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Introduction to Aggreko
The global leader in temporary power and temperature control
• A specialist energy services business, offering temporary power and
temperature control on a global basis
– Services are mission-critical, asset-intensive, often involve significant engineering
input, and are frequently in response to emergencies
• Two business models, which share resources
– Local business rents power and temperature control equipment, mainly in
developed economies, to commercial, industrial, utility and government users
– International Power Projects sells electricity, supplying and operating utility power
plants, mainly in emerging markets to utility and government users
• Global scale
– Providing services in around 100 countries; >8,000 MW of power fleet; >4,600
permanent employees
• FTSE-100, market capitalisation ~ £6.0bn
– 2011: Revenues £1,396m, Operating Profit £345m(1), Return on Capital Employed
28%(1)
2 (1) Before amortisation of intangible assets arising from business combinations
The global leader in temporary power and temperature control
• Total Shareholder Return over last five years: 394%
– Five year Compound Annual Growth Rate:
– Revenues: 21%
– Basic EPS(1): 34%;
– Dividend: 25%;
– Extremely strong cash generation: over £1bn invested in new fleet in last six years
financed entirely from operating cashflow
• Investment Case
– The global leader in two fast-growing markets
– Growth driven by long-term structural drivers in energy sector
– Proven strategy, delivering outstanding growth, with plenty of runway ahead
– Diversified exposure to both rapidly-growing emerging markets and mature
markets
– Valuable and sustainable competitive advantages
3 (1) 2011 Basic EPS is pre-amortisation of intangible assets arising from business combinations and pre-exceptional tax credits
4
2011 Results Pre-Exceptional Tax Credit
2011 2010 Movement
£m £m As reported Underlying
Revenue 1,396 1,230 14% 22%
Revenue excl. pass-through fuel 1,288 1,156 11%
Trading profit 341 314 8% 26%
Operating profit 345 317 9%
Net interest expense (18) (11) (85)%
Profit before tax 327 306 6%
Taxation (93) (92) (1)%
Profit after tax 234 214 9%
Dividends per share (declared) 20.79p 18.90p 10%
Diluted Earnings Per Share 87.72 79.69 10%
(1) All numbers are pre-amortisation of intangible assets arising from business combinations and pre-exceptional tax credits.
Note: Post amortisation and exceptional items: 2011 PBT £324m, PAT £260m, D-EPS 97.49p; 2010 PBT £304m, PAT
£213m, D-EPS 78.98p
5
2011 Results Post-Exceptional Tax Credit
2011 2010 Movement
£m £m As reported Underlying
Revenue 1,396 1,230 14% 22%
Revenue excl. pass-through fuel 1,288 1,156 11%
Trading profit 341 314 8% 26%
Operating profit 345 317 9%
Net interest expense (18) (11) (85)%
Profit before tax 327 306 6%
Taxation (64) (92) 31%
Profit after tax 263 214 23%
Dividends per share (declared) 20.79p 18.90p 10%
Diluted Earnings Per Share 98.83 79.69 24%
(1) All numbers are pre-amortisation of intangible assets arising from business combinations
Note: Post amortisation and exceptional items: 2011 PBT £324m, PAT £260m, D-EPS 97.49p; 2010 PBT £304m, PAT
£213m, D-EPS 78.98p
2011: Revenues of £1,396m from three product families
6
Power
(inc ancillaries)
Temperature
Control
Oil-free Air
Rental £1,042m (75% of
total revenues)
£899m / 86%
£116m / 11%
£27m / 3%
Gross Rental Assets
£2,013m
£1,732m / 86%
£214m / 11%
£67m / 3%
Equipment Gas & diesel
Generators 5kw-2Mw,
transformers up to
120Kv, cable,
distribution, fuelling
systems
Chillers, heaters, air
conditioners, air
handlers, de-
humidification,
cooling towers
Electric and diesel
oil-free air
compressors
Why Power & Temperature Control?
Mission critical: availability, service and reliability more important than price => strong margins
Fleet fungible between sector and geography => can operate as a global business
Rental product is different to purchase product => differentiated offering
Long life of equipment => 10-year old equipment can get same rate as new
Underlying segmental performance*
REVENUE TRADING PROFIT
2011
£m
2010
£m
Underlying
%
2011
£m
2010
£m
Underlying
%
Local Business 728 604 21% 120 104 15%
Trading Margin: 16.6% 17.2%
Rolling 12-month ROCE: 18.8% 20.6%
Int’nl Power Projects 554 444 25% 215 161 33%
excl pass-through fuel Trading Margin: 38.8% 36.5%
Rolling 12-month ROCE: 39.8% 40.1%
Total 1,282 1,048 22% 335 265 26%
Trading Margin: 26.2% 25.4%
Rolling 12-month ROCE: 28.3% 29.2%
* Pre-amortisation and excluding the net book value of intangible assets arising from business combinations. Also excluding revenue, trading profit and
operating assets from Vancouver Winter Olympics, FIFA World Cup, Asian Games, London Olympics, pass-through fuel and currency.
7
Our work is mission critical: some recent projects
• Utility support
– 200MW Japan, 190MW Argentina, 160MW Indonesia, 145MW (Gas) Bangladesh, 100MW Tanzania, 60MW Kenya, Brazil 47MW
• Commercial / Industrial / Utility
– Spent-fuel cooling for nuclear power plant; power for oil refinery during shut-down; power for utility customers during network repair
• Emergency response to natural disasters
– Tsunami in Japan
– Hurricane Protection Plans in North America
• Military Support
– US Army in Afghanistan, Kyrgyzstan, Kuwait & Iraq
• Major Events
– Asian Games, Glastonbury, US Superbowl & Pan-American Games
– London 2012
8
Customer base well diversified: revenue by customer type
9
IPP Local Business Full Year 2011
Excl. pass through fuel
Events 9%
Construction 8%
Contracting 8%
Services 7%
Quarrying and mining
6%
Oil and gas 16%
Petrochemical and refining
13%
Manufacturing 9%
Shipping 4%
Utilities 11%
Military 1%
Other 8%
Quarrying and mining
4% Oil and gas 3%
Manufacturing 1%
Utilities 80%
Military 12%
Customer base well diversified : revenue by geography
10
Full Year 2011
Excl. pass through fuel
North America 20%
Europe 15%
Middle East 15%
Africa 12%
Asia and Australasia
22%
South & Central America
16%
Competitor segmentation
11
Thousands of local small businesses
Hundreds of national
10-15 regional
2
multi-
national
Aggreko, CAT
Speedy Hire,
Power Electrics
Aggreko, CAT,
APR Energy
Three competitors in
International Power Projects
Four types of competitor
in the Local Business
Hertz, URI,
Bredenoord, RSS
Two Business Models
The Local Business
Local business: 57% of revenues(1), £734m in 2011 • Vital Statistics
– Contract value - £1k - £1m, average £10k, duration 1 day -12 months
– Customers: all sectors
– Application: all types – 25% emergency response
– Equipment: all types
– In-service lead-time: 3 hours - 4 weeks
– MW in power fleet: >3,500
• Organisation
– 165 Service Centres in 39 countries: Europe & Middle East: 57, North America: 54,
International: 54
• Keys to competitive advantage
– Experienced people and a broad range of equipment able to deploy quickly
– A low-cost operating model
– Local reputation and brand
• Financial performance
– Since our first strategy review in 2003, revenues and trading profit have increased
at a compound annual growth rate of 14% and 21% respectively.
– 2011 Trading Margin 17%(2); ROCE 19%(2)
13
(1) Excluding pass through fuel (2) Pre-amortisation of intangible assets arising from business combinations
14
Industrial
15
Major Events
Major Events
16
Commercial
Shipping
18
Utilities
Local business revenues grow at healthy premium to GDP
19
• Aggreko’s experience over the period 2003-2008
– At nominal GDP-growth of under 5%, our businesses tend to grow at 2-3pp above GDP
– At nominal GDP-growth of over 5%, our businesses grow much faster
GDP ++ GDP +++
Aggreko Revenue CAGR 03-08 vs "Aggreko" Nominal GDP
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
France UK
Germany
Irelan
d
Belgium
Netherl
ands US
Spain
Australia
Middle East
Aggreko GDP Aggreko Revenue
Aggreko Local business
revenue CAGR 03-08 = 18%
Aggreko Revenues
Aggreko GDP
GDP ++ GDP +++
Source: Oxford Economics, Aggreko management accounts
The strategy for the Local business
• In regions where GDP growth is likely to be low:-
– Build concentration and expand footprint in existing markets
• New service centres opened in the last 5 years include: Indianapolis, Long Island,
Gillette, Metz, Padova, Rome, Warsaw, Wollongong, Newman,
• Acquire businesses: GE Energy Rentals, New Zealand Generator Hire, Northland
Power, Power Plus
– Use efficiencies of scale to increase market share
– Go after under-exploited opportunities and manage product offerings
• Gas Projects; Temperature Control in Middle East & Latin America; Oil & Gas
sector penetration in North America; Mining sector in Australia.
• In regions where we expect high rates of GDP growth:-
– Enter new countries: Colombia, Peru, Panama, Russia, India
– Establish Local service centres: Delhi, Guangzhou, Durban, Belo Horizonte, Bogota,
Camacari, Copiapo, Lima, Porto Alegre
– Acquire business that give us a head start: Cummins India 20
Two Business Models
International Power Projects
International Power Projects: 43% of revenues(1), 64% of profits
• Vital Statistics
– Contract value - £1m - £60m pa (average: £4m), average duration 6-12 months
– Customers: utilities, military, mining, petrochemical
– Application: base-load & peak-shaving power
– In-service lead-time: 10-12 weeks
– 2011: 136 contracts in 46 countries
– MW in fleet: >4,400, containerised 1 MW units, gas & diesel fuelled
• Organisation
– Headquarters: Dubai
– Hubs: Rotterdam, Singapore, Panama
• Keys to competitive advantage
– The ability to deploy large fleet capacity quickly anywhere in the world
– Easily-transportable, standardised, purpose-built equipment of the highest reliability
– Expert people in engineering, commercial, tax, logistics, risk management
• Financial performance
– Since our first strategy review in 2003, revenues and trading profit have increased
at a compound annual growth rate of 31% and 40% respectively(1).
– 2011 Trading Margin 39%(2); ROCE 40%(2)
22 (1) Excluding pass through fuel (2) Excluding pass through fuel and pre-amortisation of intangible assets arising from business combinations
Uganda: 30 MW diesel power plant
24
Bangladesh: 70 MW gas power plant on-line in 90 days
Kenya: 100 MW
Drivers of Demand in International Power Projects
• Demand for power is growing very rapidly in developing countries
– 6% CAGR in electricity consumption
• Chronic under-investment in new and replacement power
infrastructure in many developing countries
– Frequent breakdowns; power utilisation factors reaching critical
points => more frequent and damaging power cuts
• Capital markets unwilling to support long-term infrastructure
projects in many developing countries
– Too many bad experiences; plenty of opportunities where political
risk is low
• De-carbonisation and ageing power fleet => developed countries
need to invest billions on power generation & transmission
– Poorer countries are being “crowded out” from equipment supply
and financing
26
Aggreko has a compelling solution
• Immediate solution to today’s problems; instant result, immediately felt
by industry and consumers
• No need to raise capital for purchase; pay as you go
• Distributed generation means that power can go where it is most
needed
• Low risk, proven solution, used by many countries
• Technically extremely helpful to network operators
– helps stabilise grid and supports other assets
• No long-term commitment – send it away when you don’t need it
27
International Power Projects Strategy
• Invest heavily in fleet => capture economies of scale => be the
largest & most efficient operator
• Operating on a global scale means we can:
– Serve demand wherever it may be
– Deliver premium standards of service: fleet availability; speed of
deployment; safety; service quality
– Diversify and manage risk
– Build recognition of brand and proposition
– Gain easy access to low-cost financing
• Focus on capturing operating efficiencies
– Control of design, manufacture and supply chain => low average capital
cost / MW
– Re-builds => multiple lives for engines => low average capital cost / MW
– Sharing fleet and people with Local business
– Investment in local staff; leverage overheads 28
Drivers of Demand:
Demand for electricity is growing faster
than supply
Drivers of Demand:
Demand Side
|31
From hut to house ... Demand for power grows very fast in developing countries
0
1
2
3
4
5
6
7
8
Lightin
g +
Fan TV
Fridge A
C
Wat
er h
eate
r
Sound s
yste
m
Hous
e Li
ghtin
g
Com
puter
Po
we
r D
em
an
d (
kw
)
Item Load
Base load
CAGR: 25 years = 18%, 50 years = 9%
ILLUSTRATIVE
Electricity consumption growing fast in non-OECD countries
32 Source: IEA, Oxford Economics
Non-OECD
7.4%
World
3.8%
OECD
1.0%
We forecast 4% CAGR in electricity demand to 2015
33 Source: IEA, Oxford Economics
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Rolling 3-average Growth in Electricity Demand 2007-2015
OE Proj World OE Proj OECD OE Proj Non-OECD
Non-OECD
6.2%
World
4.0%
OECD
1.6%
Comparative kwh consumption per head and growth rates
Kwh/head consumption
08
CAGR in kwh/head
consumption 03-08
USA 12,800 0%
UK 5,700 0%
Brazil 2,134 4%
China 2,230 14%
Vietnam 780 13%
Angola 177 12%
Yemen 150 7%
2008 2008 2008-2015
Number of
countries
Population,
millions
Average Kwh
per capita
Consumption
CAGR
Poorer than China 60 2936 426 7.1%
China 1 1339 2230 9.1%
Richer than China 92 2227 5800 2.0%
Totals 153 6501 2638 3.9%
34 Source: Oxford Economics
>5 billion people growing electricity consumption faster than GDP by 2012
35 Source: Oxford Economics
0
1
2
3
4
5
6
2000 2002 2004 2006 2008 2010 2012 2014
Population with Electricity Consumption Growing faster than GDP (billion)
Popula
tion b
n
Drivers of Demand:
De-carbonisation + replacement cycle in OECD countries
Huge demands for infrastructure financing in low-risk countries
Higher risk countries get crowded out
Drivers of Demand:
Supply Side
Recent capacity growth driven almost entirely by China
38
-
50,000
100,000
150,000
200,000
250,000
197
9
198
1
198
3
198
5
198
7
198
9
199
1
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
New MW of Permanent Power Installed 1979-2009
World China World Ex China
Source: Platts
Outside China, plant is ageing rapidly, investment inadequate
39 Source: Platts
-
100,000
200,000
300,000
400,000
500,000
600,000
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
New MW Installed 1979-2009 vs Plant >40 years old
World Installed by Year Plant >40 years excl China Installed excl China
Plant > 40 years old
A replacement cycle is about to start in OECD countries
40 Source: Platts
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2000 2005 2010 2015
N AMERICA
MIDEAST
LATIN AMERICA
EUROPE
CIS
CHINA
ASIA
ANZ-OCEANIA
AFRICA
~ 25% of global generating capacity will be >40 years old by 2015
MW
£200 billion required in UK alone in next 10 years
“The decline in our indigenous gas supplies and the need to make
demanding cuts in carbon emission levels, represent unprecedented
challenges, which will grow over the next two decades.
Large parts of our ageing energy infrastructure will need
replacement and, at the same time, we must make rapid progress
towards the substantial decarbonisation of our economy. We estimate
that up to £200 billion of investment might be required by 2020 alone, in
the face of huge global demand for investment in energy infrastructure;
volatile commodities prices; and the ongoing effects of the financial
crisis.”
OFGEM (UK Gas & Electricity markets regulator) February 2010
41
A growing number of countries cannot finance new infrastructure
| 42
EU / USA Brazil India UNBANKABLE
ILLUSTRATIVE
0%
5%
10%
15%
20%
25%
IRR
%
Project IRR's vs Country Risk
We now forecast a supply/demand gap of ~ 600 GW by 2015
43 Source: IEA, Oxford Economics, Aggreko
Demand CAGR 2004 - 2015
556 3.00% 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% 4.75% 5.00%
3.10% (22) (165) (311) (461) (614) (772) (933) (1,098) (1,267)
Net 3.20% 35 (108) (255) (404) (558) (715) (876) (1,041) (1,211)
Additional 3.50% 207 64 (82) (232) (385) (543) (704) (869) (1,038)
Capacity 3.75% 355 212 66 (84) (238) (395) (556) (721) (890)
CAGR 4.00% 506 363 217 67 (86) (244) (405) (570) (739)
2004 4.25% 661 518 372 222 69 (89) (250) (415) (584)
=>2015 4.50% 820 677 531 381 227 70 (91) (256) (425)
4.75% 983 840 693 543 390 233 71 (94) (263)
5.00% 1,149 1,006 860 710 556 399 238 73 (96)
Capacity deficit increasing annually by about 1% of global capacity / 50,000 MW
09
4.0% 07
4.9%
08
5.1%
Summary
Summary
45
• Strategies for both Local & International Power Projects are working
well
• Local business: geographic expansion in developing markets and
drive for growth in mature markets
• International Power Projects: capture as much of the ~50,000 MW
per year of additional capacity shortfall as we can; drive for scale &
operational efficiencies; build brand recognition and long-term
relationships with utilities
• As the only supplier with global reach, and having invested heavily to
capture economies of scale, Aggreko has sustainable competitive
advantage
• Aggreko has plenty of runway ahead it