Half Yearly Report

25 August 2011

Aggreko plc

INTERIM RESULTS

Aggreko plc, the world leader in the supply of temporary power and temperature control, announces its interim results for the six months to 30 June 2011.

·; Both International Power Projects and the Local business delivered good growth. Underlying group revenues up 21% and trading profit up 17%.

·; Strong demand for International Power Projects; underlying revenues up 24% and trading profit up 17%.

o Closing order book at record levels

o 25 new contracts signed for 730 MW, including major new projects in Japan, Argentina and Tanzania.

·; Local businesses underlying revenues up 19% and trading profit up 17%.

o North America and Australia recover strongly

o Investment in fast-growing economies begins to pay off.

·; Increased pace of investment: fleet capital expenditure grew by £70 million to £169 million.

·; £151 million return of capital completed in July; in addition interim dividend to be increased by 10%.

Philip Rogerson, Chairman, commented:

"Aggreko delivered a strong underlying performance in the first half of 2011, with revenue growing by 21% and trading profit by 17%. Reported revenue increased by 9% and reported trading profit decreased by 3%.

Although the prospects for the global economy in the months ahead are uncertain, we believe that profit before tax and amortisation for the year as a whole will be higher than we indicated at the time of our Trading Update at the end of June; we now expect it to be around £315 million. This would equate to a rate of growth in underlying profits of around 24%."

Rupert Soames, Chief Executive, commented:

"We generated nearly £50 million of revenue from one-off sporting events in the first half of 2010, and consequently the headline numbers in 2011 were always going to make tough comparators. However, the underlying rate of growth in revenues is running at over 20%, and it is also encouraging to note that this growth is being delivered by both the Local business and International Power Projects. We are now well placed to deliver a strong second half."

Regional performance metrics:

- ENDS -

Enquiries to:

Chairman's Statement

Introduction

Aggreko delivered a strong performance in the first half of 2011. On an underlying basis (in constant currency and excluding the one-off impact of the Vancouver Winter Olympics, the FIFA World Cup and the Asian Games as well as pass-through fuel), revenue grew by 21% and trading profit by 17%. Reported revenue increased by 9% and reported trading profit decreased by 3%.

Our strong margins and cashflows have enabled us to substantially increase the rate of our investment in rental fleet to record levels and, at the same, time deliver a material amount of value to shareholders by way of a £151 million return of capital. Plans to do this were announced in March 2011, the proposals were approved by shareholders on 5 July 2011 and the return, equivalent to 55 pence per ordinary share, was completed in July. Following the return, and on a pro-forma basis, our net debt stands at 0.8 times EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) generated in the 12 months to 30 June 2011, which has moved us closer to our longer-term target of around 1 times net debt to EBITDA.

Dividend

The Board has decided to pay an interim dividend of 7.20 pence per share, which is an increase of 10% over the 2010 interim dividend. This interim dividend will be paid on 19 October 2011 to shareholders on the register at 23 September 2011, with an ex-dividend date of 21 September 2011.

Trading

Reported revenue in the first half at £637.2 million (2010: £583.6 million) was 9% higher than 2010 while underlying revenue, as defined above, increased by 21%. Profit before tax decreased by 5% to £119.0 million (2010: £125.7 million), which represents strong underlying growth, on the same basis as above. International Power Projects order book grew to record levels and, at the end of June, was 27% higher than the year before. Many of our Local businesses delivered strong year-on-year growth, and our businesses in North America and Australia in particular performed very well.

During the first six months we accelerated the pace of investment; fleet capital expenditure in the first half was £169.4 million, compared with £99.1 million in the same period last year. As highlighted in our June trading update, it is expected that fleet capital expenditure for the full year will be around £420 million compared with £254.4 million in 2010.

Net debt increased by £125.0 million to £257.2 million in the period. Aggreko's financial position is very strong with interest cover measured on an EBITDA basis of 36.2 times (30 June 2010: 28.5 times). Aggreko had bank facilities and private placement funding totalling £762.8 million at 30 June 2011.

Board

At the Company's Annual General Meeting in April, I announced that I intend to step down as Chairman and also from the Board of Aggreko at the AGM in April 2012, at which point I will have served ten years as Chairman and fifteen years on the Board. My successor as Chairman will be Ken Hanna, who joined the Board in October 2010; Ken is Chairman of Inchcape plc and a Non-executive Director of Tesco plc.

The Board notes the publication of the Davies Review on Women on Boards in February 2011 and the subsequent consultation being undertaken by the Financial Reporting Council in relation to potential changes to the UK Corporate Governance Code. The Board aims to have a broad range of skills, backgrounds and experience. While we will continue to follow a policy of ensuring that we appoint the best people for the relevant roles, we recognise the benefits of greater gender diversity and will continue to take account of this when considering any particular appointment.

Outlook

The Local business, on an underlying basis, performed well in the first half but, as is always the case, the outcome for the year as a whole will be heavily dependent on trading during the summer season. Further good progress has been made in the first weeks of the second half, with double-digit growth in megawatts of power on rent, and most Local businesses showing some improvement in rates; temperature control volumes are at similar levels to last year. With recent contract wins in Cyprus, Iraq and Russia, we expect our Europe and Middle East business to have a much better second half. In North America the underlying business continues to trade ahead of last year. Our Local businesses in Aggreko International have continued to grow strongly on an underlying basis.

Our International Power Projects business has good momentum, and now has over 25% more MW on rent than a year ago. Recent contract awards in Kenya, Brazil, Indonesia and Mali have helped to sustain the order book, and overall trading in the first weeks of the second half has been a little stronger than we expected. In the first half, margins in International Power Projects were impacted by £14 million of provisions taken against overdue payments for three specific customers, but we are hopeful that we will see some improvement in this position in the second half.

Although the prospects for the global economy in the months ahead are uncertain, we believe that we are well placed to deliver a strong second half, and that profit before tax and amortisation for the year as a whole will be higher than we indicated at the time of our Trading Update at the end of June; we now expect it to be around £315 million. This would equate to a rate of growth in underlying profits of around 24%.

Philip Rogerson

Chairman

25 August 2011

Interim management report

Group Trading Performance

Aggreko delivered a strong performance in the first half of 2011. On an underlying basis (in constant currency and excluding the one-off impact of the Vancouver Winter Olympics, the FIFA World Cup and the Asian Games as well as pass-through fuel), revenue grew by 21% and trading profit by 17%. Reported revenue increased by 9% and reported trading profit decreased by 3%.

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

Group revenue, as reported, increased 9% to £637.2 million (2010: £583.6 million), while Group trading profit of £125.4 million (2010: £129.8 million) decreased by 3%. Group trading margin was 20% (2010: 22%). Underlying revenue and trading profit (as defined above) increased by 21% and 17% respectively. On the same basis trading margin was 21% (2010: 22%).

Group profit before tax decreased by 5% to £119.0 million (2010: £125.7 million) and profit after tax decreased by 3% to £85.1 million (2010: £87.4 million) reflecting the reduction in the tax rate from 30.5% to 28.5%. On an underlying basis both these measures of profit increased strongly. Group return on capital employed, measured on a rolling 12-month basis, decreased to 28.5% (2010: 30.8%) due to lower margins in International Power Projects, increased working capital, and the absence of the one-off sporting events of 2010, which were less capital intensive than the underlying business. The ratio of revenue (excluding pass-through fuel) to gross rental assets which decreased from 74% to 72%, also reflected the lower level of capital required for one-off sporting events.

The strengthening of sterling during the period, in particular against the US dollar, had the effect of reducing revenue by £18.7 million and trading profit by £4.8 million. Pass-through fuel accounted for £53.4 million (2010: £37.1 million) of reported revenue of £637.2 million and £1.2 million (2010: £0.9 million) of reported trading profit of £125.4 million.

Fleet capital expenditure for the period was £169.4 million, £70.3 million higher than the prior year, and 208% of the depreciation charge in the period. The Aggreko International business accounted for the majority of the investment, and the largest investment in terms of product was in our gas fleet. In addition, we acquired £6.4 million of property, plant and equipment as part of the N.Z. Generator Hire Ltd (N.Z. Generator) acquisition in March 2011. The total consideration for this acquisition was £14.4 million.

Net debt at 30 June 2011 was £97.7 million higher than the same period last year, chiefly as a consequence of the £77.4 million year-on-year increase in total capital expenditure, the N.Z. Generator acquisition and increased levels of working capital.

Regional Trading Performance as reported in £ million

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

Local business: North America

Our North American business delivered a very strong performance in the first half. Revenue in constant currency increased by 4% to $185.3 million, and by 27% on an underlying basis (i.e. excluding the impact of the Vancouver Winter Olympics). Despite the Vancouver Winter Olympics in 2010, trading profit grew by 14% to $25.6 million and trading margin improved from 13% to 14%.

On an underlying basis rental revenue was up 26% and services revenue was up 29%. Power rental revenue was up 29% with good base business growth as well as the added benefit of the acquisition of the Northland Power Services business in late 2010. Temperature control revenue was up 26%, driven by some large emergency contracts in our Cooling Tower business and oil-free compressed air rental revenues grew by 21%.

All geographic areas of the North American business achieved strong base business growth on the same period last year, after adjusting for revenues generated from the BP Gulf oil spill response and the Nashville floods. This base business growth was also well spread across sectors with the strongest growth sectors being oil & gas, petrochemical & refining, and manufacturing; the growth came from both volume and rate improvements, with rates in North America generally back to pre-recession levels.

In the first half of 2011 we invested $12 million in new emissionised fleet and we expect to invest a further $25 million in the second half. This investment programme will continue into 2012, by which time substantially all our larger power fleet will be capable of operating at Tier 2 EPA standards or above.

We are encouraged by the strong performance of the North American business in the first half and we expect to make further progress in the second half.While the business has not yet had the benefit of any material storm revenueduring the summer season, the underlying business continues to trade ahead of last year.

Local business: Europe & Middle East 

Europe

Middle East & SEE

Our Europe & Middle East business had a difficult first half; while revenue across the region increased by 8% in constant currency, lower-margin services revenue increased faster than rental. Trading profit fell by 27% from £13.9 million to £9.6 million while trading margin declined from 11% to 7%. The decline in trading profit reflected a combination of disadvantageous revenue mix, higher fuel costs and the absence of a number of higher margin projects in our Middle East business, notably in Qatar.

Revenue in Europe was 9% higher than the prior period at £83.2 million. Rental revenue increased 11% and services revenue increased 6%. Within rental revenue, power increased 10% and temperature control increased 16%. Geographic area performance was mixed with a strong performance from our Russian business, which had around 120 MW on rent at the end of the first half (June 2010: 70 MW), and good progress in Germany, France, Italy and the UK. Our businesses in Spain and Ireland continued to perform poorly in the wake of difficult economic environments. Rates across Europe remained stubbornly weak, and conditions continue to be difficult in most sectors.

Revenue in our Middle East business increased by 6% with a decrease of 4% in rental revenue and a 55% increase in lower margin services revenue, which includes fuel. Within rental revenue power decreased 7% and temperature control revenue increased by 36%, albeit off a small base. In geographic terms, we continued to trade well in Abu Dhabi, Oman and Saudi Arabia but conditions remained difficult in Dubai and Qatar in the first half.

Although markets in Europe & Middle East remain challenging we expect to have a much better second half with profits noticeably ahead of the prior year, helped by recent contract wins in Cyprus, Iraq and Russia.

Local business: Aggreko International

Aggreko International's Local businesses operate in Australia, New Zealand, Brazil, Mexico, Chile, Argentina, Singapore, China, India, South Africa and, most recently, Peru, Panama and Colombia. Revenues in 2010 included over £28 million from the FIFA World Cup contract in South Africa and there was also a small amount of revenue in the first half of 2011 from the Asian Games in Guangzhou. As a result reported revenue in the first half decreased by 12%, trading profit decreased 43% and trading margin was 18% (2010: 28%). However, excluding the impact of these events, revenue increased by 29%, with rental revenue increasing by 31% and services by 24%.

Power rental revenue increased 35% and temperature control increased 8%. Revenue in nearly all Aggreko International's Local businesses increased as compared with the same period last year, most notably in Australia where revenue increased 37%, driven by a strong performance in the mining sector.  We also opened new locations in the first half in Lima, New Delhi and Durban as well as completing the acquisition of N.Z. Generators in New Zealand, which has performed very well since acquisition.

Aggreko International's Local businesses have continued to show strong underlying growth in the first weeks of the second half, and we expect a strong underlying performance for the year as a whole.

International Power Projects: Aggreko International

Our International Power Projects business delivered a strong performance in the period with revenue, in constant currency and excluding pass-through fuel, growing by 24% to $418.5 million and trading profits increasing by 17% to $136.7 million. Trading margin remained strong at 33% (2010: 35%), despite an increase of $23 million (£14 million) in debtor provisions during the period; this increase was in respect of three customers where we are actively managing our exposure. None of the customers are disputing the payment liability and we are hopeful that we will see some improvement in this position during the second half.

Demand has been strong during the first half: we secured 25 new contracts and 730 MW of new work including 200 MW in Japan, 100 MW in Tanzania and 125 MW in Argentina. With low levels of off-hires and strong order intake, we increased our capacity on hire by 560 MW during the first half which means we have started the second half with 23% more MW on hire than the same time last year. At the end of the period, our order book was over 33,000 MW months, the equivalent of 14 months' revenue at the current run-rate, and an increase of 27% over the prior year. Revenue from our gas-powered units grew strongly and the average MW on rent has increased by around 55% year-on-year. 

On a geographic basis, Asia continued to show strong growth driven by major contracts wins in Bangladesh, Indonesia and Japan. Central America and South America also grew well with major contracts going live in Argentina. Our African and Middle East businesses declined reflecting the impact of the off hires in Kenya and Yemen which occurred in 2010. As anticipated, military revenues also declined as the US military presence in Iraq reduced.

The International Power Projects business has good momentum, and now has over 25% more MW on rent than a year ago. Recent contract awards in Kenya, Brazil, Indonesia and Mali have helped to sustain the order book, and overall trading in the first weeks of the second half has been a little stronger than we expected at the time of our Trading Update in June.

Financial Review

The movement in exchange rates during the period reduced revenue and trading profit by £18.7 million and £4.8 million respectively, with the strengthening of sterling against the US dollar having the greatest impact. Currency translation also gave rise to a £14.4 million decrease in net assets from December 2010 to June 2011. 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 for the first half of 2011 was £8.2 million, an increase of £3.2 million on 2010 reflecting the higher level of average net debt, driven by higher levels of capital expenditure in particular. Interest cover, measured against rolling 12-month EBITDA, remains very strong and increased to 36.2 times from 28.5 times in 2010.

Effective Tax Rate

The current forecast of the effective tax rate for the full year, which has been used in the interim accounts is 28.5% as compared with 30.5% in the same period last year.

Dividends

The interim dividend of 7.20 pence per ordinary share represents an increase of 10.0% compared with the same period in 2010; dividend cover is 4.4 times (30 June 2010: 5.0 times).

Cashflow

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) for the period amounted to £215.4 million, up 3% on 2010. The net cash inflow from operations during the first six months of 2011 totalled £155.2 million (2010: £208.3 million). The reduction in cash inflow from operations was caused by working capital movements, in particular an increase in debtor days in our International Power Projects business and increasing inventory in our manufacturing operation needed to service the record levels of capital expenditure.

Debtor ageing remained around historic levels across the majority of our International Power Projects customers. Three of our customers, however, had significant overdue balances, and these had a material impact on our working capital at the period end. None of the customers are disputing the payment liability and cash has been received from all three customers since the period end. We are hopeful that we will see some improvement in this position during the second half.

Capital expenditure of £181.0 million was up £77.4 million on the same period in 2010 reflecting the continued investment in fleet. The Aggreko International business accounted for the majority of the spend.

This increase in total capital expenditure, the cash outflow related to the N.Z. Generator acquisition and the higher levels of working capital were the main drivers in net debt at 30 June 2011 being £97.7 million higher than the same period last year. On a rolling 12-month basis, net debt to EBITDA was 0.5 times compared with 0.4 times for the same period in 2010.

Financial Resources

The Group's facilities are primarily in the form of committed bank facilities arranged on a bilateral basis with a number of international banks as well as our recently completed US private placement. Committed facilities totalled £762.8 million at 30 June 2011. The financial covenants attached to these facilities are that EBITDA should be no less than 4 times interest (30 June 2011: 36.2 times) and net debt should be no more than 3 times EBITDA (30 June 2011: 0.5 times). The Group does not consider that these covenants are restrictive to its operations. The maturity profile of the borrowings is detailed in Note 12 to the Accounts. The facilities in place are currently anticipated to be ample for meeting the Group's operational requirements for the foreseeable future.

Net debt amounted to £257.2 million at 30 June 2011 and, at that date, undrawn committed facilities were £481.5 million. During the period we drew down funds of US$275 million (£171 million) under our US private placement. The draw down was applied to repayment of other debt and the balance held in cash at 30 June 2011 in anticipation of the return of capital to shareholders.

Net Operating Assets

The net operating assets of the Group at 30 June 2011 totalled £1,251.5 million, up £291.5 million on the same period in 2010. The main components of net operating assets are:

A key measure of Aggreko's performance is Return on Capital Employed (ROCE) (expressed as operating profit as a percentage of average net operating assets). For each first half we calculate ROCE by taking the operating profit on a rolling 12-month basis and expressing it as a percentage of the average net operating assets at 30 June, 31 December and the previous 30 June. For the full year, we state the year's operating profit as a percentage of the average net operating assets as at 31 December, the previous 30 June and 31 December. The average net operating assets for the 12 months to 30 June 2011 were £1,092.4 million, up 21% on the same period in 2010; operating profit for the same period was £311.0 million. In the first half of 2011 the ROCE decreased to 28.5% compared with 30.8% for the same period in 2010. The decrease in ROCE was due to lower margins in International Power Projects, increased working capital, and the absence of the one-off sporting events of 2010, which were less capital intensive than the underlying business.

Acquisitions

On 31 March 2011 the Group completed the acquisition of the business and assets of N.Z. Generator Hire Limited for a total cash consideration of £14.4 million. The fair value of net assets acquired was £9.7 million resulting in goodwill of £4.7 million. During the period the Group received £0.2 million relating to the Northland Power acquisition which completed in December 2010.

Shareholders' Equity

Shareholders' equity increased by £60.1 million to £874.5 million in the six months ended 30 June 2011, represented by the net assets of the Group of £1,131.7 million before net debt of £257.2 million. The movements in shareholders' equity are analysed in the table below:

Return to shareholders

The Board announced on 10 March 2011 that Aggreko would return approximately £150 million to shareholders, which equated to 55 pence per ordinary share in issue at the record date of 8 July 2011. At a General meeting on 5 July the return of capital was approved and then completed in mid July 2011. The return of capital was made using a B Share structure. The main terms of the return of capital and related consolidation of ordinary shares were:

·; the issue of 1 B share of par value 6 18/25 pence for every 1 existing ordinary share held on record date; and

·; the issue of 31 new ordinary shares of par value 13 549/775 pence for every 32 existing ordinary shares held on the record date.

The holders of B shares had 3 options:

·; Receive a single dividend of 55 pence per B share in respect of those B shares. Following the receipt of the single B share dividend the B shares automatically converted into Deferred shares with very limited economic and other rights;

·; Sell the B shares to the Company for 55 pence per B share. All B shares bought back were subsequently cancelled by the Company; or

·; Retain the B shares. Those who retain the B shares will be entitled to receive the B share continuing dividend at the rate of 75 per cent of 12 month LIBOR, payable annually in arrears on the notional amount of 55 pence per B share. The B shares are not listed. The Company intends to make a further offer to purchase the B shares around the time of the Annual General Meeting in 2012.

Since the period end:

·; A special dividend of 55 pence per ordinary share was paid on 182,700,915 B shares, which then converted into deferred shares of negligible value resulting in a cash payment from the company of £100.5 million on 19 July 2011;

·; 85,896,058 B shares were bought back at 55 pence each resulting in a cash payment from the company of £47.2 million on 19 July 2011; and

·; The Company intends to offer to purchase the remaining 6,663,731 B shares in the future at 55 pence each.

Details of the rights that attach to the B shares and deferred shares are set out in the circular dated 10 May 2011.

Principal Risks and Uncertainties

In the day to day operations of the Group, we face risks and uncertainties. Our job is to mitigate and manage these risks and the Board has developed a formal risk management process which is described on pages 56 and 57 of the 2010 Annual Report and Accounts. Also set out on pages 31 to 35 of that report are the principal risks and uncertainties which we believe could potentially impact the Group, and these are summarised below:

·; Economic conditions;

·; Political risk;

·; Failure to collect payments or to recover assets;

·; Events;

·; Failure to conduct business dealings with integrity and honesty;

·; Acquisitions;

·; Safety;

·; Competition;

·; Product technology and emissions regulation;

·; People;

·; Information Technology; and

·; Accounting and Treasury/major fraud.

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

Shareholder information

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

Group Income Statement

For the six months ended 30 June 2011 (unaudited)

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 six months ended 30 June 2011 (unaudited)

Group Balance Sheet (Company Number: SC177553)

As at 30 June 2011 (unaudited)

Group Cash Flow Statement

For the six months ended 30 June 2011 (unaudited)

Reconciliation of net cash flow to movement in net debt

For the six months ended 30 June 2011 (unaudited)

Group statement of changes in equity

For the six months ended 30 June 2011 (unaudited)

As at 30 June 2011

As at 30 June 2010

Notes to the Interim Accounts

For the six months ended 30 June 2011 (unaudited)

1 General information

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

This condensed interim financial information was approved for issue on 25 August 2011.

This condensed consolidated interim financial information does not comprise Statutory Accounts within the meaning of Section 434 of the Companies Act 2006. Statutory Accounts for the year ended 31 December 2010 were approved by the Board on 10 March 2011 and delivered to the Registrar of Companies. The report of the auditors on those Accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

The condensed consolidated interim financial information is unaudited but has been reviewed by the Group's auditors, whose report is on page 28.

2 Basis of preparation

This condensed consolidated interim financial information for the six months ended 30 June 2011 has been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Services Authority and IAS 34 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.

Going-concern basis

The Group's banking facilities are primarily in the form of a US private placement and committed bank facilities arranged on a bilateral basis with a number of international banks; facilities totalled £762.8 million at 30 June 2011. The financial covenants attached to these facilities are that EBITDA should be no less than 4 times interest (30 June 2011: 36.2 times) and net debt should be no more than 3 times EBITDA (30 June 2011: 0.5 times). The Group does not consider that these covenants are restrictive to its operations. The maturity profile of the borrowings is detailed in Note 12 to the Accounts. The Group's forecasts and projections show that the facilities in place are currently anticipated to be ample for meeting the Group's operational requirements for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated interim financial statements.

3 Accounting policies

Except as described below, the accounting policies are consistent with those of the annual financial statements for the year ended 31 December 2010, as described in those annual financial statements.

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

No new standards and amendments to standards have been adopted in the period.

(a) New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January 2011 but not currently relevant to the Group (although they may affect the accounting for future transactions and events)

·; Amendments to IAS 24 (revised), 'Related party disclosures', issued in November 2009. It supersedes IAS 24, 'Related party disclosures', issued in 2003. IAS 24 (revised) is mandatory for periods beginning on or after 1 January 2011. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities.

·; 'Classification of rights issues' (amendment to IAS 32), issued in October 2009. The amendment applies to annual periods beginning on or after 1 February 2010. The amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. Provided certain conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. Previously, these issues had to be accounted for as derivative liabilities. The amendment applies retrospectively in accordance with IAS 8 'Accounting policies, changes in accounting estimates and errors'.

·; 'Prepayments of a minimum funding requirement' (amendments to IFRIC 14). The amendments correct an unintended consequence of IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction'. Without the amendments, entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. This was not intended when IFRIC 14 was issued, and the amendments correct this. The amendments are effective for annual periods beginning 1 January 2011. The amendments should be applied retrospectively to the earliest comparative period presented.

·; IFRIC 19, 'Extinguishing financial liabilities with equity instruments', effective 1 July 2010. The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability (debt for equity swap). It requires a gain or loss to be recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. If the fair value of the equity instruments issued cannot be reliably measured, the equity instruments should be measured to reflect the fair value of the financial liability extinguished.

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2011 and not early adopted

·; Amendments to IFRS 7 'Financial instruments: Disclosures on derecognition'. These amendments are part the IASBs comprehensive review of off balance sheet activities. The amendments will promote transparency in the reporting of transfer transactions and improve users' understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity's financial position, particularly those involving securitisation of financial asset. The amendments are effective for annual periods beginning 1 July 2011.

·; IFRS 9, 'Financial instruments', issued in November 2009. This standard is the first step in the process to replace IAS 39, 'Financial instruments: recognition and measurement'. IFRS 9 introduces new requirements for classifying and measuring financial assets and is likely to affect the Group's accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption.

·; IFRS 10 'Consolidated financial statements'. This standard builds on existing principles identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determing control where this is difficult to assess. The amendments are effective for annual periods beginning 1 January 2013.

·; IFRS 11 'Joint arrangements'. This standard provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. Proportional consolidation of joint ventures is no longer allowed. The amendments are effective for annual periods beginning 1 January 2013.

·; IFRS 12 'Disclosures of interests in other entities'. This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The amendments are effective for annual periods beginning 1 January 2013.

·; IFRS 13 'Fair value measurement'. This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The amendments are effective for annual periods beginning 1 January 2013.

·; Amendment to IAS 1 'Financial Statement presentation' regarding other comprehensive income. The main change from these amendments is a requirement to group items presented in Other comprehensive income on the basis of whether they are potentially recycled to profit or loss. The amendments are effective for annual periods beginning 1 January 2012.

·; Amendments to IAS 12 'Income taxes'. Currently IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 'Investment Property'. Hence this amendment introduces an exception to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. The amendments are effective for annual periods beginning 1 January 2012.

·; Amendment to IAS 19 'Employee Benefits'. These amendments eliminate the corridor approach and calculate finance costs on a net funding basis. The amendments are effective for annual periods beginning 1 January 2013.

·; IAS 27 (revised 2011) 'Separate financial statements'. This standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10. The amendments are effective for annual periods beginning 1 January 2013.

·; IAS 28 (revised 2011) 'Associates and joint ventures'. This standard includes the requirements for joint ventures as well as associates, to be equity accounted following the issue of IFRS 11. The amendments are effective for annual periods beginning 1 January 2013.

The only standards, amendments and interpretations endorsed by the EU as yet are amendments to IFRS 7.

The Directors do not anticipate that the adoption of any of the other above standards or interpretations will have a material impact on the Group's financial statements in the period of initial application.

4 Cashflow from operating activities

5 Cash and cash equivalents

6 Segmental reporting

(a) Revenue by segment

(b) Profit by segment