Aggreko unveils £190m pre-tax profit

Aggreko looks set to become the UK construction sector’s second-highest profit earner with a sparkling pre-tax profit of £190m.

With a turnover of £950m, the group’s latest performance represents a margin of 20%.

Aggreko is a world leader in the supply of temporary power and temperature control.

In the UK, only Balfour Beatty – which announced a pre-tax profit of £270m today – is likely to have made a bigger profit during the past year.

Aggreko’s latest financial year covered the 12 months to 31 December 2008.

The previous set of figures show a turnover of £690m in 2007 and a pre-tax profit of £120m.

While 2008 produced a top-notch performance, there is every indication that 2009 could be even better.

Philip Rogerson, Chairman, said: “We have made a very strong start, well ahead of 2008, and expect to make good progress in the first half. The outlook for the second half is less certain.

“Our current judgement is that on a constant-currency basis, trading in 2009 should be at similar levels to 2008.

“Given that over 70% of our earnings are in US dollars, if we achieve this trading performance, and if the sterling : US dollar [exchange] rate stays at today's level for the rest of the year, reported results would show substantial growth over 2008."

The largest of Aggreko’s four divisions is International Power Projects which accounts for 35% of group turnover. Military projects represented about 18% of this division’s revenue.

Overall, Aggreko operates in over 100 countries around the world, including Africa, Asia and South America.

“In some jurisdictions there are significant risks of political instability which can result in civil unrest, equipment seizure, renegotiation or nullification of existing agreements, changes in laws, taxation policies or currency restrictions,” said Rogerson.

Aggreko added: “Some of the countries in which the group operates have a reputation for corruption and, given that many of our contracts involve large sums of money, we are at risk of being accused of bribery and other unethical behaviour.

“The first and most important way of avoiding this risk is to ensure that people, both inside and outside the group, know that Aggreko does not engage in, and will not tolerate, bribery, corruption or unethical behaviour.

“We have a strict ethics policy. Rather than just publishing it, we get every employee to sign it when they join the business; every consultant acting on our behalf agrees to abide by it, and every consultancy or agency agreement has an explicit term stating that the agreement will be terminated immediately if the consultant or agent does not abide by our policy.”

Turning to its IT policy, Aggreko said that its business involves high transaction volumes, complex logistics, and the need to track thousands of assets on hundreds of sites.

“We are therefore heavily dependent on the resilience of both the application software (we use an ERP system called Movex) and of the data-processing and network infrastructure,” said Aggreko.

The main data centre is in Glasgow and it has “high levels of resilience built into it”. A new second data centre has become operational in Dubai.