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Performance

We test our strategy on a regular basis. Having conducted a root-and-branch review in 2003 we re-examined our conclusions in 2005. Again, in 2007, we have carried out a thorough review of our markets and service offerings. The main conclusions of this latest review were as follows:

• The strategy developed in 2003 and re-confirmed in 2005 is working well.

• The Group’s core markets of power and temperature control rental are growing at a healthy rate, and this gives it plenty of growth opportunities.

• The in-depth analysis we have made of the drivers of growth in our International Power Projects business indicates that the world is beginning to face structural shortages of power, which will last many years and which will sustain demand for our services.

• Our Local business also offers attractive opportunities for growth, both from expanding existing territories and developing new ones.

• As a consequence of these conclusions, we believe that it is in shareholders’ interests that we increase the rate of investment in the business. The focus of this investment will be:
  • increasing our revenue-earning capacity, and the choice we can offer to our customers, by increasing the size of our rental fleet;
  • improving our ability to serve customers by opening new service centres, both within existing markets and extending our reach into new markets; and
  • improving the operational efficiency of our business by investing in training our employees, improving processes, and extending our use of information technology.

We made good progress against these objectives in 2007:

• Total capital expenditure increased in 2007 to £180.6 million, £52.6 million up on the prior year, representing 195% of the depreciation charge. £172.4 million was investment in new fleet (2006: £114.1 million).

• In terms of operating efficiency, in 2007:
  • revenue per employee increased by 5%;
  • revenue per £ of Average Net Operating Assets has increased by 1%; and
  • ROCE has increased from 22% to 26%.

Note: All ratios relate to revenue and profit excluding pass-through fuel and exceptional items.

• In terms of improving marketing and operational reach we opened new locations in Edmonton (Canada), Padova (Italy) and Shanghai; in addition, the acquisition of GE Energy Rentals in December 2006 brought us new service centres in Dorsten (Germany), Santiago and Puerto Mont (Chile), Campinas (Brazil), Mexico City, Rancho Dominguez (California) and Miami. Aggreko rented equipment in more than 100 countries in 2007.

• We completed the integration of GE Energy Rentals faster and at a lower cost than originally anticipated.

• The Group delivered significant growth in revenues and earnings in 2007, as shown below:

Aggreko Group – (excluding pass-through fuel)

	2007	2006	Growth %
Revenue(£m)	634	497	27%
Trading profit (£m)	131	85	54%
Trading margin Return on capital	21%	17%
ROCE*	26%	22%

*calculated using average net operating assets