9th Mar 2006 07:03
Aggreko PLC09 March 2006 Thursday 9 March 2006 AGGREKO plc PRELIMINARY RESULTS FOR THE TWELVE MONTHS TO 31 DECEMBER 2005 Aggreko plc, the world leader in the supply of temporary power, temperaturecontrol and oil-free compressed air services, announces its preliminary results,prepared in accordance with International Financial Reporting Standards (IFRS),for the twelve months to 31 December 2005. Movement Twelve months Twelve months As reported Constant to 31 December to 31 December Currency 2005 2004 Group revenue £417.7m £323.6m 29.1% 27.7% Trading profit £59.6m £45.1m 32.2% 30.2%(1) (2) Profit before £56.4m £42.5m 32.8%tax (1) Earnings per 13.81p 10.83p 27.5%share (1) Dividend per 6.11p 5.82p 5.0%share (1) Pre- 2004 exceptional items(2) Trading profit represents operating profit before gain on sale of property, plant and equipment. Aggreko's trading performance in 2005 has been very strong, and reflects thesuccessful implementation of the new strategy as set out in 2004, as well asrobust demand in most markets. Reported revenue increased by 29.1% to £417.7million. Excluding 2004's exceptional items, Group pre-tax profits increased by32.8% to £56.4 million, and basic earnings per share grew by 27.5% to 13.81pence. Underlying growth (excluding pass-through fuel, currency movements andone-off storm revenues) was 19.2% for revenues and 18.7% for trading profit. Theproposed final dividend is 3.77 pence which, when added to the interim dividendof 2.34 pence, represents an increase of 5.0% over 2004. Key points include: •Revenues, trading margins and return on capital employed all show good progress •Broadly-based top-line growth: •Revenues grow by over 30% in North America, Middle East, Asia, Africa, Spain and South America. •International Power Projects has very strong second half - revenue up 45% and trading profit by 32% on prior year. •Power projects in 41 countries in 2005. •Early signs of recovery in Europe; trading profit flat year-on-year in second half, despite €2.4m reorganisation charge. •North America revenue up 31% and trading profit up 58%; business responds rapidly to Hurricanes Rita and Katrina and plays key role in reconstruction effort. •Approximately £10 million of 2005 revenue and £5 million of profit related to exceptional storm-related activity in North America unlikely to recur. •ERP rollout in North America and Europe largely complete Philip RogersonChairman of Aggreko, commented: "This has been an exceptionally strong year for Aggreko, and a vindication ofthe strategy we set out in 2004. Our North American business has had anexceptional year, and Aggreko International has also performed very strongly. InEurope, there are some early signs of recovery, which we expect to continue in2006. "As always at this early stage, there is limited visibility of the likelyout-turn for the current year, but, notwithstanding the exceptional events of2005, we expect to make further progress in 2006. " Rupert SoamesChief Executive of Aggreko commented: "Aggreko performed very well in 2005. In part this has been due to thehurricanes in North America, but this should not disguise the fact that in 2005we grew revenues by more than 30% in North America, the Middle East, Asia,Africa, Spain and South America. Our efforts to improve margins and returns oncapital employed in the Local business have paid off handsomely, as has ourdrive to increase the reach of our International Power Projects business, whichhad projects running in 41 countries in 2005. "We have largely completed the actions set out in our Strategy Review in 2004,and we are looking forward to taking the business onto the next stage of itsdevelopment as we reap the benefits of the investments we have made in systems,processes and in extending our geographic coverage. "We foresee continuing growth in demand in many of our markets, and we areincreasing our rate of capital investment in new fleet to enable us to takeadvantage of the opportunities we see ahead. We will also be increasing ourefforts to find suitable bolt-on acquisitions" - ENDS -Enquiries to : Rupert Soames / Angus Cockburn Tel. 0141 225 5900Aggreko plc Fiona Piper Tel: 020 7379 5151Maitland CHAIRMAN'S STATEMENT Introduction I am pleased to report that 2005 has been a very successful year for Aggreko,both in terms of trading and the implementation of our strategy that wasannounced in March 2004. Strategy The strategy is working well and has produced excellent results. We have seenstrong demand for our services, particularly in North & South America, theMiddle East, Africa and Australasia. Our performance in Europe has not been asstrong, but we are now positioned to start making progress in 2006. Trading Reported revenue at £417.7 million (2004: £323.6 million) was 29.1% higher than2004, while revenue in constant currency and excluding pass through fuel revenuefrom our contracts in Sri Lanka and Uganda increased by 22.1%. Profit before tax increased by 32.8% to £56.4 million (2004: £42.5 million);profit after tax was £36.7 million (2004: £29.0 million), growth of 26.7%.Consequently earnings per share have risen 27.5% to 13.81 pence (2004: 10.83pence). Net debt increased to £102.9 million (2004: £82.1 million), largely as a resultof increased capital expenditure of £80.2 million (2004: £56.1 million). Over90% of this capital investment was spent on our rental fleet to support thestrong growth in the business. Looking ahead we estimate that fleet capitalinvestment in 2006 will be around £120 million. Dividend Aggreko's financial position remains strong, as measured by net assets of £208.2million (2004: £178.5 million) and interest cover of 14.1 times (2004: 11.8times). With this in mind, the Board is recommending a final dividend of 3.77pence per ordinary share which, when added to the interim dividend of 2.34pence, gives a total for the year of 6.11 pence per ordinary share, representinga 5% increase on 2004. At this level, the dividend would be covered 2.26 times.Subject to approval by shareholders, the final dividend will be paid on 19 May2006 to ordinary shareholders on the register as at 21 April 2006, with anex-dividend date of 19 April 2006. Employees Aggreko's strong performance, in an exceptionally busy year, is due to theskills, knowledge and hard work of our employees. Their commitment anddetermination deserve my thanks and those of the Board. Board I would like to take this opportunity to welcome Kash Pandya to the Board, inhis capacity as Regional Director of Europe. Kash joined Aggreko in July 2005,having previously been Chief Executive of Johnston Group plc, and prior to thatPresident, Europe, Asia & South America of APW, the world's largest manufacturerof specialist cabinets and enclosures for the telecoms and computer industries. Outlook for 2006 We enter 2006 with strong momentum, and we expect to make good progress relativeto the first half of 2005, although the comparators in the second half will bechallenging after what has been an exceptional end to 2005. In North America, almost all of the work related to the storms of 2005 hasended, but we are still seeing encouraging levels of business growth. In Europe, we are beginning to see the benefits of the cost reductionsimplemented in the second half of 2005, and expect to be able to show meaningfulprogress in the first half of 2006. Aggreko International's Local business is enjoying good trading, with strongdemand in all its markets. The International Power Projects business has had a very strong start to theyear, with high utilisation of a fleet that is significantly larger than lastyear. As always, this business is subject to externally driven events, but weexpect a strong first half against a relatively weak comparator. As ever at this early stage, there is limited visibility of the likely out-turnfor the current year, but, notwithstanding the exceptional events of last year,we expect to make further progress against 2005. Philip G Rogerson Chairman 9 March 2006 GROUP TRADING PERFORMANCE Aggreko's performance during 2005 has been very strong, particularly in ourNorth American and International businesses, and reflects the impact of thestrategy review carried out in 2003. As reported, Group revenue at £417.7 million (2004: £323.6 million) was 29.1%higher than 2004, while Group trading profit of £59.6 million (2004: £45.1million) was 32.2% ahead of 2004. This resulted in an increase in Group tradingmargin from 13.9% in 2004 to 14.3% in 2005. Return on capital employed, measuredas operating profit divided by average net operating assets, improved to 18.5%(2004: 14.9%). Group profit before tax increased by 32.8% to £56.4 million (2004: £42.5million); profit after tax was £36.7 million (2004: £29.0 million), growth of26.7%. The higher tax charge arose from the increased proportion of profitsarising in North America, where rates of tax on profits are higher than theaverage for the Group. Earnings per share grew 27.5% to 13.81 pence (2004: 10.83pence). 2005 2004(1) Movement £m £m As reported Const currencyRevenue 417.7 323.6 29.1% 27.7%Revenue excl pass-through fuel 394.9 320.2 23.3% 22.1%Trading profit 59.6 45.1 32.2% 30.2%Operating profit 60.7 46.4 30.7% 28.9%Net interest expense (4.3) (3.9) (8.8)%Profit before tax 56.4 42.5 32.8%Taxation (19.7) (13.5) (45.8)%Profit after tax 36.7 29.0 26.7%Basic earnings per share (pence) 13.81 10.83 27.5% (1) Results are pre-2004 exceptional items In 2005 currency movements had less of an impact on our reported results than inprevious years, increasing revenues by £3.4 million and trading profit by £0.7million on a like-for-like basis. Our new contract in Uganda has brought with ita very large fuel supply element, which we pass-through to the customer at aminimal margin, in an arrangement similar to that which we have operatedsuccessfully in Sri Lanka for many years. The millions of pounds of revenuegenerated by these fuel supply contracts can lead to very large variations inour reported revenue and our trading margins, but have little impact on profits.During 2005, Sri Lankan and Ugandan fuel accounted for £22.8 million (2004: £3.4million) of reported revenues of £417.7 million. As described in the section below on North America, the year also saw a quiteexceptional level of revenue related to hurricanes and high autumn temperaturesin the southern United States. We think it unlikely that such a high level ofdemand will recur, and estimate that the impact of these exceptionalcircumstances was to increase revenues by approximately £10 million, and tradingprofits by £5 million. Excluding the impact of these additional storm revenues, as well as the currencymovements and the pass-through fuel revenues described above, Group revenuesgrew on an underlying basis by 19.2% (as reported: 29.1%) and trading profit by18.7% (as reported: 32.2%). In terms of the balance sheet, net debt increased to £102.9 million (2004: £82.1million), largely as a result of capital expenditure which increased to £80.2million (2004: £56.1 million), at which level it stood at 127% of thedepreciation charge. £73.7 million of the capital investment was on new rentalfleet. Working capital increased by £19.5 million in the year, largely as aresult of the very high levels of trading in the fourth quarter. REGIONAL TRADING PERFORMANCE As part of our adoption of International Financial Reporting Standards (IFRS),we have changed the way we report our trading to provide a more detailedsegmental breakdown of revenue and profits. This will give greater visibility ofthe performance of the component parts of the business. In terms of management structure, Aggreko's operations are managed by threeRegional Directors reporting to the Chief Executive, each of whom is responsiblefor a geographic area. George Walker and Kash Pandya (who joined the business inJune 2005) manage our Local businesses in, respectively, North America andEurope; Derek Shepherd manages Aggreko International, which comprises theInternational Power Projects business as well as our Local businesses in theMiddle East, South America and Asia-Pacific. Revenue Trading ProfitManagementGroup Geography 2005 2004 Change 2005 2004 Change £ million £ million % £ million £ million % Local Business North America USA & Canada 141.7 107.4 31.9% 26.5 16.7 59.1%Europe Northern 58.7 54.1 8.3% 4.5 3.7 23.9% Europe South & Central 55.9 52.1 7.4% 0.9 3.2 (71.1)% EuropeInternational Middle East, 52.0 38.9 33.8% 9.5 5.8 62.6% Asia-Pacific, South AmericaLocalBusinessesSub-totalLocal Business 308.3 252.5 22.1% 41.4 29.4 41.2% International Power Projects International International 86.6 67.7 28.1% 17.7 15.8 11.4% Power Projects excl pass-through fuelInternational Pass-through 22.8 3.4 0.5 (0.1) fuelSub-totalInternationalPower Projects 109.4 71.1 54.0% 18.2 15.7 15.6%Group 417.7 323.6 29.1% 59.6 45.1 32.2% North America 141.7 107.4 31.9% 26.5 16.7 59.1% Europe 114.6 106.2 7.9% 5.4 6.9 (20.6)% International 161.4 110.0 46.8% 27.7 21.5 28.3%Group 417.7 323.6 29.1% 59.6 45.1 32.2% Group excluding 394.9 320.2 23.3% 59.1 45.2 30.7% pass-through fuel The performance of each of these regions is described below, segmented asappropriate to reflect the new IFRS segmental reporting: Local Business: North America 2005 2004 Change $million $million % Revenue 257.6 196.8 30.9%Trading profit 48.2 30.5 57.9% Our Local business in North America had an excellent year, building on thesuccessful turnaround achieved in the business during 2004. This performance wasthe result of a combination of strong base business growth across all areasduring the full year and an extraordinary hurricane season in the second half.Revenue of $257.6 million was 30.9% ahead of the previous year; trading profitincreased by 57.9%; trading margin increased from 15.5% to 18.7%. Prior to 2004 storm related revenues in North America have generated revenues ofbetween $6 million - $10 million. In 2004 we had our busiest hurricane season onrecord with revenues of $13 million, but in 2005 hurricane-related revenueamounted to an unprecedented $32 million, as a result of the impact on majorconurbations of Hurricanes Katrina and Rita. Our employees in North Americaresponded superbly to the considerable operational challenges of the 2005hurricane season, but most particularly in the aftermath of Hurricane Katrinawhere we continue to support the reconstruction efforts. As stated in the Grouptrading commentary, we estimate that the impact of these exceptionalcircumstances was to increase revenues by approximately $19 million, and tradingprofits by $9 million. Excluding the estimated impact of these storms, NorthAmerican revenues grew by 22.7% and trading profit by 34.0%. Notwithstanding the impact of the storms, we have been very pleased by theperformance of our base business (i.e. day-to-day business, unaffected by largeor exceptional events such as storms or major Military projects) which grew byabout 30%, reflecting the growing effectiveness of our new sales organisationand the area-based organisation. In terms of business mix, rental revenue grew 25.8% and services revenue grew42.7%. A major part of the growth in services revenue was due to our hurricanerelated activity which by its nature attracts a higher proportion of servicerevenue in fuel and labour. Power rental revenue for 2005 was 23.4% ahead ofprior year. Temperature control and oil-free air rental revenue grew during 2005by 36.3% and 12.2% respectively, reflecting a strong performance in bothproducts during the year. The growth in temperature control was in part due tounusually high temperatures lasting well into the autumn in many parts of NorthAmerica, as well as the acquisition of the temperature control rental fleet ofPrime Energy in June 2005 for a consideration of $5.2 million. The rental fleetacquired included more than 150 chillers, air conditioning units and coolingtowers with an aggregate capacity of over 20,000 tonnes. This acquisitionexpanded our rental fleet, gave us access to new customers, and strengthened ourposition as the leading provider of temperature control rental solutions inNorth America. Our new Local business model is now well established in North America with fourrental centres and a national call centre handling all the contractadministration for the business. Our new ERP platform is now beginning toperform well, and rollout will be completed in the first half of 2006.Overall, we have had an excellent year in North America, and the North Americanmanagement team expects to see good progress in the first half of 2006 as aresult of its success in building its base business. The exceptional nature ofthe storm revenues in 2005 will make the comparatives for the second half of2006 very challenging. Local business: Europe Revenue 2005 2004 Change •million •million % Northern Europe 85.8 79.8 7.5%South & Central Europe 81.8 76.8 6.6%Total Europe 167.6 156.6 7.1% Trading Profit 2005 2004 Change •million •million % Northern Europe 6.6 5.4 22.9%South & Central Europe 1.4 4.7 (71.3)%Total Europe 8.0 10.1 (21.2)% Under the new reporting arrangements, European performance is set out in twosegments: Northern Europe comprises our Local businesses in the UK, Ireland andthe Nordic countries; South & Central Europe covers our Local businesses inGermany, Benelux, Spain and Italy. In Northern Europe revenue of €85.8 million was 7.5% ahead of the prior year;performance in the second half was much stronger than the first, with revenues15.1% ahead of the prior year. Most of this revenue growth came from services,mainly comprising fuel and transport, which grew by 19.9% in the year. Rentalrevenue increased by 1.9% with power being 2.0% ahead of the prior year, whileour smallest product, oil-free air revenue increased by 24.5%. Temperaturecontrol revenue fell by 4.6% reflecting a subdued market and a cool summer. Theincrease in service revenue drove a sharp increase in direct costs whichimpacted our margins, but, again, there was a noticeable improvement in marginsin the second half of the year. In terms of geographic performance Scotland, Ireland and our Nordic businesseshad a particularly strong year, benefiting in part from the higher levels ofactivity in the oil and gas sector. Revenue in South & Central Europe was 6.6% higher than the previous year at€81.8 million. Rental revenue grew by 1.5%, while service revenue grew by 19.2%.Within rental revenue, power increased by 4.0% with temperature control andoil-free air dropping by 0.3% and 8.4% respectively. Trading profit decreased by €3.3 million which included a €2.4 million one-offcharge associated with the reorganisation of our Southern and Central Europeanbusinesses into a single Continental European organisation structure. Theimplementation of the ERP system together with our new operating model affordedus the opportunity to streamline the management and administrative functions ofthese businesses. As in our Northern European businesses, South and CentralEurope suffered from higher direct costs, mainly fuel, and consequently lowermargins. Performance in some areas of Continental Europe was encouraging. Our Spanishbusiness continued to grow at an impressive rate, reflecting our growingpresence in this market, while our businesses in Northern Germany and Beneluxwere also ahead of the prior year. However, our French business had adisappointing year due to a combination of a weak market and high fuel prices,together with the inevitable distraction caused by the implementation of our newERP system. During 2005 we saw good progress in the performance of our rental centres, withthe operations in Cannock, Paris and Aachen operating effectively through ourpeak summer season. The ERP system is now live in all our major tradingoperations in Europe. The European business has seen two years of significant change, bothstructurally and with the implementation of the ERP system. However, much ofthis is now behind us and we anticipate seeing the early benefits of the neworganisation structure and ERP system during 2006. Local Business: Aggreko International 2005 2004 Change $million $million % Revenue 94.6 71.2 32.8%Trading profit 17.1 10.6 61.3% Aggreko International's Local businesses in the Middle East, Singapore,Australia, New Zealand and Brazil had an outstanding year. In aggregate, year onyear revenue grew by 32.8% to $94.6 million, which resulted in trading profitgrowth of 61.3% to $17.1 million and a trading margin of 18.1% as against 14.9%in 2004. The businesses in the Middle East and Australia performed very strongly. Thehigher oil revenues have led to a number of major infrastructure projects in theMiddle East, notably in the UAE and Qatar. Robust demand for commodities and ahot summer created a favourable environment for the business in Australia, whileour recently-established New Zealand business showed encouraging growth. Thebusiness in Singapore continued to benefit from the high levels of activity inshipping, and our Brazilian business has continued to secure new contracts inthe offshore oil market. In all these Local businesses we have increased ourrate of capital investment to take advantage of the favourable conditions. International Power Projects : Aggreko International The International Power Projects business had a particularly strong second halfafter a relatively weak first half. The business continues to grow quickly,albeit with some margin dilution as the proportion of business coming fromutilities increases. 2005 2004 Change $million $million % Revenue (excluding pass-through fuel) 157.5 124.0 27.1%Trading profit 32.3 29.0 10.8% International Power Projects' revenue (excluding pass-through fuel) grew by27.1% to $157.5 million in 2005. This growth reflects the large number of newcontracts secured in the year with projects in 14 new countries. Our drive tobroaden the geographical base of this business is illustrated by the fact thatat the end of 2005 we were operating 77 contracts, in 41 countries around theworld during the year (2003: 37 contracts, in 34 countries). The second halfperformance of our International Power Projects business was particularly strongwith revenues (excluding pass-through fuel) and trading profit ahead by 44.7%and 32.1% respectively. The business was successful in winning new contracts in South America, MiddleEast, Africa and Asia, many of them from power utilities. The most notable newcontract was with the Uganda Electricity Transmission Company for which we haveinstalled and are operating a 50MW temporary power plant in Kampala at anestimated value over the three years of the contract of $160 million, includingan estimated $120 million of fuel. This is the largest contract in Aggreko'shistory. The high oil price continued to create demand for our services in manyoil producing countries around the world. At the same time, military revenuesremained robust, with two additional camps delivered in the year; as aconsequence military revenues for the year were higher in 2005 at $47 million(2004: $44 million). As the utilities proportion of the business has increasedthere has been some dilution to margins and returns. However, trading margins(excluding pass-through fuel) remain strong at 20.5%, albeit at a lower levelthan 2004 of 23.6%. During 2005 we installed our first gas-fuelled temporary power solution for acustomer in Africa. Our initial experience with this gas solution was veryencouraging and on this basis we installed a second gas project for a customerin Asia towards the end of the year. While we are still at an early stage withthis technology, we believe that it has the potential to be an importantcontributor to International Power Project's future growth. Overall, we had a good year in Aggreko International, making further progresswith the implementation of our strategy and continuing to build a broader baseon which to grow the business in the future. Detailed Financial Review International Financial Reporting Standards IFRS became mandatory for all listed groups within the European Union from 1January 2005 and the Accounts for 2005 have been prepared in accordance withaccounting policies based on IFRS. The comparative figures for 2004 have beenrestated accordingly and the notes to the Accounts contain reconciliations tothe previously reported figures. These reconciliations show that there are nomaterial changes to previously reported figures as a result of the adoption ofIFRS. Critical Accounting Policies Aggreko's principal accounting policies as noted above conform withInternational Financial Reporting Standards. We need to use estimates and make judgements in the preparation of the Accounts.The most sensitive areas affecting the Accounts are discussed below. PensionsPension arrangements vary for our employees and schemes reflect best practiceand regulation in each country. The Group operates a defined benefit scheme forUK employees, which was closed to new employees joining the group after 1 April2002, as well as a number of defined contribution schemes. Under IAS 19 'Employee Benefits' Aggreko has recognised a pre tax pensiondeficit of £16.8 million at 31 December 2005 (2004: £10.2 million). The increasein the pension deficit is mainly as a result of a change in discount rate,inflation and longevity assumptions. The main assumptions used in IAS 19valuation for the previous two years are shown in note 28 of the Accounts. Thesensitivities regarding the discount rate and longevity assumptions are shown inthe table below. Assumptions Change in assumption Indicative effect on the scheme's liabilitiesDiscount rate Increase / decrease by 0.5pp Decrease by 11.6% / increase by 13.6% Longevity Increase by 1 year Increase by 3.0% During 2005 we made an additional contribution of £1.4 million to the definedbenefit scheme. An actuarial valuation is currently in progress and we willreview our future strategy with regard to reducing our pension deficit during2006. TaxationAggreko's tax charge is based on the profit for the year and tax rates in forceat the balance sheet date. Estimation of the tax charge requires an assessmentto be made of the potential tax treatment of certain items which will only beresolved once finally agreed with the relevant tax authorities. Property, plant and equipmentThe property, plant and equipment used in our business is mainly the rentalfleet which has a depreciation life typically of between 8 and 10 years. Theannual depreciation charge is sensitive to the estimated service lives weallocate to each type of asset. Asset lives are reviewed regularly and changedwhen necessary to reflect current thinking on their remaining lives in light oftechnological change, prospective economic utilisation and the physicalcondition of the assets. Currency Translation The net overall impact of exchange rates on currency translation in 2005 was toincrease revenue and operating profit by £3.4 million and £0.7 millionrespectively. Currency translation also gave rise to a £14.1 million increase inreserves as a result of year on year movements in the exchange rates. Set out inthe table below are the principal exchange rates affecting the Group's overseasprofits and net assets. 2005 2004Table 2(per £ sterling) Average Year End Average Year EndPrincipal Exchange RatesUnited States dollar 1.82 1.72 1.83 1.93Euro 1.46 1.46 1.47 1.42Other Operational ExchangeRatesUAE Dirhams 6.68 6.32 6.73 7.10Australian dollar 2.39 2.35 2.49 2.48(Source: Reuters) Interest The net interest charge for the year was £4.3 million, an increase of £0.4million on 2004, reflecting the higher level of net debt during the year.Interest cover increased to 14.1 times from 11.8 times in 2004 (pre-exceptionalitems). Effective Tax Rate The effective tax rate for the full year is 35.0% as compared with 31.6% in2004. This increase in the tax rate largely reflects the changes in the regionalmix of profits. Dividends Based on the proposed final dividend of 3.77 pence, which would result in afull-year dividend of 6.11 pence per ordinary share, dividend cover is 2.26times (2004, pre-exceptional items: 1.86 times). Under IFRS the liability for afinal dividend is only recognised in the period when it is approved andtherefore the balance sheet does not reflect the final dividend for 2005. Thedividend in these accounts represents the final dividend for 2004 of 3.57 penceper share and the interim dividend for 2005 of 2.34 pence per share. Cashflow The net cash inflow from operations during the year totalled £101.9 million(2004: £98.7 million). EBITDA (earnings before interest, taxes, depreciation andamortisation) for the year amounted to £124.1 million, up 18.6% on 2004(pre-exceptional items). This funded capital expenditure of £80.2 million, whichwas up £24.1 million on 2004. Net debt increased by £20.8 million during theyear to £102.9 million. As a result of the increase in net debt, gearing (netdebt as a percentage of equity) at 31 December 2005 increased to 49% from 45% at31 December 2004. Net Operating Assets The net operating assets of the Group at 31 December 2005 totalled £356.5million, up £59.7 million on 2004; the average net operating assets during theperiod were £326.7 million, up 5.3% on 2004. A key measure is the returngenerated from operating assets. In 2005 the return on average net operatingassets (as measured by operating profit divided by average net operating assets)increased to 18.5% compared with 14.9% in 2004. A geographic analysis of ourreturns on net operating assets is set out in the table below: 2005 2004Europe 5.5% 6.1%International 21.7% 20.8%North America 29.6% 20.3%Group 18.5% 14.9% Shareholders' EquityShareholders' equity increased by £29.7 million to £208.2 million, representedby the net assets of the Group of £311.1 million before net debt of £102.9million. The movements in shareholders' funds are analysed in the table below: Movements in Shareholders' Equity £ million £ millionAs at 31 December 2004 178.5IAS 39 opening adjustment 0.6 -----As at 1 January 2005 179.1Profit for the financial year 36.7Dividend (1) (15.7) -------- Retained earnings 21.0New share capital subscribed 1.0Purchase of own shares held under trust (3.2)Credit in respect of employee share awards 2.5Actuarial losses on retirement benefits (7.9)Currency translation difference 14.1 Other (2) 1.6 ------As at 31 December 2005 208.2 ------- (1) Reflects the final dividend for 2004 of 3.57 pence per share (2004: 3.45pence) and the interim dividend for 2005 of 2.34 pence per share (2004: 2.25pence) that were paid during the year. (2) Other includes tax on items taken directly to reserves and movements in thehedging reserve. Treasury The Group's operations expose it to a variety of financial risks that includeliquidity, the effects of changes in foreign currency exchange rates andinterest rates, and credit risk. The Group has a centralised treasury operationwhose primary role is to ensure that adequate liquidity is available to meet theGroup's funding requirements as they arise, and that financial risk arising fromthe Group's underlying operations is effectively identified and managed. The treasury operations are conducted in accordance with policies and proceduresapproved by the Board and are reviewed annually. Financial instruments are onlyexecuted for hedging purposes and transactions that are speculative in natureare expressly forbidden. Monthly reports are provided to senior management andtreasury operations are subject to periodic internal and external review. Liquidity and fundingThe Group maintains sufficient facilities to meet its normal fundingrequirements over the medium term. These facilities are primarily in the form ofbank facilities arranged on a bilateral basis with a number of internationalbanks. The Group does not consider that the financial covenants contained in thefacilities are restrictive to its operations. The Group's borrowings were £111.2million at 31 December 2005 and net debt amounted to £102.9 million. At thatdate undrawn committed facilities were £98.3 million. Interest rate riskThe Group's policy is to minimise the exposure to interest rates by ensuring anappropriate balance of fixed and floating rates. The Group's primary funding isat floating rates through its bank facilities. In order to manage the associatedinterest rate risk, the Group uses interest rate swaps to vary the mix of fixedand floating rates. At 31 December 2005 £61.8 million of the net debt of £102.9million was at fixed rates of interest resulting in a fixed to floating rate netdebt ratio of 60:40 (2004 - 77:23). Foreign exchange riskThe Group is subject to currency exposure on the translation of its netinvestments in overseas subsidiaries into sterling. In order to reduce thecurrency risk arising, the Group uses direct borrowings in the same currency asthose investments. Group borrowings are currently drawn down in the principalcurrencies affecting the Group, namely US dollar and euro, as well as sterling. The Group manages its currency flows to minimise foreign exchange risk arisingon transactions denominated in foreign currencies and uses forward contractswhere appropriate in order to hedge net currency flows. Counterparty and credit riskCash deposits and other financial instruments give rise to credit risk onamounts due from counterparties. The Group manages this risk by limiting theaggregate amounts and their duration depending on external credit ratings of therelevant counterparty. In the case of financial assets exposed to credit risk,the carrying amount in the balance sheet, net of any applicable provision forloss, represents the amount exposed to credit risk. Insurance The Group operates a policy of partial self insurance although the majority ofcover is placed in the external market. The Group monitors its insurancearrangements in such a way to ensure the quality and extent of cover. Principalareas of cover are general liability, property damage, directors and officersliability and political risk. Shareholder information Our website can be accessed at www.aggreko.com. This contains a large amount ofinformation about our business, including a range of charts and data, which canbe down loaded for easy analysis. The website also carries further detail aboutour Strategy Review, as well as all recent Stock Exchange announcements. Rupert Soames Angus CockburnChief Executive Finance Director 9 March 2006 Group Income Statementfor the year ended 31 December 2005 Notes 2005 Total before Exceptional £ million exceptional items items (Note 2) 2004 2004 2004 £ million £ million £ million Revenue 1 417.7 323.6 - 323.6Cost of sales (207.9) (152.7) (1.5) (154.2) -------- --------- -------- ---------Gross Profit 209.8 170.9 (1.5) 169.4Distribution costs (108.9) (92.9) (7.6) (100.5)Administrative (41.3) (32.9) (5.9) (38.8)expensesOther income 1.1 1.3 - 1.3 -------- --------- -------- ---------Operating profit 1 60.7 46.4 (15.0) 31.4Finance costs- Interest expense (4.8) (4.2) - (4.2)- Interest income 0.5 0.3 - 0.3 -------- --------- -------- ---------Profit before 56.4 42.5 (15.0) 27.5taxationTaxation: 3 - UK (6.1) (4.0) 1.1 (2.9)- Overseas (13.6) (9.5) 3.7 (5.8) -------- --------- -------- ---------Profit for the year 36.7 29.0 (10.2) 18.8 ======== ======== ======== ========Dividends paid in 4 (15.7) (15.2) - (15.2)the year -------- --------- -------- --------- Dividends per share 4 5.91 5.70(pence) -------- --------- -------- ---------Earnings pershare Basic (pence) 5 13.81 10.83 (3.82) 7.01 -------- --------- -------- ---------Diluted (pence) 5 13.72 10.79 (3.80) 6.99 -------- --------- -------- --------- The above results relate to continuing operations and all profit for the periodis attributable to equity shareholders of the Company Group Statement of Recognised Income and Expense 2005 2004 £ million £ million Profit for the year 36.7 18.8Actuarial losses on retirement benefits (7.9) (1.5)Movement of deferred tax on pension liability 2.4 0.5Cashflow hedges (0.6) -Net exchange gains/(losses) offset in reserves 14.1 (8.4) ------- --------Total recognised income for the year 44.7 9.4 ========Adoption of IAS 39 0.6 ------- Total recognised income since last annual Accounts 45.3 ======= Group Balance Sheetas at 31 December 2005 Notes 2005 2004 £ million £ millionNon-current assetsIntangible assets 6 1.5 1.8Property, plant and equipment 7 294.9 261.0Financial assets 0.7 - Deferred tax asset 13 0.4 0.2 -------- -------- 297.5 263.0 -------- -------- Current assets Inventories 8 35.7 24.6Trade and other receivables 9 114.0 70.2Financial assets 0.1 - Cash and cash equivalents 8.3 7.9Current tax assets 1.6 3.2 -------- -------- 159.7 105.9 -------- -------- Total assets 457.2 368.9 -------- -------- Current liabilities Financial liabilities- Borrowings 10 (9.5) (6.8)- Derivative financial instruments (0.6) - Trade and other payables 11 (93.7) (59.6)Current tax liabilities (10.4) (6.6) Provisions 12 (0.8) (3.7) -------- -------- (115.0) (76.7) -------- -------- Non-current liabilitiesFinancial liabilities- Borrowings 10 (101.7) (83.2)- Derivative financial instruments (0.2) -Deferred tax liabilities 13 (14.2) (17.9) Retirement benefit obligation (16.8) (10.2) Provisions 12 (1.1) (2.4) -------- -------- (134.0) (113.7) -------- -------- Total liabilities (249.0) (190.4) -------- -------- Net assets 208.2 178.5 ======== ======== Shareholders' equity Share capital 14 53.8 53.6Share premium 16 6.8 6.0Treasury shares 15 (6.5) (3.3)Capital redemption reserve 16 0.1 0.1Hedging reserve 16 - - Foreign exchange reserve 16 (5.2) (19.3)Retained earnings 16 159.2 141.4 -------- --------Total shareholders' equity 208.2 178.5 ======== ======== The financial statements on pages x to x were approved by the Board of Directorson 9 March 2006 and were signed on its behalf by: P G RogersonChairman A G CockburnFinance Director Group Cash Flow Statementfor the year ended 31 December 2005 Notes 2005 2004 £ million £ millionCash flows from operating activitiesCash generated from operations (i) 101.9 98.7 Tax paid (18.3) (10.4) ------- -------Net cash generated from operating activities 83.6 88.3 ------- ------- Cash flows from investing activitiesPurchases of property, plant and equipment (PPE) (80.1) (56.0)Proceeds from sale of PPE 3.8 3.7Purchase of intangible assets (0.1) (0.1) ------- -------Net cash used in investing activities (76.4) (52.4) ------- ------- Cash flows from financing activitiesNet proceeds from issue of ordinary shares 1.0 0.3Increase in long term loans 31.5 29.0Repayment of long term loans (19.0) (47.0)Net movement in short term loans 3.4 2.6Interest received 0.5 0.3Interest paid (4.6) (4.2)Dividends paid to shareholders (15.7) (15.2)Purchase of treasury shares (3.2) (3.3) ------- -------Net cash used in financing activities (6.1) (37.5) Net increase/(decrease) in cash and cashequivalents 1.1 (1.6)Cash and cash equivalents at beginning of the 4.9 6.6yearExchange loss on cash and cash equivalents - (0.1) ------ -------Cash and cash equivalents at end of the year 6.0 4.9 ------- ------- Reconciliation of net cash flow to movement innet debt for the year ended 31 December 2005 Increase/(decrease) in cash and cash equivalents 1.1 (1.6)Cash (inflow)/outflow from movement in debt (15.9) 15.4 ------- -------Changes in net debt arising from cash flows (14.8) 13.8 Exchange (losses)/gains (6.0) 4.0 ------- ------- Movement in net debt in period (20.8) 17.8Net debt at beginning of period (82.1) (99.9) ------- -------Net debt at end of period (102.9) (82.1) ========= ======== Notes to the Group Cash Flow Statementfor the year ended 31 December 2005 (i) Cashflow from operating activities 2005 2004 £ million £ million Profit for the year 36.7 18.8Adjustments for:Tax 19.7 8.7Depreciation 63.0 58.0Impairment of property, plant and equipment - 2.3Amortisation of intangibles 0.4 0.2Interest income (0.5) (0.3)Interest expense 4.8 4.2Profit on sale of property, plant and equipment (seebelow) (1.1) (1.3)Share based payments 2.5 1.0Changes in working capital (excluding the effects ofexchange differences onconsolidation):Increase in inventories (9.0) (2.6)Increase in trade and other receivables (35.9) (11.5)Increase in trade and other payables 25.4 15.1Net movements in provisions for liabilities andcharges (4.2) 5.8Increase in retirement benefit obligation 0.1 0.3 ------- ------- Cash generated from operations 101.9 98.7 ======= ====== In the cashflow statement, proceeds from sale of property, plant and equipmentcomprise: 2005 2004 £ million £ million Net book amount 2.7 2.4Profit on sale of property, plant and equipment 1.1 1.3 ------- ------- Proceeds from sale of property, plant and equipment 3.8 3.7 ======= ======= Notes to the Accountsfor the year ended 31 December 2005 Note 1Segmental reporting(a) Revenue by segment Total revenue Inter-segment revenue External revenue 2005 2004 2005 2004 2005 2004 £ million £ million £ million £ million £ million £ millionNorthernEurope 58.7 54.8 - 0.7 58.7 54.1South &Central Europe 56.0 52.7 0.1 0.6 55.9 52.1North America 141.8 107.6 0.1 0.2 141.7 107.4Middle East,Asia-Pacific, SouthAmerica 52.5 39.2 0.5 0.3 52.0 38.9 ------ ------ ------- ------ ------ -------Local Business 309.0 254.3 0.7 1.8 308.3 252.5InternationalPower Projects 110.7 71.7 1.3 0.6 109.4 71.1Eliminations (2.0) (2.4) (2.0) (2.4) - - ------ ------ ------ ------ ------ -------Group 417.7 323.6 - - 417.7 323.6 ========= ========= ======== ======== ======= ======= Inter-segment transfers or transactions are entered into under the normalcommercial terms and conditions that would also be available to unrelated thirdparties. International Power Projects is a global segment administered from Dubai.At the end of 2005 the assets of the International Power Projects segment arepredominantly located in the Middle East, Asia-Pacific, South America andAfrica. (b) Profit bysegment Trading Profit Gain/(loss) on sale of PPE Operating Profit 2005 2004 2005 2004 2005 2004 £ million £ million £ million £ million £ million £ millionNorthernEurope 4.5 3.7 0.2 0.3 4.7 4.0South &Central Europe 0.9 3.2 0.3 0.3 1.2 3.5North America 26.5 16.7 0.3 0.8 26.8 17.5Middle East,Asia-Pacific, SouthAmerica 9.5 5.8 0.1 (0.2) 9.6 5.6 ------ ------ ------- ------ ------ -------Local 41.4 29.4 0.9 1.2 42.3 30.6BusinessInternationalPower Projects 18.2 15.7 0.2 0.1 18.4 15.8 ------ ------ ------- ------ ------ -------Group 59.6 45.1 1.1 1.3 60.7 46.4 ========= ========= ========= =========Exceptionalitems (Note - (15.0)2) ------ -------Operatingprofit postexceptionalitems 60.7 31.4Finance costs- net (4.3) (3.9) ------ -------Profit beforetaxation 56.4 27.5Taxation (19.7) (8.7) ------ -------Profit forthe 36.7 18.8year ========= ========= (c)Depreciation and amortisation by segment 2005 2004 £ million £ millionNorthern Europe 9.8 9.5 South & Central Europe 9.7 9.8 North America 17.0 15.9 Middle East,Asia-Pacific, South America 7.6 6.3 ------ -------Local Business 44.1 41.5 International Power Projects 19.3 16.7 ------ -------Group 63.4 58.2 ========= ========= (d) Capital expenditure of property, plant and equipment and intangible assetsby segment 2005 2004 £ million £ millionNorthern Europe 6.2 4.2South & Central Europe 5.7 4.8North America 21.2 8.5Middle East, Asia-Pacific, SouthAmerica 16.2 8.7 ------ -------Local Business 49.3 26.2International Power Projects 30.9 29.9 ------ -------Group 80.2 56.1 ========= ========= Capital expenditure comprises additions to property, plant and equipment andintangible assets. (e) Assets/(liabilities) by segment Assets Liabilities 2005 2004 2005 2004 £ million £ million £ million £ millionNorthern Europe 57.4 65.8 (7.4) (7.1)South & CentralEurope 70.4 68.2 (17.0) (14.5)North America 132.1 93.3 (27.4) (16.3)Middle East,Asia-Pacific,South America 56.3 39.7 (11.7) (9.5) ------- ------ ------ -------Local Business 316.2 267.0 (63.5) (47.4)InternationalPower Projects 138.2 98.5 (34.4) (21.3) ------- ------ ------ -------Group 454.4 365.5 (97.9) (68.7) ========= ========= ========= ========= Segment assets include property, plant and equipment, intangible assets,inventory, receivables and operating cash. Segment liabilities comprise operating liabilities. They exclude taxation,the retirement benefit obligation and corporate borrowings. (f) Average number of employees by segment 2005 2004 number numberNorthern Europe 345 345South & Central Europe 385 382North America 635 633Middle East, Asia-Pacific, South America 254 219 _______ _______Local Business 1,619 1,579International Power Projects 378 425 _______ _______Group 1,997 2,004 ========= ========= (g) Segmental revenue by location of customer 2005 2004 £ million £ millionUK 47.7 44.8Continental Europe 66.9 61.4North America 141.7 107.4Middle East 58.4 52.2Australasia 22.1 18.5Africa 46.8 11.5Other 34.1 27.8 _______ _______Total 417.7 323.6 ========= ========= (h) Reconciliation of net operating assets to net assets 2005 2004 £ million £ millionNet operating assets 356.5 296.8Retirement benefits obligation (16.8) (10.2)Net tax and finance payable (22.6) (21.1) ------ ------- 317.1 265.5Borrowings (108.9) (87.0) ------ -------Net assets 208.2 178.5 ======= ======= Note 2 Exceptional items The exceptional charge in 2004 related to the restructuring programme enteredinto as a result of an in-depth review of the Group's strategy which wasannounced in March 2004. Note 3Taxation 2005 2004 £ million £ millionAnalysis of charge in yearCurrent tax expense:UK Corporation tax 6.5 3.1Double taxation relief (0.6) (0.4) -------- -------- 5.9 2.7 Overseas taxation 16.5 10.2 -------- -------- 22.4 12.9 Over provision in respect of prior years:UK - (0.3)Overseas (0.4) (0.4) -------- -------- (0.4) (0.7) -------- -------- 22.0 12.2Deferred taxation (Note13):Temporary differences arising in current year (2.2) (3.0)Over provision in respect of prior year (0.1) (0.5) -------- -------- 19.7 8.7 ====== ===== 2005 2004 £ million £ millionTax on items charged to equity Deferred tax charge on exchange movementsoffset in reserves - (0.1)Deferred tax on pension scheme deficit 2.4 0.5Deferred tax on share-based payments 1.1 - -------- ------- 3.5 0.4 -------- -------- The current tax rate and effective tax rate on profit on ordinary activities forthe year varied from the standard rate of UK Corporation tax as follows: 2005 2004 % % Corporation tax 30.0 30.0Effect of tax rate applied to overseas earnings 2.8 1.1Permanent differences 3.0 4.9Current tax prior year adjustments (0.7) (2.5)Deferred tax prior year adjustment (0.1) (1.9) -------- --------Total effective tax rate 35.0 31.6 ====== ====== Note 4 Dividends 2005 2005 2004 2004 £ million per share (p) £ million per share (p) Final paid 9.5 3.57 9.2 3.45Interim paid 6.2 2.34 6.0 2.25 ------- --------- -------- --------- 15.7 5.91 15.2 5.70 ====== ====== ====== ====== In addition, the directors are proposing a final dividend in respect of thefinancial year ended 31 December 2005 of 3.77 pence per share which will absorban estimated £9.9 million of shareholders' funds. It will be paid on 19 May 2006to shareholders who are on the register of members on 21 April 2006. Note 5 Earnings per share Basic earnings per share have been calculated by dividing the earningsattributable to ordinary shareholders by the weighted average number of sharesin issue during the year, excluding shares held by the Employee Share OwnershipTrusts which are treated as cancelled. 2005 2004 Profit for the year (£ million) 36.7 18.8 ====== ====== Weighted average number of ordinary shares in issue (million) 265.3 266.9 ======= ======= Basic earnings per share (pence) 13.81 7.01 ======= ====== For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. These represent share options granted to employees where the exerciseprice is less than the average market price of the Company's ordinary sharesduring the year. The number of shares calculated as above is compared with thenumber of shares that would have been issued assuming the exercise of the shareoptions. 2005 2004 Profit for the year (£ million) 36.7 18.8 ------ ------ Weighted average number of ordinary shares in issue (million) 265.3 266.9Adjustment for share options (million) 1.8 1.0 ------ ------Diluted weighted average number of ordinary shares in issue(million) 267.1 267.9 ------ ------Diluted earnings per share (pence) 13.72 6.99 ------ ------ Aggreko plc assesses the performance of the Group by adjusting earnings pershare, calculated in accordance with IAS 33, to exclude items it considers to benon-recurring and believes that the exclusion of such items provides a bettercomparison of business performance. The calculation of earnings per ordinaryshare on a basis which excludes exceptional items is based on the followingadjusted earnings: 2005 2004 £ million £ million Profit for the year 36.7 18.8Exclude exceptional items (net of attributabletaxation) - 10.2 ------ ------- Adjusted earnings 36.7 29.0 ====== ======An adjusted earnings per share figure is presentedbelow 2005 2004 Basic earnings per share pre-exceptional items (pence) 13.81 10.83 ------- -------Diluted earnings per share pre-exceptional items(pence) 13.72 10.79 ------- -------- Note 6Intangible assets 2005 2004 £ million £ millionCostAt 1 January 2.7 2.6Additions 0.1 0.1 --------- -------- At 31 December 2.8 2.7 --------- -------- Accumulated amortisationAt 1 January 0.9 0.7Charge for the year 0.4 0.2 --------- -------- At 31 December 1.3 0.9 --------- -------- Net book values At 31 December 1.5 1.8 ======== ======== Amortisation charges in the year have been charged through administrativeexpenses. Note 7Property, plant and equipment Year ended 31 December 2005 Short Vehicles, Freehold leasehold Rental plant & properties properties fleet equipment Total £ million £ million £ million £ million £ millionCostAt 1 January 2005 22.3 5.1 549.8 40.3 617.5Reclassifications 0.1 - - (0.1) -Exchangeadjustments 1.7 0.3 43.5 1.4 46.9Additions 1.0 0.9 73.7 4.5 80.1Disposals (0.1) (0.2) (14.0) (1.5) (15.8) --------- --------- -------- --------- --------- At 31 December2005 25.0 6.1 653.0 44.6 728.7 ======= ====== ======== ======= ======== AccumulateddepreciationAt 1 January 2005 9.3 2.3 321.1 23.8 356.5Exchangeadjustments 0.7 0.1 25.5 1.1 27.4Charge for theyear 0.8 0.4 58.1 3.7 63.0Disposals - (0.2) (11.4) (1.5) (13.1) --------- --------- -------- --------- --------- At 31 December2005 10.8 2.6 393.3 27.1 433.8 ======= ====== ======== ======= ======== Net book values At 31 December2005 14.2 3.5 259.7 17.5 294.9 ======= ===== ======= ====== ======= At 31 December2004 13.0 2.8 228.7 16.5 261.0 ====== ===== ======= ====== ======= Note 7Property, plant and equipment (continued) Year ended 31 December 2004 Short Vehicles, Freehold leasehold Rental plant & properties properties fleet equipment Total £ million £ million £ million £ million £ millionCostAt 1 January 2004 22.2 4.8 545.4 37.4 609.8Reclassifications 0.3 - (0.2) (0.1) -Exchangeadjustments (1.1) (0.2) (26.0) (1.0) (28.3)Additions 1.7 0.5 48.5 5.3 56.0Disposals (0.8) - (17.9) (1.3) (20.0) --------- --------- -------- --------- --------- At 31 December2004 22.3 5.1 549.8 40.3 617.5 ====== ===== ======= ====== ======= Accumulated depreciationAt 1 January 2004 6.8 2.1 298.1 23.0 330.0Exchangeadjustments (0.4) (0.1) (14.9) (0.8) (16.2)Charge for theyear 0.8 0.3 54.3 2.6 58.0Impairment 2.3 - - - 2.3Disposals (0.2) - (16.4) (1.0) (17.6) --------- --------- -------- --------- --------- At 31 December2004 9.3 2.3 321.1 23.8 356.5 ===== ===== ======= ====== ======= Net book values At 31 December2004 13.0 2.8 228.7 16.5 261.0 ======= ===== ======= ====== ======= At 31 December2003 15.4 2.7 247.3 14.4 279.8 ====== ===== ======= ====== ======= Impairment costs of £2.3 million in 2004 are included in administrativeexpenses within the income statement. Capital grants totalling £0.5 million in respect of additions to property,plant and equipment are netted against the cost of the related asset and thecost is depreciated. Note 8Inventories 2005 2004 £ million £ million Raw materials and consumables 31.2 23.1Work in progress 4.5 1.5 ------ ------- 35.7 24.6 ====== ====== Note 9Trade and other receivables 2005 2004 £ million £ million Trade receivables 91.6 59.2Less: provision for impairment of receivables (4.1) (2.9) -------- --------Trade recievables net 87.5 56.3 Prepayments and accrued income 19.0 12.1Other receivables 7.5 1.8 -------- -------- Total receivables 114.0 70.2 ======= ====== There is no concentration of credit risk with respect to trade receivables,as the Group has a large number of customers who are unrelated andinternationally dispersed. Other receivables principally comprise deposits and advance payments. Note 10Financial assets/liabilities 2005 2004 £ million £ million Non-currentBank borrowings 101.7 83.2 CurrentBank overdrafts 2.3 3.0Bank borrowings 7.2 3.8 --------- -------- 9.5 6.8 --------- -------- Total borrowings 111.2 90.0 --------- -------- Short-term deposits (0.4) (0.5)Cash at bank and in hand (7.9) (7.4) ------- ------- Net borrowings 102.9 82.1 ======= ====== The bank overdrafts and borrowings are all unsecured. Note 11Trade and other payables 2005 2004 £ million £ million Trade payables 27.3 17.7Other taxation and social security payable 3.3 3.3Other payables 8.8 4.4Accruals and deferred income 54.3 34.2 ------- ------- 93.7 59.6 ====== ====== Note 12Provisions Legal indemnity Reorganisation Employee And termination restructuring benefit Total £ million £ million £ million At 1 January 2005 5.8 0.3 6.1Utilised during year (4.2) - (4.2) --------- --------- -------At 31 December 2005 1.6 0.3 1.9 --------- --------- ------- 2005 2004 £ million £ million Analysis of total provisionsCurrent 0.8 3.7Non-current 1.1 2.4 --------- -------Total provisions 1.9 6.1 --------- ------- (i) The provision for reorganisation and restructuring comprises the estimatedcosts of restructuring the Group's North American, European and Internationaloperations and the provisions are generally in respect of severance, propertyand related costs. The provision is expected to be fully utilised before the endof 2007. (ii) The provision for legal indemnity employee termination benefit relates to astatutory employee termination benefit scheme in France. The provision isexpected to be utilised within 20 years. Note 13Deferred tax 2005 2004 £ million £ million At 1 January (17.7) (23.1)Exchange differences (1.9) 1.5Credit to the income statement 2.3 3.5Credit to equity 3.5 0.4 --------- -------At 31 December (13.8) (17.7) ======== ======== Note 14Share capital 2005 2005 2004 2004 Number £000 Number £000 Authorised:Ordinary shares of 20peach 349,750,010 69,950 349,750,010 69,950 --------- -------- --------- ------- Number of £000 Number of £000 shares sharesAllotted, called up and fullypaid:Ordinary shares of 20p eachAt 1 January 268,186,132 53,637 267,837,689 53,568 Employee share optionscheme 992,748 199 348,443 69 --------- -------- --------- ------- At 31 December 269,178,880 53,836 268,186,132 53,637 ============= ======== ============= ======== During the year 992,748 Ordinary shares of 20p each have been issued at pricesranging from £1.05 to £1.33 to satisfy the exercise of options under theSavings-Related Share Option Schemes ('Sharesave') by eligible employees. Note 15 Treasury Shares 2005 2004 £ million £ million Treasury Shares (6.5) (3.3) ======= ======= Interests in own shares represent the cost of 3,678,341 of the company'sordinary shares (nominal value 20 pence) purchased in June 2004 (2,016,720) andMay 2005 (1,661,621). These shares represent 1.4% of issued share capital as at 31December 2005 (2004: 0.7%). These shares were acquired by a trust in the open market using funds provided byAggreko plc to meet obligations under the Long Term Incentive Arrangements. Thecosts of funding and administering the scheme are charged to the incomestatement of the Company in the period to which they relate. The market value ofthe shares at 31 December 2005 was £10.0 million (2004: £3.4 million). Note 16Statement of changes in equity As at 31 December 2005 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 at31 53.6 6.0 (3.3) 0.1 - (19.3) 141.4 178.5December2004 Adoption ofIAS 39 - - - - 0.6 - - 0.6 ------ ------ ------ ------ ------ ------ ------ ------ Balance at 1January 2005 53.6 6.0 (3.3) 0.1 0.6 (19.3) 141.4 179.1 Net Movement in foreigncurrency cashflow hedge - - - - (1.0) - - (1.0) Net movementin interestrate swaps - - - - 0.4 - - 0.4 Currencytranslationdifferences(i) - - - - - 14.1 - 14.1 Current taxonitems taken - - - - - - (1.3) (1.3)toortransferredfromequity Deferred taxon itemstaken - - - - - - 3.5 3.5to ortransferredfromequity Actuariallosses onretirementbenefits - - - - - - (7.9) (7.9) Purchase oftreasuryshares - - (3.2) - - - - (3.2) Credit inrespect ofemployee - - - - - - 2.5 2.5shareawards New sharecapitalsubscribed 0.2 0.8 - - - - - 1.0 Profit forthe - - - - - - 36.7 36.7year ------ ------ ------ ------ ------ ------ ------ ------ Totalrecognisedincome/(loss) 0.2 0.8 (3.2) - (0.6) 14.1 33.5 44.8for the ------ ------ ------ ------ ------ ------ ------ ------year Dividendspaid - - - - - - (15.7) (15.7)during 2005 ------ ------ ------ ------ ------ ------ ------ ------ Balance at31 53.8 6.8 (6.5) 0.1 - (5.2) 159.2 208.2December ------ ----- ------- ----- --- ------- ------- -------2005 (i) Included in currency translation differences of the Group are exchangelosses of £6.2 million arising on borrowings denominated in foreign currenciesdesignated as hedges of net investments overseas, offset by exchange gains of£20.3 million relating to the translation of overseas results and net assets. As at 31 December 2004 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 at1 53.6 5.7 - 0.1 - (10.8) 137.8 186.4January2004 Currencytranslationdifferences(i) - - - - - (8.4) - (8.4) Deferredtaxon items - - - - - (0.1) 0.5 0.4takento ortransferredfromequity Actuariallosses onretirementbenefits - - - - - - (1.5) (1.5) Purchase oftreasuryshares - - (3.3) - - - - (3.3) Credit inrespect ofemployee - - - - - - 1.0 1.0shareawards New sharecapitalsubscribed - 0.3 - - - - - 0.3 Profit forthe - - - - - - 18.8 18.8year ------ ------ ------ ------ ----- ------ ------ ------ Totalrecognisedincome/(loss) - 0.3 (3.3) - - (8.5) 18.8 7.3for the ------ ------ ------ ------ ----- ------ ------ ------year Dividendspaid - - - - - - (15.2) (15.2)during 2004 ------ ------ ------ ------ ----- ------ ------ ------ Balance at31 53.6 6.0 (3.3) 0.1 - (19.3) 141.4 178.5December ------ ----- ------- ----- ----- -------- ------- -------2004 (i) Included in currency translation differences of the Group are exchange gainsof £4.1 million arising on borrowings denominated in foreign currenciesdesignated as hedges of net investments overseas, offset by exchange losses of£12.5 million relating to the translation of overseas results and net assets. Notes: 1.The above figures represent an abridged version of the Group's fullAccounts for the year ended 31 December 2005, upon which the auditors have givenan unqualified report. 2.The Annual Report will be posted to all shareholders on 17 March 2006and will be available on request from the Secretary, Aggreko plc, Ailsa Court,121 West Regent Street, Glasgow, G2 2SD. The Annual General Meeting will be heldin Glasgow on 26 April 2006. The Annual Report contains full details of theprincipal accounting policies adopted in the preparation of these financialstatements. 3. A final dividend of 3.77 pence per share will be recommended toshareholders and, if approved, will be paid on 19 May 2006 to shareholders onthe register at 21 April 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AGK.L