25th Aug 2009 07:00
Tuesday 25 August 2009
Aggreko plc
INTERIM RESULTS
FOR THE SIX MONTHS TO 30 JUNE 2009
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 2009.
|
2009 pre- |
2009 post- |
2008 pre- |
Movement pre-intangible |
||
|
intangible |
intangible |
intangible |
asset amortisation |
||
|
asset |
asset |
asset |
As |
Constant |
|
|
amortisation |
amortisation |
amortisation |
reported |
Currency |
|
|
Group revenue |
£499.8m |
£499.8m |
£407.7m |
22.6% |
(1.1)% |
|
Group revenue excl pass-through fuel |
£474.8m |
£474.8m |
£368.3m |
28.9% |
4.8% |
|
Trading profit (1) |
£107.0m |
£105.8m |
£73.2m |
46.2% |
14.1% |
|
Profit before tax |
£106.9m |
£105.7m |
£68.6m |
55.9% |
|
|
Earnings per share |
27.07p |
26.76p |
17.13p |
58.0% |
|
|
Dividend per share |
4.37p |
4.37p |
3.80p |
15.0% |
|
|
(1) |
Trading profit represents operating profit before gain on sale of property, plant and equipment. |
|
(2) |
All figures below are stated before amortisation of intangible assets arising from business combinations (2009: £1.2m pre-tax, £0.8m post-tax; 2008: £0.7m pre-tax, £0.4m post-tax) as management believe that the exclusion of such items provides a better comparison of business performance. |
Highlights:
|
Strong first half, with sharply improved trading margins and return on capital employed |
||
|
- |
Revenue increased by 23% (5% in constant currency excl. fuel) |
|
|
- |
Trading profit up 46% (14% in constant currency) |
|
|
- |
Earnings per share up 58% |
|
|
- |
Return on capital employed up 2pp to record 30% |
|
|
- |
Strong operating cashflow of £199m (2008: £99m) |
|
|
- |
Net debt reduced by £77m in first half to £287m |
|
|
- |
£92m invested in new fleet (2008: £120m) |
|
|
Interim dividend increased by 15% |
||
|
International Power Projects revenue increased by 40% and trading profit by 72%, in constant currency and excluding fuel |
||
|
- |
notable new contract wins, including 140MW in Kenya, 100MW in Saudi Arabia, 30MW in Ethiopia and 20MW in Guadeloupe |
|
|
Local business revenue, in constant currency, decreased by 13% and trading profit by 29% reflecting challenging market conditions |
||
|
- |
tough comparators with Beijing Olympics in both first and second half of 2008 |
|
|
- |
more power on rent than a year ago, but rates noticeably weaker |
|
|
- |
new businesses in South Africa and India made an encouraging start |
|
|
Outlook for 2009 unchanged with profits in constant currency expected to be similar to 2008 despite tough H2 comparatives with Beijing Olympics and exceptional US storm revenues in 2008 |
||
Philip Rogerson, Chairman, commented:
"In the first half of 2009, Aggreko delivered another strong performance, despite the difficult economic conditions, producing increased trading margins and returns on capital employed."
"Our outlook for the full year remains unchanged from previous guidance, namely that we expect that profits in constant currency will be at similar levels in 2009 to those achieved in 2008. Given that over 70% of our earnings are in US dollars, if we achieve this trading performance, and if the Sterling : US Dollar rate stays at today's level for the rest of the year, reported results would show substantial growth over 2008."
Rupert Soames, Chief Executive, commented:
"We expect that conditions in the Local business will continue to be challenging particularly compared with a very strong second half in 2008 when we had the benefit of both the Beijing Olympics and exceptionally high storm-related revenues in North America. We have deliberately sought to defend and, where possible, increase our market share and we currently have more power on rent in our Local businesses than we did a year ago. However in achieving this, rates have weakened noticeably. Our temperature control business is having a poor summer season in both North America and Europe, with low ambient temperatures and few customers suffering the capacity constraints which drive demand for additional cooling. Our response to this challenging environment has been to restrict new fleet investment and to reduce headcount in our worst-affected Local businesses."
"In International Power Projects we have recently been awarded some sizeable new projects, including an additional 140MW in Kenya and 100MW in Saudi Arabia. Project extensions continue to run at a healthy rate, but converting enquiries for large new projects into finalised contracts remains difficult in many territories. During the second half of 2008 we significantly increased the amount of MW on rent, but, as expected, net increases during the first half have run at more modest levels. We anticipate that net additions on rent in the second half will continue at this lower rate, and as a consequence, we expect the business will grow year-on-year during the second half but at a noticeably slower pace than that seen in the first half."
Regional performance metrics:
|
Revenue millions |
Const Curr. |
Trading Profit millions* |
Const Curr. |
|||
|
2009 |
2008 |
Change % |
2009 |
2008 |
Change % |
|
|
North America |
$140.4 |
$159.0 |
(11)% |
$17.3 |
$23.2 |
(28)% |
|
Europe & Middle East |
£122.1 |
£120.6 |
(12)% |
£14.4 |
£16.5 |
(28)% |
|
International Local business |
£48.5 |
£53.8 |
(18)% |
£10.6 |
£13.9 |
(32)% |
|
International Power Projects excl fuel |
$313.4 |
$223.9 |
40% |
$104.4 |
$59.1 |
72% |
* Trading profit is before amortisation of intangible assets arising from business combinations
- ENDS -
Enquiries to:
Rupert Soames / Angus Cockburn
Aggreko plc
Tel. 0141 225 5900
Neil Bennett / George Hudson
Maitland
Tel: 020 7379 5151
Chairman's Statement
Introduction
In the first half of 2009, Aggreko delivered another strong performance, despite the difficult economic conditions, producing increased trading margins and returns on capital employed. Reported revenue grew by 23% and trading profit increased by 46%, and while currency movements flattered the headline performance, on a constant currency basis trading profit grew by 14%. Earnings per share grew 58%, and the return on average capital employed, measured on a rolling 12-month basis, was a record 29.6% (2008: 27.5%). This performance was driven by our International Power Projects business, which grew its trading profit by 72% in constant currency; the Local businesses had a more challenging first half with trading profit falling by 30% in constant currency in the face of deteriorating market conditions and tough comparators, including the impact of last year's Beijing Olympic Games.
Dividend
The Board has decided to declare an interim dividend of 4.37 pence per share, which is an increase of 15% over the 2008 interim dividend. This interim dividend will be paid on 23 October 2009 to shareholders on the register at 25 September 2009, with an ex-dividend date of 23 September 2009.
Trading
Reported revenue in the first half at £499.8 million (2008: £407.7 million) was 23% higher than 2008 while revenue, in constant currency and excluding pass-through fuel increased by 5%. Profit before tax increased by 56% to £105.7 million (2008: £67.9 million), and earnings per share increased by 58% to 26.76 pence.
During the first six months of the year, we continued to invest in new fleet assets, albeit at a slower rate than in 2008. Capital expenditure was £97.4 million, compared with £124.3 million in the same period last year. As highlighted in our June trading update it is expected that capital expenditure for the full year will be around £170 million compared with £265.2 million in 2008.
In the first six months, the business was strongly cash generative with net debt decreasing by £76.8 million to £287.2 million in the period. Aggreko's financial position remains strong with gearing of 58% (30 June 2008: 88%) and interest cover, measured on an EBITDA basis, of 23.6 times (30 June 2008: 21.2 times). Aggreko had bank facilities totalling £536.2 million at 30 June 2009, with the next significant maturity not due until 2011. The facilities now in place are ample for meeting the Group's anticipated requirements.
Outlook
Our outlook for the full year remains unchanged from the guidance given in the announcement of our Preliminary Results in March, and repeated in our April and June Trading Statements, namely that we expect that profits in constant currency will be at similar levels in 2009 to those achieved in 2008. Given that over 70% of our earnings are in US dollars, if we achieve this trading performance, and if the Sterling : US Dollar rate stays at today's level for the rest of the year, reported results would show substantial growth over 2008.
We expect that conditions in the Local business will continue to be challenging particularly compared with a very strong second half in 2008 when we had the benefit of both the Beijing Olympics and exceptionally high storm-related revenues in North America. We have deliberately sought to defend and, where possible, increase our market share and we currently have more power on rent in our Local businesses than we did a year ago. However in achieving this, rates have weakened noticeably. Our temperature control business is having a poor summer season in both North America and Europe, with low ambient temperatures and few customers suffering the capacity constraints which drive demand for additional cooling. Our response to this challenging environment has been to restrict new fleet investment and to reduce headcount in our worst-affected Local businesses.
In International Power Projects we have recently been awarded some sizeable new projects, including an additional 140MW in Kenya and 100MW in Saudi Arabia. Project extensions continue to run at a healthy rate, but converting enquiries for large new projects into finalised contracts remains difficult in many territories. During the second half of 2008 we significantly increased the amount of MW on rent, but, as expected, net increases during the first half have run at more modest levels. We anticipate that net additions on rent in the second half will continue at this lower rate, and as a consequence, we expect the business will grow year-on-year during the second half but at a noticeably slower pace than that seen in the first half.
Philip G Rogerson
Chairman
25 August 2009
Interim management report
Group Trading Performance
In the first half of 2009, Aggreko delivered strong revenue growth in its International Power Projects business partly offset by a weaker performance in the Local business. Group return on capital employed, measured on a rolling 12-month basis, increased to 29.6% (2008: 27.5%) and Group trading margin increased to 21.2% (2008: 17.8%).
|
2009 |
2008 |
Movement |
||
|
£m |
£m |
As reported |
Constant |
|
|
Currency |
||||
|
Revenue |
499.8 |
407.7 |
22.6% |
(1.1)% |
|
Revenue excl pass-through fuel |
474.8 |
368.3 |
28.9% |
4.8% |
|
Trading profit (1) |
105.8 |
72.5 |
45.8% |
13.7% |
|
Operating profit |
113.6 |
74.2 |
53.0% |
19.3% |
|
Net interest expense |
(7.9) |
(6.3) |
(25.2)% |
|
|
Profit before tax |
105.7 |
67.9 |
55.6% |
|
|
Taxation |
(33.8) |
(22.4) |
(50.9)% |
|
|
Profit after tax |
71.9 |
45.5 |
57.9% |
|
|
Basic earnings per share (pence) |
26.76 |
16.97 |
57.7% |
|
|
(1) |
Trading profit represents operating profit before gain on sale of property, plant and equipment. |
Group revenue, as reported, increased 23% to £499.8 million (2008: £407.7 million), while Group trading profit of £105.8 million (2008: £72.5 million) increased by 46%. Excluding the impact of the currency movements and pass-through fuel revenue, the impact of which is set out below, Group revenue grew by 5% and trading profit by 15%. On the same basis, trading margin in the first half was 22.2% which compares with 19.3% in 2008.
Group profit before tax grew by 56% to £105.7 million (2008: £67.9 million) and profit after tax increased by 58% to £71.9 million (2008: £45.5 million).
The weakening of sterling during the period, in particular against the US dollar, had a material impact on the results of the Group with reported revenue increasing by £97.5 million and trading profit by £20.5 million as a consequence of currency movements. Pass-through fuel accounted for £25.0 million (2008: £39.4 million) of reported revenue of £499.8 million and £0.5 million (2008: £1.3 million) of reported trading profit of £105.8 million.
Total capital expenditure for the period was £97.4 million, £26.9 million lower than the prior year. This spend was 130% of the depreciation charge in the period, reflecting the investment in fleet which was mainly for the benefit of the International Power Projects business. In addition, we acquired £1.6 million of property, plant and equipment as part of the Cummins India Ltd acquisition which we completed on 1 January 2009. The ratio of revenue (excluding pass-through fuel) to gross rental assets, which is a key measure of capital productivity, decreased from 75% to 66%. This decrease primarily reflects the reduction in utilisation and pressure on rental rates that has been felt in the Local business. Capital expenditure has been reduced significantly in the Local business this year and we will continue to move fleet between regions to maximise utilisation and minimise the need for capital expenditure.
In the first six months, the business was strongly cash generative with net debt decreasing by £76.8 million to £287.2 million; £28.9 million of this decrease was as a consequence of currency movements. Cash flow from operating activities totalled £199.3 million (2008: £99.0 million).
As we disclosed in the December 2008 Annual Report and Accounts the sale of our Northern European oil-free air business was completed in March 2009 and a gain on sale of £5.8 million was recognised within operating profit in the Group income statement in the six months ending 30 June 2009.
Regional Trading Performance as reported in £ million
In November 2008 we announced that from 1 January 2009 the operations of our Local business in the Middle East would be integrated with those of the European region, to create a new region to be called Europe & the Middle East. This has resulted in the following changes:
|
a new segment titled Europe comprising the previously reported segments of Northern Europe and Continental Europe excluding power projects in the Eastern Mediterranean; |
|
|
a new segment titled Middle East & South East Europe ("Middle East") comprising Middle East, previously included within the Middle East, Asia-Pacific and South America segment, and power projects in the Eastern Mediterranean; previously reported in the Continental Europe segment. |
|
Revenue |
Trading |
|||||
|
Profit |
||||||
|
Management Group |
2009 |
2008 |
Change |
2009 |
2008 |
Change |
|
£ million |
£ million |
% |
£ million |
£ million |
% |
|
|
Local business |
||||||
|
North America |
94.1 |
80.5 |
16.8% |
10.8 |
11.3 |
(4.9)% |
|
Europe |
79.5 |
87.2 |
(8.7)% |
4.4 |
8.9 |
(49.9)% |
|
Middle East |
42.6 |
33.4 |
27.5% |
9.9 |
7.5 |
30.5% |
|
Sub-total Europe & Middle East |
122.1 |
120.6 |
1.3% |
14.3 |
16.4 |
(12.8)% |
|
International Local businesses |
48.5 |
53.8 |
(9.7)% |
10.3 |
13.7 |
(24.8)% |
|
Sub-total Local business |
264.7 |
254.9 |
3.9% |
35.4 |
41.4 |
(14.6)% |
|
International Power Projects |
||||||
|
International Power projects (IPP) excl. pass-through fuel |
210.1 |
113.4 |
85.2% |
69.9 |
29.8 |
133.7% |
|
IPP pass-through fuel |
25.0 |
39.4 |
(36.7)% |
0.5 |
1.3 |
(63.1)% |
|
Sub-total International Power Projects |
235.1 |
152.8 |
53.8% |
70.4 |
31.1 |
126.4% |
|
Group |
499.8 |
407.7 |
22.6% |
105.8 |
72.5 |
45.8% |
|
Group excluding pass-through fuel |
474.8 |
368.3 |
28.9% |
105.3 |
71.2 |
47.8% |
The performance of each of these regions in the first half is described below:
Local business: North America
|
Constant Currency (1) |
||||
|
2009 |
2008 |
Change |
||
|
$ million |
$ million |
% |
||
|
Revenue |
140.4 |
159.0 |
(11.1)% |
|
|
Trading profit |
16.1 |
22.4 |
(30.5)% |
|
(1) |
Constant currency takes account of the impact of translational exchange movements in respect of our businesses which operate in currency other than sterling. |
Our North American business had a difficult first half reflecting the challenging economic environment, with revenue, in constant currency, decreasing by 11% to $140.4 million and trading profit decreasing by 30% to $16.1 million. Trading margin decreased to 11.5% (2008: 14.1%). After a reasonable first quarter, conditions deteriorated in the second quarter, and there are no signs of improvement so far in quarter three.
Revenue in most areas decreased during the first half, most notably in the West, Great Lakes and South Texas. Revenue in our Canadian business, however, grew as a result of the acquisition of Power Plus Rentals and Sales Limited ("Power Plus") which we completed in August 2008. In terms of market sectors, the biggest revenue decreases were experienced in utilities, manufacturing and petrochemicals and refining. These falls were mitigated to some extent by growth in oil and gas as well as in services and events, the highlight of which was a contract to provide power for the Presidential Inauguration.
In terms of revenue mix, rental revenue decreased 9% and services revenue decreased 14%. Power rental revenue was 4% ahead of prior year benefiting from ongoing reconstruction work following the major hurricanes of 2008 and the impact of the Power Plus acquisition. Oil-free air rental revenue was down 17% reflecting the challenging conditions in the manufacturing sector. Temperature control revenue was down 21% on prior year in part caused by low ambient temperatures and a reduction in work where we have historically supported customers suffering from capacity constraints.
Local business: Europe & Middle East
|
Constant Currency |
||||
|
2009 |
2008 |
Change |
||
|
£ million |
£ million |
% |
||
|
Revenue |
122.1 |
120.6 |
(11.6)% |
|
|
Trading profit |
14.3 |
16.4 |
(27.7)% |
Europe
|
Constant Currency |
||||
|
2009 |
2008 |
Change |
||
|
£ million |
£ million |
% |
||
|
Revenue |
79.5 |
87.2 |
(15.9)% |
|
|
Trading profit |
4.4 |
8.9 |
(53.8)% |
Middle East
|
Constant Currency |
||||
|
2009 |
2008 |
Change |
||
|
AED million |
AED million |
% |
||
|
Revenue |
233.7 |
242.5 |
(2.2)% |
|
|
Trading profit |
53.9 |
54.7 |
(3.2)% |
Our Europe & Middle East business had a challenging first half with revenue decreasing in constant currency by 12% and trading profit by 28%. Trading margin decreased to 11.7% (2008: 13.6%).
Revenue in Europe was 16% lower, in constant currency, than the prior period at £79.5 million and trading profit decreased by £4.5 million compared to the same period last year. Trading margin decreased to 5.6% (2008: 10.1%). As in North America, after a reasonable first quarter, conditions deteriorated in the second quarter, and there are no signs of improvement so far in quarter three. Rental revenue decreased by 17% in constant currency, while services revenue decreased by 14%. Within rental revenue, power and temperature control revenue decreased by 10% and 25% respectively. Most areas were down on prior year apart from France which was helped by storm revenue of £3.1 million in the first quarter of 2009. The prior year numbers for Europe include revenue from the UEFA football championships of £5.3 million and £2.5 million of revenue from the European oil-free air business, the disposal of which was completed in early 2009. Adjusting for the impact of these items, revenue decreased, in constant currency by 11.0% compared to the prior period. On a sector basis, revenue from events, services and petrochemicals and refining all fell significantly with small increases in shipping and manufacturing having relatively little offsetting impact.
In our Middle East business revenue and trading profit were slightly down on last year decreasing by 2% and 3% respectively. Trading margin increased slightly to 23.1% (2008: 22.5%) in part due to a high proportion of rental revenue. Rental revenue was up 3%, while services revenue decreased by 24% mainly driven by a reduction in fuel revenue. Power rental revenue increased 8% reflecting strong activity levels in many countries in the Middle East. Temperature control revenue decreased by 28% largely due to the completion of a number of large cooling projects in Dubai. In geographic terms, revenue in Dubai fell significantly due to the rapid contraction of the construction sector, but this fall was largely offset by continued growth in other markets in the Middle East. These markets benefited from the ongoing flow of new construction projects combined with buoyant activity levels in sectors such as oil and gas and utilities.
Local business: Aggreko International
|
Constant Currency |
||||
|
2009 |
2008 |
Change |
||
|
£ million |
£ million |
% |
||
|
Revenue |
48.5 |
53.8 |
(17.8)% |
|
|
Trading profit |
10.3 |
13.7 |
(33.2)% |
Aggreko's International Local businesses in Asia, Australasia, Latin America and South Africa had a challenging first half compared to the strong performance in the first half in 2008, with revenue declining by 18%, in constant currency, to £48.5 million and trading profit declining by 33% to £10.3 million. Trading margin decreased to 21.3% from 25.6% in the prior year. The first half of 2008, however, included revenue of £9.1 million from the Beijing Olympics; excluding the impact of Beijing, revenue increased by 3% in constant currency.
Revenue in most of Aggreko's International Local businesses decreased period to period. Performance in Australia was impacted by a decline in certain areas of the mining sector, particularly nickel and iron ore. However, activity levels in thermal coal and gold mining remained robust as did the utility sector. Revenue in our Local businesses in Brazil and Chile also declined as demand from the manufacturing and mining sectors weakened. Despite challenges in Mexico during the first half, our business continued to grow strongly with good momentum being generated during the final weeks of the first half. In Singapore, economic conditions were difficult and revenue decreased on prior year largely due to sharp reductions in shipping related activity. Our small acquisition in India is performing well and while we are still at a very early stage in its evolution we have seen a steady increase in utilisation and rates during the period. We now have some 32MW on rent in India. Growth in our start up business in South Africa is also encouraging with the highlight being the successful execution of a contract to provide power for the Confederations Cup.
International Power Projects: Aggreko International
|
Constant |
|||
|
2009 |
2008 |
Currency Change |
|
|
$ million |
$ million |
% |
|
|
Revenue (excluding pass-through fuel) |
313.4 |
223.9 |
40.0% |
|
Trading profit (excluding pass-through fuel) |
104.3 |
59.1 |
71.8% |
Our International Power Projects business delivered another strong performance with revenue in constant currency and excluding pass-through fuel, growing by 40%, to $313.4 million and trading profits increasing by 72% to $104.3 million.
During the first six months of 2009 we carried out power projects in a total of 53 countries and signed 9 new contracts including 30MW in Ethiopia, 26MW in Iraq, and 20MW in Guadeloupe. Revenue from our gas-powered units grew 126% and we now have 150MW of gas-powered capacity contracted to customers. Utilities remain the biggest sector in the projects business accounting for 69% (2008: 66%) of the revenue. Our order book has decreased from a peak of 22,000MW at June 2008 to just over 18,000MW at June 2009 which is equivalent to about 10 months revenue at the current run-rate. This decline is due in part to a reduction in the months remaining on a number of large multi-year contracts. The enquiry pipeline has remained strong throughout the first half and we have recently signed new contracts in Kenya and Saudi Arabia.
During the period there was a lack of new contracts mobilising with many customers extending contracts; this had a significant impact on both revenue and margins. The level of contract extensions combined with a healthy level of utilisation had a very positive impact in terms of trading margin which reached a record 33.3% (2008: 26.4%).
Outlook
Our outlook for the full year remains unchanged from the guidance given in the announcement of our Preliminary Results in March, and repeated in our April and June Trading Statements, namely that we expect that profits in constant currency will be at similar levels in 2009 to those achieved in 2008. Given that over 70% of our earnings are in US dollars, if we achieve this trading performance, and if the Sterling : US Dollar rate stays at today's level for the rest of the year, reported results would show substantial growth over 2008.
We expect that conditions in the Local business will continue to be challenging particularly compared with a very strong second half in 2008 when we had the benefit of both the Beijing Olympics and exceptionally high storm-related revenues in North America. We have deliberately sought to defend and, where possible, increase our market share and we currently have more power on rent in our Local businesses than we did a year ago. However in achieving this, rates have weakened noticeably. Our temperature control business is having a poor summer season in both North America and Europe, with low ambient temperatures and few customers suffering the capacity constraints which drive demand for additional cooling. Our response to this challenging environment has been to restrict new fleet investment and to reduce headcount in our worst-affected Local businesses.
In International Power Projects we have recently been awarded some sizeable new projects, including an additional 140MW in Kenya and 100MW in Saudi Arabia. Project extensions continue to run at a healthy rate, but converting enquiries for large new projects into finalised contracts remains difficult in many territories. During the second half of 2008 we significantly increased the amount of MW on rent, but, as expected, net increases during the first half have run at more modest levels. We anticipate that net additions on rent in the second half will continue at this lower rate, and as a consequence, we expect the business will grow year-on-year during the second half but at a noticeably slower pace than that seen in the first half.
Financial Review
Aggreko's financial year will be 53 weeks in 2009, with the additional week to be taken in the fourth quarter, therefore having no impact on the interim report.
Currency Translation
The volatility of exchange rates during the period had a material impact on the results of the Group with revenue and trading profit increasing by £97.5 million and £20.5 million respectively in the 12 month period to June 2009. Set out in the table below are the principal exchange rates affecting the Group's overseas profits and net assets:
|
(per £ sterling) |
June 2009 |
June 2008 |
Dec-08 |
|||
|
|
Average |
Period |
Average |
Period |
Average |
Period |
|
End |
End |
End |
||||
|
Principal Exchange Rates |
|
|||||
|
United States dollar |
1.49 |
1.65 |
1.97 |
1.99 |
1.86 |
1.48 |
|
Euro |
1.12 |
1.17 |
1.29 |
1.26 |
1.26 |
1.05 |
|
Other Operational Exchange |
|
|||||
|
Rates |
|
|||||
|
UAE Dirhams |
5.48 |
6.06 |
7.25 |
7.30 |
6.84 |
5.42 |
|
Australian dollar |
2.10 |
2.04 |
2.13 |
2.07 |
2.19 |
2.16 |
|
(Source: Reuters) |
|
|
|
|
|
|
Interest
The net interest charge for the first half of 2009 was £7.9 million, an increase of £1.6 million on 2008 reflecting the higher level of average net debt. Interest cover, measured on a rolling 12-month EBITDA basis, remains strong and increased to 23.6 times from 21.2 times in 2008.
Effective Tax Rate
The current forecast of the effective tax rate for the full year, which has been used in the interim accounts is 32% as compared with 33% in the same period last year. This decrease in the tax rate largely reflects changes in the regional mix of profits.
Dividends
Based on the declared interim dividend of 4.37 pence per ordinary share which, is an increase of 15.0% as compared with the same period in 2008, dividend cover is 6.1 times (30 June 2008: 4.5 times).
Cashflow
In the first six months, the business was strongly cash generative with net debt decreasing by £76.8 million to £287.2 million; £28.9 million of this decrease was as a consequence of currency movements. Cash flow from operating activities totalled £199.3 million (2008: £99.0 million) and this helped to fund capital expenditure of £97.4 million (2008: £124.3 million) as well as tax, interest and dividend payments. Gearing (net debt as a percentage of equity) at 30 June 2009 decreased to 58% from 88% at 30 June 2008 while on a rolling 12- month basis net debt to EBITDA was 0.80x compared to 0.91x for the same period in 2008.
Financial Resources
The Group's banking facilities are primarily in the form of committed bank facilities totalling £536.2 million at 30 June 2009, arranged on a bilateral basis with six international banks. The financial covenants attached to these facilities are that EBITDA should be at least 4 times interest (at 30 June 2009: 23.6 times), operating profit should be no less than 3 times interest (at 30 June 2009: 14.9 times) and net debt should be no more than 3 times EBITDA (at 30 June 2009: 0.8 times). The Group does not consider that these covenants are restrictive to its operations. The maturity profile of the borrowings is detailed in Note 11 in the Accounts with the next significant maturity not due until the second half of 2011. The facilities now in place are currently anticipated to be ample for meeting the Group's requirements for the foreseeable future.
Net debt amounted to £287.2 million at 30 June 2009 and, at that date, undrawn committed facilities were £247.0 million.
Net Operating Assets
The net operating assets of the Group at 30 June 2009 totalled £872.3 million, up £219.6 million on the same period in 2008. The main components of Net Operating Assets are:-
|
Movement |
||||
|
£ million |
2009 |
2008 |
Headline |
Const Curr. |
|
Rental Fleet |
652.3 |
479.0 |
36.2% |
18.2% |
|
Property, Plant |
51.4 |
44.8 |
14.7% |
5.3% |
|
Inventory |
82.9 |
80.8 |
2.6% |
(8.7%) |
|
Net Trade Debtors |
144.3 |
132.9 |
8.6% |
(4.9%) |
A key measure of Aggreko's performance is the return (expressed as operating profit) as a percentage of average net operating assets; we call this measure Return on Capital Employed (ROCE). 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, 1 January and the previous 30 June. For the full year, we state the period's operating profit as a percentage of the average net operating assets as at 31 December, the previous 30 June and 1 January. The average net operating assets for the 12 months to 30 June 2009 were £825.6 million, up 45% on the same period in 2008, and the operating profit for the same period was £244.2 million. In the first half of 2009 the ROCE increased to 29.6% compared with 27.5% for the same period in 2008 with the increase primarily reflecting the growth in the margin in our International Power Projects business and the one off gain on sale of the European oil-free air business.
Acquisition of Cummins India Ltd
On 1 January 2009 the Group completed the acquisition of the power rental business of Cummins India Ltd for a total cash consideration of £4.2 million. The fair value of net assets acquired was £3.5 million resulting in goodwill of £0.7 million.
Shareholders' Equity
Shareholders' equity increased by £24.7 million to £489.5 million in the six months ended 30 June 2009, represented by the net assets of the Group of £776.7 million before net debt of £287.2 million. The movements in shareholders' equity are analysed in the table below:
|
Movements in Shareholders' Equity |
£ million |
£ million |
|
As at 1 January 2009 |
464.8 |
|
|
Profit for the financial period |
71.9 |
|
|
Dividend (1) |
(16.9) |
|
|
Retained earnings |
55.0 |
|
|
New share capital subscribed |
1.5 |
|
|
Purchase of own shares held under trust |
(8.4) |
|
|
Credit in respect of employee share awards |
4.5 |
|
|
Actuarial gains on retirement benefits |
6.3 |
|
|
Currency translation difference |
(47.2) |
|
|
Movement in hedging reserve |
20.7 |
|
|
Other (2) |
(7.7) |
|
|
As at 30 June 2009 |
489.5 |
|
(1) |
Reflects the dividend of 6.28 pence per share (2008: 5.02 pence) that was paid during the period. |
|
(2) |
Other includes tax on items taken directly to reserves. |
Principal Risks and Uncertainties
In the day to day operations of the Group, we face risks and uncertainties. Our job is to mitigate and manage these risks and the Board has developed a formal risk management process which is described on page 50 of the 2008 Annual Report and Accounts. Also set out on pages 24 to 27 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;
Failure to collect payments;
Events;
Failure to conduct business dealings with integrity and honesty;
Acquisitions;
Operational incidents;
Competition;
Product technology and emissions regulation;
People;
Information Technology;
Investor Relations and Market Abuse;
Accounting and Treasury/major fraud; and
Liquidity
We do not believe that the principal risks and uncertainties facing the business have changed materially since the publication of the Annual Report.
Shareholder information
Our website can be accessed at www.aggreko.com. This contains a large amount of information about our business, including a range of charts and data, which can be downloaded for easy analysis. The website also carries copies of recent investor presentations, as well as Stock Exchange announcements.
|
Rupert Soames |
Angus Cockburn |
|
Chief Executive |
Finance Director |
|
25 August 2009 |
Group Income Statement
For the six months ended 30 June 2009 (unaudited)
|
6 months |
6 months |
Year |
||
|
ended |
ended |
ended |
||
|
30 Jun |
30 Jun |
31 Dec |
||
|
2009 |
2008 |
2008 |
||
|
Notes |
£ million |
£ million |
£ million |
|
|
Revenue |
6 |
499.8 |
407.7 |
946.6 |
|
Cost of sales |
(194.5) |
(185.5) |
(409.5) |
|
|
Gross profit |
305.3 |
222.2 |
537.1 |
|
|
Distribution costs |
(131.4) |
(98.3) |
(221.3) |
|
|
Administrative expenses |
(68.1) |
(51.4) |
(115.2) |
|
|
Other income
|
7.8 |
1.7 |
4.2 |
|
|
Operating profit |
6 |
113.6 |
74.2 |
204.8 |
|
Net finance costs |
||||
|
- Finance cost |
(8.0) |
(6.5) |
(15.3) |
|
|
- Finance income |
0.1 |
0.2 |
0.5 |
|
|
Profit before taxation |
105.7 |
67.9 |
190.0 |
|
|
Taxation |
9 |
|||
|
- UK |
(13.6) |
(7.6) |
(18.3) |
|
|
- Overseas |
(20.2) |
(14.8) |
(49.0) |
|
|
Profit for the period |
71.9 |
45.5 |
122.7 |
|
|
The above results relate to continuing operations and all profit for the period is attributable to equity shareholders of the Company. |
||||
|
Earnings per share (pence) |
||||
|
Basic |
8 |
26.76 |
16.97 |
45.77 |
|
Diluted |
8 |
26.69 |
16.88 |
45.56 |
Group Statement of Comprehensive Income
For the six months ended 30 June 2009 (unaudited)
|
6 months |
6 months |
Year |
|
|
ended |
ended |
ended |
|
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
Profit for the period |
71.9 |
45.5 |
122.7 |
|
Other comprehensive income |
|||
|
Actuarial gains/(losses) on retirement benefits |
6.3 |
(9.1) |
(4.0) |
|
Movement of deferred tax on pension liability |
(1.8) |
2.5 |
1.1 |
|
Cashflow hedges (net of deferred tax) |
14.9 |
0.4 |
(21.7) |
|
Net exchange (losses)/gains offset in reserves |
(47.2) |
5.5 |
99.0 |
|
Other comprehensive (loss)/income for the period, net of tax |
(27.8) |
(0.7) |
74.4 |
|
Total comprehensive income for the period |
44.1 |
44.8 |
197.1 |
Group Balance Sheet
As at 30 June 2009 (unaudited)
|
30 Jun |
30 Jun |
31 Dec |
||
|
2009 |
2008 |
2008 |
||
|
Notes |
£ million |
£ million |
£ million |
|
|
Non-current assets |
||||
|
Goodwill |
10 |
49.7 |
38.4 |
53.0 |
|
Other intangible assets |
15.9 |
9.6 |
16.6 |
|
|
Property, plant and equipment |
703.7 |
523.8 |
752.0 |
|
|
Derivative financial instruments |
- |
0.2 |
- |
|
|
Deferred tax asset |
4.8 |
2.4 |
4.8 |
|
|
774.1 |
574.4 |
826.4 |
||
|
Current assets |
||||
|
Inventories |
82.9 |
80.8 |
98.6 |
|
|
Trade and other receivables |
219.0 |
210.9 |
272.7 |
|
|
Derivative financial instruments |
- |
0.1 |
- |
|
|
Cash and cash equivalents |
5 |
16.3 |
11.1 |
15.3 |
|
Current tax assets |
- |
2.1 |
1.7 |
|
|
318.2 |
305.0 |
388.3 |
||
|
Total assets |
1,092.3 |
879.4 |
1,214.7 |
|
|
Current liabilities |
||||
|
Borrowings |
11 |
(26.8) |
(12.4) |
(167.7) |
|
Derivative financial instruments |
(3.0) |
(1.6) |
(15.9) |
|
|
Trade and other payables |
(206.6) |
(214.2) |
(252.9) |
|
|
Current tax liabilities |
(43.7) |
(21.6) |
(49.9) |
|
|
Provisions |
- |
(0.4) |
_ ___- |
|
|
(280.1) |
(250.2) |
(486.4) |
||
|
Non-current liabilities |
||||
|
Borrowings |
11 |
(276.7) |
(276.5) |
(211.6) |
|
Derivative financial instruments |
(11.6) |
(2.8) |
(19.1) |
|
|
Deferred tax liabilities |
(33.0) |
(18.4) |
(24.6) |
|
|
Retirement benefit obligation |
13 |
(1.2) |
(13.1) |
(8.0) |
|
Provisions |
(0.2) |
(0.7) |
__(0.2) |
|
|
(322.7) |
(311.5) |
(263.5) |
||
|
Total liabilities |
(602.8) |
(561.7) |
(749.9) |
|
|
Net assets |
489.5 |
317.7 |
464.8 |
|
|
Shareholders' equity |
||||
|
Share capital |
54.6 |
54.4 |
54.4 |
|
|
Share premium |
11.5 |
9.6 |
10.2 |
|
|
Treasury shares |
(25.9) |
(21.0) |
(20.5) |
|
|
Capital redemption reserve |
0.1 |
0.1 |
0.1 |
|
|
Hedging reserve (net of deferred tax) |
(10.2) |
(3.0) |
(25.1) |
|
|
Foreign exchange reserve |
32.7 |
(14.2) |
79.9 |
|
|
Retained earnings |
426.7 |
291.8 |
365.8 |
|
|
Total shareholders' equity |
489.5 |
317.7 |
464.8 |
|
Group Cash Flow Statement
For the six months ended 30 June 2009 (unaudited)
|
6 months |
6 months |
Year |
||
|
ended |
ended |
ended |
||
|
30 Jun |
30 Jun |
31 Dec |
||
|
2009 |
2008 |
2008 |
||
|
Notes |
£ million |
£ million |
£ million |
|
|
Cash flows from operating activities |
||||
|
Cash generated from operations |
4 |
199.3 |
99.0 |
276.1 |
|
Tax paid |
(29.7) |
(17.5) |
(39.6) |
|
|
Net cash generated from operating activities |
169.6 |
81.5 |
236.5 |
|
|
Cash flows from investing activities |
||||
|
Acquisitions (net of cash acquired) |
(4.2) |
- |
(15.9) |
|
|
Purchases of property, plant and equipment (PPE) |
(97.4) |
(124.3) |
(265.2) |
|
|
Proceeds from sale of PPE |
11.9 |
2.6 |
9.0 |
|
|
Net cash used in investing activities |
(89.7) |
(121.7) |
(272.1) |
|
|
Cash flows from financing activities |
||||
|
Net proceeds from issue of ordinary shares |
1.4 |
0.9 |
1.3 |
|
|
Increase in long-term loans |
73.7 |
89.7 |
185.7 |
|
|
Repayment of long-term loans |
(124.1) |
(29.0) |
(107.1) |
|
|
Net movement in short-term loans |
(0.2) |
4.5 |
4.9 |
|
|
Interest received |
0.1 |
0.2 |
0.5 |
|
|
Interest paid |
(8.2) |
(6.2) |
(14.6) |
|
|
Dividends paid to shareholders |
(16.9) |
(13.5) |
(23.7) |
|
|
Purchase of treasury shares |
(8.4) |
(13.2) |
(13.2) |
|
|
Sale of own shares by Employee Benefit Trust |
- |
_ __- |
0.9 |
|
|
Net cash (used in)/generated from financing activities |
(82.6) |
33.4 |
34.7 |
|
|
Net decrease in cash and cash equivalents |
(2.7) |
(6.8) |
(0.9) |
|
|
Cash and cash equivalents at beginning of the period |
10.3 |
9.6 |
9.6 |
|
|
Exchange (loss)/gain on cash and cash equivalents |
(1.2) |
0.4 |
1.6 |
|
|
Cash and cash equivalents at end of the period |
5 |
6.4 |
3.2 |
10.3 |
Reconciliation of net cash flow to movement in net debt
For the six months ended 30 June 2009 (unaudited)
|
6 months |
6 months |
Year |
||
|
ended |
ended |
ended |
||
|
30 Jun |
30 Jun |
31 Dec |
||
|
2009 |
2008 |
2008 |
||
|
Notes |
£ million |
£ million |
£ million |
|
|
Decrease in cash and cash equivalents |
(2.7) |
(6.8) |
(0.9) |
|
|
Cash outflow/(inflow) from movement in debt |
50.6 |
(65.2) |
(83.5) |
|
|
Changes in net debt arising from cash flows |
47.9 |
(72.0) |
(84.4) |
|
|
Exchange gain/(loss) |
28.9 |
(3.2) |
(77.0) |
|
|
Movement in net debt in period |
76.8 |
(75.2) |
(161.4) |
|
|
Net debt at beginning of period |
(364.0) |
(202.6) |
(202.6) |
|
|
Net debt at end of period |
11 |
(287.2) |
(277.8) |
(364.0) |
Group statement of changes in equity
For the six months ended 30 June 2009 (unaudited)
As at 30 June 2009
|
Attributable to equity holders of the company |
||||||||
|
Foreign |
||||||||
|
Ordinary |
Share |
Capital |
exchange |
|||||
|
share |
premium |
Treasury |
redemption |
Hedging |
reserve |
Retained |
Total |
|
|
capital |
account |
shares |
reserve |
reserve |
(translation) |
earnings |
equity |
|
|
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
|
|
Balance at 1 January 2009 |
54.4 |
10.2 |
(20.5) |
0.1 |
(25.1) |
79.9 |
365.8 |
464.8 |
|
Profit for the period |
- |
- |
- |
- |
- |
- |
71.9 |
71.9 |
|
Other comprehensive income: |
||||||||
|
Fair value gains on foreign currency cash flow hedge |
- |
- |
- |
- |
6.3 |
- |
- |
6.3 |
|
Transfers from hedging reserve to property, plant and equipment |
- |
- |
- |
- |
6.2 |
- |
- |
6.2 |
|
Fair value gains on interest rate swaps |
- |
- |
- |
- |
8.2 |
- |
- |
8.2 |
|
Currency translation differences |
- |
- |
- |
- |
- |
(47.2) |
- |
(47.2) |
|
Current tax on items taken to or transferred from equity |
- |
- |
- |
- |
- |
- |
0.4 |
0.4 |
|
Deferred tax on items taken to or transferred from equity |
- |
- |
- |
- |
(5.8) |
- |
(2.3) |
(8.1) |
|
Actuarial gains on retirement benefits |
- |
- |
- |
- |
- |
- |
6.3 |
6.3 |
|
Total comprehensive income for the period ended 30 June 2009 |
- |
- |
- |
- |
14.9 |
(47.2) |
76.3 |
44.0 |
|
Transactions with owners: |
||||||||
|
Purchase of treasury shares |
- |
- |
(8.4) |
- |
- |
- |
- |
(8.4) |
|
Credit in respect of employee share awards |
- |
- |
- |
- |
- |
- |
4.5 |
4.5 |
|
Issue of ordinary shares to employees under share option schemes |
- |
- |
3.0 |
- |
- |
- |
(3.0) |
- |
|
New share capital subscribed (Note (i)) |
0.2 |
1.3 |
- |
- |
- |
- |
- |
1.5 |
|
Dividends paid during the period |
- |
- |
- |
- |
- |
- |
(16.9) |
(16.9) |
|
0.2 |
1.3 |
(5.4) |
- |
- |
- |
(15.4) |
(19.3) |
|
|
Balance at 30 June 2009 |
54.6 |
11.5 |
(25.9) |
0.1 |
(10.2) |
32.7 |
426.7 |
489.5 |
|
(i) |
During the period 608,575 Ordinary shares of 20 pence each have been issued at prices ranging from £1.17 to £5.04 to satisfy the exercise of options under the Savings-Related Share Option Schemes ('Sharesave') and Executive Share Option Schemes by eligible employees. In addition 298,020 shares were allotted at par to US participants in the Long Term Incentive Plan. |
As at 30 June 2008
|
Attributable to equity holders of the company |
||||||||
|
Foreign |
||||||||
|
Ordinary |
Share |
Capital |
exchange |
|||||
|
share |
premium |
Treasury |
redemption |
Hedging |
reserve |
Retained |
Total |
|
|
capital |
account |
shares |
reserve |
reserve |
(translation) |
earnings |
equity |
|
|
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
|
|
Balance at 1 January 2008 |
54.2 |
8.8 |
(10.5) |
0.1 |
(3.4) |
(19.7) |
263.8 |
293.3 |
|
Profit for the period |
- |
- |
- |
- |
- |
- |
45.5 |
45.5 |
|
Other comprehensive income: |
||||||||
|
Transfers from hedging reserve to property, plant and equipment |
- |
- |
- |
- |
0.6 |
- |
- |
0.6 |
|
Currency translation differences |
- |
- |
- |
- |
- |
5.5 |
- |
5.5 |
|
Current tax on items taken to or transferred from equity |
- |
- |
- |
- |
- |
- |
2.0 |
2.0 |
|
Deferred tax on items taken to or transferred from equity |
- |
- |
- |
- |
(0.2) |
- |
2.6 |
2.4 |
|
Actuarial losses on retirement benefits |
- |
- |
- |
- |
- |
- |
(9.1) |
(9.1) |
|
Total comprehensive income for the period ended 30 June 2008 |
- |
- |
- |
- |
0.4 |
5.5 |
41.0 |
46.9 |
|
Transactions with owners: |
||||||||
|
Purchase of treasury shares |
- |
- |
(13.2) |
- |
- |
- |
- |
(13.2) |
|
Credit in respect of employee share awards |
- |
- |
- |
- |
- |
- |
3.2 |
3.2 |
|
Issue of ordinary shares to employees under share option schemes |
- |
- |
2.7 |
- |
- |
- |
(2.7) |
- |
|
New share capital subscribed (Note (i)) |
0.2 |
0.8 |
- |
- |
- |
- |
- |
1.0 |
|
Dividends paid during the period |
- |
- |
- |
- |
- |
- |
(13.5) |
(13.5) |
|
0.2 |
0.8 |
(10.5) |
- |
- |
- |
(13.0) |
(22.5) |
|
|
Balance at 30 June 2008 |
54.4 |
9.6 |
(21.0) |
0.1 |
(3.0) |
(14.2) |
291.8 |
317.7 |
|
(i) |
During the period 547,400 Ordinary shares of 20 pence each have been issued at prices ranging from £1.05 to £3.30 to satisfy the exercise of options under the Savings-Related Share Option Schemes ('Sharesave') and Executive Share Option Schemes by eligible employees. In addition 456,735 shares were allotted at par to US participants in the Long Term Incentive Plan. |
Notes to the Interim Accounts
For the six months ended 30 June 2009 (unaudited)
1 General information
This condensed consolidated interim financial information was approved for issue on 25 August 2009.
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 2008 were approved by the Board on 5 March 2009 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 237 of the Companies Act 1985.
This 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 2009 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 2008, which have been prepared in accordance with IFRSs as adopted by the European Union.
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 2008, as described in those annual financial statements.
Taxes on income in the interim period are accrued using the tax rate that would be applicable to expected total annual earnings.
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2009.
|
IAS 1 (revised) 'Presentation of financial statements'. This revised standard prohibits the presentation of items of income and expenses (that is 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All 'non-owner changes in equity' are required to be shown in a performance statement. Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). The Group has elected to present two statements: an income statement and a statement of comprehensive income. The interim financial statements have been prepared under the revised disclosure requirements. |
||
|
IFRS 8 'Operating segments'. IFRS 8 replaces IAS 14 'Segment reporting'. It requires a 'management approach' under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in: |
||
|
- |
A new segment titled Europe comprising the previously reported segments of Northern Europe and Continental Europe excluding power projects in the Eastern Mediterranean; |
|
|
- |
A new segment titled Middle East & South East Europe (MESEE) comprising Middle East, previously included with the Middle East, Asia-Pacific and South America segment, and power projects in the Eastern Mediterranean, previously reported in the Continental Europe segment. |
|
|
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the plc Board of Directors. |
||
The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2009, but are not currently relevant for the Group.
|
IFRIC 13, 'Customer loyalty programmes' |
|
|
IFRIC 14, 'The limit on a defined benefit asset, minimum funding requirements and their interaction' |
|
|
IFRIC 15, 'Agreements for construction of real estate' |
|
|
IFRIC 16, 'Hedges of a net investment in a foreign operation' |
|
|
IFRS 7 (Amendment), 'Improving disclosures about financial instruments' |
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2009 and have not been early adopted.
|
Effective Date |
|
|
IFRS 3 (Revised) - Business combinations |
1 July 2009 |
|
IAS 27 (Revised) - Consolidated and separate financial statements |
1 July 2009 |
|
IAS 39 (Amendment) - Financial instruments: Recognition and measurement |
1 July 2009 |
|
IFRIC 17 - Distributions of non-cash assets to owners |
1 July 2009 |
|
IFRIC 18 - Transfers of assets from customers |
1 July 2009 |
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
|
6 months |
6 months |
Year |
|
|
ended |
ended |
ended |
|
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
Profit for the period |
71.9 |
45.5 |
122.7 |
|
Adjustments for: |
|||
|
Tax |
33.8 |
22.4 |
67.3 |
|
Depreciation |
74.9 |
51.9 |
115.9 |
|
Amortisation of intangibles |
1.4 |
0.9 |
1.9 |
|
Finance income |
(0.1) |
(0.2) |
(0.5) |
|
Finance cost |
8.0 |
6.5 |
15.3 |
|
Profit on sale of PPE |
(7.8) |
(1.7) |
(4.2) |
|
Share based payments |
4.5 |
3.2 |
7.8 |
|
Changes in working capital (excluding the effects of exchange differences on consolidation): |
|||
|
Decrease/ (increase) in inventories |
8.6 |
(19.8) |
(20.4) |
|
Decrease/ (increase) in trade and other receivables |
32.4 |
(41.5) |
(51.7) |
|
(Decrease)/ increase in trade and other payables |
(28.3) |
32.7 |
23.8 |
|
Net movements in provisions for liabilities and charges |
- |
(0.9) |
(1.8) |
|
Cash generated from operations |
199.3 |
99.0 |
276.1 |
5 Cash and cash equivalents
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
Cash at bank and in hand |
15.7 |
10.3 |
14.8 |
|
Short-term bank deposits |
_0.6 |
0.8 |
0.5 |
|
16.3 |
11.1 |
15.3 |
|
|
Cash and bank overdrafts include the following for the purposes of the cashflow statement: |
|||
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
Cash and cash equivalents |
16.3 |
11.1 |
15.3 |
|
Bank overdrafts (Note 11) |
(9.9) |
(7.9) |
(5.0) |
|
6.4 |
3.2 |
10.3 |
|
6 Segmental reporting
(a) Revenue by segment
|
Total revenue |
Inter-segment revenue |
External revenue |
|||||||||
|
6 months |
6 months |
Year |
6 months |
6 months |
Year |
6 months |
6 months |
Year |
|||
|
ended |
ended |
ended |
ended |
ended |
ended |
ended |
ended |
ended |
|||
|
30 Jun |
30 Jun |
31 Dec |
30 Jun |
30 Jun |
31 Dec |
30 Jun |
30 Jun |
31 Dec |
|||
|
2009 |
2008 |
2008 |
2009 |
2008 |
2008 |
2009 |
2008 |
2008 |
|||
|
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
|||
|
Middle East & South East Europe |
42.6 |
33.5 |
75.2 |
- |
0.1 |
0.2 |
42.6 |
33.4 |
75.0 |
||
|
Europe |
79.5 |
87.2 |
181.6 |
- |
- |
- |
79.5 |
87.2 |
181.6 |
||
|
North America |
94.1 |
80.6 |
207.7 |
- |
0.1 |
0.2 |
94.1 |
80.5 |
207.5 |
||
|
International Local |
48.5 |
54.0 |
116.6 |
- |
0.2 |
0.3 |
48.5 |
53.8 |
116.3 |
||
|
Local business |
264.7 |
255.3 |
581.1 |
- |
0.4 |
0.7 |
264.7 |
254.9 |
580.4 |
||
|
International Power Projects |
235.7 |
152.8 |
366.2 |
0.6 |
- |
- |
235.1 |
152.8 |
366.2 |
||
|
Eliminations |
(0.6) |
(0.4) |
(0.7) |
(0.6) |
(0.4) |
(0.7) |
- |
- |
- |
||
|
Group |
499.8 |
407.7 |
946.6 |
- |
- |
- |
499.8 |
407.7 |
946.6 |
||
|
(i) |
Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties. |
|
(ii) |
International Power Projects (IPP) is a global segment administered from Dubai. At the period end the assets of the IPP segment are predominantly located in the Middle East, Asia-Pacific, South America and Africa. |
(b) Profit by segment
|
Trading profit pre intangible |
Amortisation of intangible assets |
||||||||||
|
asset amortisation |
arising from business combinations |
Trading profit |
|||||||||
|
6 months |
6 months |
Year |
6 months |
6 months |
Year |
6 months |
6 months |
Year |
|||
|
ended |
ended |
ended |
ended |
ended |
ended |
ended |
ended |
ended |
|||
|
30 Jun |
30 Jun |
31 Dec |
30 Jun |
30 Jun |
31 Dec |
30 Jun |
30 Jun |
31 Dec |
|||
|
2009 |
2008 |
2008 |
2009 |
2008 |
2008 |
2009 |
2008 |
2008 |
|||
|
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
|||
|
Middle East & South East Europe |
9.9 |
7.5 |
19.5 |
- |
- |
(0.1) |
9.9 |
7.5 |
19.4 |
||
|
Europe |
4.5 |
9.0 |
24.1 |
(0.1) |
(0.1) |
(0.1) |
4.4 |
8.9 |
24.0 |
||
|
North America |
11.6 |
11.7 |
46.0 |
(0.8) |
(0.4) |
(1.1) |
10.8 |
11.3 |
44.9 |
||
|
International Local |
10.6 |
13.9 |
32.8 |
(0.3) |
(0.2) |
(0.2) |
10.3 |
13.7 |
32.6 |
||
|
Local business |
36.6 |
42.1 |
122.4 |
(1.2) |
(0.7) |
(1.5) |
35.4 |
41.4 |
120.9 |
||
|
International Power Projects |
70.4 |
31.1 |
79.8 |
- |
- |
(0.1) |
70.4 |
31.1 |
79.7 |
||
|
Group |
107.0 |
73.2 |
202.2 |
(1.2) |
(0.7) |
(1.6) |
105.8 |
72.5 |
200.6 |
||
(b) Profit by segment continued
|
Gain/(loss) on sale of PPE |
Operating profit |
||||||
|
6 months |
6 months |
Year |
6 months |
6 months |
Year |
||
|
ended |
ended |
ended |
ended |
ended |
ended |
||
|
30 Jun |
30 Jun |
31 Dec |
30 Jun |
30 Jun |
31 Dec |
||
|
2009 |
2008 |
2008 |
2009 |
2008 |
2008 |
||
|
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
||
|
Middle East & South East Europe |
(0.1) |
- |
(0.2) |
9.8 |
7.5 |
19.2 |
|
|
Europe |
6.3 |
0.1 |
2.6 |
10.7 |
9.0 |
26.6 |
|
|
North America |
1.6 |
0.7 |
1.1 |
12.4 |
12.0 |
46.0 |
|
|
International Local |
- |
- |
- |
10.3 |
13.7 |
32.6 |
|
|
Local business |
7.8 |
0.8 |
3.5 |
43.2 |
42.2 |
124.4 |
|
|
International Power Projects |
- |
0.9 |
0.7 |
70.4 |
32.0 |
80.4 |
|
|
Group |
7.8 |
1.7 |
4.2 |
113.6 |
74.2 |
204.8 |
|
|
Finance costs - net |
(7.9) |
(6.3) |
(14.8) |
||||
|
Profit before taxation |
105.7 |
67.9 |
190.0 |
||||
|
Taxation |
(33.8) |
(22.4) |
(67.3) |
||||
|
Profit for the period |
71.9 |
45.5 |
122.7 |
||||
(c) Depreciation and amortisation by segment
|
6 months |
6 months |
Year |
|||||
|
ended |
ended |
ended |
|||||
|
30 Jun |
30 Jun |
31 Dec |
|||||
|
2009 |
2008 |
2008 |
|||||
|
£ million |
£ million |
£ million |
|||||
|
Middle East & South East Europe |
8.1 |
4.7 |
10.5 |
||||
|
Europe |
12.7 |
12.1 |
24.7 |
||||
|
North America |
15.2 |
11.8 |
26.8 |
||||
|
International Local |
7.9 |
5.9 |
12.6 |
||||
|
Local business |
43.9 |
34.5 |
74.6 |
||||
|
International Power Projects |
32.4 |
18.3 |
43.2 |
||||
|
Group |
76.3 |
52.8 |
117.8 |
(d) Capital expenditure on property, plant & equipment and intangible assets by segment
|
6 months |
6 months |
Year |
|||||
|
ended |
ended |
ended |
|||||
|
30 Jun |
30 Jun |
31 Dec |
|||||
|
2009 |
2008 |
2008 |
|||||
|
£ million |
£ million |
£ million |
|||||
|
Middle East & South East Europe |
8.5 |
10.5 |
17.0 |
||||
|
Europe |
5.7 |
14.6 |
33.1 |
||||
|
North America |
8.4 |
20.9 |
40.8 |
||||
|
International Local |
12.7 |
19.5 |
37.2 |
||||
|
Local business |
35.3 |
65.5 |
128.1 |
||||
|
International Power Projects |
65.6 |
58.8 |
147.6 |
||||
|
Group |
100.9 |
124.3 |
275.7 |
|
(i) |
Capital expenditure comprises additions of property, plant and equipment (PPE) of £97.4 million (30 June 2008: £124.3 million, 31 December 2008: £265.2 million), acquisitions of PPE of £1.6 million (30 June 2008: £nil, 31 December 2008: £5.1 million) and acquisitions of other intangible assets of £1.9 million (30 June 2008: £nil, 31 December 2008: £5.4 million). |
|
(ii) |
The net book value of total Group disposals of PPE during the period were £4.1 million (30 June 2008: £0.9 million, 31 December 2008: £4.8 million). |
(e) Total assets by segment
|
6 months |
6 months |
Year |
|||||
|
ended |
ended |
ended |
|||||
|
30 Jun |
30 Jun |
31 Dec |
|||||
|
2009 |
2008 |
2008 |
|||||
|
£ million |
£ million |
£ million |
|||||
|
Middle East & South East Europe |
105.1 |
68.7 |
102.0 |
||||
|
Europe |
161.0 |
185.4 |
200.6 |
||||
|
North America |
208.4 |
173.6 |
257.2 |
||||
|
International Local |
122.5 |
94.8 |
110.9 |
||||
|
Local business |
597.0 |
522.5 |
670.7 |
||||
|
International Power Projects |
490.5 |
352.1 |
537.5 |
||||
|
1,087.5 |
874.6 |
1,208.2 |
|||||
|
Deferred and current tax asset |
4.8 |
4.5 |
6.5 |
||||
|
Derivative financial instruments |
- |
0.3 |
- |
||||
|
Total assets per balance sheet |
1,092.3 |
879.4 |
1,214.7 |
7 Dividends
The dividends paid in the period were:
|
6 months |
6 months |
Year |
|
|
ended |
ended |
ended |
|
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
Total dividend (£ million) |
16.9 |
13.5 |
23.7 |
|
Dividend per share (pence) |
6.28 |
5.02 |
8.82 |
An interim dividend in respect of 2009 of 4.37 pence (2008: 3.80 pence), amounting to a total dividend of £11.8 million (2008: £10.2 million) was declared during the period.
8 Earnings per share
Basic earnings per share have been calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares in issue during the period, excluding shares held by the Employee Share Ownership Trusts which are treated as cancelled.
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
Profit for the period (£ million) |
71.9 |
45.5 |
122.7 |
|
Weighted average number of ordinary shares in issue (million) |
268.6 |
268.3 |
268.2 |
|
Basic earnings per share (pence) |
26.76 |
16.97 |
45.77 |
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares. These represent share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
Profit for the period (£ million) |
71.9 |
45.5 |
122.7 |
|
Weighted average number of ordinary shares in issue (million) |
268.6 |
268.3 |
268.2 |
|
Adjustment for share options (million) |
0.7 |
1.3 |
1.2 |
|
Diluted weighted average number of ordinary shares in issue (million) |
269.3 |
269.6 |
269.4 |
|
Diluted earnings per share (pence) |
26.69 |
16.88 |
45.56 |
9 Taxation
The taxation charge for the period is based on an estimate of the Group's expected annual effective rate of tax for 2009 based on prevailing UK tax legislation at 30 June 2009. This is currently estimated to be 32.0% (2008: 33.0%).
10 Goodwill
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
Cost |
|||
|
Balance at beginning of period |
53.0 |
38.0 |
38.0 |
|
Acquisition (Note 16) |
0.7 |
- |
5.4 |
|
Exchange adjustments |
(4.0) |
0.4 |
9.6 |
|
At end of period |
49.7 |
38.4 |
53.0 |
|
Accumulated impairment losses |
|||
|
At beginning and end of period |
- |
- |
- |
|
Net book value at beginning of period |
53.0 |
38.0 |
38.0 |
|
Net book value at end of period |
49.7 |
38.4 |
53.0 |
|
11 Borrowings |
|||
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
Non-current |
|||
|
Bank borrowings |
276.7 |
276.5 |
211.6 |
|
Current |
|||
|
Bank overdrafts |
9.9 |
7.9 |
5.0 |
|
Bank borrowings |
16.9 |
4.5 |
162.7 |
|
26.8 |
12.4 |
167.7 |
|
|
Total borrowings |
303.5 |
288.9 |
379.3 |
|
Short-term deposits |
(0.6) |
(0.8) |
(0.5) |
|
Cash at bank and in hand |
(15.7) |
(10.3) |
(14.8) |
|
Net borrowings |
287.2 |
277.8 |
364.0 |
|
The bank overdrafts and borrowings are all unsecured. |
|||
|
The maturity of financial liabilities |
|||
|
The maturity profile of the borrowings was as follows: |
|||
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
Within 1 year, or on demand |
26.8 |
12.4 |
167.7 |
|
Between 1 and 2 years |
2.6 |
133.9 |
- |
|
Between 2 and 3 years |
246.8 |
30.0 |
185.8 |
|
Between 3 and 4 years |
- |
112.6 |
- |
|
Between 4 and 5 years |
27.3 |
- |
25.8 |
|
303.5 |
288.9 |
379.3 |
|
|
12 Capital commitments |
|||
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
Contracted but not provided for (property, plant and equipment) |
22.5 |
31.1 |
12.6 |
|
13 Pension commitments |
|||
|
Analysis of movement in retirement benefit obligation in the period: |
|||
|
30 Jun |
30 Jun |
31 Dec |
|
|
2009 |
2008 |
2008 |
|
|
£ million |
£ million |
£ million |
|
|
At start of period |
(8.0) |
(8.1) |
(8.1) |
|
Income expense |
(0.8) |
(0.7) |
(1.5) |
|
Contributions |
1.3 |
4.8 |
5.6 |
|
Net actuarial gain/(loss) |
6.3 |
(9.1) |
(4.0) |
|
At end of period |
(1.2) |
(13.1) |
(8.0) |
The net actuarial gain of £6.3 million in the period is mainly driven by an increase in the discount rate used to value the retirement benefit obligation which increased from 5.4% at 31 December 2008 to 6.3% at 30 June 2009.
14 Related party transactions
Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There were no other related party transactions in the period.
15 Seasonality
The Group is subject to seasonality with the third quarter of the year being our peak demand period, accordingly revenue and profits have historically been higher in the second half of the year.
16 Acquisition of the power rental business of Cummins India Ltd.
On 1 January 2009 the Group completed the acquisition of the business and assets of the power rental business of Cummins India Ltd (CIL) for a total cash consideration of £4.2 million. The business acquired had revenue in 2008 of £2.9 million and operating profit of £0.8 million.
The power rental business of Cummins India Ltd was fully integrated into the Aggreko business on acquisition therefore it is not possible to separately disclose post acquisition revenue or profit/loss for this acquisition.
The acquisition method of accounting has been adopted and the goodwill arising on the purchase has been capitalised. The acquisition was completed on a slump sale basis. This means that no specific book values were assigned to the assets and liabilities purchased. An independent valuation was carried out to assign fair values to the assets. The details of the transaction and fair value of assets acquired are shown below:
|
Fair value |
|
|
£million |
|
|
Intangible fixed assets |
1.9 |
|
Property, plant & equipment |
1.6 |
|
Net assets acquired |
3.5 |
|
Goodwill |
0.7 |
|
___ |
|
|
Consideration |
4.2 |
Goodwill represents the value of synergies arising from the integration of the acquired business. Synergies include direct cost savings, improved utilisation of the acquired fleet assets and the reduction of overheads.
Statement of Directors' Responsibilities
The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
|
An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and |
|
|
Material related party transactions in the first six months and any material changes in the related-party transactions described in the last annual report. |
The Directors of Aggreko plc are listed in the Aggreko plc Annual Report for 31 December 2008 with the exception of the following changes in the period: Derek Shepherd and Andrew Salvesen retired on 29 April 2009.
By order of the Board
Rupert Soames
Chief Executive
25 August 2009
Angus Cockburn
Finance Director
25 August 2009
Independent Review Report to Aggreko plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009, which comprises the income statement, balance sheet, statement of comprehensive income, cash flow statement, statement of changes in equity and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in Note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow
25 August 2009
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