Audit Committee Report

Responsibilities and role of the Audit Committee

The Committee's main responsibilities are to oversee and monitor:

• the external audit process, including the appointment of the external auditor, their fees and independence;
• the nature and scope of the external audit and its effectiveness;
• the effectiveness of internal audit;
• the Company's procedure for handling allegations from whistleblowers and for detecting fraud;
• the effectiveness of systems for internal financial control, financial reporting and risk management;
• the integrity of the Company's financial reports, including reviewing the findings of the external audit; and
• making appropriate recommendations to the Board.

The full Terms of Reference of the Committee are available on our website at www.aggreko.com/investors/corporategovernance.

Membership of the Committee

The members of the Committee during the year were as follows:

Robert MacLeod	Chairman
David Hamill
Ken Hanna	(appointed 21 October 2010)
Russell King
Nigel Northridge	(resigned 31 August 2010)

All members of the Committee are independent Non-executive Directors. Robert MacLeod, a chartered accountant and Group Finance Director of Johnson Matthey plc, and Ken Hanna, until recently Chief Financial Officer of Cadbury plc, each brings a high level of recent relevant financial experience to the Committee. Peter Kennerley is Secretary to the Committee. The Group Chairman, the Chief Executive, Finance Director, Group Financial Controller and Head of Internal Audit attend meetings by invitation when appropriate. The main audit partner from our external auditor also generally attends the Committee. At least once each year we hold a separate session with the external auditor without members of management and a separate private session with the Head of Internal Audit.

Main activities of the Committee during the year

The Committee met three times during the year.

External auditor independence 

We reconfirmed our policy on non-audit services provided by the external auditor: individual fees in excess of 50% of the annual audit fee and any in excess of the aggregate fees above 100% of the audit fee require the Committee's specific approval. We also considered the actual level and nature of non-audit work and were satisfied that they were in line with policy and did not detract from the objectives and independence of the external auditor.

Reappointment of external auditor

The Committee last supervised a competitive tender for the external audit in 2006, following which PricewaterhouseCoopers were reappointed external auditor. The Committee is again recommending to the Board that a proposal be put to shareholders at the 2011 Annual General Meeting for the reappointment of PricewaterhouseCoopers. There are no contractual restrictions on the Company's choice of external auditor, and in making our recommendation we took into account, amongst other matters, the objectivity and independence of PricewaterhouseCoopers, as noted above, their continuing effectiveness and cost.

Internal audit function

An important element of our role is to review the annual progress of the internal audit plan against the agreed plan for the year.

The internal audit team currently consists of three members of staff in addition to the Head of Internal Audit, and the team undertake financial, operational and strategic audits across the Aggreko group using a risk based methodology. Group Internal Audit is also responsible for IT related audits, and these services are provided by an outsourced provider. We agreed the scope of work and coverage levels as part of the annual internal audit plan and the team work under the direction of the Head of Internal Audit to deliver the plan throughout the year. We also considered all internal control issues raised in the internal audit reports and the adequacy of internal audit resources.

Whistleblowing

The Committee reviewed the Company's arrangements for reporting potential improprieties in financial reporting or other matters, independent investigation and follow-up and we can confirm that they remained adequate for addressing the Company's obligations under the Code.

Robert MacLeod
Chairman of the Audit Committee
10 March 2011