13th Sep 2007 07:01
Aggreko PLC13 September 2007 Aggreko plc INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2007 Aggreko plc, the world leader in the supply of temporary power, temperaturecontrol and oil-free compressed air services, announces its interim results forthe six months to 30 June 2007. Movement Six months to Six months to As Constant 30 June 2007 30 June 2006 reported Currency Group revenue £317.5m £238.0m 33.4% 42.8% Trading profit (1) £50.9m £30.7m 65.5% 83.1% Profit before tax £47.5m £29.6m 60.3% Earnings per share 11.64p 7.14p 62.9% Dividend per share 3.04p 2.53p 20.0% (1) Trading profit represents operating profit before gain on sale of property, plant and equipment. Key points include: • 33% increase in revenues (43% in constant currency) to £317.5m, driven by record levels of investment in new fleet and the successful integration of the GE Energy Rentals acquisition. • 65% increase in trading profit (83% in constant currency). • Demand for International Power Projects extremely strong, with revenues up 74% in constant currency and excluding pass-through fuel - Margins boosted by exceptionally high levels of utilisation. • Local businesses increase revenues by 30% in constant currency, with strong performances in Middle East, Australia, South America and Europe. Philip Rogerson, Chairman, commented: "I am pleased to report that Aggreko has produced another very strong set ofresults for the first half of 2007. The most notable performance was in AggrekoInternational, where the strong demand we have seen in the last few yearscontinues unabated, and revenues grew by 68%; our European business grewrevenues by over 30%, and in North America revenues grew by 14%." "We now anticipate that Aggreko's performance for the year will be well ahead ofmarket expectations." Rupert Soames, Chief Executive, commented: "The growth in our revenues and earnings is the result of strong demand, greatlyincreased investment in new rental fleet, and the successful integration of theGE Energy Rentals business, which we acquired in December 2006. In many of the90 countries in which we operate, there are power shortages caused by demandoutstripping supply and ageing infrastructure; these issues will not be resolvedquickly, and we foresee a growing need for temporary power. Having consolidatedour position as the world's leading provider of temporary power, with over 4,000megawatts of generating capacity, Aggreko is well-positioned to benefit fromthis growing demand." - ENDS - Enquiries to : Rupert Soames / Angus CockburnAggreko plcTel. 0141 225 5900 Neil Bennett/ Charlotte WalshMaitlandTel: 020 7379 5151 Chairman's Statement Introduction I am pleased to report that Aggreko has produced another very strong set ofresults for the first half of 2007. The most notable performance was in ourInternational business, where the strong demand we have seen in the last fewyears has continued unabated. It is also encouraging to report that our Europeanbusiness grew strongly in the first half, while our North American business grewrevenues by 14% in constant currency(1). Encouraging progress has also been made in integrating the business of GE EnergyRentals, which we acquired on 4 December 2006. The integration in terms ofpeople, locations and systems is essentially complete and the operations of thetwo businesses are now fully combined. The rebranding and servicing of theacquired fleet is also progressing well with the bulk of this work likely to becomplete by the end of the year. Trading Reported revenue in the first half at £317.5 million (2006: £238.0 million) was33% higher than 2006 while revenue, in constant currency and excludingpass-through fuel(2) from our contracts in Sri Lanka and Uganda, increased by41%. Pre-tax profits rose to £47.5 million, an increase of 60% and basic earnings pershare increased by 63% to 11.64 pence. Diluted earnings per share increased by62% to 11.50 pence. During the first six months of the year, Aggreko's capital expenditure amountedto £84.3 million, compared with £70.6 million in the same period last year. Itis expected that capital expenditure for the full year will be around £185million compared with £128.0 million in 2006. This increase in capitalexpenditure will support revenue growth and reflects the continued high levelsof utilisation across the Group, most notably in our International business. Largely as a consequence of the higher level of capital expenditure, net debtincreased during the period by £18.5 million to £223.7 million; this compareswith £130.2 million at 30 June 2006. Aggreko's financial position remainsstrong, as measured by net assets of £247.4 million (30 June 2006: £213.0million) and interest cover of 9.3 times (2006: 11.5 times). Dividend Taking account of the strong trading performance, the Board has decided todeclare an interim dividend of 3.04 pence per share, which is an increase of 20%over the 2006 interim dividend. This interim dividend will be paid on 16November 2007 to shareholders on the register at 19 October 2007, with anex-dividend date of 17 October 2007. Board Changes I am delighted to welcome two new Non-Executive Directors to the Board ofAggreko. David Hamill joined the Board as a Non-Executive Director on 1 May2007. David, who is Chairman and Chief Executive of ICI Paints, has considerableexperience in businesses which, like Aggreko, operate on a global basis. RobertMacLeod joined the Board of Aggreko on 10 September 2007. Robert, a CharteredAccountant who is Group Finance Director of WS Atkins Plc, has excellentfinancial experience gained in an international environment. Outlook We have made a good start to the second half of 2007 with encouraging levels ofactivity. In North America, after a cold start to the summer season, trading in July andAugust improved as temperatures increased. We are still seeing growth in demand,although this could change quite rapidly and we remain watchful for any impactcurrent macro-economic events might have on our customers. We have good momentumgoing into the last four months of the year, and we believe that, short of amajor deterioration in market conditions, performance in the second half will bewell ahead of last year. In Europe, the key summer trading period began slowly due to poor weather acrossmany parts of Europe in May, June and July. The business has however regainedmomentum in recent weeks and we expect performance for the full year to be wellahead of the previous year. In Aggreko International's Local business the strong market conditions arelikely to continue, and we expect continued year on year growth in the secondhalf, albeit at a rather slower rate than in the first half. The strong demand we have seen in the International Power Projects businesscontinues unabated. With the new contracts secured in the first half of 2007,and with many existing contracts extending, we anticipate another strongperformance from this business in the second half. Overall, we now anticipate that Aggreko's performance for the year will be wellahead of market expectations. Philip G RogersonChairman13 September 2007 (1) Constant currency takes account of the impact of translational exchange movements in respect of our businesses which operate in currency other than sterling. (2) Pass-through fuel revenue relates to two contracts in Sri Lanka and Uganda in our International Projects business where we provide fuel on a pass-through basis. Business Review Group Trading Performance Aggreko delivered an exceptionally strong trading performance during the firsthalf of 2007, notwithstanding adverse currency movements. Group revenue, asreported, was up 33% on 2006 at £317.5 million (2006: £238.0 million), whileGroup trading profit of £50.9 million (2006: £30.7 million) increased by 65%.Group trading margin improved from 12.9% in 2006 to 16.0% in 2007 and return oncapital employed, measured on a rolling 12-month basis, improved from 21.1% in2006 to 24.4%. Group profit before tax grew by 60% to £47.5 million (2006: £29.6 million) andprofit after tax increased by 63% to £30.9 million (2006: £19.0 million).Earnings per share increased by 63% to 11.64 pence (2006: 7.14 pence). The effect of currency movements in the period - mainly the US dollar exchangerate - has been to decrease revenue by £15.6 million and trading profit by £2.9million on a like-for-like basis. Pass-through fuel accounted for £28.1 million(2006: £18.3 million) of reported revenue of £317.5 million. Excluding the impact of the currency movements as well as pass-through fuelrevenue, Group revenue grew by 41% (as reported: 33%) and trading profit by 83%(as reported: 65%). On the same basis, trading margin in the first half was17.2% (as reported: 16.0%) which compares with 13.7% in 2006 (as reported:12.9%). 2007 2006 Movement £m £m As reported Constant Currency Revenue 317.5 238.0 33.4% 42.8%Revenue excl pass-through fuel 289.4 219.7 31.7% 40.7%Trading profit 50.9 30.7 65.5% 83.1%Operating profit 53.3 32.4 64.1% 81.3%Net interest expense (5.8) (2.8) (104.3)%Profit before tax 47.5 29.6 60.3%Taxation (16.6) (10.6) (55.9)%Profit after tax 30.9 19.0 62.8%Basic earnings per share (pence) 11.64 7.14 62.9% The Group's growth was supported by substantial investment in new fleet duringthe period. Total capital expenditure for the period was £84.3 million, £13.7million up on the prior year. Update on the acquisition of GE Energy Rentals The Group acquired the Energy Rentals business of General Electric (GE-ER) inDecember 2006. This acquisition increased our world-wide power and temperaturecontrol fleet by about 30%, and the integration of the two businesses is nowvirtually complete. All the organisational challenges associated withintegrating the employees from GE Energy Rentals into the Aggreko business arebehind us and we are delighted by the calibre of our new colleagues and thespeed with which they assimilated themselves into Aggreko. All the majorproperty changes have been executed and the GE business was very quicklytransferred onto Aggreko's information technology platform. In terms of theacquired fleet, most has now been re-branded and serviced and we expect tocomplete the remaining work by the end of the year. As at August 2007, over 50%of the GE-ER power fleet and 55% of the chiller fleet was on rent. The terms of the acquisition allowed GE to deliver to Aggreko, subject tocertain conditions, further equipment to a maximum potential consideration of£14.9 million during 2007. So far, £6.7 million of this deferred considerationhas been paid. We are now confident that the returns from this acquisition willexceed our original expectations as a result of lower-than-expected acquisitionand integration costs and higher utilisation of the acquired fleet. Regional Trading Performance as reported in £ million Revenue Trading ProfitManagement Geography/Line 2007 2006 Change 2007 2006 ChangeGroup of Business £ million £ million % £ million £ million % Local business North America USA & Canada 74.8 72.2 3.6% 11.2 12.3 (9.3)%Europe Northern Europe 39.5 28.9 36.7% 3.9 0.2 1,963.9% Continental Europe 37.2 29.9 24.6% 1.1 0.3 257.9% InternationalLocalBusinesses Middle East, 53.3 35.2 51.3% 10.7 7.5 42.5% Asia-Pacific, South AmericaSub-totalLocal business 204.8 166.2 23.2% 26.9 20.3 32.4% International Power Projects International International 84.6 53.5 58.1% 23.0 9.8 132.0% Power Projects excl. pass-through fuelInternational Pass-through fuel 28.1 18.3 1.0 0.6 Sub-total International Power Projects 112.7 71.8 56.9% 24.0 10.4 129.9% Group 317.5 238.0 33.4% 50.9 30.7 65.5% North America 74.8 72.2 3.6% 11.2 12.3 (9.3)% Europe 76.7 58.8 30.6% 5.0 0.5 894.9% International 166.0 107.0 55.1% 34.7 17.9 93.5% Group 317.5 238.0 33.4% 50.9 30.7 65.5%Group excludingpass-through fuel 289.4 219.7 31.7% 49.9 30.1 65.2% The performance of each of these regions in the first half is described below: Local business: North America 2007 2006 Change $ million $ million % Revenue 147.4 129.3 13.9%Trading profit 22.0 22.0 -% Our Local business in North America continued to make progress in the first halfwith revenue increasing by 14% to $147.4 million and trading profit at a similarlevel to last year. This led to a decrease in trading margin to 14.9% (2006:17.0%), mainly as a result of the additional depreciation of the GE-ER fleet. Most areas performed well in the first half, although revenues in the Gulf areaand in our cooling tower business, both of which benefited from thereconstruction work in the aftermath of the 2005 hurricane season, were belowlast year. The Great Lakes and West areas, in particular, performed well. In terms of business mix, rental revenue grew by 15% and services revenue grewby 11%. Power revenue for the first half was 21% ahead of the prior year, whiletemperature control revenue for the period was 13% ahead of last year. Oil-freeair revenue was 6% ahead of the prior period. As we said at the time of the acquisition, the main challenge in North Americais putting to work the 45% increase in power fleet arising from the GE EnergyRentals acquisition. Considerable effort has been made during the first half toget the equipment re-branded and serviced in time for the start of our keysummer trading period and we are well positioned to take advantage of anyopportunities that may arise in the second half. Local business: Europe Revenue 2007 2006 Change • million • million % Northern Europe 58.6 42.1 39.2%Continental Europe 55.1 43.4 26.7% --------- --------- ---------Total Europe 113.7 85.5 33.0% Trading Profit 2007 2006 Change • million • million % Northern Europe 5.8 0.2 2,001.5%Continental Europe 1.7 0.5 264.4% --------- --------- ---------Total Europe 7.5 0.7 913.0% Our European businesses continued the momentum gained last year and made goodprogress in the first half with revenues increasing by 33% and trading profitincreasing by €6.8 million. Trading margin increased to 6.6% (2006: 0.9%). In Northern Europe, revenue of €58.6 million for the first six months was 39%higher than the prior period with revenue increasing in all areas. Thefastest-growing areas were the UK South East, with strong utility andconstruction sector growth, and our UK Events business, which undertook a numberof large contracts in the period, including Glastonbury. Rental revenue increased by 32%, with power and temperature control revenueincreasing by 41% and 2% respectively; revenues from oil-free air increased by12%. The small increase in temperature control revenue reflects the cool startto the summer season in June. Services revenue, which mainly comprises fuel andtransport, grew by 51%. Revenue growth was driven across several sectors mostnotably utilities, events and contracting. It is particularly encouraging to seethe Northern Europe trading margin increasing from 0.7% to 9.9%, notwithstandingthe large increase in lower-margin service revenues. Revenue in Continental Europe was 27% higher than the previous period at €55.1million and trading profit increased by €1.2 million over the same period lastyear. Rental revenue grew by 28%, while services revenue grew by 24%. Withinrental revenue, power increased by 34%, while temperature control and oil-freeair increased by 16% and 18% respectively. Included within the headline numbersare revenues relating to major power projects in Russia and Greece. Excludingthese major projects, underlying revenues increased by 22% over the same periodlast year. Performance in most areas in Continental Europe was encouraging withparticularly strong growth in France, Spain and Italy. Across ContinentalEurope, revenues grew strongly over the prior year in most sectors. Local business: Aggreko International 2007 2006 Change $ million $ million % Revenue 105.1 63.1 66.5%Trading profit 21.0 13.4 56.8% Aggreko's International Local businesses in the Middle East, Asia, Australia,New Zealand and South America had another excellent first half. In aggregate,period-on-period revenue grew by 66% to $105.1 million, which resulted intrading profit growth of 57% to $21.0 million and trading margin of 20.0% asagainst 21.2% in 2006. Infrastructure development in the Middle East continues to drive high levels ofactivity particularly in the UAE, Saudi Arabia and Qatar; the largest sector isconstruction which continues to show strong growth. It is also encouraging tosee our temperature control revenue in the Middle East growing rapidly year onyear. In Australia the booming mining industry and work helping utilities torespond to breakdowns and emergencies has seen revenues increase by 43% overlast year. Our local business in South & Central America has been transformed by theacquisition of the GE-ER businesses in Brazil, Mexico and Chile. To Aggreko'sexisting service centres in Manaus and Macae, the GE-ER acquisition has addedCampinas, Mexico City, Santiago, Antofagasta and Puerto Monte. The additionalservice centres and strong demand in the oil & gas sector drove local businessrevenues in South & Central America to increase by 385%. In Asia, our new service centre in Hong Kong had a difficult first half, butShanghai, which opened a few months later, is performing well; we have recentlywon our first major project in China, with 9 MW to be provided to a miningproject in Yunnan. Our largest local business in the area - Singapore -continued to perform well, with revenues increasing by 26%. International Power Projects: Aggreko International 2007 2006 Change $ million $ million % Revenue (excluding pass-through fuel) 166.7 95.8 74.0%Trading profit (excluding pass-through fuel) 45.5 17.8 155.2% Trading in the first six months in our International Power Projects business hasbeen exceptionally strong with revenue, excluding pass-through fuel, growing by74% to $166.7 million and trading profits increasing by 155% to $45.5 million. The revenue growth reflects very high levels of utilisation on a fleetsignificantly larger than last year; during the period the business reached alandmark with over 1,500 MW on hire. Furthermore, there was a noticeable declinein the number of contracts de-mobilising, as many customers extended theircontracts; this had a significant impact on both revenues and margins as it cantake several months to re-deploy equipment to new contracts, during which timethe fleet is not earning revenue. The consequent high utilisation and lowerproject deployment costs resulted in exceptionally strong trading margins of27.3%, up from 18.6% in 2006. During the period we have won fourteen new contracts, including over 100 MW inYemen and 60 MW in Qatar. Our International Power Projects businesses in Africa,Middle East and Asia all delivered good growth; in aggregate during the firstsix months of 2007 we carried out power projects in a total of 49 countries andthe number of operational projects increased by over 13% over the same periodlast year. As anticipated, on a sector basis we increased our utility revenuesas a percentage of total revenue, although military revenues continued to grow. In July 2007 we announced that we had been selected as the Exclusive Supplier ofTemporary Power and Temperature Control to the Beijing 2008 Olympic Games. Atthis stage, this agreement covers sponsorship arrangements only, but as a resultof this agreement we are well-placed to negotiate a supply agreement with theChinese authorities. Outlook We have made a good start to the second half of 2007 with encouraging levels ofactivity. In North America, after a cold start to the summer season, trading in July andAugust improved as temperatures increased. We are still seeing growth in demand,although this could change quite rapidly and we remain watchful for any impactcurrent macro-economic events might have on our customers. We have good momentumgoing into the last four months of the year, and we believe that, short of amajor deterioration in market conditions, performance in the second half will bewell ahead of last year. In Europe, the key summer trading period began slowly due to poor weather acrossmany parts of Europe in May, June and July. The business has however regainedmomentum in recent weeks and we expect performance for the full year to be wellahead of the previous year. In Aggreko International's Local business the strong market conditions arelikely to continue, and we expect continued year on year growth in the secondhalf, albeit at a rather slower rate than in the first half. The strong demand we have seen in the International Power Projects businesscontinues unabated. With the new contracts secured in the first half of 2007,and with many existing contracts extending, we anticipate another strongperformance from this business in the second half. Overall, we now anticipate that Aggreko's performance for the year will be wellahead of market expectations. Financial Review Currency Translation The net overall impact of exchange rates on currency translation in the firstsix months of 2007 was to decrease revenue and trading profit by £15.6 millionand £2.9 million respectively. Currency translation also gave rise to a £1.7million decrease in reserves as a result of period on period movements inexchange rates. Set out in the table below are the principal exchange ratesaffecting the Group's overseas profits and net assets. (per £ sterling) 2007 2006 Average Period Average Period End End Principal Exchange RatesUnited States dollar 1.97 2.00 1.79 1.84Euro 1.48 1.48 1.46 1.45Other Operational Exchange RatesUAE Dirhams 7.24 7.37 6.58 6.77Australian dollar 2.44 2.36 2.41 2.48(Source: Reuters) Interest The net interest charge for the first half of 2007 was £5.8 million, an increaseof £3.0 million on 2006, reflecting the higher level of net debt during theperiod. Interest cover decreased to 9.3 times from 11.5 times in 2006. Effective Tax Rate The current forecast of the effective tax rate for the full year, which has beenused in the interim accounts, is 35.0% as compared with 36.0% in the same periodlast year. This decrease in the tax rate largely reflects the change in regionalmix of profits. Dividends Based on the proposed interim dividend of 3.04 pence per ordinary share, anincrease of 20.0% as compared with the same period in 2006, dividend cover is3.8 times (30 June 2006: 2.8 times). Cashflow The net cash inflow from operations during the first six months of 2007 totalled£96.6 million (2006: £60.5 million). EBITDA (earnings before interest, taxes,depreciation and amortisation) for the period amounted to £98.5 million, up45.9% on 2006. This helped to fund capital expenditure of £84.3 million, whichwas up £13.7 million on the same period in 2006 reflecting increased investmentin our rental fleet to support the growth of the business. In addition, £6.7million of a maximum potential deferred consideration of £14.9 million was paidto GE for the delivery of additional fleet assets as part of the GE EnergyRentals acquisition in December 2006. It is pleasing to note that working capital efficiency as measured by revenue/debtors and revenue/inventories improved over the same period last year. Net debt increased by £18.5 million during the period and, at £223.7 million, is£93.5 million higher than at 30 June 2006. As a result of the increase in netdebt, gearing (net debt as a percentage of equity) at 30 June 2007 increased to91% from 61% at 30 June 2006. Net Operating Assets The net operating assets of the Group (including goodwill) at 30 June 2007totalled £502.1 million, up £119.0 million on the same period in 2006. The maincomponents of Net Operating Assets are:- £ million 2007 2006 Movement Rental Fleet 349.5 277.0 26.1%Property, Plant 42.1 38.5 9.7%Inventory 51.6 38.4 34.3%Net Trade Debtors 96.9 79.1 22.6% A key measure of Aggreko's performance is the return (expressed as operatingprofit) as a percentage of average net operating assets; we call this measureReturn on Capital Employed (ROCE). For each first half we calculate ROCE bytaking the operating profit on a rolling 12 month basis and expressing it as apercentage of the average net operating assets at June 30th, January 1st and theprevious June 30th. For the full year, we state the period's operating profit asa percentage of the average net operating assets as at December 31st, theprevious June 30th and January 1st. The average net operating assets for the 12months to 30 June 2007 were £451.8 million, up 28% on the same period in 2006,and the operating profit for the same period was £110.4 million. In the firsthalf of 2007 the ROCE increased to 24.4% compared with 21.1% for the same periodin 2006. Shareholders' Equity Shareholders' equity increased by £21.2 million to £247.4 million in the sixmonths ended 30 June 2007, represented by the net assets of the Group of £471.1million before net debt of £223.7 million. The movements in shareholders' equityare analysed in the table below: Movements in Shareholders' Equity £ million £ million As at 1 January 2007 226.2 Profit for the financial period 30.9Dividend (1) (11.1) -------- Retained earnings 19.8New share capital subscribed 0.4Purchase of own shares held under trust (4.3)Credit in respect of employee share awards 2.6Actuarial gains on retirement benefits 3.1Currency translation difference (1.7)Other(2) 1.3 -------As at 30 June 2007 247.4 ------- (1) Reflects the dividend of 4.19 pence per share (2006: 3.77 pence) that was paid during the period. (2) Other includes tax on items taken directly to reserves and movements in the hedging reserve. Shareholder information Our website can be accessed at www.aggreko.com. This contains a large amount ofinformation about our business, including a range of charts and data, which canbe down loaded for easy analysis. The website also carries copies of recentinvestor presentations, as well as Stock Exchange announcements. Rupert Soames Angus CockburnChief Executive Finance Director13 September 2007 Group Income StatementFor the six months ended 30 June 2007 (unaudited) Year ended 31 December Total Notes 6 months 6 months before Exceptional ended ended exceptional Items 30 Jun 30 Jun items (Note 5) 2007 2006 2006 2006 2006 £ million £ million £ million £ million £ million Revenue 4 317.5 238.0 540.7 - 540.7 Operatingexpenses (264.2) (205.6) (451.2) (9.2) (460.4) --------- --------- --------- ------- -------OperatingProfit 4 53.3 32.4 89.5 (9.2) 80.3 Financecosts- Interest expense (6.4) (3.2) (7.2) - (7.2)- Interest income 0.6 0.4 0.8 - 0.8 --------- --------- --------- ------- -------Profitbefore 47.5 29.6 83.1 (9.2) 73.9taxationTaxation: 8 - UK (3.6) (2.4) (6.4) 0.7 (5.7)- Overseas (13.0) (8.2) (23.5) 1.5 (22.0) --------- --------- --------- ------- -------Profit forthe period 30.9 19.0 53.2 (7.0) 46.2 --------- --------- --------- ------- ------- Dividendspaid in the period 6 11.1 10.0 16.7 - 16.7 --------- --------- --------- ------- ------- Dividendsper share (pence) 6 4.19 3.77 6.30 - 6.30 --------- --------- --------- ------- ------- Earningsper share (pence) Basic 7 11.64 7.14 20.05 (2.64) 17.41 Diluted 7 11.50 7.08 19.87 (2.62) 17.25 The above results relate to continuing operations and all profit for the periodis attributable to equity shareholders of the Company. Group Statement of Recognised Income and ExpenseFor the six months ended 30 June 2007 (unaudited) 6 months 6 months Year ended ended ended 30 Jun 30 Jun 31 Dec 2007 2006 2006 £ million £ million £ million Profit for the period 30.9 19.0 46.2Actuarial gains on retirement benefits 3.1 1.9 1.5Movement of deferred tax on pensionliability (0.9) (0.6) (0.4)Cashflow hedges (net of deferred tax) - 1.3 1.2Net exchange losses offset in reserves (1.7) (9.1) (20.5) ------- ------- -------Total recognised income for the period 31.4 12.5 28.0 ------- ------- ------- Group Balance Sheetas at 30 June 2007 (unaudited) Notes 30 Jun 30 Jun 31 Dec 2007 2006 2006 £ million £ million £ million Non-current assetsGoodwill 9 46.1 - 46.9Intangible assets 10.6 1.4 11.5Property, plant and equipment 391.6 315.5 353.8Financial assets - derivative financialinstruments 0.8 1.1 1.1Deferred tax asset 1.0 0.4 1.0 ------- ------- ------- 450.1 318.4 414.3 ------- ------- -------Current assetsInventories 51.6 38.4 41.5Trade and other receivables 156.0 121.2 153.2Financial assets - derivative financialinstruments 1.0 0.9 0.9Cash and cash equivalents 3 8.1 8.6 13.0Current tax assets 1.3 2.5 1.3 ------- ------- ------- 218.0 171.6 209.9 ------- ------- -------Total assets 668.1 490.0 624.2 ------- ------- ------- Current liabilitiesFinancial liabilities- Borrowings 10 (2.9) (56.2) (10.3)Trade and other payables (157.7) (98.2) (141.4)Current tax liabilities (11.2) (10.5) (9.4)Provisions 11 (2.6) (0.3) (5.9) ------- ------- ------- (174.4) (165.2) (167.0) ------- ------- -------Non-current liabilitiesFinancial liabilities- Borrowings 10 (228.9) (82.6) (207.9)- Derivative financial instruments (0.1) (0.1) (0.3)Deferred tax liabilities (11.2) (12.5) (9.4)Retirement benefit obligation (5.0) (15.6) (13.1)Provisions 11 (1.1) (1.0) (0.3) ------- ------- ------- (246.3) (111.8) (231.0) ------- ------- ------- Total liabilities (420.7) (277.0) (398.0) ------- ------- -------Net assets 247.4 213.0 226.2 ------- ------- -------Shareholders' equityShare capital 54.0 53.8 53.9Share premium 7.5 6.9 7.2Treasury shares (10.6) (6.5) (9.1)Capital redemption reserve 0.1 0.1 0.1Hedging reserve (net of deferred tax) 1.2 1.3 1.2Foreign exchange reserve (27.4) (14.3) (25.7)Retained earnings 222.6 171.7 198.6 ------- ------- -------Total shareholders' equity 247.4 213.0 226.2 ------- ------- ------- Group Cash Flow StatementFor the six months ended 30 June 2007 (unaudited) 6 months 6 months Year ended ended ended 30 Jun 30 Jun 31 Dec 2007 2006 2006 Notes £ million £ million £ million Cash flows from operatingactivitiesCash generated from operations 2 96.6 60.5 160.2Tax paid (11.4) (12.2) (26.2) -------- -------- -------- Net cash generated from operatingactivities 85.2 48.3 134.0 -------- -------- -------- Cash flows from investingactivitiesAcquisitions (net of cashacquired) (6.7) - (95.8)Purchases of property, plant andequipment (PPE) (84.3) (70.6) (128.0)Proceeds from sale of PPE 4.4 2.7 4.7 -------- -------- --------Net cash used in investingactivities (86.6) (67.9) (219.1) -------- -------- -------- Cash flows from financingactivitiesNet proceeds from issue ofordinary shares 0.3 0.1 0.5Net increase in borrowings 18.7 32.4 113.9Interest received 0.6 0.4 0.8Interest paid (6.1) (3.0) (6.8)Dividends paid to shareholders (11.1) (10.0) (16.7)Purchase of treasury shares (4.2) - (2.6) ------- ------------ ---------Net cash (used in)/generated fromfinancing activities (1.8) 19.9 89.1 -------- -------- -------- Net (decrease)/increase in cashand cash equivalents (3.2) 0.3 4.0Cash and cash equivalents atbeginning of the period 10.0 6.0 6.0Exchange loss on cash and cashequivalents - (0.1) - -------- -------- -------- Cash and cash equivalents at endof the period 3 6.8 6.2 10.0 -------- -------- -------- Reconciliation of net cash flow tomovement in net debtFor the six months ended 30 June2007 (unaudited) (Decrease)/increase in cash andcash equivalents (3.2) 0.3 4.0Cash inflow from movement in debt (18.7) (32.4) (113.9) -------- -------- --------- Changes in net debt arising fromcash flows (21.9) (32.1) (109.9) Exchange gains 3.4 4.8 7.6 --------- -------- -------- Movement in net debt in period (18.5) (27.3) (102.3)Net debt at beginning of period (205.2) (102.9) (102.9) --------- --------- --------- Net debt at end of period 10 (223.7) (130.2) (205.2) --------- --------- --------- Notes to the Interim AccountsFor the six months ended 30 June 2007 (unaudited) 1 Basis of preparation of interim Accounts i. This interim financial information has been prepared in accordancewith the Listing Rules of the Financial Services Authority and has been preparedin accordance with International Financial Reporting Standards (IFRS) as adoptedfor use in the European Union. The interim Accounts have been prepared on thebasis of the principal accounting policies as set out on pages 72 to 78 of theGroup's 2006 Annual Report and Accounts. As permitted, the Group has chosen notto adopt IAS 34 - Interim Financial Statements, in preparing these interimfinancial statements, and therefore this information is not wholly compliantwith International Financial Reporting Standards. ii. The results for the half years to 30 June 2007 and 30 June 2006are unaudited but have been reviewed by the Group's auditors, whose report is onpage x. iii. These interim financial statements do not comprise statutory Accountswithin the meaning of Section 240 of the Companies Act 1985. iv. The Statutory Accounts for 2006 have been delivered to the Registrar ofCompanies. The report of the auditors on those Accounts was unqualified and didnot contain a statement under either Section 237(2) or 237(3) of the CompaniesAct 1985. 2 Cashflow from operating activites 6 months 6 months Year ended ended ended 30 June 30 June 31 Dec 2007 2006 2006 £ million £ million £ million Profit for the period 30.9 19.0 46.2Adjustments for:Tax 16.6 10.6 27.7Depreciation 44.3 34.9 72.5Amortisation of intangibles 0.9 0.2 0.8Interest income (0.6) (0.4) (0.8)Interest expense 6.4 3.2 7.2Profit on sale of PPE (2.4) (1.7) (2.8)Share based payments 2.6 0.2 4.1Changes in working capital (excluding the effects of exchangedifferences on consolidation):Increase in inventories (10.6) (4.1) (5.5)Increase in trade and other receivables (5.6) (11.4) (27.6)Increase in trade and other payables 16.6 9.9 32.8Net movements in provisions forliabilities and charges (2.5) (0.6) 4.3Net retirement benefit cost - 0.7 1.3 --------- --------- --------Cash generated from operations 96.6 60.5 160.2 --------- --------- -------- 3 Cash and cash equivalents 30 Jun 30 Jun 31 Dec 2007 2006 2006 £ million £ million £ million Cash at bank and in hand 6.5 8.2 12.5Short-term bank deposits 1.6 0.4 0.5 ----- ------- -------- 8.1 8.6 13.0 ----- ------- ------- Cash and bank overdrafts include the following for the purposes ofthe cashflow statement: 30 Jun 30 Jun 31 Dec 2007 2006 2006 £ million £ million £ million Cash and cash equivalents 8.1 8.6 13.0Bank overdrafts (Note 10) (1.3) (2.4) (3.0) ------- ------- -------- 6.8 6.2 10.0 ------- ------- -------- 4 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 2007 2006 2006 2007 2006 2006 2007 2006 2006 £ million £ million £ million £ million £ million £ million £ million £ million £ millionNorthernEurope 39.5 28.9 66.1 - - - 39.5 28.9 66.1ContinentalEurope 37.2 29.9 69.6 - - - 37.2 29.9 69.6North America 74.9 72.4 159.2 0.1 0.2 0.2 74.8 72.2 159.0 Middle East,Asia-Pacific,South America 53.5 35.4 77.9 0.2 0.2 0.3 53.3 35.2 77.6 ------ ------ ------ ----- ----- ----- ------ ------ ------ Local Business 205.1 166.6 372.8 0.3 0.4 0.5 204.8 166.2 372.3InternationalPower Projects 112.8 72.5 170.1 0.1 0.7 1.7 112.7 71.8 168.4Eliminations (0.4) (1.1) (2.2) (0.4) (1.1) (2.2) - - - ------ ------ ------ ----- ----- ----- ------ ------ ------Group 317.5 238.0 540.7 - - - 317.5 238.0 540.7 ------ ------ ------ ----- ----- ----- ------ ------ ------ i. Inter-segment transfers or transactions are entered intounder the normal commercial terms and conditions that would also be available tounrelated third parties. ii. International Power Projects (IPP) is a global segmentadministered from Dubai. At the period end the assets of the International PowerProjects segment are predominantly located in the Middle East, Asia-Pacific,South America and Africa. iii. In accordance with how management monitors the businessthe results of our projects business in Europe are now included in ContinentalEurope instead of Northern Europe as previously reported. Comparative figureshave been restated but the effect is not considered material. (b) Profit by segment Trading profit Gain/(loss) on sale of PPE Operating 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 2007 2006 2006 2007 2006 2006 2007 2006 2006 £ million £ million £ million £ million £ million £ million £ million £ million £ million NorthernEurope 3.9 0.2 3.5 - 0.3 0.6 3.9 0.5 4.1ContinentalEurope 1.1 0.3 7.4 0.5 0.1 0.1 1.6 0.4 7.5North America 11.2 12.3 33.8 0.3 1.2 2.2 11.5 13.5 36.0 Middle East,Asia-Pacific,South America 10.7 7.5 15.7 0.1 - 0.1 10.8 7.5 15.8 ------ ----- ------ ----- ------- ----- ------ ----- ------ Local 26.9 20.3 60.4 0.9 1.6 3.0 27.8 21.9 63.4BusinessInternationalPower 24.0 10.4 26.3 1.5 0.1 (0.2) 25.5 10.5 26.1Projects ------ ----- ------ ----- ------- ----- ------ ----- ------ Group 50.9 30.7 86.7 2.4 1.7 2.8 53.3 32.4 89.5 ------ ----- ------ ----- ------- ----- ------ ----- ------ Exceptionalitems (Note 5) - - (9.2) ------ ----- ------Operatingprofit postexceptionalitems 53.3 32.4 80.3 Finance costs- net (5.8) (2.8) (6.4) ------ ----- ------Profit beforetaxation 47.5 29.6 73.9 Taxation (16.6) (10.6) (27.7) ------ ----- ------Profit forthe period 30.9 19.0 46.2 ------ ----- ------ 5 Exceptional items The exceptional charge in 2006 related to the acquisition of GE Energy Rentalsand comprises integration costs, redundancy and related costs, property andother costs. 6 Dividends The dividends paid in the period were: 6 months 6 months Year ended ended ended 30 Jun 30 Jun 31 Dec 2007 2006 2006 Total dividend (£ million) 11.1 10.0 16.7Dividend per share (pence) 4.19 3.77 6.30 An interim dividend in respect of 2007 of 3.04 pence (2006:2.53 pence),amounting to a total dividend of £8.1 million (2006: £6.7 million) was declaredduring the period. 7 Earnings per share Basic earnings per share have been calculated by dividing the earningsattributable to ordinary shareholders by the weighted average number of sharesin issue during the period, excluding shares held by the Employee ShareOwnership Trusts which are treated as cancelled. 30 Jun 30 Jun 31 Dec 2007 2006 2006 Profit for the period (£ million) 30.9 19.0 46.2 ------ ------ ------Weighted average number of ordinary shares inissue (million) 265.4 265.5 265.4 ------ ------ ------Basic earnings per share (pence) 11.64 7.14 17.41 ------ ------ ------ For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. These represent share options granted to employees where the exerciseprice is less than the average market price of the Company's ordinary sharesduring the period. The number of shares calculated as above is compared with thenumber of shares that would have been issued assuming the exercise of the shareoptions. 30 Jun 30 Jun 31 Dec 2007 2006 2006 Profit for the period (£ million) 30.9 19.0 46.2 ------ ------ ------ Weighted average number of ordinary shares in issue(million) 265.4 265.5 265.4Adjustment for share options (million) 3.3 2.3 2.4 ------ ------ ------Diluted weighted average number of ordinary sharesin issue (million) 268.7 267.8 267.8 ------ ------ ------Diluted earnings per share (pence) 11.50 7.08 17.25 ------ ------ ------ Aggreko plc assesses the performance of the group by adjusting earnings pershare, calculated in accordance with IAS 33, to exclude items it considers to benon-recurring and believes that the exclusion of such items provides a bettercomparison of business performance. The calculation of earnings per ordinaryshare on a basis which excludes exceptional items is based on the followingadjusted earnings: 30 Jun 30 Jun 31 Dec 2007 2006 2006 £ million £ million £ million Profit for the period 30.9 19.0 46.2Exclude exceptional items (net ofattributable taxation) - - 7.0 ------- ------- ------Adjusted earnings 30.9 19.0 53.2 ------- ------- ------ An adjusted earnings per share figure ispresented below Basic earnings per share pre-exceptionalitems (pence) 11.64 7.14 20.05Diluted earnings per share pre-exceptionalitems (pence) 11.50 7.08 19.87 ------- ------- ------ 8 Taxation The taxation charge for the period is based on an estimate of the Group'sexpected annual effective rate of tax for 2007 which is currently estimated tobe 35.0% (2006:36.0%). 9 Goodwill 2007 £ millionCostBalance as at 1 January 2007 46.9Exchange adjustments (0.8) -------As at 30 June 2007 46.1 -------Accumulated impairment losses -------At 1 January 2007 and 30 June 2007 - -------Net book value at 1 January 2007 46.9 -------Net book value at 30 June 2007 46.1 ------- The fair value adjustments relating to the acquisition of GE Energy Rentals on 4December 2006 are provisional and will be finalised in the Annual Report &Accounts for the year ended 31 December 2007. During the period the Group paid£6.7 million of the deferred consideration for the fixed assets of GE EnergyRentals. 10 Financial assets/liabilities 30 Jun 30 Jun 31 Dec 2007 2006 2006 £ million £ million £ million Non-currentBank borrowings 228.9 82.6 207.9 CurrentBank overdrafts 1.3 2.4 3.0Bank borrowings 1.6 53.8 7.3 ---------- -------- -------- 2.9 56.2 10.3 ---------- -------- --------Total borrowings 231.8 138.8 218.2 ---------- -------- --------Short-term deposits (1.6) (0.4) (0.5)Cash at bank and in hand (6.5) (8.2) (12.5) ---------- -------- --------Net borrowings 223.7 130.2 205.2 ---------- -------- -------- 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 2007 2006 2006 £ million £ million £ million Within 1 year, or on demand 2.9 56.2 10.3Between 1 and 2 years - - -Between 2 and 3 years 133.3 82.6 123.8Between 3 and 4 years - - -Between 4 and 5 years 95.6 - 84.1 ------- -------- ------- 231.8 138.8 218.2 ------- -------- ------- 11 Provisions Statutory Reorganisation employee and termination restructuring benefit Total £ million £ million £ million At 1 January 2007 5.9 0.3 6.2 Utilised during the period (2.5) - (2.5) ------- ------- -------At 30 June 2007 3.4 0.3 3.7 ------- ------ ------- 30 Jun 30 Jun 31 Dec 2007 2006 2006 £ million £ million £ millionAnalysis of total provisionsCurrent 2.6 0.3 5.9Non-current 1.1 1.0 0.3 ------- ------- -------Total provisions 3.7 1.3 6.2 ------- ------- ------- (i) The provision for reorganisation and restructuring comprises the following: (a) Estimated costs of restructuring the Group's North American, European andInternational operations and the provisions are generally in respect ofseverance, property and related costs. The provision is expected to be fullyutilised before the end of 2007. (b) Estimated costs related to the integration of the GE Energy Rentals businessto the Group's global operations. These provisions are in respect of severance,property and other integration costs and are expected to be fully utilisedwithin 8 years. (ii) The provision for statutory employee termination benefit relates to astatutory employee termination benefit scheme in France. The provision isexpected to be utilised within 19 years. 12 Statement of Changes in Equity 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 £ millionBalance at1 January 2007 53.9 7.2 (9.1) 0.1 1.2 (25.7) 198.6 226.2 Net movementin foreigncurrency cash flow hedge - - - - (0.3) - - (0.3) Net movementon interest rate swaps - - - - 0.3 - - 0.3 Currency translationdifferences - - - - - (1.7) - (1.7) Current tax onitems taken to or transferredfrom equity - - - - - - 2.0 2.0 Deferred taxon items takento or transferred from equity - - - - - - (0.7) (0.7) Actuarial gains onretirement benefits - - - - - - 3.1 3.1 Purchase oftreasury shares - - (4.3) - - - - (4.3) Credit in respect of employee share awards - - - - - - 2.6 2.6 Issue of ordinaryshares to employeesunder share option schemes - - 2.8 - - - (2.8) - New sharecapitalsubscribed (i) 0.1 0.3 - - - - - 0.4 Profit forthe period - - - - - - 30.9 30.9 -------- -------- -------- -------- -------- --------- ------ ------ Totalrecognisedincome/(loss) 0.1 0.3 (1.5) - - (1.7) 35.1 32.3for the period -------- -------- -------- -------- -------- --------- ------ ------ Dividends paid - - - - - - (11.1) (11.1)during period -------- -------- -------- -------- -------- --------- ------ ------ Balance at30 June 2007 54.0 7.5 (10.6) 0.1 1.2 (27.4) 222.6 247.4 -------- -------- -------- -------- -------- --------- ------ ------ (i) During the period 709,938 Ordinary shares of 20p each have been issued, ofthese 467,079 were issued to participants in the Aggreko Performance Share Planand the Aggreko Co-investment Plan at an option price of £1 for all the sharescomprised in their award, the remaining shares were issued at prices rangingfrom £1.17 to £3.07. 13 Date of approval The interim Accounts were approved by the Board of Directors on 13 September2007. 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