Notes to the Interim Accounts

For the six months ended 30 June 2014 (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 5 August 2014.

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 2013 were approved by the Board on 6 March 2014 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 2014 has been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority (previously 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 2013, 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 £798 million at 30 June 2014. The financial covenants attached to these facilities are that EBITDA should be no less than 4 times interest (30 June 2014: 28 times) and net debt should be no more than 3 times EBITDA (30 June 2014: 0.9 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 2013, 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.

New and amended standards and interpretations need to be adopted in the first interim financial statements issued after their effective date (or date of early adoption). There are no new IFRSs or IFRICs that are effective for the first time for this interim period that would be expected to have a material impact on the Group.

4 Cashflow from operating activities

	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million
Profit for the period	97	105	246
Adjustments for:
Tax	33	39	87
Depreciation	130	137	273
Amortisation of intangibles	2	2	5
Finance income	(1)	–	(1)
Finance cost	11	13	26
Profit on sale of PPE	–	(2)	(6)
Share based payments	2	(3)	(2)
Changes in working capital (excluding the effects of exchange   differences on consolidation):
(Increase)/decrease in inventories	(12)	20	23
Increase in trade and other receivables	(81)	(30)	(32)
Increase/(decrease) in trade and other payables	32	(8)	(10)
Net movement in provisions for liabilities and charges	–	(3)	(6)
Cash generated from operations	213	270	603

5 Cash and cash equivalents

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
Cash at bank and in hand	34	27	23
Short-term bank deposits	4	5	15
	38	32	38

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

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
Cash and cash equivalents	38	32	38
Bank overdrafts (Note 13)	(18)	(17)	(26)
	20	15	12

6 Segmental reporting

(a) Revenue by segment

	External revenue
	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million
Americas	340	317	645
Europe, Middle East and Africa	303	277	625
Asia, Pacific and Australia	125	166	303
Group	768	760	1,573
Local business	431	433	904
Power Projects	337	327	669
Group	768	760	1,573

(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 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million
Americas	68	69	151	(2)	(2)	(4)	66	67	147
Europe, Middle East and Africa	50	32	114	–	–	–	50	32	114
Asia, Pacific and Australia	24	56	92	–	–	(1)	24	56	91
Group	142	157	357	(2)	(2)	(5)	140	155	352
Local business	59	64	163	(2)	(2)	(5)	57	62	158
Power Projects	83	93	194	–	–	–	83	93	194
Group	142	157	357	(2)	(2)	(5)	140	155	352

	Gain on sale of PPE			Operating profit
	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million
Americas	–	1	3	66	68	150
Europe, Middle East and Africa	–	–	2	50	32	116
Asia, Pacific and Australia	–	1	1	24	57	92
Group	–	2	6	140	157	358
Local business	–	2	4	57	64	162
Power Projects	–	–	2	83	93	196
Operating profit	–	2	6	140	157	358
Finance costs – net				(10)	(13)	(25)
Profit before taxation				130	144	333
Taxation				(33)	(39)	(87)
Profit for the period				97	105	246

(c) Depreciation and amortisation by segment

	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million
Americas	51	53	107
Europe, Middle East and Africa	54	53	109
Asia, Pacific and Australia	27	33	62
Group	132	139	278
Local business	69	72	144
Power Projects	63	67	134
Group	132	139	278

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

	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million
Americas	64	56	103
Europe, Middle East and Africa	32	35	68
Asia, Pacific and Australia	25	32	57
Group	121	123	228
Local business	80	69	117
Power Projects	41	54	111
Group	121	123	228

(e) Assets/(liabilities) by segment

	Assets			Liabilities
	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million	6 months ended 30 June 2014 £ million	6 months ended 30 June 2013 £ million	Year ended 31 Dec 2013 £ million
Americas	859	918	819	(117)	(121)	(107)
Europe, Middle East and Africa	728	764	726	(164)	(172)	(160)
Asia, Pacific and Australia	361	449	375	(51)	(65)	(55)
Group	1,948	2,131	1,920	(332)	(358)	(322)
Local business	1,092	1,160	1,071	(148)	(154)	(144)
Power Projects	856	971	849	(184)	(204)	(178)
Group	1,948	2,131	1,920	(332)	(358)	(322)
Tax and finance payable	37	34	44	(117)	(110)	(123)
Derivative financial instruments	4	19	11	(8)	(10)	(9)
Borrowings	–	–	–	(557)	(567)	(375)
Retirement benefit obligation	–	–	–	(3)	(2)	(6)
Total assets/(liabilities) per balance sheet	1,989	2,184	1,975	(1,017)	(1,047)	(835)

7 Dividends

The dividends paid in the period were:

	6 months ended 30 June 2014	6 months ended 30 June 2013	Year ended 31 Dec 2013
Total dividend (£ million)	46	42	66
Dividend per share (pence)	17.19	15.63	24.74

An interim dividend in respect of 2014 of 9.38 pence (2013: 9.11 pence), amounting to a total dividend of £24 million (2013: £24 million) was declared during the period. This interim dividend will be paid on 3 October 2014 to shareholders on the register on 5 September 2014, with an ex-dividend date of 3 September 2014.

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 2014	30 June 2013	31 Dec 2013
Profit for the period (£ million)	97	105	246
Weighted average number of ordinary shares in issue (million)	266	267	267
Basic earnings per share (pence)	36.48	39.32	92.15

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 2014	30 June 2013	31 Dec 2013
Profit for the period (£ million)	97	105	246
Weighted average number of ordinary shares in issue (million)	266	267	267
Adjustment for share options (million)	–	–	–
Diluted weighted average number of ordinary shares in issue (million)	266	267	267
Diluted earnings per share (pence)	36.45	39.27	92.03

9 Taxation

The taxation charge for the period is based on an estimate of the Group's expected annual effective rate of tax for 2014 based on prevailing tax legislation at 30 June 2014. This is currently estimated to be 26% (2013: 27%).

10 Goodwill

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
Cost
Balance at beginning of period	133	145	145
Exchange adjustments	–	2	(12)
At end of period	133	147	133
Accumulated impairment losses	–	–	–
Net book value at end of period	133	147	133

11 Property, plant and equipment

Six months ended 30 June 2014

	Freehold properties £ million	Short leasehold properties £ million	Rental fleet £ million	Vehicles, plant and equipment £ million	Total £ million
Cost
At 1 January 2014	63	19	2,373	84	2,539
Exchange adjustments	(1)	–	(65)	–	(66)
Additions	5	1	107	8	121
Disposals	–	–	(27)	(3)	(30)
At 30 June 2014	67	20	2,388	89	2,564
Accumulated depreciation
At 1 January 2014	19	12	1,291	52	1,374
Exchange adjustments	(1)	–	(37)	–	(38)
Charge for the period	1	1	123	5	130
Disposals	–	–	(24)	(2)	(26)
At 30 June 2014	19	13	1,353	55	1,440
Net book values
At 30 June 2014	48	7	1,035	34	1,124
At 31 December 2013	44	7	1,082	32	1,165

Six months ended 30 June 2013

	Freehold properties £ million	Short leasehold properties £ million	Rental fleet £ million	Vehicles, plant and equipment £ million	Total £ million
Cost
At 1 January 2013	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

12 Trade and other receivables

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
Trade receivables	369	366	346
Less: provision for impairment of receivables	(61)	(73)	(61)
Trade receivables – net	308	293	285
Prepayments	38	32	26
Accrued income	95	91	64
Other receivables	37	45	42
Total receivables	478	461	417

Provision for impairment of receivables

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
Americas	29	40	35
Europe, Middle East and Africa	22	25	20
Asia, Pacific and Australia	10	8	6
Group	61	73	61
Local Business	13	9	12
Power Projects	48	64	49
Group	61	73	61

13 Borrowings

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
Non-current
Bank borrowings	319	260	138
Private placement notes	220	246	227
	539	506	365
Current
Bank overdrafts	18	17	26
Bank borrowings	18	61	10
	36	78	36
Total borrowings	575	584	401
Short-term deposits	(4)	(5)	(15)
Cash at bank and in hand	(34)	(27)	(23)
Net borrowings	537	552	363

Overdrafts and borrowings are unsecured.

The maturity of financial liabilities

The maturity profile of the borrowings was as follows:

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
Within 1 year, or on demand	36	78	36
Between 1 and 2 years	231	–	38
Between 2 and 3 years	56	195	100
Between 3 and 4 years	76	26	–
Between 4 and 5 years	15	89	45
Greater than 5 years	161	196	182
	575	584	401

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 £8 million categorised as level 2 and forward foreign currency contracts and options representing an asset of £4 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 Share Capital

	2014 Number of shares	2014 £000
(i) Ordinary shares
At 1 January (ordinary shares of 13549/775 pence)	269,029,545	36,880
Employee share option scheme	56,870	8
Share consolidation (79 for 83 shares as at 27 May 2014*)	(12,968,020)	–
Share split:
Deferred ordinary shares (Note (i))	–	(17,147)
B shares (Note (iii))	–	(181)
Transfer to capital redemption reserve (Note (ii))	–	(7,182)
At 30 June (ordinary shares of 4329/395 pence)	256,118,395	12,378

(ii) Deferred ordinary shares of 618/25 pence (2013: 618/25 pence)
At 1 January and 30 June	182,700,915	12,278
(iii) Deferred ordinary shares of 1/775 pence (2013:1/775 pence)
At 1 January and 30 June	18,352,057,648	237
(iv) Deferred ordinary shares of 984/775 pence (2013: nil)
At 1 January	–	–
Share split (Note (i))	188,251,587	17,147
At 30 June	188,251,587	17,147
(v) B Shares of 984/775 pence (2013: nil)
At 1 January	–	–
Share split (Note (iii))	1,989,357	181
At 30 June	1,989,357	181

In June 2014 the Group completed a return of capital using a B share structure. The main terms of the return of capital and related consolidation of ordinary shares were:

• the issue of 1 B share of par value 9⁸⁴/₇₇₅ pence for every 1 existing ordinary share held on the record date. This resulted in the creation of 269,086,415 B shares; and
• the issue of 79 new ordinary shares of par value 4³²⁹/₃₉₅ pence for every 83 existing ordinary shares held on the record date.

As a result of the return of capital:

(i) From the 269,086,415 B shares created a special dividend of 75 pence per B share was paid on 188,251,587 B shares, which then converted into deferred shares of negligible value resulting in a cash payment from the Company of £141.2 million on 6 June 2014;

(ii) A further 78,845,471 B shares were bought back at 75 pence each resulting in a cash payment from the Company of £59.1 million on 6 June 2014. As a result of this transaction £7,182k was transferred from ordinary share capital to the capital redemption reserve being 78,845,471 shares at par value 9⁸⁴/₇₇₅ pence; and

(iii) The Company intends to further offer to purchase the remaining 1,989,357 B shares in the future at 75 pence each.

£2 million has been transferred back to the Group from the Group Employee Benefit Trust. Such amount represents the portion of the 2011 return of capital received by the Employee Benefit Trust in respect of the B shares created out of the ordinary shares held in the Employee Benefit Trust at the time of the 2011 return; and is equivalent to 55 pence per B share.

15 Capital commitments

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
Contracted but not provided for (property, plant and equipment)	40	25	15

16 Pension commitments

Analysis of movement in retirement benefit obligation in the period:

	30 June 2014 £ million	30 June 2013 £ million	31 Dec 2013 £ million
At start of period	(6)	(4)	(4)
Income statement expense	(1)	(1)	(2)
Contributions	3	4	5
Total remeasurements	1	(1)	(5)
At end of period	(3)	(2)	(6)

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.