1 Results presentation For the six months ending 30 June 2016 Results Presentation August 2016
2 1H16 Operating Review 1 Chris Weston, CEO Results Presentation August 2016
3 1H16 Operating Review Agenda 1H16 Financial Review Business Priorities and 2016 Outlook 1 Chris Weston, CEO 2 Carole Cran, CFO 3 Chris Weston, CEO Results Presentation August 2016
4 4 Group summary Difficult trading conditions, progress being made • Implementation of business priorities continues to progress well • Revenues of £685m, trading profit of £77m, driven by known headwinds • Slow first half in North American petrochemical and refining sector • Debtor provision increased, reflecting ongoing payment challenges in Venezuela • Utility order intake to date of 875MW • Balance sheet; gearing at 1.2 times • Disciplined investment in new fleet • Half year dividend maintained Results Presentation August 2016
5 Oil & Gas & Mining Other 11 Contracting Petrochemical & Refining Utilities Services Events 10 Manufacturing Revenues 8% lower, weak trading in North America 42% Rental Solutions Group revenue Construction Quarrying Revenue by sector 1H16 Operational summary 10 11 14 18 (ex pass through fuel) • North America down 20%; difficult conditions in oil and gas and petrochemicals and refining • Reduced headcount and capex spend; reorganised North American business unit • Good performance in Europe and Australia Pacific • Temperature control revenues up 15% 10 % 18 % 14 % 11 % 10 % 8 % 7 % 6 % 5 % 11 % Results Presentation August 2016
6 Shipping Group revenue Power Solutions Industrial 18% growth in other regions Revenues 12% lower, declines in Latin America offset Events Manufacturing Services Construction Oil & Gas & Mining Quarrying 10 Contracting Other Utilities 10 Operational summary Revenue by sector 1H16 31 12 (ex pass through fuel) • Excluding Baku Games revenues down 2% • Strong performance in Eurasia and Africa • Steady performance in Middle East • Brazil and Chile challenging; removing costs 7 % 31 % 12 % 10 % 8 % 6 % 6 % 5 % 5 % 10 % Results Presentation August 2016
7 Utilities Group revenue 40% Revenues down 16%, known headwinds during the first half Other Oil & Gas & Mining Quarrying Power Solutions Utility 84 Revenue by sector 1H16 Operational summary (ex pass through fuel) • Strong order intake of 875MW; (YTD 2015: 451MW) • Prospect pipeline remains healthy, but competitive market place • 20% offhired in H1, main offhire Mozambique 84 % 6 % 5 % 5 % Results Presentation August 2016
8 Yemen 8 Extensions Argentina Venezuela Bangladesh Key extension discussions in next few months 450 MW 380 MW • New volume of around 2.5GW awarded to 5 • 180MW up for renewal this year and 10 year contracts • 85MW in B.Baria expected to • 120MW extended until September 2016, extend for 3 years subject to contract. Tender for extension to • 95MW in Ashungang extended 2017 to be issued until September • Remainder of contract due for renewal between October 2016 and June 2017 130 MW 160 MW • Extension due in second half • Out of contract • Operated for more than 10 years • Security a challenge • Running at lower levels • Need for power in country; working to extend • Continuing to support the country Results Presentation August 2016
9 1H16 Financial & Operating Review 2 Carole Cran, CFO Results Presentation August 2016
(11) (20) 19.8p 9.4p 71 Profit before tax (634) £m 1H16 Trading profit 67 82 Profit before tax 77 Trading profit 661 51 685 Revenues decrease by 12% £m 1H16 1H15 Reported 61 Change Underlying Change 1 Trading margins of 11% (pre-exceptional items) (post-exceptional items) Revenue 781 (12)% (12)% Revenue excl. 752 (12)% (12)% pass-through fuel Profit after tax 43 114 (32)% (27)% Diluted earnings per share 16.8p Operating profit 115 (29)% Net interest expense (13) 14% • Exceptional charge of £10m in H1 102 (31)% • Total cash cost of £35m against Tax (27) 26% benefits of £80m Profit after tax 75 (33)% 2 reflects country mix • Tax rate of 28% Diluted earnings per share 29.6p (33)% Dividends per 9.4p -% share (declared) Net Debt at period end (467) 1 Underlying excludes pass-through fuel and currency translation 2 Tax rate pre-exceptional costs 10 Results Presentation August 2016
280 Change 1 14% 3% 10 Trading profit Rental Solutions Revenue £m 1H16 1H15 Reported Change Underlying Challenging first half • 20% decline in North America • Actions taken on cost base 294 (5)% (8)% • Seasonal business, H2 weighted 32 (70)% (71)% • Good performance in Europe and Trading margin 11% Australia Pacific ROCE 20% 1 Underlying excludes currency translation 11 Results Presentation August 2016
117 Reported 8% 9 Trading profit Change 1 Underlying Change Revenue 1H15 1H16 Power Solutions: Industrial 9% £m Trading margin decline driven by Baku • 3pp margin drop driven by Baku Games 136 (14)% (12)% • Pressure on rates in Latin America 15 (39)% (39)% • Margin accretion in Middle East Trading margin 11% ROCE 6% 1 Underlying excludes currency translation 12 Results Presentation August 2016
Change 1 1H15 22% 58 Trading profit 264 Revenue Power Solutions: Utility Change Reported Underlying 1H16 £m 16% Known headwinds impact revenues • Margin improvement net of lower costs and increased debtor provision (ex fuel) 322 (18)% (16)% • Debtor provision stands at $88m 68 (15)% 2% • Currency impact and working capital Trading margin 21% affecting ROCE ROCE 22% 1 Underlying excludes pass-through fuel and currency translation 13 Results Presentation August 2016
Movement in Net Debt (98) (3) Operating Cash Flow (145) Gearing in line with strategic range (22) (11) 14 (101) Free Cash Flow (17) (45) (8) Net Cash Flow (70) (75) (15) 100 82 219 EBITDA £m 1H16 137 • Activity levels drive higher working 1H15 capital Operating Profit 115 • Trade debtors up by £33m Depreciation & Amortisation 140 255 • Net debt was £634m and includes Working Capital (1) £75m of FX Cashflows relating to exceptional items - • Headroom against facilities of £355m Other 1 255 Tax (37) Net Interest (13) Purchase of Fixed Assets (147) Proceeds from Fixed Asset Disposals 5 63 Dividends (45) Return of Value & Changes in Equity 1 19 Exchange 8 27 14 Results Presentation August 2016
2016 4,828 Industrial Power Solutions Rental Solutions 83% 1H16 2,322 55% Capital allocation discipline maintained 62% 2,494 90% 2016 76% Utility 2016 2015 2014 2015 2014 £23m Rental Solutions Fleet 1H16 £32m 51% £36m 2015 2014 Power Solutions 1H15 1H 15 1H 1H16 16 1H 1H15 15 1H15 1H 15 Average utilisation 63% 77% 55% Fleet Capex / 80% 115% 105% Fleet Depreciation Fleet Capex £22m £76m £40m Power Solutions (Utility) Fleet Power Solutions (Industrial) Fleet at 30 Jun (MW) at 30 Jun (MW) at 30 Jun (MW) 2015 5,267 2015 2,316 2015 2,266 Diesel Gas 15 Results Presentation August 2016
Business Priorities and 2016 Outlook 3 Chris Weston, CEO 16 Results Presentation August 2016
Business priorities Customer Technology Rental Solutions • Interviews with around a thousand customers • Streamlining customer experience from enquiry to payment • Enabling service differentiation by customer needs • Remote monitoring – operations centre now monitors 6 thousand assets • Developing applications in temperature control 17 Results Presentation August 2016
Business priorities Power Solutions EFFICIENCY • Removed duplication and right-sized organisation • Improvements in project site delivery – 15% of costs removed • Upgrading site performance management system • Optimising depot footprint 18 Results Presentation August 2016
Business priorities New products Efficiency MS HFO in assembly New Gas Power Solutions TECHNOLOGY • Medium speed HFO engine: 15%* fuel saving • Solar-diesel product: 5-10% fuel saving • New gas engine in build • Adding 350 G3+ engines to fleet in 2016 • Work continuing on G3++ *based on $50 oil price 19 Results Presentation August 2016
Power Solutions Business priorities CUSTOMER • Progress on assessing supply, demand dynamics • Sales pipeline management tighter • Conversion rates up, helped by lower oil price, costs out and G3+ fuel efficiency 20 Results Presentation August 2016
Efficiency 21 Group business priorities REMOVING £80m FROM THE BUSINESS • 700 roles removed from the organisation • Significant number of projects underway to improve procurement • £40m of savings in 2016, £80m benefit from the start of 2017 • Cost savings are 80% opex, 20% capex • Balance reinvestment for growth with margins and returns 21 Results Presentation August 2016
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