Half Yearly Report

RNS Number : 5799R

Aggreko PLC

25 August 2010

 

Aggreko plc

INTERIM RESULTS

FOR THE SIX MONTHS TO 30 JUNE 2010

 

 

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 2010.

 

			Movement pre- intangible
	2010 pre-	2009 pre-	asset amortisation		2010 post-
	intangible asset	intangible asset	As	Constant	intangible asset
	amortisation	amortisation	reported	currency	amortisation
Group revenue	£583.6m	£499.8m	16.7%	16.7%	£583.6m
Group revenue excl pass-through fuel	£546.5m	£474.8m	15.1%	14.9%	£546.5m
Trading profit (1)	£131.2m	£107.0m	22.6%	22.4%	£129.8m
Profit before tax	£127.1m	£106.9m	18.9%		£125.7m
Earnings per share	32.84p	27.07p	21.3%		32.49p
Dividend per share	6.55p	4.37p	50.0%		6.55p

 

(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 (2010: £1.4m pre-tax, £0.9m post-tax; 2009: £1.2m pre-tax, £0.8m post-tax) as management believe that the exclusion of such items provides a better comparison of business performance.

  Highlights:

 

·; Another strong performance, with revenue in constant currency and excluding pass-through fuel increasing by 15% and trading profit by 22%

 

·; Interim and final dividend to be increased by 50%, reflecting very high levels of profit growth over recent years and confidence in the prospects for the business

 

·; Record order intake in International Power Projects; contracts signed for 860MW in 18 countries

- 650MW of new contracts in Asia and Central & South America, delivering strategic goal to increase presence in these regions

- Closing order book up 49% on prior year

- 40% increase in volume of gas-powered generation on rent

 

·; Strong performance by Local businesses

- Outstanding performance in major events: Vancouver Winter Olympics, FIFA World Cup, Glastonbury, US Superbowl, Eurovision Song Contest and UK & US Golf Open Championships

- Signs of recovery in several territories in second quarter; rates beginning to improve

- Strong start to summer trading in North America, supporting Gulf of Mexico clean-up and Nashville floods

- Good progress in new countries: 70MW on hire in Russia, 50MW in India

 

·; Continued investment and strong operating cashflow; capital expenditure 134% of depreciation, but net debt still falls £16m

 

Philip Rogerson, Chairman, commented:

 

"Aggreko delivered another strong performance in the first half of 2010 with reported revenue increasing by 17% and reported trading profit increasing by 23%. Earnings per share, pre-intangible asset amortisation, increased by 21% to 32.84 pence. The trading performance was underpinned by the Vancouver Winter Olympics and the FIFA World Cup contracts. I am also delighted to report that we intend to recommend an increase of 50% to both the interim and final dividend."

 

"We believe that we will make further good progress in the second half and that the outcome for the year as a whole will be slightly better than our previous expectations."

 

Rupert Soames, Chief Executive, commented:

 

"In the first half we have laid the foundations for another year of good progress. The record level of order intake in International Power Projects and the strong performance in our Local businesses underline the strength and global reach of our business".

 

Regional performance metrics:

 

	Revenue millions		Constant	Trading Profit millions*		Constant
			currency			currency
			change			change
	2010	2009	%	2010	2009	%
North America	$175.3	$140.4	23.5%	$23.8	$17.3	37.5%
Europe & Middle East	£125.1	£122.1	3.9%	£14.0	£14.4	(1.3)%
International Local business	£85.0	£48.5	50.8%	£23.9	£10.6	86.0%
International Power Projects excl fuel	$337.4	$313.4	7.7%	$117.1	$104.4	12.4%

 

* Trading profit represents operating profit before gain on sale of property, plant and equipment and 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

 

Aggreko delivered another strong performance in the first half of 2010 with reported revenue increasing by 17% and reported trading profit increasing by 23%. Earnings per share increased by 21% to 32.49 pence. Our International Power Projects business continued to grow in the first half and, encouragingly, secured new contracts in 18 countries for a record 860MW. Trading in the Local business was also strong, largely due to the Vancouver Winter Olympics and FIFA World Cup contracts. These events were amongst the largest and most complex we have ever undertaken and I am pleased to report that they were executed to a very high standard.

 

Dividend

 

The Board has decided to pay an interim dividend of 6.55 pence per share, which is an increase of 50% over the 2009 interim dividend; the Board intends to propose at the appropriate time that this level of increase should also be applied to the final dividend, which would give a dividend for the year as a whole of 18.90 pence per share (2009: 12.60 pence). This increase reflects the very high level of profit increases over the last few years and the confidence that the Board has in the prospects for the business. This interim dividend will be paid on 20 October 2010 to shareholders on the register at 24 September 2010, with an ex-dividend date of 22 September 2010.

 

Trading

 

Reported revenue in the first half at £583.6 million (2009: £499.8 million) was 17% higher than 2009 while revenue, in constant currency and excluding pass-through fuel increased by 15%. Profit before tax increased by 19% to £125.7 million (2009: £105.7 million).

 

During the first six months we accelerated the investment in new fleet and total capital expenditure in the first half was £103.6 million, compared to £97.4 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 £265 million compared to £149.7 million in 2009.

 

Net debt decreased by £16.0 million to £159.5 million in the period. Aggreko's financial position remains very strong with gearing of 23% (30 June 2009: 58%) and interest cover, measured on an EBITDA basis, of 28.5 times (30 June 2009: 23.6 times). Aggreko had bank facilities totalling £467.7 million at 30 June 2010, with the next significant maturity due in September 2011.

 

Board changes

 

Nigel Northridge will retire as a director of the Company on 31 August 2010. Nigel joined the Board in February 2002, and we have benefited enormously from his advice and experience during his time on the Board. We wish him well for the future. I am delighted to say that David Hamill has agreed to take on the role of senior independent director and that Russell King has agreed to chair the Remuneration Committee. We expect to announce the appointment of an additional independent non-executive director in the near future.

 

Outlook

 

We expect that conditions in the Local business will continue to improve. Volumes of equipment on rent are ahead of last year, and rates are beginning to strengthen in many areas; in particular there has been a sharp improvement in temperature control rentals. North America has had a strong start to the summer season, in part due to work supporting the clean-up efforts in the Gulf of Mexico and in responding to the floods in Nashville earlier in the year. Elsewhere, Europe & Middle East is a little ahead of last year, and Aggreko International's Local businesses will have a strong second half supported by revenue from the FIFA World Cup and improving trading in Australia and South America.

 

In International Power Projects, we expect continued growth in the second half as the record order intake seen in the first half feeds through to revenues in the second half, albeit partly mitigated by a high rate of off-hires, notably in the Middle East and Kenya, as contracts related to either hydro-shortfall or summer peak-shaving come to an end. The prospect pipeline remains strong for both gas and diesel projects.

 

Although the second half of 2009 included the benefit of both the 53rd week and the Vancouver Winter Olympics, we expect that the improving performance of the Local businesses, and the strong order-book and margins in International Power Projects, will enable us to make further good progress in the second half and that the outcome for the year as a whole will be slightly better than our previous expectations.

 

 

Philip G Rogerson

Chairman

25 August 2010

 

 

Interim management report

 

Group Trading Performance

 

In the first half of 2010, Aggreko delivered a strong trading performance helped by revenues from the Vancouver Winter Olympics and the FIFA World Cup. Group return on capital employed, measured on a rolling 12-month basis, increased to 30.8% (2009: 29.6%) and Group trading margin increased to 22.2% (2009: 21.2%).

 

	2010	2009	Movement
	£m	£m	As reported	Constant
				currency
Revenue	583.6	499.8	16.7%	16.7%
Revenue excl pass-through fuel	546.5	474.8	15.1%	14.9%
Trading profit (1)	129.8	105.8	22.7%	22.6%
Operating profit	130.7	113.6	15.1%	15.0%
Net interest expense	(5.0)	(7.9)	37.2%
Profit before tax	125.7	105.7	19.0%
Taxation	(38.3)	(33.8)	(13.4)%
Profit after tax	87.4	71.9	21.6%
Basic earnings per share (pence)	32.49	26.76	21.4%

 

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

 

Group revenue, as reported, increased 17% to £583.6 million (2009: £499.8 million), while Group trading profit of £129.8 million (2009: £105.8 million) increased by 23%. Excluding currency movements and pass-through fuel revenue, the impact of which is set out below, Group revenue grew by 15% and trading profit by 22%. On the same basis, trading margin in the first half was 23.6% which compares with 22.2% in 2009. Revenue excluding currency, the Vancouver Winter Olympics and the FIFA World Cup increased by 7% on the same period last year.

 

Group profit before tax grew by 19% to £125.7 million (2009: £105.7 million) and profit after tax increased by 22% to £87.4 million (2009: £71.9 million).

 

Currency had a minor impact on trading during the period with the various currency movements almost cancelling each other out. Pass-through fuel accounted for £37.1 million (2009: £25.0 million) of reported revenue of £583.6 million and £0.9 million (2009: £0.5 million) of reported trading profit of £129.8 million.

 

Total capital expenditure for the period was £103.6 million, £6.2 million higher than the prior year. This spend was 134% of the depreciation charge in the period, reflecting the continued investment in fleet with the International business accounting for the majority of the spend. The ratio of revenue (excluding pass-through fuel) to gross rental assets, which is a key measure of capital productivity, decreased from 79% to 74%.

 

In the first six months, the business generated positive net cash flows and net debt decreased by £16.0 million to £159.5 million. Cash flow from operating activities totalled £208.3 million (2009: £199.3 million).

 

Regional Trading Performance as reported in £ million

 

	Revenue			Trading
				Profit
Management Group	2010	2009	Change	2010	2009	Change
	£ million	£ million	%	£ million	£ million	%
Local business
North America	115.0	94.1	22.2%	14.7	10.8	36.1%
Europe	76.4	79.5	(3.9)%	2.4	4.4	(44.7)%
Middle East	48.7	42.6	14.2%	11.5	9.9	15.5%
Sub-total Europe & Middle East	125.1	122.1	2.4%	13.9	14.3	(2.6)%
International Local businesses	85.0	48.5	75.1%	23.5	10.3	127.3%
Sub-total Local business	325.1	264.7	22.8%	52.1	35.4	47.1%
International Power Projects (IPP)
IPP excl. pass-through fuel	221.4	210.1	5.4%	76.8	69.9	9.8%
IPP pass-through fuel	37.1	25.0	48.5%	0.9	0.5	89.3%
Sub-total International Power Projects	258.5	235.1	10.0%	77.7	70.4	10.4%
Group	583.6	499.8	16.7%	129.8	105.8	22.7%
Group excluding pass-through fuel	546.5	474.8	15.1%	128.9	105.3	22.4%

 

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

 

Local business: North America

 

				Constant currency1
		2010	2009	change
		$ million	$ million	%
Revenue		175.3	140.4	23.5%
Trading profit		22.4	16.1	39.4%

 

(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 strong first half, largely as a result of the successful execution of the Vancouver Winter Olympics. Revenue in constant currency increased by 23% to $175.3 million and trading profit increased by 39% to $22.4 million; trading margin increased to 12.8% (2009: 11.5%). Revenue from the Winter Olympics recognised in the period amounted to $30 million bringing the total contract value to $45 million, including the revenue that was recognised in the second half of 2009. This was the largest project ever undertaken by our North American business and our team performed extremely well installing over 1,800 individual electrical panels, 750 transformers and 500 miles of cable servicing 52 venues and other sites.

 

Excluding the Olympics, total revenue increased 3% on the same period last year. Rental revenue was up 2% and services revenue was up 6%. Power rental revenue was down 5% while temperature control revenue was up 8% reflecting the dehumidification work performed in the aftermath of the Nashville floods as well as the higher temperatures in many areas in the late spring. Oil-free compressed air rental revenues grew 13%.

 

Performance was mixed on an area basis with strong trading in the Southeast and Canada but weaker in the other areas, most notably the West and Central. In terms of market sector performance we saw increases in petrochemical and refining, contracting and manufacturing but decreases in services and construction.

 

The summer season in North America started strongly, with volumes in both power and temperature control well ahead of 2009. In mid-August, temperature control and power volumes were up about 30% and 10% respectively. Some of this volume relates to work supporting the clean-up efforts in the Gulf of Mexico, but most regions are seeing encouraging growth. Rates have also begun to improve, although they are still below those achieved in 2008.

 

Local business: Europe & Middle East 

 

				Constant Currency
		2010	2009	Change
		£ million	£ million	%
Revenue		125.1	122.1	3.9%
Trading profit		13.9	14.3	(1.3)%

 

Europe

 

				Constant Currency
		2010	2009	Change
		£ million	£ million	%
Revenue		76.4	79.5	(2.8)%
Trading profit		2.4	4.4	(45.2)%

 

Middle East

 

				Constant Currency
		2010	2009	Change
		AED million	AED million	%
Revenue		272.6	233.7	16.5%
Trading profit		64.4	53.9	18.2%

 

Our Europe & Middle East business saw revenue increase in constant currency by 4% but trading profit decreased by 1%. Trading margin decreased slightly to 11.1% (2009: 11.7%).

 

Revenue in Europe was £3.1 million lower than the prior period at £76.4 million; the revenue reduction matched the revenues generated in 2009 from the exceptional winter storms in France, so, on an underlying basis, revenues were flat. Trading profit decreased by £2.0 million compared to the same period last year reflecting a 6% fall in rental revenue and a 1% increase in lower margin service revenue. Trading margin decreased to 3.1% (2009: 5.6%). Within rental revenue, power decreased 8% but temperature control increased 5%. Area performance was mixed with decreases in France and Benelux offset by growth in a number of territories, most notably Italy and Norway. On a sector basis, revenues from utilities, shipping and manufacturing fell while oil and gas and services increased. Our newest business in Russia is performing well with over 70MW on rent at the end of the first half (June 2009: 25MW on rent).

 

Our Middle East business had a strong first half with revenue increasing by 16% and trading profit increasing by 18%. Trading margin increased slightly to 23.6% (2009: 23.1%). Rental revenue was up 14% and services revenue was up 32%, with a marked increase in fuel revenue. Power rental revenue increased 17% but temperature control revenue decreased by 18% albeit off quite a small base. In geographic terms, the adverse economic conditions experienced in Dubai in 2009 have continued to have an impact in 2010 with revenue falling significantly again. However, this decrease has been more than offset by continued growth in other markets in the Middle East. On a sector basis we had good growth in utilities, oil and gas and construction but weaker demand in shipping and manufacturing.

 

The third quarter has continued in much the same pattern as the first half, with growth in the Middle East, and generally sluggish demand in Europe. In recent weeks, demand has improved in Continental Europe, particularly for temperature control, but it is too early to say whether this presages a more general recovery or not.

 

Local business: Aggreko International

 

				Constant Currency
		2010	2009	Change
		£ million	£ million	%
Revenue		85.0	48.5	50.8%
Trading profit		23.5	10.3	88.4%

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

 

Revenue growth of this business in the first half was almost entirely generated by the FIFA World Cup contract, which was the largest events contract by value ever performed by Aggreko with 259 generators and chillers, 525 kilometres of cable and over 1,200 distribution panels on 11 sites. Revenue from the FIFA World Cup in the period amounted to £28.7 million, and this drove an increase of 51% in the total revenues of Aggreko International's Local businesses. Trading margin increased to 27.6% from 21.3% in the prior year.

 

Excluding the World Cup, total revenue, in constant currency, was in line with last year with both rental and services revenue the same as last year. Power and temperature control revenue were also in line with prior year. Revenue in the majority of Aggreko International's Local businesses increased as compared to the same period last year but this was offset by revenue declining 15% in Australia, which is the largest business in this segment.

 

We would expect Aggreko International's Local businesses to have a strong second half supported by revenue from the FIFA World Cup and improving trading in Australia and South America.

 

International Power Projects: Aggreko International

 

			Constant
	2010	2009	currency change
	$ million	$ million	%
Revenue (excluding pass-through fuel)	337.4	313.4	7.7%
Trading profit (excluding pass-through fuel)	117.1	104.3	12.4%

 

Our International Power Projects business delivered another good performance with revenue in constant currency and excluding pass-through fuel, growing by 8%, to $337.4 million and trading profits increasing by 12% to $117.1 million. Trading margin remained strong at 34.7% (2009: 33.3%).

 

Demand has been strong during the first half and we secured 36 new contracts in 18 countries and a record 860MW of new work. Importantly, much of the new work has come from Asia and Central & South America, areas which have been a strategic focus for our International Power Projects business for the last couple of years. New contracts won in the first half include 450MW in Asia, and 200MW in Central & South America. At the end of the period, our order book was over 26,800 MW months, the equivalent of 14 months' revenue at the current run-rate, and an increase of 49% over the prior year.

 

As a consequence of the high order intake, we put on-hire around 50% more than in any previous six-month period. However, we have only been able to deliver this rate of on-hires because the new contract wins have coincided with some large off-hires, which also reached record levels. The four-year drought finally ended in Kenya, and the country's hydro generation is now running at almost full capacity; as a consequence, our customer, Kenya Electricity Generating Company, has off-hired some 150MW since the beginning of the year. The Yemeni power utility has also off-hired over 100MW. The record rate of on- and off-hires resulted in lower utilisation during the first half as equipment was serviced and moved from old projects to new. Revenue from our gas-powered units grew strongly and the number of MW on rent has increased by 40% year-on-year.

 

Outlook

 

We expect that conditions in the Local business will continue to improve. Volumes of equipment on rent are ahead of last year, and rates are beginning to strengthen in many areas; in particular there has been a sharp improvement in temperature control rentals. North America has had a strong start to the summer season, in part due to work supporting the clean-up efforts in the Gulf of Mexico and in responding to the floods in Nashville earlier in the year. Elsewhere, Europe & Middle East is a little ahead of last year, and Aggreko International's Local businesses will have a strong second half supported by revenue from the FIFA World Cup and improving trading in Australia and South America.

 

In International Power Projects, we expect continued growth in the second half as the record order intake seen in the first half feeds through to revenues in the second half, albeit partly mitigated by a high rate of off-hires, notably in the Middle East and Kenya, as contracts related to either hydro-shortfall or summer peak-shaving come to an end. The prospect pipeline remains strong for both gas and diesel projects.

 

Although the second half of 2009 included the benefit of both the 53rd week and the Vancouver Winter Olympics, we expect that the improving performance of the Local businesses, and the strong order-book and margins in International Power Projects, will enable us to make further good progress in the second half and that the outcome for the year as a whole will be slightly better than our previous expectations.

 

Financial Review

 

Although currency movements had little impact on the trading result during the period, currency translation did have a larger impact on the balance sheet given the movement in period end rates, with net assets increasing £33.3 million from December 2009 to June 2010 due to currency translation. Set out in the table below are the principal exchange rates affecting the Group's overseas profits and net assets:

 

(per £ sterling)	June 2010		June 2009		Dec-09
	Average	Period	Average	Period	Average	Period
		End		End		End
Principal Exchange Rates
United States dollar	1.52	1.52	1.49	1.65	1.57	1.62
Euro	1.15	1.21	1.12	1.17	1.12	1.12
Other Operational Exchange
Rates
UAE Dirhams	5.60	5.58	5.48	6.06	5.76	5.95
Australian dollar	1.71	1.79	2.10	2.04	1.99	1.80
(Source: Reuters)

 

Interest

 

The net interest charge for the first half of 2010 was £5.0 million, a decrease of £2.9 million on 2009 reflecting the lower level of average net debt. Interest cover, measured against rolling 12-month EBITDA, remains very strong and increased to 28.5 times from 23.6 times in 2009.

 

Effective Tax Rate

 

The current forecast of the effective tax rate for the full year, which has been used in the interim accounts is 30.5% as compared with 32.0% in the same period last year. This decrease in the tax rate largely reflects changes in the regional mix of profits.

 

Dividends

 

The interim dividend of 6.55 pence per ordinary share represents an increase of 50.0% compared with the same period in 2009; dividend cover is 5.0 times (30 June 2009: 6.1 times).

 

Cashflow

 

The net cash inflow from operating activities during the period totaled £208.3 million (2009: £199.3 million) which has funded capital expenditure of £103.6 million (2009: £97.4 million) as well as tax, interest and dividend payments. Net debt at £159.5 million decreased by £16.0 million during the period and was £127.7 million lower compared to June 2009. Gearing (net debt as a percentage of equity) at 30 June 2010 decreased to 23% from 58% at 30 June 2009 while on a rolling 12- month basis net debt to EBITDA was 0.4x compared to 0.8x for the same period in 2009.

 

Working capital at 30 June 2010 is £8 million higher than the previous half year with inventory, receivables and payables all increasing, driven in large part by higher levels of fleet build, greater levels of trading activity and foreign currency translation movements. Stripping out the impact of currency, the increase in receivables was mainly due to higher levels of trading activity in our International Power Projects and North American businesses. The increase in payables, after allowing for currency, was driven by a general increase in the level of accruals reflecting higher levels of on and off hires at project sites and also includes a deferred revenue balance relating to the FIFA World Cup.

 

Financial Resources

 

The Group's banking facilities are primarily in the form of committed bank facilities totalling £467.7 million at 30 June 2010, arranged on a bilateral basis with a number of international banks. The financial covenants attached to these facilities are that Operating Profit should be no less than 3 times interest (30 June 2010: 18.4 times), EBITDA should be no less than 4 times interest (30 June 2010: 28.5 times) and net debt should be no more than 3 times EBITDA (30 June 2010: 0.4 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 to the Accounts with the next significant maturity not due until September 2011. 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 £159.5 million at 30 June 2010 and, at that date, undrawn committed facilities were £300.2 million.

 

Net Operating Assets

 

The net operating assets of the Group at 30 June 2010 totalled £960.0 million, up £87.7 million on the same period in 2009. The main components of net operating assets are:-

 

			Movement
£ million	2010	2009	Headline	Const Curr.
Rental fleet	719.7	652.3	10.3%	2.2%
Property, plant	52.7	51.4	2.5%	(1.7)%
Inventory	106.4	82.9	28.4%	20.3%
Net trade debtors	187.6	144.3	30.0%	20.8%

 

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 2010 were £905.4 million, up 10% on the same period in 2009; operating profit for the same period was £279.2 million. In the first half of 2010 the ROCE increased to 30.8% compared with 29.6% for the same period in 2009.

 

Shareholders' Equity

 

Shareholders' equity increased by £86.5 million to £689.6 million in the six months ended 30 June 2010, represented by the net assets of the Group of £849.1 million before net debt of £159.5 million. The movements in shareholders' equity are analysed in the table below:

 

Movements in Shareholders' Equity	£ million	£ million
As at 1 January 2010		603.1
Profit for the financial period	87.4
Dividend (1)	(22.1)
Retained earnings		65.3
New share capital subscribed		1.0
Purchase of own shares held under trust		(27.2)
Credit in respect of employee share awards		10.3
Actuarial losses on retirement benefits		(1.7)
Currency translation difference		33.3
Movement in hedging reserve		(5.5)
Other (2)		11.0
As at 30 June 2010		689.6

 

(1)	Reflects the dividend of 8.23 pence per share (2009: 6.28 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 52 of the 2009 Annual Report and Accounts. Also set out on pages 29 to 33 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 or to recover assets;

·; 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 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.

 

 

Rupert Soames	Angus Cockburn
Chief Executive	Finance Director
25 August 2010

 

 

Group Income Statement

For the six months ended 30 June 2010 (unaudited)

 

		6 months	6 months	Year
		ended	ended	ended
		30 Jun	30 Jun	31 Dec
		2010	2009	2009
	Notes	£ million	£ million	£ million
Revenue	6	583.6	499.8	1,023.9
Cost of sales		(237.1)	(194.5)	(396.0)
Gross profit		346.5	305.3	627.9
Distribution costs		(142.5)	(131.4)	(251.5)
Administrative expenses		(74.2)	(68.1)	(123.9)
Other income		0.9	7.8	9.6
Operating profit	6	130.7	113.6	262.1
Net finance costs
- Finance cost		(5.1)	(8.0)	(18.5)
- Finance income		0.1	0.1	0.4
Profit before taxation		125.7	105.7	244.0
Taxation	9	(38.3)	(33.8)	(75.6)
Profit for the period		87.4	71.9	168.4

 

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	32.49	26.76	62.67
Diluted	8	32.33	26.69	62.42

 

 

Group Statement of Comprehensive Income

For the six months ended 30 June 2010 (unaudited)

 

	6 months	6 months	Year
	ended	ended	ended
	30 Jun	30 Jun	31 Dec
	2010	2009	2009
	£ million	£ million	£ million
Profit for the period	87.4	71.9	168.4
Other comprehensive income
Actuarial (losses)/gains on retirement benefits	(1.7)	6.3	(2.1)
Movement in deferred tax on pension liability	0.5	(1.8)	0.6
Cashflow hedges (net of deferred tax)	(4.1)	14.9	20.4
Net exchange gains/(losses) offset in reserves	33.3	(47.2)	(30.2)
Other comprehensive income/(loss) for the period, net of tax	28.0	(27.8)	(11.3)
Total comprehensive income for the period	115.4	44.1	157.1

 

 

Group Balance Sheet (Company Number: SC177553)

As at 30 June 2010 (unaudited)

 

		30 Jun	30 Jun	31 Dec
		2010	2009	2009
	Notes	£ million	£ million	£ million
Non-current assets
Goodwill		52.8	49.7	51.3
Other intangible assets		15.0	15.9	15.5
Property, plant and equipment	10	772.4	703.7	713.0
Deferred tax asset		6.6	4.8	6.6
		846.8	774.1	786.4
Current assets
Inventories		106.4	82.9	86.3
Trade and other receivables		297.3	219.0	223.3
Cash and cash equivalents	5	31.5	16.3	22.2
Current tax assets		4.2	-	3.9
		439.4	318.2	335.7
Total assets		1,286.2	1,092.3	1,122.1
Current liabilities
Borrowings	11	(53.5)	(26.8)	(17.7)
Derivative financial instruments		(0.9)	(3.0)	-
Trade and other payables		(300.6)	(206.6)	(219.9)
Current tax liabilities		(60.9)	(43.7)	(52.6)
		(415.9)	(280.1)	(290.2)
Non-current liabilities
Borrowings	11	(137.5)	(276.7)	(180.0)
Derivative financial instruments		(11.3)	(11.6)	(6.7)
Deferred tax liabilities		(27.3)	(33.0)	(36.1)
Retirement benefit obligation	13	(4.4)	(1.2)	(5.8)
Provisions		(0.2)	(0.2)	__(0.2)
		(180.7)	(322.7)	(228.8)
Total liabilities		(596.6)	(602.8)	(519.0)
Net assets		689.6	489.5	603.1
Shareholders' equity
Share capital		54.8	54.6	54.7
Share premium		14.2	11.5	13.3
Treasury shares		(49.6)	(25.9)	(25.8)
Capital redemption reserve		0.1	0.1	0.1
Hedging reserve (net of deferred tax)		(8.8)	(10.2)	(4.7)
Foreign exchange reserve		83.0	32.7	49.7
Retained earnings		595.9	426.7	515.8
Total shareholders' equity		689.6	489.5	603.1

 

 

Group Cash Flow Statement

For the six months ended 30 June 2010 (unaudited)

 

		6 months	6 months	Year
		ended	ended	ended
		30 Jun	30 Jun	31 Dec
		2010	2009	2009
	Notes	£ million	£ million	£ million
Cash flows from operating activities
Cash generated from operations	4	208.3	199.3	430.8
Tax paid		(33.3)	(29.7)	(60.1)
Net cash generated from operating activities		175.0	169.6	370.7
Cash flows from investing activities
Acquisitions (net of cash acquired)		-	(4.2)	(4.2)
Purchases of property, plant and equipment (PPE)		(103.6)	(97.4)	(160.9)
Proceeds from sale of PPE		3.5	11.9	15.4
Net cash used in investing activities		(100.1)	(89.7)	(149.7)
Cash flows from financing activities
Net proceeds from issue of ordinary shares		1.0	1.4	3.4
Increase in long-term loans		105.9	73.7	89.1
Repayment of long-term loans		(123.8)	(124.1)	(256.2)
Net movement in short-term loans		(1.4)	(0.2)	3.9
Interest received		0.1	0.1	0.4
Interest paid		(5.0)	(8.2)	(19.1)
Dividends paid to shareholders		(22.1)	(16.9)	(28.6)
Purchase of treasury shares		(27.2)	(8.4)	(8.4)
Net cash used in financing activities		(72.5)	(82.6)	(215.5)
Net increase/(decrease) in cash and cash equivalents		2.4	(2.7)	5.5
Cash and cash equivalents at beginning of the period		13.5	10.3	10.3
Exchange gain/(loss) on cash and cash equivalents		0.1	(1.2)	(2.3)
Cash and cash equivalents at end of the period	5	16.0	6.4	13.5
Reconciliation of net cash flow to movement in net debt For the six months ended 30 June 2010 (unaudited)
		6 months	6 months	Year
		ended	ended	ended
		30 Jun	30 Jun	31 Dec
		2010	2009	2009
	Notes	£ million	£ million	£ million
Increase/(decrease) in cash and cash equivalents		2.4	(2.7)	5.5
Cash outflow from movement in debt		19.3	50.6	163.2
Changes in net debt arising from cash flows		21.7	47.9	168.7
Exchange (loss)/gain		(5.7)	28.9	19.8
Movement in net debt in period		16.0	76.8	188.5
Net debt at beginning of period		(175.5)	(364.0)	(364.0)
Net debt at end of period	11	(159.5)	(287.2)	(175.5)

 

 

Group statement of changes in equity

For the six months ended 30 June 2010 (unaudited)

 

As at 30 June 2010

 

	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 2010	54.7	13.3	(25.8)	0.1	(4.7)	49.7	515.8	603.1
Profit for the period	-	-	-	-	-	-	87.4	87.4
Other comprehensive income:
Fair value losses on foreign currency cash flow hedge	-	-	-	-	(0.5)	-	-	(0.5)
Transfers from hedging reserve to property, plant and equipment	-	-	-	-	0.1	-	-	0.1
Fair value losses on interest rate swaps	-	-	-	-	(5.1)	-	-	(5.1)
Currency translation differences	-	-	-	-	-	33.3	-	33.3
Deferred tax on items taken to or transferred from equity	-	-	-	-	1.4	-	-	1.4
Actuarial losses on retirement benefits(net of tax)	-	-	-	-	-	-	(1.2)	(1.2)
Total comprehensive income for the period ended 30 June 2010	-	-	-	-	(4.1)	33.3	86.2	115.4
Transactions with owners:
Purchase of treasury shares(Note (ii))	-	-	(27.2)	-	-	-	-	(27.2)
Credit in respect of employee share awards	-	-	-	-	-	-	10.3	10.3
Issue of ordinary shares to employees under share option schemes	-	-	3.4	-	-	-	(3.4)	-
Current tax on items taken to or transferred from equity	-	-	-	-	-	-	1.4	1.4
Deferred tax on items taken to or transferred from equity	-	-	-	-	-	-	7.7	7.7
New share capital subscribed (Note (i))	0.1	0.9	-	-	-	-	-	1.0
Dividends paid during the period	-	-	-	-	-	-	(22.1)	(22.1)
	0.1	0.9	(23.8)	-	-	-	(6.1)	(28.9)
Balance at 30 June 2010	54.8	14.2	(49.6)	0.1	(8.8)	83.0	595.9	689.6

 

(i)	During the period 408,998 Ordinary shares of 20 pence each have been issued at prices ranging from £1.17 to £6.46 to satisfy the exercise of options under the Savings-Related Share Option Schemes ('Sharesave') and Executive Share Option Schemes by eligible employees. In addition 213,406 shares were allotted at par to US participants in the Long-Term Incentive Plan.
(ii)	During the period 2,286,161 Ordinary shares of 20 pence each were acquired in the open market at prices ranging from £11.52 to £12.41 by the Aggreko Employee Benefit Trust. These shares were acquired using funds provided by Aggreko plc to meet its obligation under the Long-term Incentive Arrangements.

 

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)
Deferred tax on items taken to or transferred from equity	-	-	-	-	(5.8)	-	-	(5.8)
Actuarial gains on retirement benefits (net of tax)	-	-	-	-	-	-	4.5	4.5
Total comprehensive income for the period ended 30 June 2009	-	-	-	-	14.9	(47.2)	76.4	44.1
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)	-
Current tax on items taken to or transferred from equity	-	-	-	-	-	-	0.4	0.4
Deferred tax on items taken to or transferred from equity	-	-	-	-	-	-	(0.5)	(0.5)
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)	-	-	-	(15.5)	(19.4)
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.

 

 

Notes to the Interim Accounts

For the six months ended 30 June 2010 (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 2010.

 

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 2009 were approved by the Board on 4 March 2010 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 reviewed by the Group's auditors, whose report is on page 27.

 

 

2 Basis of preparation

 

The condensed consolidated interim financial information for the six months ended 30 June 2010 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 2009, 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 2009, 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.

 

a) New and amended standards adopted by the Group

 

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2010:

 

IFRS 3 (revised), 'Business combinations', and consequential amendment to IAS 27, 'Consolidated and separate financial statements', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. There has been no impact of IFRS 3 (revised) and IAS 27 (revised) on the current period.

 

b) Standards, amendments and interpretations to existing standards effective in 2010 but not relevant to the Group:

 

·; IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the Group, as it has not made any non-cash distributions.

·; IFRIC 18, 'Transfers of assets from customers', effective for transfer of assets received on or after 1 July 2009. This is not relevant to the Group as it has not received any assets from customers.

·; Additional exemptions for first-time adopters' (Amendment to IFRS 1) was issued in July 2009. The amendments are required to be applied for annual periods beginning on or after 1 January 2010. This is not relevant to the Group, as it is an existing IFRS preparer.

·; Improvements to International Financial Reporting Standards 2009 were issued in April 2009. The effective dates vary standard by standard but most are effective 1 January 2010.

 

c) The following new standards, new interpretations and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2010 and have not been early adopted:

 

·; IFRS 9, 'Financial instruments', issued in December 2009. This addresses the classification and measurement of financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption only when endorsed by the EU. The Group is yet to assess IFRS 9's full impact however initial indications are that it will not have a material impact on the Group.

·; Revised IAS 24, 'Related party disclosures', issued in November 2009. It supersedes IAS 24, 'Related party disclosures', issued in 2003. The revised IAS 24 is required to be applied from 1 January 2011. Earlier application, in whole or in part, is permitted.

·; 'Classification of rights issues' (Amendment to IAS 32), issued in October 2009. For rights issues offered for a fixed amount of foreign currency, current practice appears to require such issues to be accounted for as derivative liabilities. The amendment states that if such rights are issued pro rata to all the entity's existing shareholders in the same class for a fixed amount of currency, they should be classified as equity regardless of the currency in which the exercise price is denominated. The amendment should be applied for annual periods beginning on or after 1 February 2010. Earlier application is permitted.

·; 'Prepayments of a minimum funding requirement' (Amendments to IFRIC14), issued in November 2009. 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 the problem. The amendments are effective for annual periods beginning 1 January 2011. Earlier application is permitted. The amendments should be applied retrospectively to the earliest comparative period presented.

·; IFRIC 19, 'Extinguishing financial liabilities with equity instruments'. This clarifies the requirements of IFRSs when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity's shares or other equity instruments to settle the financial liability fully or partially. The interpretation is effective for annual periods beginning on or after 1 July 2010. Earlier application is permitted.

·; Improvements to International Financial Reporting Standards 2010 were issued in May 2010. The effective dates vary standard by standard but most are effective 1 January 2010.

 

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
	2010	2009	2009
	£ million	£ million	£ million
Profit for the period	87.4	71.9	168.4
Adjustments for:
Tax	38.3	33.8	75.6
Depreciation	77.4	74.9	148.2
Amortisation of intangibles	1.4	1.4	2.7
Finance income	(0.1)	(0.1)	(0.4)
Finance cost	5.1	8.0	18.5
Profit on sale of PPE	(0.9)	(7.8)	(9.6)
Share based payments	10.3	4.5	9.2
Changes in working capital (excluding the effects of exchange differences on consolidation):
(Increase)/decrease in inventories	(16.6)	8.6	7.5
(Increase)/decrease in trade and other receivables	(64.0)	32.4	35.2
Increase/(decrease) in trade and other payables	70.0	(28.3)	(24.5)
	_____	_____	_____
Cash generated from operations	208.3	199.3	430.8

 

 

5 Cash and cash equivalents

 

	30 Jun	30 Jun	31 Dec
	2010	2009	2009
	£ million	£ million	£ million
Cash at bank and in hand	31.2	15.7	21.7
Short-term bank deposits	0.3	_0.6	0.5
	31.5	16.3	22.2
Cash and bank overdrafts include the following for the purposes of the cashflow statement:
	30 Jun	30 Jun	31 Dec
	2010	2009	2009
	£ million	£ million	£ million
Cash and cash equivalents	31.5	16.3	22.2
Bank overdrafts (Note 11)	(15.5)	(9.9)	(8.7)
	16.0	6.4	13.5

 

 

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
	2010	2009	2009		2010	2009	2009		2010	2009	2009
	£ million	£ million	£ million		£ million	£ million	£ million		£ million	£ million	£ million
Middle East & South East Europe	48.7	42.6	90.8		-	-	0.1		48.7	42.6	90.7
Europe	76.4	79.5	158.9		-	-	-		76.4	79.5	158.9
North America	115.3	94.1	197.7		0.3	-	0.1		115.0	94.1	197.6
International Local	85.8	48.5	97.0		0.8	-	0.2		85.0	48.5	96.8
Local business	326.2	264.7	544.4		1.1	-	0.4		325.1	264.7	544.0
International Power Projects	259.2	235.7	481.0		0.7	0.6	1.1		258.5	235.1	479.9
Eliminations	(1.8)	(0.6)	(1.5)		(1.8)	(0.6)	(1.5)		___-	-	___-
Group	583.6	499.8	1,023.9		___-	-	___-		583.6	499.8	1,023.9

 

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

 

(b) Profit by segment

 

	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
	2010	2009	2009		2010	2009	2009		2010	2009	2009
	£ million	£ million	£ million		£ million	£ million	£ million		£ million	£ million	£ million
Middle East & South East Europe	11.5	9.9	22.5		-	-	(0.1)		11.5	9.9	22.4
Europe	2.5	4.5	13.0		(0.1)	(0.1)	(0.1)		2.4	4.4	12.9
North America	15.6	11.6	35.7		(0.9)	(0.8)	(1.6)		14.7	10.8	34.1
International Local	23.9	10.6	24.1		(0.4)	(0.3)	(0.6)		23.5	10.3	23.5
Local business	53.5	36.6	95.3		(1.4)	(1.2)	(2.4)		52.1	35.4	92.9
International Power Projects	77.7	70.4	159.7		___-	-	(0.1)		77.7	70.4	159.6
Group	131.2	107.0	255.0		(1.4)	(1.2)	(2.5)		129.8	105.8	252.5

 

	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
	2010	2009	2009		2010	2009	2009
	£ million	£ million	£ million		£ million	£ million	£ million
Middle East & South East Europe	0.2	(0.1)	(0.1)		11.7	9.8	22.3
Europe	0.9	6.3	7.0		3.3	10.7	19.9
North America	1.4	1.6	2.7		16.1	12.4	36.8
International Local	(0.1)	-	0.1		23.4	10.3	23.6
Local business	2.4	7.8	9.7		54.5	43.2	102.6
International Power Projects	(1.5)	-	(0.1)		76.2	70.4	159.5
Group	0.9	7.8	9.6		130.7	113.6	262.1
Finance costs - net					(5.0)	(7.9)	(18.1)
Profit before taxation					125.7	105.7	244.0
Taxation					(38.3)	(33.8)	(75.6)
Profit for the period					87.4	71.9	168.4

 

(c) Depreciation and amortisation by segment

 

					6 months	6 months	Year
					ended	ended	ended
					30 Jun	30 Jun	31 Dec
					2010	2009	2009
					£ million	£ million	£ million
Middle East & South East Europe					8.9	8.1	16.3
Europe					10.3	12.7	24.9
North America					14.0	15.2	28.4
International Local					9.2	7.9	16.1
Local business					42.4	43.9	85.7
International Power Projects					36.4	32.4	65.2
Group					78.8	76.3	150.9

 

(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
					2010	2009	2009
					£ million	£ million	£ million
Middle East & South East Europe					12.6	8.5	11.9
Europe					9.7	5.7	7.9
North America					12.5	8.4	24.4
International Local					21.2	12.7	21.0
Local business					56.0	35.3	65.2
International Power Projects					47.6	65.6	99.2
Group					103.6	100.9	164.4

 

(i)	Capital expenditure comprises additions of property, plant and equipment (PPE) of £103.6 million (30 June 2009: £97.4 million, 31 December 2009: £160.9 million), acquisitions of PPE of £nil (30 June 2009: £1.6 million, 31 December 2009: £1.4 million) and acquisitions of other intangible assets of £nil (30 June 2009: £1.9 million, 31 December 2009: £2.1 million).
(ii)	The net book value of total Group disposals of PPE during the period were £2.6 million (30 June 2009: £4.1 million, 31 December 2009: £5.8 million).

 

(e) Total assets by segment

 

					6 months	6 months	Year
					ended	ended	ended
					30 Jun	30 Jun	31 Dec
					2010	2009	2009
					£ million	£ million	£ million
Middle East & South East Europe					124.3	105.1	106.1
Europe					155.0	161.0	148.1
North America					241.8	208.4	222.2
International Local					166.1	122.5	114.1
Local business					687.2	597.0	590.5
International Power Projects					588.2	490.5	521.1
					1,275.4	1,087.5	1,111.6
Deferred and current tax asset					10.8	4.8	10.5
					______	______	______
Total assets per balance sheet					1,286.2	1,092.3	1,122.1

 

 

7 Dividends

 

The dividends paid in the period were:

 

	6 months	6 months	Year
	ended	ended	ended
	30 Jun	30 Jun	31 Dec
	2010	2009	2009
Total dividend (£ million)	22.1	16.9	28.6
Dividend per share (pence)	8.23	6.28	10.65

 

An interim dividend in respect of 2010 of 6.55 pence (2009: 4.37 pence), amounting to a total dividend of £17.5 million (2009: £11.8 million) was proposed 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
	2010	2009	2009
Profit for the period (£ million)	87.4	71.9	168.4
Weighted average number of ordinary shares in issue (million)	269.0	268.6	268.7
Basic earnings per share (pence)	32.49	26.76	62.67

 

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
	2010	2009	2009
Profit for the period (£ million)	87.4	71.9	168.4
Weighted average number of ordinary shares in issue (million)	269.0	268.6	268.7
Adjustment for share options (million)	1.3	0.7	1.0
Diluted weighted average number of ordinary shares in issue (million)	270.3	269.3	269.7
Diluted earnings per share (pence)	32.33	26.69	62.42

 

 

9 Taxation

 

The taxation charge for the period is based on an estimate of the Group's expected annual effective rate of tax for 2010 based on prevailing tax legislation at 30 June 2010. This is currently estimated to be 30.5% (2009: 32.0%).

 

 

10 Property, plant and equipment

Six months ended 30 June 2010

 

		Short		Vehicles,
	Freehold	leasehold	Rental	plant &
	properties	properties	fleet	equipment	Total
	£ million	£ million	£ million	£ million	£ million
Cost
At 1 January 2010	40.2	13.8	1,379.0	65.7	1,498.7
Exchange adjustments	0.7	0.4	64.8	0.8	66.7
Additions	1.7	0.5	99.1	2.3	103.6
Disposals	-	-	(22.3)	(0.7)	(23.0)
At 30 June 2010	42.6	14.7	1,520.6	68.1	1,646.0
Accumulated depreciation
At 1 January 2010	12.7	6.7	718.7	47.6	785.7
Exchange adjustments	0.5	0.1	29.7	0.6	30.9
Charge for the year	0.9	0.6	72.3	3.6	77.4
Disposals	-	_ -	(19.8)	(0.6)	(20.4)
At 30 June 2010	14.1	7.4	800.9	51.2	873.6
Net book values
At 30 June 2010	28.5	7.3	719.7	16.9	772.4
At 31 December 2009	27.5	7.1	660.3	18.1	713.0
Six months ended 30 June 2009
		Short		Vehicles,
	Freehold	leasehold	Rental	plant &
	properties	properties	fleet	equipment	Total
	£ million	£ million	£ million	£ million	£ million
Cost
At 1 January 2009	37.9	11.9	1,382.8	64.4	1,497.0
Exchange adjustments	(3.0)	(1.0)	(131.0)	(2.4)	(137.4)
Additions	1.7	1.3	91.7	2.7	97.4
Acquisitions	-	-	1.6	-	1.6
Disposals	-	-	(40.8)	(0.6)	(41.4)
At 30 June 2009	36.6	2.2	1,304.3	64.1	1,417.2
Accumulated depreciation
At 1 January 2009	11.7	5.6	684.3	43.4	745.0
Exchange adjustments	(1.1)	(0.3)	(65.6)	(2.1)	(69.1)
Charge for the year	0.7	0.8	70.0	3.4	74.9
Disposals	-	-	(36.7)	(0.6)	(37.3)
At 30 June 2009	11.3	6.1	652.0	44.1	713.5
Net book values
At 30 June 2009	25.3	6.1	652.3	20.0	703.7
At 31 December 2008	26.2	6.3	698.5	21.0	752.0

 

11 Borrowings

	30 Jun	30 Jun	31 Dec
	2010	2009	2009
	£ million	£ million	£ million
Non-current
Bank borrowings	137.5	276.7	180.0
Current
Bank overdrafts	15.5	9.9	8.7
Bank borrowings	38.0	16.9	9.0
	53.5	26.8	17.7
Total borrowings	191.0	303.5	197.7
Short-term deposits	(0.3)	(0.6)	(0.5)
Cash at bank and in hand	(31.2)	(15.7)	(21.7)
Net borrowings	159.5	287.2	175.5
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
	2010	2009	2009
	£ million	£ million	£ million
Within 1 year, or on demand	53.5	26.8	17.7
Between 1 and 2 years	109.0	2.6	151.1
Between 2 and 3 years	28.5	246.8	-
Between 3 and 4 years	-	-	28.9
Between 4 and 5 years	-	27.3	-
	191.0	303.5	197.7

 

 

12 Capital commitments

 

	30 Jun	30 Jun	31 Dec
	2010	2009	2009
	£ million	£ million	£ million
Contracted but not provided for (property, plant and equipment)	19.2	22.5	8.3

 

 

13 Pension commitments

 

Analysis of movement in retirement benefit obligation in the period:

 

	30 Jun	30 Jun	31 Dec
	2010	2009	2009
	£ million	£ million	£ million
At start of period	(5.8)	(8.0)	(8.0)
Income statement expense	(1.2)	(0.8)	(1.5)
Contributions	4.3	1.3	5.8
Net actuarial (loss)/gain	(1.7)	6.3	(2.1)
At end of period	(4.4)	(1.2)	(5.8)

 

The net actuarial loss of £1.7 million in the period is mainly driven by a decrease in the discount rate assumption used to value the retirement benefit obligation which decreased from 5.7% at 31 December 2009 to 5.4% at 30 June 2010.

 

 

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 Events occurring after the balance sheet date

 

A number of changes to the UK corporation tax system were announced in the June 2010 Budget Statement. The Finance (No 2) Act 2010, which was substantively enacted on 20 July 2010, includes legalisation to reduce the main rate of corporation tax from 28% to 27% from 1 April 2011. Further reductions to the main rate are proposed to reduce the rate by 1% per annum to 24% by 1 April 2014. The changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements. The changes are not expected to have a material impact on the Group.

 

 

Statement of Directors' Responsibilities

 

The Directors confirm that to the best of their knowledge, these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report 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 2009.

 

 

By order of the Board

 

 

Rupert Soames

Chief Executive

 

Angus Cockburn

Finance Director

 

 

25 August 2010

 

 

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 2010, 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 2010 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 2010