TIDMAGK
RNS Number : 1231H
Aggreko PLC
23 March 2020
AGGREKO PLC
23 MARCH 2020
COVID-19 UPDATE
Given the current and rapidly changing developments regarding
COVID-19, Aggreko plc issues this update.
Our people
Since the start of the COVID-19 outbreak our primary concern has
been the welfare of our people, their families and the local
communities in which we work. We have implemented several measures
to protect our people and engaged in frequent communication to help
them respond safely to the spread of the virus.
While we have not closed offices or depots around the world, we
are supporting an increasing number of our people in working from
home. We will continue to follow developments closely and will take
further action as appropriate.
Financial position
We have entered this period of uncertainty with a strong
financial position. As at the end of February the Group had
immediately available liquidity of GBP606 million, comprising GBP66
million of available cash, GBP458 million of undrawn committed
facilities arranged on a bilateral basis with eight international
banks and GBP82 million of undrawn uncommitted facilities. The
financial covenants attached to the committed facilities are that
EBITDA should be no less than 4 times interest and net debt should
be no more than 3 times EBITDA. The covenants exclude the impact of
IFRS 16 'Leases' and, on that basis, at 31 December 2019, these
ratios were 14 times and 0.9 times respectively.
The maturity profile of our current committed facilities is set
out within the appendix to this announcement.
Financial priorities
As noted above, we are in a strong financial position as we face
the challenges presented by the spread of the virus.
Notwithstanding this, our initial priority has been to understand
better the potential impact on the Group's financing and liquidity,
and to take prompt action to preserve Aggreko's financial position.
These measures have included, but are not limited to, a detailed
review of and reduction in discretionary spend, hiring freezes,
travel restrictions and the limiting of our fleet capital
expenditure to that required to fulfil secured orders and meet
known demand.
As the situation has continued to develop with increasing
uncertainty over its duration, we have considered a range of
scenarios to stress-test the Group's liquidity position through to
the end of this year. These show that even in the reasonably
probable worst case scenario, with appropriate mitigating actions,
we expect to remain within the Group's financial covenants, while
maintaining headroom under our existing committed facilities.
We have already refinanced all our facilities that would have
matured in 2020, and we expect to continue with our usual practice
of refinancing our facilities well in advance of their maturity
dates. In addition, we will explore the newly announced Covid
Corporate Financing Facility (CCFF) from the Bank of England.
Current trading
Since we last updated the market on 3 March, the impact on the
Group's revenue arising from COVID-19 has been limited and what we
have experienced has been primarily in the events sector. However,
as central governments and businesses take further action to
contain and delay the spread of the virus, there is now significant
uncertainty around future demand across several sectors and
geographies. The recent sharp fall in the oil price has compounded
this level of uncertainty. Additionally, we are beginning to face
some operational challenges getting our people to project sites as
countries close borders and restrict travel. In terms of our supply
chain, there has been relatively little impact to date although,
specifically, we are experiencing delays of a few weeks in
equipment orders from China.
We are in regular dialogue with our customer on the Tokyo 2020
Olympic and Paralympic Games and, in line with the current
International Olympic Committee guidance, we are continuing our
work in support of delivering the Games, which are due to start on
24 July 2020.
As a reminder of the sector, geographic and contract length
diversity of the Group, we have provided some key details on the
split of the Group's business within the appendix to this
announcement.
Dividend
Despite the strong financial position of the Group, given the
rising level of uncertainty as to how the situation will develop,
alongside the other measures we are taking to preserve the Group's
cash position the Board has decided to withdraw its recommendation
to pay a final dividend at the forthcoming AGM. We will review this
decision again later in the year once the outlook becomes clearer.
We recognize that this is a significant decision, but the Board
believes that it is an appropriate and prudent measure to take at
this point as the Group seeks to preserve its strong liquidity,
cashflow and financial position through these most uncertain
times.
Outlook
While the challenges facing our business are unprecedented, as
noted above our primary concern remains the welfare of our people,
their families and the local communities in which we work.
We have a global, diversified business, with a robust balance
sheet and we are taking immediate measures to contain our costs and
protect our strong financial position.
However, given the continued uncertainty, we do not believe it
is possible to retain the Group's 2020 guidance as communicated at
our full year results on 3 March. We will continue to monitor the
situation closely and provide further updates as necessary.
Beyond the AGM on 23 April, our next scheduled announcement is
the interim results on 6 August, alongside which we had planned to
provide an update on our strategic priorities. While we believe
that a continued focus on our four strategic priorities set out in
2015 will underpin the performance of the business over the longer
term, given the current market uncertainties we have taken the
decision to postpone this strategic update.
Enquiries
Investors and analysts
Louise Bryant, Aggreko plc +44 7813 210 809
Richard Foster, Aggreko plc +44 7989 718 478
Financial media
Andy Rivett-Carnac, Headland +44 7968 997 365
This announcement contains inside information. The person
responsible for arranging for the release of this announcement on
behalf of Aggreko plc is Richard Foster, Investor Relations
Manager.
APPENDIX
Rental Solutions
Rental Solutions is a transactional business with forward order
book clarity of around five weeks. Average contract length is
around three weeks. The geographic split of Rental Solutions
revenue for the year ended 31 December 2019 was as follows:
-- North America - 32% of total Group revenue (ex-fuel)
-- Northern Europe - 6% of total Group revenue (ex-fuel)
-- Continental Europe - 10% of total Group revenue (ex-fuel)
-- Australia Pacific - 5% of total Group revenue (ex-fuel)
Given the recent reduction in the oil price, the following
breakdown of our oil and gas exposure in North America for the year
ended 31 December 2019 should be noted:
-- 25% of North America revenue is derived from the oil and gas
(O&G) sector (33% at the peak in 2014)
-- 90% of North America O&G revenue is from shale (i.e. 8% of total Group revenue, ex-fuel)
-- 70% of North America O&G revenue is from the Permian
basin (i.e. 6% of total Group revenue, ex-fuel)
-- Average contract length in O&G is around five months
Power Solutions Industrial
Power Solutions Industrial has both a transactional and a
projects business. The most material geographic region is the
Middle East, which represents 10% of Group revenue (ex-fuel) and
has an average contract length of around five months. The average
contract length in the Power Solutions Industrial projects
business, excluding Eurasia, is just under five years. In Eurasia,
the majority of our contracts are between two and ten years in
length.
Power Solutions Utility
The average contract length of our utility projects is between
five and six years.
Events
The events sector represented 8% of Group revenue (ex-fuel) in
the year ended 31 December 2019.
Maturity profile of the Group's current committed facilities
GBP million 2020 2021 2022 2023 2024+ Total
------ ----- ----- ----- ------
Committed bank facilities
(variable rate) nil 71 150 200 125 546
US private placement
notes (fixed rate) nil 146 0 0 375 521
--------------------------- ------ ----- ----- ----- ------ ------
Total nil 217 150 200 500 1,067
--------------------------- ------ ----- ----- ----- ------ ------
Note: Non-Sterling facilities have been translated at current
spot rates
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END
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