Notes to the Interim Accounts

For the six months ended 30 June 2013 (unaudited)

1 General information

The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is 120 Bothwell Street, Glasgow G2 7JS, UK.

This condensed interim financial information was approved for issue on 1 August 2013.

This condensed consolidated interim financial information does not comprise Statutory Accounts within the meaning of Section 434 of the Companies Act 2006. Statutory Accounts for the year ended 31 December 2012 were approved by the Board on 7 March 2013 and delivered to the Registrar of Companies. The report of the auditors on those Accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. 

The condensed consolidated interim financial information is unaudited but has been reviewed by the Group's auditors, whose report is in the Independent Review Report to Aggreko plc.

2 Basis of preparation

This condensed consolidated interim financial information for the six months ended 30 June 2012 has been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Services Authority and IAS 34 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with IFRSs as adopted by the European Union.

Going-concern basis
The Group's banking facilities are primarily in the form of committed bank facilities arranged on a bilateral basis with a number of international banks and private placement notes; facilities totalled £868 million at 30 June 2012.The financial covenants attached to these facilities are that EBITDA should be no less than 4 times interest (30 June 2012: 26.3 times) and net debt should be no more than 3 times EBITDA (30 June 2012: 1.2 times). The Group does not consider that these covenants are restrictive to its operations. The maturity profile of the borrowings is detailed in Note 13 to the Accounts. The Group's forecasts and projections show that the facilities in place are currently anticipated to be ample for meeting the Group's operational requirements for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated interim financial statements.

3 Accounting policies

Except as described below, the accounting policies are consistent with those of the annual financial statements for the year ended 31 December 2012, as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the plc Board of Directors.

In September 2012 the Group announced a new organisational structure comprising three regions: The Americas; Europe, the Middle East and Africa (EMEA) and Asia, Pacific and Australia (APAC). This new structure took effect from 1 January 2013.

This is reflected by the Group's divisional management and organisational structure and the Group's internal financial reporting systems.

Aggreko's segments comprise these three new regions comprising: The Americas, EMEA and APAC as well as the Total Local business and the Total Power Projects business.

The risks and rewards within the Power Projects business are significantly different from those within the Group's Local business. The Local business focuses on smaller, more frequently occurring events, whereas the Power Projects business concentrates on large contracts, which can arise anywhere in the world.

The segmental analysis is in Note 6 to the Accounts. All prior year numbers have been restated in accordance with this new structure.

New and amended standards adopted by the Group
The following new standards are mandatory for the first time for the financial year beginning 1 January 2013: 

• IAS 19, 'Employee benefits' was amended in June 2011. The impact on the Group was to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability. The impact of this in the income statement is less than £0.1 million. Prior year numbers have not been restated as the amounts are not material. 
• IFRS 13, 'Fair value measurement'. IFRS 13 measurement and disclosure requirements are applicable for the December 2013 year end. The Group has included the disclosures required by IAS 34. See Note 13.

4 Cashflow from operating activities

	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million
Profit for the period	105	108	276
Adjustments for:
Tax	39	38	91
Depreciation	137	110	236
Amortisation of intangibles	2	2	5
Finance income	–	–	(2)
Finance cost	13	12	27
Profit on sale of PPE	(2)	(1)	(4)
Share based payments	(3)	8	14
Changes in working capital   (excluding the effects of exchange differences on consolidation):
Decrease/(increase) in inventories	20	(26)	(33)
Increase in trade and other receivables	(30)	(124)	(53)
(Decrease)/increase in trade and other payables	(8)	7	(84)
Net movement in provisions for liabilities and charges	(3)	–	6
Cash generated from operations	270	134	479

5 Cash and cash equivalents

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Cash at bank and in hand	27	22	23
Short-term bank deposits	5	1	–
	32	23	23

Cash and bank overdrafts include the following for the purposes of the cashflow statement:

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Cash and cash equivalents	32	23	23
Bank overdrafts (Note 13)	(17)	(29)	(22)
	15	(6)	1

6 Segmental reporting

(a) Revenue by segment

	Total revenue			Inter-segment revenue			External revenue
	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million
Americas	317	280	607	–	–	–	317	280	607
Europe, Middle East and Africa	277	280	627	–	–	1	277	280	626
Asia, Pacific and Australia	166	174	351	–	–	1	166	174	350
Eliminations	–	–	(2)	–	–	(2)	–	–	–
Group	760	734	1,583	–	–	–	760	734	1,583
Local business	433	404	906	–	–	1	433	404	905
Power Projects	327	330	679	–	–	1	327	330	678
Eliminations	–	–	(2)	–	–	(2)	–	–	–
Group	760	734	1,583	–	–	–	760	734	1,583

(b) Profit by segment

	Trading profit pre intangible asset amortisation			Amortisation of intangible assets arising from business combinations			Trading profit
	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million
Americas	69	57	133	(2)	(2)	(4)	67	55	129
Europe, Middle East and Africa	32	42	128	–	–	–	32	42	128
Asia, Pacific and Australia	56	60	125	–	–	(1)	56	60	124
Group	157	159	386	(2)	(2)	(5)	155	157	381
Local business	64	54	175	(2)	(2)	(5)	62	52	170
Power Projects	93	105	211	–	–	–	93	105	211
Group	157	159	386	(2)	(2)	(5)	155	157	381

 

	Gain on sale of PPE			Operating profit
	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million
Americas	1	–	2	68	55	131
Europe, Middle East and Africa	–	–	1	32	42	129
Asia, Pacific and Australia	1	1	1	57	61	125
Group	2	1	4	157	158	385
Local business	2	1	4	64	53	174
Power Projects	–	–	–	93	105	211
Operating profit pre exceptional items	2	1	4	157	158	385
Exceptional items				–	–	7
Operating profit post exceptional items				157	158	392
Finance costs – net				(13)	(12)	(25)
Profit before taxation				144	146	367
Taxation				(39)	(38)	(91)
Profit for the period				105	108	276

(c) Depreciation and amortisation by segment

	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million
Americas	53	42	91
Europe, Middle East and Africa	53	40	88
Asia, Pacific and Australia	33	30	62
Group	139	112	241
Local business	72	59	126
Power Projects	67	53	115
Group	139	112	241

(d) Capital expenditure on property, plant and equipment and intangible assets by segment

	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million
Americas	56	147	225
Europe, Middle East and Africa	35	102	168
Asia, Pacific and Australia	32	48	110
Group	123	297	503
Local business	69	208	290
Power Projects	54	89	213
Group	123	297	503

(e) Assets/(liabilities) by segment

	Assets			Liabilities
	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million	6 months ended 30 June 2013 £ million	6 months ended 30 June 2012 £ million	Year ended 31 Dec 2012 £ million
Americas	918	865	881	(121)	(134)	(123)
Europe, Middle East and Africa	764	781	710	(172)	(223)	(166)
Asia, Pacific and Australia	449	475	478	(65)	(97)	(72)
Group	2,131	2,121	2,069	(358)	(454)	(361)
Local business	1,160	1,176	1,137	(154)	(220)	(168)
Power Projects	971	945	932	(204)	(234)	(193)
Group	2,131	2,121	2,069	(358)	(454)	(361)
Tax and finance payable	34	21	44	(110)	(74)	(106)
Derivative financial instruments	19	–	11	(10)	(14)	(14)
Borrowings	–	–	–	(567)	(672)	(594)
Retirement benefit obligation	–	–	–	(2)	(1)	(4)
Total assets/(liabilities) per balance sheet	2,184	2,142	2,124	(1,047)	(1,215)	(1,079)

7 Dividends

The dividends paid in the period were:

	6 months ended 30 June 2013	6 months ended 30 June 2012	Year ended 31 Dec 2012
Total dividend (£ million)	42	36	58
Dividend per share (pence)	15.63	13.59	21.87

An interim dividend in respect of 2013 of 9.11 pence (2012: 8.28 pence), amounting to a total dividend of £24 million (2012: £22 million) was proposed during the period. This interim dividend will be paid on 4 October 2013 to shareholders on the register on 6 September 2013, with an ex-dividend date of 4 September 2013.

8 Earnings per share

Basic earnings per share have been calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares in issue during the period, excluding shares held by the Employee Share Ownership Trusts which are treated as cancelled.

	30 June 2013	30 June 2012	31 Dec 2012
Profit for the period (£ million)	105	108	276
Weighted average number of ordinary shares in issue (million)	267	264	265
Basic earnings per share (pence)	39.32	41.03	104.14

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares. These represent share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

	30 June 2013	30 June 2012	31 Dec 2012
Profit for the period (£ million)	105	108	276
Weighted average number of ordinary shares in issue (million)	267	264	265
Adjustment for share options (million)	–	1	1
Diluted weighted average number of ordinary shares in issue (million)	267	265	266
Diluted earnings per share (pence)	39.27	40.91	103.86

Aggreko plc assesses the performance of the Group by adjusting earnings per share, calculated in accordance with IAS 33, to exclude items it considers to be non-recurring and believes that the exclusion of such items provides a better comparison of business performance. The calculation of earnings per ordinary share on a basis which excludes exceptional items is based on the following adjusted earnings:

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Profit for the period	105	108	276
Exclude exceptional items	–	–	(10)
Adjusted earnings	105	108	266

An adjusted earnings per share figure is presented below.

	30 June 2013	30 June 2012	31 Dec 2012
Basic earnings per share pre-exceptional items (pence)	39.32	41.03	100.67
Diluted earnings per share pre-exceptional items (pence)	39.27	40.91	100.40

9 Taxation

The taxation charge for the period is based on an estimate of the Group's expected annual effective rate of tax for 2013 based on prevailing tax legislation at 30 June 2013. This is currently estimated to be 27.0% (2012: 26.0%).

10 Goodwill

	30 June 2013 £ million	30 June 2012 (Restated) £ million	31 Dec 2012 (Restated) £ million
Cost
Balance at beginning of period	145	65	65
Acquisition	–	87	89
Fair value adjustments	–	3	2
Exchange adjustments	2	(1)	(11)
At end of period	147	154	145
Accumulated impairment losses	–	–	–
Net book value at end of period	147	154	145

During the period the Group has finalised the fair values of the net assets acquired from Poit Energia on 16 April 2012. Accordingly the fair values previously reported at 30 June 2012 and 31 December 2012 have been restated with an increase in goodwill and a corresponding decrease in property, plant and equipment of £2 million at December 2012 and £3 million at June 2012.

11 Property, plant and equipment

Six months ended 30 June 2013

	Freehold properties £ million	Short leasehold properties £ million	Rental fleet (Restated) £ million	Vehicles, plant and equipment £ million	Total £ million
Cost
At 1 January 2013 (Restated, Note 10)	59	18	2,328	95	2,500
Exchange adjustments	2	–	93	1	96
Additions	5	1	111	6	123
Disposals	(2)	–	(24)	(4)	(30)
At 30 June 2013	64	19	2,508	98	2,689
Accumulated depreciation
At 1 January 2013	18	10	1,134	62	1,224
Exchange adjustments	1	–	47	1	49
Charge for the period	1	1	129	6	137
Disposals	(1)	–	(21)	(3)	(25)
At 30 June 2013	19	11	1,289	66	1,385
Net book values
At 30 June 2013	45	8	1,219	32	1,304
At 31 December 2012	41	8	1,194	33	1,276

	Freehold properties £ million	Short leasehold properties £ million	Rental fleet (Restated) £ million	Vehicles, plant and equipment £ million	Total £ million
Cost
At 1 January 2012	58	17	2,013	79	2,167
Exchange adjustments	–	–	(34)	(2)	(36)
Additions	1	1	220	11	233
Acquisitions	–	–	45	3	48
Fair value adjustments	–	–	(3)	–	(3)
Disposals	(1)	(1)	(22)	(1)	(25)
At 30 June 2012	58	17	2,219	90	2,384
Accumulated depreciation
At 1 January 2012	17	9	998	56	1,080
Exchange adjustments	–	–	(15)	(1)	(16)
Charge for the period	1	1	103	5	110
Disposals	(1)	(1)	(19)	(1)	(22)
At 30 June 2012	17	9	1,067	59	1,152
Net book values
At 30 June 2012	41	8	1,152	31	1,232
At 31 December 2011	41	8	1,015	23	1,087

The 2012 comparatives have been restated for the final fair value adjustments arising on the acquisition of Poit Energia which totalled a £3 million reduction in rental fleet cost at 30 June 2012 and a £2 million reduction inrental fleet cost at 31 December 2012.

12 Trade and other receivables

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Trade receivables	366	398	356
Less: provision for impairment of receivables	(73)	(54)	(63)
Trade receivables – net	293	344	293
Prepayments	32	44	24
Accrued income	91	83	69
Other receivables	45	37	35
Total receivables	461	508	421

Provision for impairment of receivables

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Americas	40	31	38
Europe, Middle East and Africa	25	19	19
Asia, Pacific and Australia	8	4	6
Group	73	54	63
Local Business	9	9	10
Power Projects	64	45	53
Group	73	54	63

13 Borrowings

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Non-current
Bank borrowings	260	397	199
Private placement notes	246	241	232
	506	638	431
Current
Bank overdrafts	17	29	22
Bank borrowings	61	34	163
	78	63	185
Total borrowings	584	701	616
Short-term deposits	(5)	(1)	–
Cash at bank and in hand	(27)	(22)	(23)
Net borrowings	552	678	593

Overdrafts and borrowings are unsecured.

The maturity of financial liabilities
The maturity profile of the borrowings was as follows:

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Within 1 year, or on demand	78	63	185
Between 1 and 2 years	–	234	–
Between 2 and 3 years	195	–	174
Between 3 and 4 years	26	164	25
Between 4 and 5 years	89	–	–
Greater than 5 years	196	240	232
	584	701	616

During the period the Group refinanced £350 million of facilities.

Fair value estimation
The carrying value of non-derivative financial assets and liabilities, comprising cash and cash equivalents, trade and other receivables, trade and other payables and borrowings is considered to materially equate to their fair value. Derivative financial instruments, which are measured at fair value, comprise interest rate swaps representing a liability of £10 million categorised as level 2 and forward foreign currency contracts and options representing an asset of £19 million, which are considered to be level 1. The fair value of interest rate swaps is calculated at the present value of estimated future cash flows using market interest rates. The valuation techniques employed are consistent with the year end Annual Report. There are no financial instruments measured as level 3.

14 Provisions 

	Reorganisation and Poit integration £ million
At 1 January 2013	6
Utilised during period	(3)
At 30 June 2013	3

Analysis of total provisions

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Current	2	–	5
Non current	1	–	1
	3	–	6

15 Capital commitments

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
Contracted but not provided for (property, plant and equipment)	25	45	13

16 Pension commitments

Analysis of movement in retirement benefit obligation in the period:

	30 June 2013 £ million	30 June 2012 £ million	31 Dec 2012 £ million
At start of period	(4)	(6)	(6)
Income statement expense	(1)	(1)	(2)
Contributions	4	2	6
Net actuarial (loss)/gain	(1)	4	(2)
At end of period	(2)	(1)	(4)

17 Related party transactions

Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There were no other related party transactions in the period.

18 Seasonality

The Group is subject to seasonality with the third quarter of the year being our peak demand period, accordingly revenue and profits have historically been higher in the second half of the year.