Aggreko International Kash Pandya Regional Director Aggreko International 1
Aggreko International One management team Two business models which support each other International Power Projects Local Business 2
International Power Projects Kash Pandya Regional Director Aggreko International 3
The key messages Demand for power is growing very rapidly in the developing world The major forecasting institutions have consistently under-estimated the rate of growth in demand There is a replacement cycle just beginning which means that about 25% of the current installed capacity will need to be replaced in the next 7-10 years There has been under-investment in new and replacement power infrastructure Power utilisation factors are reaching critical points in many developing countries => more frequent and damaging power cuts In this scenario, Aggreko s temporary power solution is compelling Delivery in weeks No need for capital raising pay as you go Can provide efficient peaking capacity as well as 24x7 Distributed generation means that additional power does not need additional transmission Send it away when you don t need it anymore ie when permanent capacity can cope 4
International Power Projects strategy Be the biggest => capture economies of scale => be the most efficient operator Global scale means we can: Achieve higher rates of utilisation Deliver premium standards of service: dependability; speed of deployment; safety Better manage risk Build recognition of brand and proposition Focus on capturing operating efficiencies Control of design, manufacture and supply chain => lower average capital cost / MW Re-builds => multiple lives for engines => lower average capital cost / MW Increased investment in local staff; leverage overheads Balance the footprint of the business Develop businesses in Central & South America and Asia; revenue CAGR 69% and 38% respectively 07-09 Diversify fuel types / improve emissions capability Over 300 MW of Gas; T2 emissions compliant QSK50 generator in trial; 60MW ultra-low emissions running in Chile 5
International Power Projects performance 2004-2009 $m Excl Fuel 2004 2005 2006 2007 2008 2009 Revenues 124.0 157.5 230.5 362.8 524.1 661.3 Power Rental 116.8 144.0 208.2 342.5 475.5 630.8 TC Rental OFA Rental Services 7.2 13.5 22.3 20.3 48.6 30.5 Trading Profit 29.0 32.3 45.6 99.1 143.5 247.5 Margin % 23.6% 20.5% 19.8% 27.3% 27.4% 37.4% ROCE % 21.1% 19.3% 21.9% 34.7% 29.2% 41.6% 5-year CAGR: Revenue: 40%, Trading Profit: 54% 6
2009 Revenue Breakdown by Sector Mining 3% Manufacturing 3% Oil and gas 5% Military 19% Utilities 70% 7
2009 Revenue Breakdown by geography South America 18% Asia 7% South and East Africa 34% Military 17% North and West Africa 27% 8 8
International Power Projects Global Hubs Rotterdam Dubai Panama Singapore 4 Strategic Fleet & Spares hubs for rapid mobilisation and support 9
Global Hubs Dubai hub AIP s main facility 40,000 sq m Service and Repair Centre refurbishing up to 125 units per annum Power Engineering, Mobilization, QHSE and Supply Chain 200+ employees Dubai depot Rotterdam Hub Based near Rotterdam 12,000 sq m Main mobilization base for West Africa and the Americas. Project preparation, Supply Chain 10
Global Hubs Singapore hub Main operations hub for Asia. 10,000 sq m Project mobilisation, installation, commissioning and supply chain. Singapore depot. Panama Hub Latest addition to AIP hubs. On the Trans-America highway. Project Mobilisation and Supply Chain. 6,000 sq m Will expand to become main operations base for Central America. 11
Fleet By far the largest fleet of temporary power in the world Can run at high rates of utilisation Can afford to hold 100 s MW available for immediate delivery Economies of scale in procurement, logistics and operations Managed as a single global fleet; ~4,000 MW incl Local business Supply chain and product design controlled by Aggreko Migrating to new diesel technology: Cummins QSK50 Better emissions performance 21% more power / 20ft container Improved control & diagnostics High degree of commonality with existing KTA50 G3 Gas upgrading to Aggreko Mark 2 package of Cummins QSK60 Better performance, fully containerised, Aggreko standard control systems 12
International Power Projects Fleet 2008 2009 Generators Average MW in Fleet 2,255 2,854 Average Utilisation 89% 87% 13
Refurbishments new from old for 50-60% of new cost 2004 2009 No of refurbs @ Jebel Ali 46 67 Average Hours at refurb 16,700 hrs 26,000 hrs PLUS on-site refurbs 0 46 Total Number of sets rebuild 46 113 Improved maintenance regimes => longer lives before rebuild => lower capital cost / running hour On-site refurbs beginning to work well, but we need to see how machines perform over extended running 14
Benefits of gas v diesel Up to 50% cost savings / MWh depending on relative diesel / gas price Can often use stranded gas minimal cost to country & balance of payments Lower emissions Lower environmental impact - no major fuel storage on site, fewer oil changes, lower noise Smaller footprint / MW Gas infrastructure continuing to expand 15
Gas product offering extremely attractive For the customer:- Better fuel efficiency than OCGT Rapid deployment High granularity deployed in units of 1MW Distributed generation Minimal infrastructure required For Aggreko Same underlying technology as diesel 20 container / 6-pack Longer contracts at higher rental rate Shared resources and equipment with Local business 16
AIP growing in scale & footprint 2004-25 countries 2010-60 countries to date 17
Biggest Projects 2004 Sri Lanka 130MW Started with 20MW in Jaffna Oct 03 Previously 200MW in 2000/2001 Currently 15MW in Jaffna RMS Qatar 64MW 1 site providing power for military camp Started with 15MW in 2002 Currently 25MW IAP Iraq 81MW Started in July 03 with 50MW Currently 53MW IAP Afghanistan 33MW Started in Oct 2003 with 24MW Currently 76MW Venezuela 30MW Started Dec 03, San Fernando Currently 160MW, 5 sites 18
Biggest Projects - 2010 Indonesia 322.5MW 7 sites Started with 10MW in Feb 2010! Delivery by August 2010 BPDB, Bangladesh 250MW 3 sites 100MW at 132kV, 150 at 33kV Started with 40MW in 2008 Delivery by August Angola 272MW 18 sites Started with 20MW in 2003 Venezuela 160MW 5 sites Started at 30MW in 2003 EGESA, Panama 100MW 2 Sites First multi megawatt contract with a utility company in Panama 19
Competitive environment largely unchanged Central & South America CAT dealers, Sullair, Gen-rent, Olivera, APR Africa APR, CAT dealers, local entrepreneurs Asia APR, CAT dealers, local entrepreneurs 20
Managing risks in difficult places: people Risks to people Crime Kidnap Injury, illness Terrorism West Wharf, Karachi, Pakistan We operate in some very challenging environments 21
Managing risks in difficult places: assets Risks to property Uninsured loss or damage Expropriation Nationalisation A near miss from a mortar attack We operate in some very challenging environments 22
Managing risks in difficult places: payment Risks to payment Delayed payment Country default Exchange Risks Early termination Non-compliance with minimum off-takes We operate in some very challenging environments 23
CASE STUDIES 24
Kenya: hydro variability, rapid economic growth 45MW supplied in 2000 Aggreko executes well Off-hires 2001/2002 Further drought in 2006 1 st Tender 100MW 2006 2 nd Tender additional 140MW 2009 Delivered in 8 weeks from contract 3 sites: Naivasha, Eldoret, Embakasi Rains return in 2010 => capacity winds down to 40MW Deciding factors: price, previous good experience, speed of delivery 25
Bangladesh: rapid economic growth Burgeoning demand and inadequate investment in power Dependable capacity 3,600 MW, demand 5,000 MW 2007 tender for 370MW Gas/Diesel/HFO 37 responses Aggreko only foreign bidder selected; awarded 40MW Khulna plant in January 2008 Aggreko performs well, most others fail 2009 further tender 530MW HFO/Diesel 63 responses All contracts awarded to local suppliers, most fail 2010 Power crisis deepens: Prime Minister intervenes April: Aggreko awarded 200MW +10MW additional in Khulna June: Aggreko delivers 100MW; balance in August Deciding factors: price, previous performance, speed of delivery 26
Indonesia: isolated grids, rapid economic growth Historically, a difficult territory to penetrate Strong local CAT dealer Poor track record of treatment of international power companies But well suited to Aggreko technology Rapid increase in demand / 17,508 islands / no national grid Foot in the door in 2004, and keep pushing 2004 15 MW diesel in Batam 2008 first gas contract in the world 20 MW Batam 2009, leadership changes in utility determined to reduce loadshedding 2010, breakthrough year:10 sites contracted, 3 more under MoU, total 326 MW Deciding factors: price, persistence, speed of delivery, flexibility 27
Argentina: ageing infrastructure / increasing demand Challenging country for power business Strong local competitor, Sullair Recent history of default But: ageing power infrastructure, and growing demand 2007 first tender for 100MW 2008 Aggreko awarded 35MW 2009 Aggreko awarded additional 10MW 2010 Further 30MW secured Deciding factors: price, operational performance, ability to manage country risk 28
Summary Aggreko has important competitive advantages in IPP Global reach Economies of scale Diversified risk portfolio A Local business to support it and grow with it Significant financial fire-power We continue to develop the product portfolio QSK50 / Gas The drivers of growth are structural and long-term BUT: High operational leverage Rates of return need to reflect high level of operational & commercial risk The more successful we are, the more people want to compete with us Military business will start to decline at some point 29
APPENDIX MARKET DATA 6/11/2010 30
Recent growth in new capacity almost entirely driven by China 180,000 MW of Permanent Power Installed 1967-2007 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000-1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 World China World Ex China Source: 31 Platts
Outside China plant is ageing, investment is declining 500,000 MW Installed 1967-2007 vs Plant >40 years old 450,000 400,000 Plant > 40 years old 350,000 300,000 250,000 200,000 150,000 100,000 50,000-1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 World Installed by Year Plant >40 years excl China Installed excl China Source: Platts 32
~ 25% current capacity will be >40 years old by 2015 1,200,000 1,000,000 800,000 600,000 400,000 200,000 N AMERICA MIDEAST LATIN AMERICA EUROPE CIS CHINA ASIA ANZ-OCEANIA AFRICA - 2000 2005 2010 2015 Source: Platts 33
Growth-rate in consumption much faster in non-oecd countries 9.0% 8.0% 7.0% Rolling 3-average Growth in Electricity Consumption 1988-2007 Non-OECD 8.2% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% World 4.5% OECD 1.8% 0.0% 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 World OECD Non-OECD Source: IEA, Oxford Economics 34
We now forecast 4% CAGR in electricity demand to 2015 9.0% Rolling 3-average Growth in Electricity Demand 2007-2015 8.0% 7.0% 6.0% Forecast Non-OECD 6.2% 5.0% 4.0% 3.0% World 4.0% 2.0% 1.0% OECD 1.6% 0.0% 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 OE Proj World OE Proj OECD OE Proj Non-OECD Source: IEA, Oxford Economics 35
And we think that IEA forecasts are too low 9.0% Rolling 3-year average growth in Electricity Demand 2007-2015 8.0% 7.0% Forecast 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% World OE / AGK 4.0% World IEA 2.6% 0.0% 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 OE Proj World OE Proj OECD OE Proj Non-OECD IEA Proj World IEA Proj OECD IEA Proj Non-OECD Source: IEA, Oxford Economics 36
Another 1.5 billion people growing consumption faster than GDP by 2012 6 Population with Electricity Consumption Growing faster than GDP (billion) 5 Population bn 4 3 2 1 0 2000 2002 2004 2006 2008 2010 2012 2014 Source: Oxford Economics 37
We now forecast a capacity deficit of around 600 GW by 2015 Capacity deficit increasing by about 1% of global capacity / 50,000 MW per annum Demand / supply gap forecast in 2015 in GW Demand CAGR 2004-2015 556 3.00% 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% 4.75% 5.00% 3.10% (22) (165) (311) (461) (614) (772) (933) (1,098) (1,267) Net 3.20% 35 (108) (255) (404) (558) (715) (876) (1,041) (1,211) Additional 3.50% 207 64 (82) (232) (385) (543) (704) (869) (1,038) Capacity 3.75% 355 212 66 (84) (238) (395) (556) (721) (890) CAGR 4.00% 506 363 217 67 (86) (244) (405) (570) (739) 2004 4.25% 661 518 372 222 69 (89) (250) (415) (584) =>2015 4.50% 820 677 531 381 227 70 (91) (256) (425) 4.75% 983 840 693 543 390 233 71 (94) (263) 5.00% 1,149 1,006 860 710 556 399 238 73 (96) 09 4.0% 07 4.9% 08 5.1% Source: IEA, Oxford Economics, Aggreko 38