demand for our services. If the oil-price is persistently low - by which we mean under $40 per barrel - we would expect to see an adverse impact on our business in oil-producing countries.

Exchange rate fluctuations can have a material impact on our performance reflected in sterling: the Group's asset values, earnings and cash flows are influenced by a wide variety of currencies owing to the geographic diversity of the Group's customers and areas of operation. The majority of the Group's revenue and costs are denominated in US dollars. The relative value of currencies can fluctuate widely and could have a material impact on the Group's asset values, costs, earnings, debt levels and cash flows, expressed in sterling.

Political Risk

This section should be read in conjunction with the subsequent section on failure to collect payments. The Group operates in around 100 countries, many in Africa, Asia and Central and South America. In some jurisdictions there are significant risks of political instability which can result in civil unrest, equipment seizure, renegotiation or nullification of existing agreements, changes in laws, taxation policies or currency restrictions. Any of these could have a damaging effect on the profitability of our operations in a country.

Prior to undertaking a contract in a new country, we carry out a risk assessment process to consider risks to our people, assets and to payments. The safety of our employees is always our first concern. If the level of risk is considered unacceptable we will decline to participate in any contract; where there are potential issues, we develop detailed contingency plans. Our greatest exposure lies in our International Power Projects business, and they perform risk assessments on a contract-by-contract basis. The Group uses a wide range of tools and techniques to manage financial risk, including insurances, bonds, guarantees and cash advances.

Generally, we find that Governments are keen to behave in a fair way to suppliers of critical infrastructure such as Aggreko. In the last three years, we have had two incidents, both of which were subsequently resolved, where our equipment has been seized by authorities as a result of tax or import duty disputes. Neither of these were material to a Group of our size, but either could have been fatal to a small company. Both are indicative of the fact that we operate in countries where the behaviour of the authorities can be unpredictable, and not always in line with contractual commitments.

The general level of political risk faced by the business has probably increased over the last year, mainly as a result of the recent unrest in the Middle East and Africa.

Failure to collect payments or to recover assets

The vast majority of the contracts into which the Group enters are small relative to the size of the Group and, if a customer fails to pay a debt, this is dealt with in the normal course. However, the Group has some large contracts in developing countries where payment practices can be unpredictable. The Group constantly monitors the risk profile and debtor position of such contracts, and deploys a variety of techniques to mitigate the risks of delayed or non-payment. This mitigation will vary from customer to customer, but our armoury includes obtaining advance payments, letters of credit, bank guarantees, and in some cases insurance against losses. As a result of the rigorous approach to risk management, the Group has historically had a low level of bad debt, and has never had a significant loss. While the rapid growth in our International Power Projects business makes it less likely that any bad debt would be material to the Group's balance sheet, the increased number of contracts and countries in which we operate increases the likelihood of a loss and makes it highly likely that, at some stage, a major customer will default or prevent us from repatriating assets.

The risk of non-payment of a receivable presents a particular risk for a public company such as Aggreko, because our customers are rarely attuned to our obligations to regularly update the market on our performance. While we seek to ensure that no one country could cause the company material medium or long-term damage, failure to collect a major debt could result in an unexpected, and possibly significant, reduction in our profits in any given reporting period. We continually make judgements as to whether we need to book a provision against particular debts, and if these are material, they could cause us to miss a forecast and lead to a negative share price reaction. Unless a customer actually seizes equipment, deciding whether a receivable will be collected or not is more art than science and there have been several occasions when we have had to make difficult judgements as to when to provide for a debt. There may come a time when we get it wrong, and either we announce a provision on a debt which a few days later gets paid, or do not announce a provision and find ourselves subsequently criticised for not providing for it earlier.

Even though we have an ever broader portfolio of contracts, and therefore a more diversified portfolio of risk, we caution investors that the current very high returns on capital that we earn, particularly in our International Power Projects business, are in effect "risk-unadjusted". So far, no customer has behaved badly enough to adjust them.

Events

The business is, by nature, driven by events. People hire generators because some event or need makes it essential. Aggreko's revenues, cashflows and profits can be influenced significantly by external events as evidenced in the past by hurricanes in North America or by the contracts to supply power to the military camps in the Middle East. These events are, by their nature, difficult to predict and, combined with the high operational gearing inherent in our business, can lead to volatility in trading outcomes. By developing the business globally, as well as by increasing and broadening the Group's revenue base, the impact of a single event on the overall Group will reduce. Additionally, the ability to move equipment around the world allows the Group to adjust to changes in utilisation caused by any changes in demand.

Failure to conduct business dealings with integrity and honesty

Some of the countries in which the Group operates have a reputation for corruption and, given that many of our contracts involve large sums of money, we are at risk of being accused of bribery and other unethical behaviour. The first and most important way of avoiding this risk is to ensure that people, both inside and outside the Group, know that Aggreko does not engage in, and will not tolerate, bribery, corruption or unethical behaviour. We have a strict Ethics Policy, a copy of which is available on our website www.aggreko.com. Rather than just publishing it, we get every employee to sign it when they join the business; every consultant acting on our behalf agrees in writing to abide by it, and every consultancy or agency agreement has an explicit term stating that the agreement will be terminated immediately if the consultant or agent does not abide by our policy. We are also in the process of rolling out a confidential, multi-lingual hotline, available world-wide, which will allow any employee who has any concerns to report them to an independent third party on an anonymous basis.

While the risk of unethical behaviour can take many forms, the most significant risk we run in this area is the behaviour of third party sales agents and consultants in our International Power Projects business. Given the ephemeral nature of this business - there might be no business for us in a country for 5 years and then suddenly a power crisis might present an opportunity to supply 100 MW for 6 months - it is not practical to maintain full-time salespeople in each of the 100 countries where we do, or could conceivably do, business. Instead, we make agreements with organisations which know a country well, can keep our services on the radar of decision makers, and keep us briefed on opportunities. When an opportunity arises, we send in our own salespeople to work with them. These consultants do not get paid a retainer and may receive no compensation other than a "thank you" and a pat on the back for years; the reason why they are prepared to do this is because when we do win a contract, they are well rewarded. And they work hard for the money, often taking responsibility for the supply of critical elements of the project such as finding power-plant sites, providing administration and technical services, labour and security. The fact that they are only paid on results might be seen to raise the risk that they are tempted to indulge in bribery to secure their income. How do we protect against this? In our view, it is all down to the choice of the sales consultant and, to this end, we carry out comprehensive due diligence on all potential candidates. Before we appoint an agent or consultant, we use specialist third-party investigators to conduct comprehensive background checks on them; these checks include obtaining bank references and searches for previous records of inappropriate behaviour or of any family or other links with the customer or government. Once a sales consultant has been appointed, we keep a close eye on them. Payments made to agents and sales consultants are subject to audit by both internal and external auditors to ensure they are in accordance with the agreements, and we have a full-time Compliance Officer who continuously monitors our dealings with sales consultants and agents. In addition, we carry out regular training by outside lawyers of managers and salespeople who deal in at-risk jurisdictions and, from time to time, we conduct independent reviews of contract files. We also structure our sales consultancy agreements to allow us to terminate any agreement immediately and without compensation in the event that we suspect any inappropriate behaviour. Given that these sales consultants have much to gain by working for us, this is a powerful incentive to behave.

Despite the fact that none of the business that we would consider to be at elevated risk of ethical issues comes under its jurisdiction, until recently we have modelled our compliance regime around the requirements of the US Foreign Corrupt Practices Act (FCPA), on the basis that it probably sets the highest standards in the world. However, the imminent passing into law of the Bribery Act in the UK, which is generally regarded as being significantly stronger than the FCPA, has led us to further review and tighten our procedures. Amongst the changes we have made is the establishment of a Board Ethics Committee, composed entirely of non-executive directors, to approve our ethics-related policies and procedures and to monitor compliance.

Acquisitions

It is part of our strategy to acquire businesses in our core market which can add value to Aggreko. In the last seven years, we have acquired five small businesses - the temperature control business of Prime Energy in the USA, the assets and business of Power Plus Rentals & Sales Ltd in Canada, the power rental business of Cummins India, the power business of Northland Power Services in the Rocky Mountains region of North America, the power rental business of N.Z. Generator Hire Limited - and one large global business - GE Energy Rentals. We are well aware that buying businesses can be risky; in our business, the greatest areas of risk are:-

·; Over-paying

·; Acquiring liabilities we do not know about or understand

·; Failing to integrate effectively

We mitigate these risks by having a rigorous acquisition process, which is overseen by the Board. All acquisitions are subject to detailed financial modelling, using different scenarios, so we can understand the likely returns in various circumstances. We undertake detailed due diligence, particularly on the operational side, and we look for extensive warranties and covenants from vendors. Finally, we have a well-developed and effective acquisition integration model as demonstrated by the success of the GE ER integration.

Safety

The business of the group involves transporting, installing and operating large amounts of heavy equipment, which produces lethal voltages or very high pressure air, and involves the use of millions of litres of fuel which could cause serious damage to the environment. Every day, we manage the risks associated with this business, and we have carefully designed procedures to minimise the risk of an accident. If these procedures are not followed however, accidents can happen and might result in injury to people, claims against the Group, damage to its reputation and its chances of winning and retaining contracts.

The Group has a proactive operational culture that puts health and safety at the top of its agenda in order to reduce the likelihood of an accident. We work very closely with our customers, employees and Health & Safety authorities, to evaluate and assess major risks to ensure that health and safety procedures are rigorously followed. The Group has developed health and safety KPI's which are reviewed by the Board on a regular basis.

Competition 

Aggreko operates in a highly competitive business. The barriers to entry are low, particularly in the Local business and, in every major market in which we operate, competitors are constantly entering or leaving the market. We welcome this competition as it keeps us sharp and also helps to grow the overall rental market which, in many countries, is under-developed.

We monitor competitor activity carefully but, ultimately, our only protection from suffering material damage to our business by competitors is to work relentlessly to provide our customers with a high quality and differentiated service proposition at a price that they believe provides good value.

Product technology & emissions regulation

The majority of Aggreko's fleet is diesel-powered, and some of our equipment is over 10 years old. As part of the increasing focus on environmental issues, countries continue to introduce legislation related to permissible levels of emissions and this has the potential to affect our business. Our engines are sourced from major manufacturers who, in turn, have to develop products which conform to legislation, so we are dependent on them being able to respond to legislation. We also have to be aware that when we buy a generator, we want to be able to rent it for its useful life and to be able to move it between countries.

To mitigate these risks, we adopt a number of strategies. First, we retain considerable in-house expertise on engine technology and emissions - so we have a good understanding of these issues. Secondly, we have very close relationships with engine manufacturers, so we get good forward visibility of their product development pipeline. When new products appear - particularly those with improved emissions performance - we try to introduce them into the fleet as quickly as possible to ensure that, over time, our fleet evolves to ever-better levels of emissions performance. An example of this is the significant investment we have made in the development of our gas-fuelled technology: these engines have significantly reduced emissions compared with other fuel types. Thirdly, if emissions-compliance becomes such an issue that it begins to impact our business in a material way in some territories, our global footprint will be a major advantage as it gives us numerous options for the re-deployment of our fleet.

People

Aggreko knows that it is people who make the difference between great performance and mediocre performance. This is true at all levels within the business. We are keenly aware of the need to attract the right people, establish them in their roles and manage their development. As a framework for people development, we have in place a talent management programme which covers most of the management population. Under this programme, we try to identify the development needs of each individual from the outset, as well as identifying successor candidates for senior roles. We have also worked with one of the world's leading business schools, IMD, to develop and deliver a tailor-made group-wide management education programme.

Another risk is that competitors seek to recruit our key personnel. For many years, Aggreko has been a target for recruitment and we manage this on a daily basis. We actually regard it as a compliment that so many companies want to recruit our people. The main mitigation for this is to make sure that people enjoy working for Aggreko, that they feel that they are recognised, cared for, and have challenging and interesting jobs. Reward is also an important part of the equation, and there can be little doubt that our policy of rewarding people well for good performance, and of having a successful Long-Term Incentive Plan, has acted as a powerful retention tool.

Information Technology

Our business involves high transaction volumes, complex logistics and the need to track thousands of assets on hundreds of sites. We are therefore heavily dependent on the resilience of both the application software (we use an ERP system called Movex) and of the data-processing and network infrastructure. A serious failure in this area would immediately and materially affect our business.

The Group has a detailed disaster recovery plan in place which is tested on a regular basis. Our main data centre in Glasgow has high levels of resilience built into it, and we also have a physically separate third-party disaster-recovery site. Additionally, we have a second data centre in Dubai which will allow the Group to continue processing data in the event of a major incident.

Accounting and Treasury/Major fraud

There is a risk that fraud or accounting discrepancies may occur if the financial and operational control framework is inadequate. This may distort the reported results. In order to mitigate this risk, significant work has been undertaken to put in place a robust control framework. Additionally, a strong Internal Audit function reviews the operation of this control framework and reports regularly to the Audit Committee. The risk is also mitigated by recruiting and developing a strong finance function which is focused on ensuring the accuracy and integrity of the reported results.

Group Income Statement

for the year ended 31 December 2010

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

Group Statement of Comprehensive Income

for the year ended 31 December 2010

Group Balance Sheet (Company Number: SC177553)

as at 31 December 2010

The financial statements on pages 22 to 37 were approved and authorised for issue by the Board of Directors on 10 March 2011 and were signed on its behalf by:

Group Cash Flow Statement

for the year ended 31 December 2010

Reconciliation of net cash flow to movement in net debt

for the year ended 31 December 2010

Group statement of changes in equity

For the year ended 31 December 2010

Group statement of changes in equity (continued)

For the year ended 31 December 2010

Notes to the Group Cash Flow Statement

for the year ended 31 December 2010

In the cash flow statement, proceeds from sale of PPE comprise:

Notes to the Accounts

for the year ended 31 December 2010

Note 1

Segmental reporting

(a) Revenue by segment

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

(b) Profit by segment