Chairman's Statement

Introduction

I am pleased to report that Aggreko has delivered another strong performance in 2011, with underlying¹ growth in revenues of 22% and in trading profit² of 26%. The Group also achieved solid headline growth despite the fact that 2010 was an extraordinary year for our revenue from major sporting events, with the FIFA World Cup, the Vancouver Winter Olympics and the Asian Games together accounting for about £87 million of revenue in 2010. Such a happy coincidence of three world-class events running in the same year happens only once every four years. We therefore feel justified in focusing on the underlying results, which we define as being revenue and trading profit excluding these events, pass-through fuel³, and currency movements, as well as a small amount of revenue from the London Olympics which arose in 2011. The strength of our performance is tribute to the breadth and diversity of the Group and the continuing demand we see in all our key markets.

Amongst our businesses, and on an underlying basis, International Power Projects grew revenue by 25% and trading profit by 33%. Our Local business delivered 21% growth in revenue, and 15% growth in trading profit.

At a Group level, reported revenues increased by 14%, profit before tax increased by 6% to £324 million (2010: £304 million) and diluted earnings per share before a £29 million exceptional tax credit⁴ increased by 10% to 86.76 pence (2010: 78.98 pence).

Strategy

Aggreko's strategy has remained broadly unchanged since it was developed in 2003. Our goal is to deliver attractive and growing returns to shareholders, excellent service to customers, and rewarding careers to our employees as the leading global provider of temporary power and temperature control. We focus on growing our business organically, supported by fleet investment and geographic expansion, but we will also make acquisitions where they can add value. We continued to invest heavily in the business in 2011, with fleet capital expenditure of 2.2 times depreciation. In addition, on 31 March 2011 we completed the acquisition of N.Z. Generator Hire Limited for a total consideration of £14 million. We also continued our strategy of geographical expansion in the Local business, opening fifteen new locations in the year, and acquiring four others as part of the N.Z. Generator acquisition; most of these new locations were in emerging markets where economies are growing most quickly.

In our last five year strategy review in 2007, we set out our view that the business could deliver, on average, double-digit revenue and earnings growth over the period 2007-2012, with fleet capital expenditure expected to be around £1 billion over the same period. I am pleased to report that we are well ahead of plan, having delivered compound annual growth over the first four years of 19% in revenue and 26% in operating profit. Fleet capital expenditure over the period has averaged £263 million per annum – which is above our original forecast reflecting the strength of revenue and profit growth; in 2012 we expect to invest around £350 million in our fleet. We believe that our strategies for both the Local and International Power Projects businesses are working well, and that our performance in 2012 will allow us to report that the targets we set in 2007 have been significantly exceeded. Work is already well underway on the next five year strategy for the period 2013 – 2017 which will be set out along with our results in March 2013.

Return to shareholders

In July 2011 we completed a £148 million return of capital to shareholders, equivalent to 55 pence per ordinary share; a further £3 million will be paid in 2012 to those shareholders who elected to defer all or part of their return. Following the return, at 31 December 2011 our net debt stands at 0.7 times EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) which has moved us closer to our longer-term target of around 1 times net debt to EBITDA.

Dividend

The Board is recommending a 10% increase in the dividend for the year as a whole; this will comprise a final dividend of 13.59 pence per ordinary share which, when added to the interim dividend of 7.20 pence, gives a total for the year of 20.79 pence. At this level, the dividend would be covered 4.2 times on a pre-exceptional basis. Subject to approval by shareholders, the final dividend will be paid on 22 May 2012 to ordinary shareholders on the register as at 20 April 2012, with an ex-dividend date of 18 April 2012.

Funding

Net cash inflow from operations during the year increased by 9% to £509 million (2010: £468 million). This funded capital expenditure of £418 million, which was £149 million higher than in 2010. Net debt at 31 December 2011 of £365 million was £232 million higher than the previous year mainly as a result of the increase in capital expenditure and the £148 million return of capital to shareholders.

The Group maintains sufficient facilities to meet its normal funding requirements over the medium term. At 31 December 2011 these facilities totalled £669 million in the form of committed bank facilities arranged on a bilateral basis with a number of international banks, and private placement notes which were put in place during the first half of 2011. Since the year end we have put in place a further £30 million of committed facilities.

Ethics Committee

Integrity and honesty in all our business dealings are central to Aggreko's reputation and long term success. For many years the Group has had a clear and robust ethics policy, and strong related procedures. Last year the Board took the further step of establishing a committee whose principal tasks are to advise the Board on the development of strategy and policy on ethical matters, and to oversee Aggreko's policies and procedures for the identification, assessment, management and reporting of ethical risk. The members of the Committee are David Hamill, Ken Hanna, and myself as Chairman. The Ethics Committee had its first meeting in February 2011 and a report on its activities is included in the Ethics Committee Report.

Board

At the Company's AGM in April 2011, I announced that I intend to step down as Chairman and also from the Board of Aggreko at the AGM in April 2012 at which point I will have served ten years as Chairman and fifteen years on the Board. Over the last ten years your Company has enjoyed compound growth of 19% in earnings per share and the share price has increased six-fold. I shall be succeeded as Chairman by Ken Hanna, who joined the Board in October 2010; Ken is Chairman of Inchcape plc and a Non-executive Director of Tesco plc.

It has always been my belief that the most important investment that a company can make is in its people, and there is no doubt in my mind that the outstanding success of your Company is due to its dedicated and talented management team, and to the quality and determination of its workforce worldwide. On behalf of all the owners of the business, I would like to thank them all for their contribution to the success of your Company.

Outlook for 2012

The business has had a strong start to the year. Having entered 2012 with 21% more power on hire than the prior year in International Power Projects and 14% more in the Local business, the growth rate in both businesses has accelerated.

Our International Power Projects business has had very strong order intake in the first two months of the year, with 300 MW of new orders taken so far, mainly in Africa, Asia and the Middle East. At the end of 2011 we had a record 14 months of forward order cover and the prospect pipeline remains strong.

Amongst the Local businesses, Europe & Middle East have had a good start, and, with the London Olympics in the second half, should have a strong year. North America likewise is showing double-digit growth in rental revenue in the first two months. Aggreko International's Local businesses continue to benefit from our strategy of expanding our depot network in fast-growing markets; at the end of February they have over 30% more power on rent than the prior year, and we currently plan to open about 20 new facilities in 2012.

Given the strong start to the year, we are planning to increase the rate of investment in fleet; we now expect that our fleet capital expenditure in 2012 is likely to be about £30 million higher than we anticipated at the end of December, at around £350 million. We are confident that the business will deliver strong growth in the first half of 2012; at this early stage of the year, we are more cautious about the second half of 2012, when, in any case, comparatives will be tougher. Overall, we continue to believe that we will deliver another year of good growth in 2012.

Philip Rogerson
Chairman
9 March 2012