A strengthened base for improving returns Aggreko plc Annual Report and Accounts 2018 Aggreko is well placed to benefi t from profound shifts in the energy market. The need for power continues to grow, only with added complexity from decarbonisation, decentralisation, digitalisation and demographic change – the four Ds. We are focused on the needs of our customers, tailoring solutions to improve their experience; we are investing in technology to reduce the cost of energy through innovation; we seek to optimise the deployment of our resources to deliver operational and capital effi ciency and we are cultivating a high-performance organisation focused on realising the full potential of our expert people. OUR STRATEGIC APPROACH The core strategic priorities remain unchanged since 2015, but we have evolved them and will continue to Customer Technology Capital Expert ensure that our objectives focus investment effi ciency people remain relevant as our markets change. → Being particular → Developing → Being mobile → Staying safe about the sectors competitive and modular and professional Read more on page 10 we target confi gurable at all times → Getting the very products → Offering specialist maximum out → Nurturing our solutions → Smarter use of our assets full potential of connected → Being simple to → Striving for the → Living Always systems and do business with most competitive Orange data analytics cost base → Integrated renewable and storage technology OUR INVESTMENT CASE With our leading positions Market leadership: Potential for growth: Group in diversifi ed markets, we Maintaining our leading position well positioned to return to believe we are well placed in our global markets sustainable growth to return to growth and Diversifi ed markets: Focusing Improving returns: Targeting deliver improved ROCE on key sectors where our Group ROCE in the mid-teens (return on capital employed) specialism differentiates us in 2020 while continuing to return value to shareholders Strategy for the change in Cash returns to shareholders: through dividend payments. energy markets: At the forefront An attractive, sustainable of renewables integration dividend Read more on page 06 Strategic report Strategic We have worked hard since 2015 to strengthen the foundations of this business while dealing with the very signifi cant Governance information Shareholder challenges and changes in our markets. We believe we are now better structured and positioned to begin to reap the rewards of this work and improve statements Financial our returns. Chris Weston Chief Executive Offi cer Learn more about us at www.plc.aggreko.com PERFORMANCE HIGHLIGHTS CONTENTS Revenue Profi t before tax Strategic report Financial statements 01 Performance highlights 86 Independent auditor’s report £1,760m £182m 02 Aggreko at a glance 90 Group income statement 2017: £1,698m1 2017: £190m1, 2 04 Chairman’s statement 90 Group statement of comprehensive income Diluted EPS Operating profi t 05 Interview with our CEO & CFO 91 Group balance sheet 06 Our business model 49.2p £219m 92 Group cash fl ow statement 2017: 52.4p1 2017: £224m1, 2 08 The opportunities in our markets 93 Reconciliation of net cash fl ow to movement in net debt Return on capital employed3 Dividend per share 10 Our strategic priorities 94 Group statement of 20 Group performance review changes in equity 10.3% 27.12p 27 Financial review 2017: 10.7%1 2017: 27.12p 96 Notes to the Group accounts 34 Stakeholders 135 Company balance sheet Read more on page 20 36 Sustainability 136 Company statement of 38 Risk comprehensive income 137 Company statement of Governance changes in equity 46 Introduction to governance 138 Notes to the Company accounts 48 Leadership 141 Defi nition and calculation 51 Leadership and effectiveness of non-GAAP measures 54 Accountability Shareholder information 62 Remuneration 143 Notice of Annual General 80 Statutory disclosures Meeting and notes 85 Statement of Directors’ ibc Shareholder information 1 2017 numbers are shown on a pre-exceptional basis and have been responsibilities restated for the implementation of IFRS 15. Refer to Note 1 of the Accounts on page 96. 2 2017 operating profi t and profi t before tax post-exceptional items were £183 million and £149 million respectively. 3 ROCE calculation is detailed on page 141. Aggreko plc Annual Report and Accounts 2018 01 AGGREKO AT A GLANCE Aggreko is a world-leading provider of mobile modular power, temperature control and energy services. We are working at the forefront of a rapidly changing energy market and are focused on solving our customers’ challenges to provide cost-effective, fl exible and greener solutions across the globe. Our global reach Read more on page 06 Rental Solutions Power Solutions 80 195 6,000+ 6,659MW Countries Sales and Permanent Average MW on hire Sales and service centres employees excluding hybrids service centres Notable events managed in 2018 Ryder Cup Paris, France Winter Olympics 2018 Pyeongchang, Super Bowl South Korea Minnesota, USA Commonwealth Games 2018 Gold Coast, Australia 02 Aggreko plc Annual Report and Accounts 2018 Strategic report Strategic Rental Solutions Power Solutions We provide power, heating We provide power, heating and cooling to emerging markets and cooling in developed for customers with longer-term power needs. markets. Our customer requirements tend to revolve Industrial (PSI) Utility (PSU) around smaller, short-term Comprises medium-term projects Longer-term projects projects and key events. for industrial customers, as well providing power to national as shorter-term rental contracts. utility customers. Governance information Shareholder Revenue Revenue Revenue £822m £424m £342m 52% of Group revenue 27% of Group revenue 21% of Group revenue Financial statements Financial Operating profi t Operating profi t Operating profi t £105m £71m £43m 48% of Group operating profi t 32% of Group operating profi t 20% of Group operating profi t * PSU revenue excludes pass-through fuel. Key sectors % of revenus Key sectors % of revenue 1. Building services and 1. Oil & gas 39% 100% of revenue is derived construction 18% 2. Mining 13% from national utility customers. 2. Petrochemical & refi ning 18% 3. Events 13% 3. Oil & gas 13% 4. Building services and 4. Utilities 12% construction 11% 5. Events 10% 5. Manufacturing 8% 6. Manufacturing 7% 6. Utilities 6% 7. Quarrying & mining 5% 7. Petrochemical & refi ning 2% 8. Other 17% 8. Other 8% Read more on page 24 Read more on page 25 The longer-term opportunity for Aggreko: an energy market in transition We are anticipating and responding We have developed specifi c applications to the megatrends of Decarbonisation, and tools to help our customers adapt Decentralisation, Digitalisation and to the energy transition. Demographic change in our markets. Our strategic priorities are designed to ensure We have identifi ed the opportunities these that we make the most of these changes, and trends present, playing to our established strength we are investing in our capabilities accordingly. in providing modular, temporary power and to the Read more about our strategy on page 10 new skills we are developing. We offer maximum and our marketplace on page 08 fuel fl exibility, using gas, diesel, renewable fuel sources and microgrid and storage solutions. Aggreko plc Annual Report and Accounts 2018 03 CHAIRMAN’S STATEMENT Introduction from Ken Hanna 2018 has been a critical year for the Group And while the comprehensive review in which we have begun to see a return this year confi rmed that our strategy on the very signifi cant work that has is right, we have reduced our ROCE been done to strengthen Aggreko’s expectations to a more realistic level foundations and respond to its changing of mid-teens in 2020. A critical year for the markets. Over the past three years we I would like to thank everyone in Aggreko have undertaken a wide-ranging agenda Group in which we have who has embraced our values and of improvements across the business. begun to see a return helped to improve the business and, We have seen increased competition by delivering their local objectives, on the very signifi cant enter our markets, in particular in the has contributed to a good fi nancial utility market, which signifi cantly performance this year. I know that this work that has been impacted our contract rates and returns. does not happen without commitment done to strengthen The dramatic fall in the oil price also took and discipline, and I am very grateful for its toll on the business as a result of our their support. Aggreko’s foundations previous high concentration in the oil As you read through this year’s Annual and gas market, which we have taken and respond to its Report, I believe that you will see how steps to address over the past three years. much stronger Aggreko is and where its changing markets, with Finally, the liquidity constraints of some ambition lies, as well as the challenges we of our key customers in the emerging an additional focus on still face and the many self-help measures markets resulted in a signifi cant increase we have in place to deal with them. the operational disciplines in the level of working capital across our and cultural changes project portfolio. needed to compete. Our strategic priorities since 2015 have sought to address these challenges Ken Hanna by focusing on operating effi ciency Chairman improvements and increased investment Ken Hanna in new technology to develop a more Chairman cost-effi cient fl eet, a more diversifi ed sales strategy, and an increase in our focus on working capital management across the Group. As a result of these changes, with an additional focus on the operational disciplines and cultural changes needed to compete, I believe that Aggreko is now a much stronger business. With the appointment of a new CFO in January 2018, we took the opportunity to review our strategy with a particular focus on fi nancial returns.