Aggreko PLC (AGK) - Interim Management Statement
RNS Number : 0734P
19 October 2012
19 October 2012
INTERIM MANAGEMENT STATEMENT
Aggreko plc, the world leader in the supply of temporary power and temperature
control, is today issuing its Interim Management Statement covering the period
from 1 July 2012 to date.
As a result of strong trading in the Local businesses, and helped by the
London 2012 Olympics, Aggreko has delivered a robust performance in the third
quarter, and trading at a Group level has been in line with our expectations.
On a reported basis, revenues grew by 22%, whilst on an underlying(1) basis
revenues grew by 13%.
International Power Projects' business revenues in the third quarter grew 15%
excluding pass-through fuel and currency movements.Order intake in the third
quarter was below last year at 115 MW, but shortly after the quarter end we
signed two contracts including a second contract for 74 MW with the Hokkaido
Electric Company in Japan, which takes year to date order intake to 870 MW;
this compares with 944 MW at the same point in 2011. When this plant is
commissioned, we will have more than 240 MW on rent in Japan, which is more
than in the immediate post-tsunami period. Capacity on hire at the end of the
quarter was 17% ahead of the prior year. Trading margin in the quarter in
International Power Projects has been lower than last year, in large part
because of the unusually high mobilisation costs relating to the Mozambique
contract; we also increased further our bad debt provision in the quarter,
which, set against a large release in the third quarter of 2011 depressed
margins relative to the prior year.
The Local business delivered a better-than-expected performance in the third
quarter, with revenues on a reported basis growing by 32%. On an underlying
basis, revenues grew by 11% in the third quarter; within this North America
grew by 13%; Europe & Middle East grew by 8%; and Aggreko International's
Local business grew by 13%. Both underlying and reported trading margins in
the Local business were higher in the third quarter than in the prior year. We
have finalised the value of the London 2012 Olympics contract at £59 million,
and we are all proud of the excellent performance of our events team in
faultlessly delivering this demanding contract.
Net debt at £685 million has increased by £7 million in the three months to 30
September 2012.This compares to net debt of £424 million at 30 September
2011; the £261 million year-on-year increase is largely due to the acquisition
of Poit Energia, and higher levels of both capital expenditure and working
Poit Energia deferred consideration
The Poit Energia acquisition included a deferred consideration of up to £20
million, payable if stretching performance targets for the calendar year 2012
were met. Having completed the acquisition earlier than we anticipated, it
now makes sense to integrate the two businesses as soon as possible, and
accordingly we have agreed with the Vendors that we will terminate the earn
out period early in return for a payment of £3 million of the possible £20
million. The £17 million release of the deferred consideration from the
balance sheet will be treated as an exceptional credit in the full year income
statement, which will be partially offset by Poit Energia integration costs
and re-organisation costs related to the implementation of the new Group
Having had a strong third quarter we now expect the Local business will have a
better second half than we previously anticipated, supported both by better
base business performance and additional work from the London Olympics.
Margins for the Local business on both an underlying and reported basis are
forecast to be better than last year for the full year.
International Power Projects will have a strong year, although second half
revenue growth rates will be slightly lower than we expected at the time of
our Interim Results. Margins and returns for the year will be lower than 2011
due to the high mobilisation costs in Mozambique and the increase in our bad
debt provision, with our current assumption being that we will not be able to
reduce the level of provisions held before the year end.
Overall, trading continues to run broadly in line with our expectations.
Despite the increase in bad debt provisions during the year and unusually high
mobilisation costs, we expect that Group margins for the year as a whole, both
on a reported and underlying basis, will be at similar levels to last year.
Since our last trading update in early August, however, exchange rates have
moved against us, and we have also increased our bad debt provisions; we
expect that, between them, these two factors will impact our anticipated
profits for the year by about 2.5%.
Looking ahead, we expect to spend about £415 million on fleet capital
expenditure in the current year. However, given the need to absorb into the
wider business the fleet we built in the first half for the London Olympics,
and being mindful also of a weakening macro-economic outlook in many
developing economies, the rate of fleet capital expenditure in the first half
of 2013 is likely to be lower than in 2012.
There will be a conference call for analysts and investors at 8.30am today.
For dial-in details, please contact Sian Stanley on 020 7379 5151 or
- ENDS -
Rupert Soames / Angus Cockburn
Tel. 0141 225 5900
Neil Bennett / Tom Eckersley
Tel: 020 7379 5151
(1) Underlying revenue excludes revenue from major events (Asian Games in 2011
and London Olympics in 2012), Poit Energiaacquisition, pass-through fuel and
This information is provided by RNS
The company news service from the London Stock Exchange
IMSEASENFLXAFEF -0- Oct/19/2012 06:00 GMT
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