Results Presentation For the year ended 31 December 2017 - 6 MARCH 2018 - Aggreko plc
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
6 MARCH 2018
Results
Presentation
For the year ended
31 December 2017
Results Presentation March 2018 1
Introduction
Chris Weston
CEO
Results Presentation March 2018 2
Operating
& financial review
Heath Drewett
CFO
Results Presentation March 2018 3
Group summary
PBT in line with market expectations
Movement Group revenue up 4%,
CHANGE
9% excluding Argentina
excluding
£m
pre-exceptional items FY17 FY16 CHANGE
pass-through Exceptional charge of
fuel and currency
Revenue 1,730 1,515 14% 4%
£41 million relating to
Operating profit 229 248 (8)% (10)%
investment in our business
Net interest expense (34) (27) (28)%
priorities programme
Profit before tax 195 221 (12)%
Tax rate of 29%
Taxation (57) (63) 9%
Profit after tax 138 158 (13)% Recommended final dividend in
Diluted earnings per share 53.9p 61.9p (13)% line with 2016
Dividend per share 27.1p 27.1p -
Operating margin 13% 16% (3)pp
ROCE 11% 13% (2)pp
Results Presentation March 2018 4
Movement
Business CHANGE
performance pre-exceptional items FY17 FY16 CHANGE
excluding
currency
Revenue (£m) 720 629 15% 9%
RENTAL SOLUTIONS Operating profit (£m) 81 52 57% 49%
Operating margin 11% 8%
ROCE 12% 8%
REVENUE
Fleet capital expenditure (£m) 55 68
(% OF GROUP excl. pass-through fuel)
45% % REVENUE BY SECTOR FY17
Business services & construction 21%
FLEET
Petrochemical & refining 17%
at 31 December (MW)
Utilities 11%
Events 10%
FY17 FY16 Oil & gas 9%
2,396 2,255 Manufacturing 8%
Mining 5%
56% 52% Other 19%
DIESEL GAS UTILISATION
Results Presentation March 2018 5
Movement
Business CHANGE
performance pre-exceptional items FY17 FY16 CHANGE
excluding
currency
Revenue (£m) 340 262 30% 20%
POWER SOLUTIONS Operating profit (£m) 55 32 71% 53%
INDUSTRIAL Operating margin 16% 12%
ROCE 11% 7%
REVENUE
Fleet capital expenditure (£m) 43 37
(% OF GROUP excl. pass-through fuel)
21% % REVENUE BY SECTOR FY17
Oil & Gas 39%
FLEET
Business services & construction 17%
at 31 December (MW)
Events 11%
Manufacturing 8%
FY17 FY16 Utilities 7%
68% 2,521 2,465 Mining 7%
63% Petrochemical & refining 2%
Other 9%
DIESEL GAS UTILISATION
Results Presentation March 2018 6
Movement
Business CHANGE
performance pre-exceptional items &
FY17 FY16 CHANGE
excluding pass-
through fuel
excluding pass-through fuel and currency
POWER SOLUTIONS Revenue (£m) 531 564 (6)% (9)%
UTILITY Operating profit (£m) 96 164 (42)% (42)%
Operating margin 18% 29%
REVENUE ROCE 10% 19%
(% OF GROUP excl. pass-through fuel) Fleet capital expenditure (£m) 148 136
34% % REVENUE BY SECTOR FY17
Utilities 83%
FLEET
Oil & gas 7%
at 31 December (MW)
Mining 6%
Manufacturing 3%
79%
74% FY17 FY16 Other 1%
5,004 4,947
DIESEL GAS HFO UTILISATION
Results Presentation March 2018 7
Cash flow
£m FY17 FY16
EBITDA 529 533 Capital expenditure of £272 million
Working capital (51) (119)
− Fleet capex of £246 million
Cash flows relating to exceptional items (30) (23)
Other 2 (3) Three acquisitions completed in year
Operating cash flow 450 388
Tax (69) (64)
− Younicos £45m
Net interest (34) (26) − KBT £25m
Acquisitions (73) (22)
− TuCo £3m
Purchase of fixed assets (272) (263)
Other fixed asset movements 9 18
Net debt to EBITDA of 1.2 times, unchanged
Free cash flow 11 31
Dividends (69) (69)
Changes in equity - (8)
Net cash flow (58) (46)
Exchange 55 (114)
Movement in net debt (3) (160)
Net debt (652) (649)
Results Presentation March 2018 8
Working capital
Inventory NET POSITION
Increased activity driven by major events and growth in
Eurasia, offset by improved inventory management INVENTORY
-1 2017
Payables -21 2016
Improvement in supplier terms; best practice employed
to leverage scale PAYABLES
2017 +113
Receivables -17 2016
Revenue growth drove £90 million outflow
RECEIVABLES
£36 million outflow as a result of payment delays in -163 2017
Africa -81 2016
Power Solutions Utility provision increased
$23 million
Results Presentation March 2018 9
Reporting changes
Reflecting the changes in our business
− focusing on what matters
More emphasis on average MW on hire, reduced prominence of order intake
− no longer routinely announcing large individual contract wins
Increased customer sector focus
− re-assign non utility work out of Power Solutions Utility into Industrial
No future Q1 trading updates
Results Presentation March 2018 10Outlook
Continued growth expected in Rental Solutions and Power Solutions Industrial
− further benefits of the business priorities programme
− leveraging operational gearing
Off-hires in Japan and discounted pricing in Argentina remain headwinds for Power Solutions Utility
Recent strengthening of Sterling creates adverse translation effects
− continuation of current rates would drive a c. 8% adverse profit impact
Overall, excluding currency effects, 2018 profit before tax expected to be in
line with 2017
Results Presentation March 2018 11Making a massive difference
for our customers
Chris Weston
CEO
Results Presentation March 2018 12How we see our
business today
Making a massive difference
for our customers and the
communities we serve Aggreko is a customer focused specialist provider of
power, temperature control and energy services on a
global basis
Customer Technology Efficiency
People & Always Orange
Results Presentation March 2018 13Rental Solutions
What we’ve done Market drivers Going forward
Introduced sector focus Continued sector focus and specialisation
2.2
− 387 dedicated sales employees across the Use new back office systems, remote
business monitoring and data analytics to drive efficiency
2.0
Reorganised business operations Drive to higher value, complex solutions
£27 million cost removed across Rental Increase utilisation to >60% via fleet
Rebuilt customer journey management systems
1.8
− significant investment in new systems 1.7 1.7 Introduce e-commerce
Selective acquisitions GDP growth in developed markets 2017 - 2021
RESULTS TO DATE
Revenue growing ROCE growing Utilisation improving
+9%
12% 56%
8%
2016 2017 2016 2017 UTILISATION Results Presentation March 2018 14Power Solutions Industrial
What we’ve done Market drivers Going forward
Sector focus Continued sector focus and specialisation
− Closed 20 depots; remaining around key Deploy systems proven in Rental Solutions
sector locations 62 7,050
− Use new back office systems and remote
− 130 sector specialists employed 61 monitoring to drive efficiency
60
Removed £25m of costs Drive to higher value, complex solutions
Fleet rationalization and redeployment to 60
6,800 Increase utilisation to over 70% via fleet
improve utilisation management systems
6,700 6,719
Copper price forecast $/mt 2018-2021
Oil price forecast $/BBL 2018-2021
RESULTS TO DATE
Revenue growing ROCE growing Utilisation improving
+20%
11%
68%
7%
2016 2017 2016 2017 UTILISATION Results Presentation March 2018 15Power Solutions Utility
What we’ve done Market drivers Going forward
Market Intelligence Platform improves market GDP growth & commodities Use new back office systems, remote monitoring
understanding & customer insight and data analytics to drive efficiency
Transmission & distribution
58 dedicated regional specialists Continued drive to reduce receivables and
Renewables penetration inventory
Removed £44 million of cost
Continue to develop sales discipline
New products designed to meet customer needs
Improve utilisation to above 80%
Deployed CRM system
− particular focus on HFO & NGG sales
Enhanced sales discipline and focus
Total market conversion 2 – 2.5GW
RESULTS TO DATE IMPACTED BY LEGACY CONTRACTS
Revenue down ROCE decline Utilisation down
(9)% 8%
2% 74%
11%
8%
Argentina
2016 2017 2016 2017 UTILISATION Results Presentation March 2018 16The future: energy markets are
transforming
Cloud based data analytics
Our digitalisation
Opportunity as we digitalise Aggreko
Operating data collection via the ROC
Energy market interface
(where applicable)
Data analytics to benefit maintenance costs
and customer focused product development
Y.Q system significantly enhances our ability
to understand customer profiles and tailor
solutions
Results Presentation March 2018 17 Added capabilities to enhance our skills
The future: energy − Younicos brings software to smoothly manage integration of thermal, renewable and
markets are storage
transforming Opportunity as renewables grow and need to be integrated
− Off grid & microgrid
− Commercial & Industrial behind the meter
Decarbonisation, − Improve efficiency: driving down cost for customers, and through own use
decentralisation and
digitalisation are changing the
ways we generate and consume
energy, globally
\\\\\\\\
Results Presentation March 2018 18Summary
The group has been through significant, and
necessary changes
Rental Solutions & Power Solutions Industrial
are performing well
Utility is not where it needs to be
− Legacy issues now clearing
Team and plan in place to deliver
Results Presentation March 2018 19Aggreko is a customer focused specialist provider of power, temperature
control and energy services on a global basis. These services are based on
modular and mobile equipment operated on a digital platform with a
market leading integration capability.
Results Presentation March 2018 20Appendix
Results Presentation March 2018 21Revenue mix
Revenue % of Revenue mix (excl. fuel)
1
FY17 FY16 Underlying FY17 FY16 Change
£m £m change % % pp
Power 1,010 966 (1)% 64% 66% (2)
Temperature control 182 161 7% 11% 11% -
Oil-free air 31 28 6% 2% 2% -
Total rental 1,223 1,155 1% 77% 79% (2)
Service revenue 368 300 16% 23% 21% 2
Revenue excl. pass-through fuel 1,591 1,455 4% 100% 100%
Pass-through fuel 139 60 n/a
Total revenue 1,730 1,515 4%
1 Excluding revenue from pass–through fuel and currency.
Results Presentation March 2018 22Balance sheet
£m FY17 FY16
Intangible assets / goodwill 215 183
Tangible fixed assets 1,214 1,309
Working capital 586 603
Retirement benefit obligation (25) (30)
Derivative financial instruments (3) (6)
Provisions for taxes (18) (42)
Net debt (652) (649)
Net assets 1,317 1,368
Results Presentation March 2018 23Foreign exchange impact
FX RATES REVENUE (£m)
FY17 Restated
at February
FY17 February FY17 2018
average 2018 closing actual closing rates Variance % Variance
US Dollar 1.29 1.39 834 771 (63) (8)%
Euro 1.14 1.13 213 214 1 1%
Australian Dollar 1.68 1.78 78 74 (4) (5)%
Argentinian Peso 21.36 27.77 64 49 (15) (23)%
Brazilian Real 4.12 4.54 217 197 (20) (9)%
Canadian Dollar 1.67 1.77 24 22 (2) (6)%
Russian Rouble 75.19 78.95 76 73 (3) (5)%
Other 224 216 (8) (4)%
Total revenue 1,730 1,616 (114) (7)%
Total operating profit 229 211 (18) (8)%
Note: UAE Dirhams included within US Dollar as it is pegged to the US dollar; Argentinian Peso includes Power Solutions Utility contracts
which are pegged to the US Dollar but paid and reported in Argentinian Pesos.
Results Presentation March 2018 24IFRS 15 impact
Effective from 1 January 2018
Revenue is recognised when we transfer control of goods/services to the customer
The costs to fulfil the service to the customer (including mob/demob) will be amortised over the period of the initial contract
In 2017, the effect of this would have been immaterial:
− revenue increase of £2m
− operating cost increase of £5m
− PBT reduction of £3m
We will restate 2017 numbers as part of our 2018 reporting
Further detail is included in the notes to the accounts in the Annual Report
Results Presentation March 2018 25Impact of US tax reforms
Aggreko’s US business accounted for 17% of Group PBT and 10% of Group tax charge in 2017 so overall impact is limited
We benefitted from a one off reduction in tax rate of c.5pp in 2017 due to the revaluation of deferred tax liabilities as a
result of the permanent reduction in the US statutory corporate income tax rate from 35% to 21% (24.75% including state
tax)
Assuming no change to the relative proportion of business from the US, based on 2017 pre-exceptional PBT, the impact for
Group is:
− Reduction in the Group’s ETR of c.1.5pp
− Assuming no increase in the current level of debt in our US business, we do not anticipate that there will be a material
restriction on the level of deductible interest
− We do not anticipate that the Base Erosion & Anti Avoidance Tax (“BEAT”) will impact Aggreko assuming that the
current levels of annual gross receipts remain as now
Note: ETR is effective tax rate Results Presentation March 2018 26Disclaimer
The information contained in this presentation has largely been extracted from the Results Announcement for the year ended 31
December 2017.
This presentation may contain certain “forward-looking” statements. By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any
outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of
Aggreko speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their
completeness or accuracy or the basis on which they were prepared.
This presentation is published solely for information purposes.
The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who are
subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements.
All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere.
Results Presentation March 2018 27You can also read
