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Q3 2019 Financial Information Algeco Investments 2 S.à r.l.

Algeco Investments 2 S.à r.l. Q3 2019

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Introductory Note

Unless the context requires otherwise, all references to “we,” “us,” “our”, “Algeco” and the “Group” refer to Algeco Investments 2 S.à r.l. (the “Company”), a limited liability company incorporated under the laws of Luxembourg, together with its subsidiaries. The Company is ultimately owned by Algeco Holding S.à r.l., a limited liability company incorporated under the laws of Luxembourg. Algeco Holding S.à r.l. is principally owned by a group of investment funds managed by TDR Capital LLP (“TDR”).

There are no material changes to the risk factors the Group faces as disclosed in the annual report for the year ended 31 December 2018.

Significant developments in the Quarter Following the appointment of Mike Smith as Chairman of Algeco in June 2019, the following major developments have occurred;

On 31 October, we acquired the modular space businesses, BUKO Huisvesting and BUKO Bouw & Winkels (collectively “BUKO”), which are both based in the Netherlands. The businesses are spread over five sites in the Netherlands, with the largest locations in Beverwijk and Zaltbommel. In completing the acquisition, we welcomed 195 new colleagues and have grown our fleet in the Netherlands from 3,000 to more than 15,000 units. BUKO has a strong position and very good client relationships in the Netherlands, especially in the construction, education, healthcare and government sectors. BUKO provides temporary and semi-permanent buildings.

Andrew Tyler, Chief Executive Officer, will be stepping down from his role in November 2019. Algeco has initiated the search for a new CEO to work alongside Mike Smith. As CEO of Algeco, Andrew led the creation of Algeco Group, the integration of the European and Asia Pacific businesses and the relocation of the Headquarters from Baltimore to London. He oversaw the successful integration of Touax Solutions Modulaires and the spin-off of Target Hospitality, the North American remote accommodation business.

We have stream lined the Group’s corporate function. In the quarter ended 30 September 2019, this resulted in a restructuring expense of €1.5m.

Algeco Investments BV has lent €154m of the proceeds from the Target Hospitality disposal to Algeco Investments 1 Sarl. This loan has been made in accordance with the terms set out in the Group’s principal financing documents (see note 10 to the financial statements). Algeco Investments 1 S.à r.l. has used €50m of the proceeds of the loan to redeem issued preference shares.

Business review of the Quarter ended 30 September 2019 Discussion of Results for the continuing business The table below sets out the non-financial KPIs which are the average number of active units in our modular lease fleet, the average utilisation of our modular lease units, the average monthly rental rate per unit (excluding value added products, VAPS 360°) and the average VAPS 360° revenue per unit.


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Non-financial Key Performance Indicators1

2019 2018

Q3 Dec Q3 Number of active units in our modular lease fleet at period end

231,000 234,000 240,000

This is a key metric as it measures the total useable fleet. The number of units in the fleet naturally fluctuates depending on our customers’ demand and preference to purchase or lease the units. We invest in new units where customer demand exceeds availability and the financial returns meet our internal hurdle rate. The movements from Q3 2018 is mostly due to the planned reductions following the UK restructuring plan and the Touax acquisition. The movement from December 2018 is the result of the continued reduction in the UK fleet as a part of the UK restructuring plan.

Average utilisation rate of our modular lease units 79% 81% 82% This is a key metric as it measures how successful we have been in maintaining and leasing the fleet. The average utilisation rate of our modular lease units has decreased by 3% since Q3 2018 and 2% since the year end. The main reason for the decline is a reduction in the France, ENSE (as defined below), German and APAC business units, offset by increases in the UK business units. Average monthly rental rate (ARR) per unit excluding VAPS 360°

€148 €145 €147

This is a key metric as it measures how successful we have been at achieving price targets. The average monthly rental rate per unit excluding VAPS 360° is slightly higher than Q3 2018 and 3% higher than the average for 2018.

VAPS 360° revenue per unit €77 €63 €67 This is a key metric as it measures how successful we have been in selling these high margin products to customers. Overall, the VAPS 360° revenue per unit has increased by €10 since Q3 2018 and €14 compared to the average for 2018. This is a key strategic focus.

1 The average utilisation rate of our modular lease units is the ratio of

(i) the number of units in use (including units from the time they are leased to a customer until the time they are returned to us) to

(ii) the total number of units available for lease in our modular fleet. Our average monthly rental rate per unit for a period uses constant currency and is equal to the ratio of

(i) our rental income for that period excluding VAPS 360°, delivery and installation services, damages and early termination penalties, to

(ii) the average number of modular lease units rented with our customers during that period. Our VAPS 360° revenue per unit is equal to

(i) The total VAPS 360° revenue, divided by (ii) The total number of units on rent.


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Revenue, Underlying EBITDA, Loss before tax and Net capex

Financial Key Performance Indicators €m

Q3 2019

Q3 2018

Movement

YTD 2019

YTD 2018

Movement

Revenue 260 253 7 3% 706 704 2 0% Underlying EBITDA2 75 78 -3 -4% 194 194 - - Loss / profit before tax from continuing operations

(32) 9 -41 4.5x (79) (19) -60 3x

Net capex3 (41) (39) 2 5% (79) (79) - - Revenue: In Q3 2019 revenue has increased by 3% compared to Q3 2018. For the YTD revenue is the same. In Q3 2019 leasing revenue has fallen by 3% to €177m reflecting a reduction in the number of units on rent partly offset by higher VAPS 360° revenue and prices. Leasing revenue also fell by 3% for the YTD. Sales revenue has increased by 17% in Q3 2019 to €83m due to higher volumes of new sales projects in France, APAC and ENSE. Overall for YTD sales revenue has increased by 10% to €201m. We continue to see revenue growth in France, UK and ENSE and revenue has fallen in APAC, following mobile camps coming off-hire. In Germany our penetration into the construction market continues to be slow resulting in a decrease in revenue. Overall, our strategy to take advantage of our scale and move units within mainland Europe has enabled us to match customer demand. Underlying EBITDA: In Q3 2019 underlying EBITDA decreased by €3m, 4%, compared to Q3 2018. The Q3 2018 result was impacted by a large one-off sale of used units to a large strategic customer with an impact of €4m. Excluding this impact, underlying EBITDA increased by €1m. For YTD EBITDA has been stable. This reflects strong growth in France and ENSE, offset by declines in APAC, UK and Germany. Group loss before tax from continuing operations: has increased by €41m to €32m in Q3 2019 compared to a profit of €9m in Q3 2018. In Q3 2019, this is the result of the decrease in underlying EBITDA of €3m and the following costs, which are not included in underlying EBITDA: The separately disclosed items of €4m are €2m higher than 2018. In 2019, the costs are principally related to

the corporate and UK restructuring, €3m, and acquisition costs, €1m. Net finance expense has increased by €29m to €61m (2018: €32m). The increase is primarily due to the €27m

mark to market non-cash revaluation loss on the shares we hold in Target Hospitality. Foreign exchange losses were €10m (Q3 2018: €2m).

The loss has increased by €60m to €79m in YTD 2019 compared to a loss of €19m in YTD 2018. The increase is the result of the combination of the following costs, which are not included in underlying EBITDA: The separately disclosed items of €19m are €18m higher (YTD 2018: €1m). In 2019, the costs are principally

related to the corporate and UK restructuring plan, €13m, integrating Touax, €2m, acquisition costs, €1m, and the share based payment charge, €3m.

Net finance expense has increased by €8m to €143m (YTD 2018: €135m). The increase is due to a €40m mark to market non-cash revaluation loss on the shares we hold in Target Hospitality in 2019 offset by the expenses of early redemption and release of deferred financing fees we incurred in 2018.

Currency losses of €13m are €35m greater that the gain of €22m in YTD 2018. Our exposure to currency movements is lower following the 2018 refinancing and the currency hedges we now have in place.

Net capital expenditure (net capex): is the same year on year and was up by €2m compared to Q3 2018. We continue to focus on the efficient use of our fleet to reduce our requirements for capex and to match market demand.

2 Underlying EBITDA: this is a non-GAAP measure which we have defined as net income from discontinued operations before income tax expense, net finance expense, net currency gains and losses, depreciation and amortisation (“EBITDA”), adjusted to exclude certain non-cash items and the effect of what we consider to be transactions or events not related to our core business operations. The reconciliation of our consolidated operating profit to underlying EBITDA for the three and nine months ended 30 September 2019 and 2018 is set out in note 3 to the consolidated financial statements. We believe that underlying EBITDA provides useful information to investors because it is a measure used by our management team to evaluate our operating performance, to make day-to-day operating decisions, and is frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results across our industry. 3 Net capex: this is a non-GAAP measure, which we have defined as total capital expenditure in the year to date, excluding additions resulting from the application of IFRS 16 lease accounting, less proceeds received from disposals of rental equipment, other property, plant and equipment and other intangible assets.


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Business units performance (€m) France

Revenue Underlying EBITDA Net Capex 2019 2018 Change % 2019 2018 Change % 2019 2018 Change %

Q3 72 66 6 9 28 27 1 4 11 11 - -

Q2 57 60 -3 -5 22 18 4 22 8 8 - -

Q1 56 54 2 4 19 16 3 19 7 8 -1 -14

YTD 185 180 5 3 69 61 8 13 26 27 -1 -4 Our operations in France continue to perform well. The increase in revenue in the quarter is mostly from leasing revenue with sales also slightly above the previous year despite a large one-off sale in Q3 2018. YTD 2019 revenue is 3% higher than YTD 2018. We have lower utilisation of the French fleet, but this is offset by higher prices and VAPS 360° increasing our margins. We continue to refurbish the Touax units and manage the fleet to keep our capital expenditure requirements at a minimum. Overall, the market in France is buoyant and we believe that we are well placed to succeed. Asia Pacific and China (“APAC”)


Q3 51 53 -2 -4 10 12 -2 -22 2 2 - -

Q2 47 56 -9 -16 11 11 - - 1 4 -3 -75

Q1 49 51 -2 -4 10 11 -1 -9 1 4 -3 -75

YTD 147 160 -13 -8 30 35 -5 -14 4 10 -6 -60 Revenue is lower year on year due to two large Australian mobile camps coming off-hire in Q4 2018. Excluding these Australian mobile camps lease revenue per unit has increased. Underlying EBITDA is down 22% in Q3 2019 compared to Q3 2018 and for the YTD 2019 has reduced by 14% mainly due to the approximately €4m impact from the mobile camps coming off-hire in Q4 2018. Net capex has decreased as we have been able to deploy our existing fleet to meet demand in Q3 2019 and are directing capex on a Group wide basis to address the best opportunities. UK


Q3 52 54 -2 -4 9 13 -4 -31 (2) 1 -3 -200

Q2 48 46 2 4 9 12 -3 -25 3 4 -1 -25

Q1 46 40 6 15 9 10 -1 -10 7 8 -1 -12

YTD 146 140 6 4 27 35 -8 -23 8 13 -5 -38

The UK market continues to be challenging. Revenue in our leasing business has declined and has been offset by growth in the sales business. The reduction in underlying EBITDA is due to the margins being lower in the sales business than the leasing business. Following the strategic review, announced in Q1 2019, the actions to address the structural position are now in progress. In Q3, we have incurred expense of €1m relating to the plan. As previously reported, the total costs related to the strategic plan are still expected to be approximately €15m to €25m, with a significantly lower cash outflow, all of which will be adjusted from underlying EBITDA.


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Our UK fleet is substantially different from the rest of Europe in that a much greater portion is a traditional “Anti-Vandal” (containerised) fleet and not modular. In the UK, we have 7,000 European-style modular units and have not bought a new anti-vandal product for over five years. We have decided to rationalise the UK fleet and are disposing of approximately 4,200 of our older units in 2019 that do not fit our target markets. This disposal of a portion of the UK fleet is the reason for the negative net capex in Q3 2019. To enable further growth in the UK we will invest in new modular fleet and 360° VAPS. We will consolidate a number of our UK sites and increase investment in the remaining footprint.

The continued uncertainty around Brexit is delaying large government construction projects and private sector investment decisions with an impact on our UK business. We understand these projects are delayed and not cancelled. Other than the impact on UK demand, we believe that the effect of Brexit on both our UK and European businesses is limited. Our UK business is not heavily reliant on imported goods or non-UK employees and both our key suppliers will not be disrupted by Brexit. In addition, our European businesses are not reliant on UK suppliers. A further economic slowdown could result in reduced business opportunities, but our business model tends to be resilient against economic downturns as we can reduce capital expenditure on a discretionary basis. In addition, it is possible that uncertainty over regulations for country borders, or border inefficiencies, will result in customers requiring temporary storage solutions increasing demand for our units. Eastern, Northern and Southern Europe (“ENSE”)


Q3 57 50 7 14 18 17 1 6 11 5 6 120

Q2 46 43 3 7 15 12 3 25 5 3 2 66

Q1 40 38 2 5 12 10 2 20 3 5 -2 -40

YTD 143 131 12 9 45 39 7 19 19 13 6 46 Our business in ENSE continues to grow and we have transferred units from Germany and France to ENSE to match demand. This has resulted in both increased revenue and underlying EBITDA. Our business in Southern Europe in particular has seen high sales and leasing growth and a strong pipeline. We see on-going opportunities in these developing markets and are positioning ourselves to further capture these. Germany


Q3 36 37 -1 -3 16 16 - - 15 12 3 25

Q2 34 39 -5 -13 13 16 -3 -19 3 1 2 150

Q1 30 36 -6 -17 13 13 - - 2 1 1 50

YTD 100 112 -12 -11 42 45 -3 -9 20 14 6 43 The decrease in revenue has been mostly in the construction sector which has been more competitive and our attempts to increase price have been at the expense of volume. Our penetration into the construction sector, where Touax traditionally had a strong presence, has been slow. Besides the construction sector, other markets are relatively stable. We continue to grow our position in the premium end of the market and have invested capex to address these markets such as kindergartens. Corporate costs Our corporate costs of €5m for Q3 2019 and €18m for YTD have decreased by €1m compared to Q3 2018 and €2m YTD 2018 respectively. Corporate costs were higher in 2018 because they included costs related to the previous team in Baltimore and a period of dual running costs.


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Interest and net debt Net finance expense has increased by €8m to €143m (2018: €135m). The increase is due to a €40m mark to market non-cash revaluation loss on the shares we hold in Target Hospitality in 2019, offset by the expenses of early redemption, release of deferred financing fees and higher interest charges that we incurred in 2018. Currency losses of €13m are €35m greater that the gain of €22m in 2018. Our exposure to currency movements is lower following the 2018 refinancing and the currency hedges we now have in place. Net debt4 at the end of Q3 2019 was €1,393m (December 2018: €1,669m), excluding the €98m of shares in Target Hospitality Corp. Substantially all our debt is repayable in 2023. Our bonds are denominated in a mixture of euros and US dollars. At the time of the refinancing in February 2018, we put swaps in place that fixed a portion of the interest and currency to match our global structure and kept $290m of our bonds unhedged to match flows from our US operations. We are reviewing our strategy with respect to this US dollar exposure. In addition to the exposure to the US dollar, we have exposure to pound sterling and Australian dollar. Our current policy is not to hedge currency exposures other than those related to the bonds. We do not have a history of significant bad or doubtful debts and we use credit insurance to mitigate our exposure to credit risk on trade receivable balances. Cash flows The Group had a net operating cash inflow from operating activities of €76m in Q3 (Q3 2018: €60m) and €201m YTD 2019 (2018: €152m). Investing activities resulted in a net cash outflow of €189m in Q3 2019 (Q3 2018: outflow of €58m) due to the €154m loan to Algeco Investemnts 1 S.à r.l. offset by lower capital expenditure. YTD 2019 there was a €212m inflow (YTD 2018: outflow of €156m) due to the proceeds of €454m from the sale of Target Hospitality offsetting the net capital expenditure of €79m in the continuing Group and €8m in Target Hospitality. Financing activities resulted in a net cash outflow of €72m in Q3 (Q3 2018: €42m). YTD 2019 there was a €218m outflow from financing activities (YTD 2018: outflow of €53m) due to the repayments of facilities of €81m following the sale of Target Hospitality, €115m interest payments and €21m of lease payments. Consequently, cash decreased by €185m in Q3 2019 (Q3 2018: decrease of €44m) and increased by €191m in the YTD 2019 (YTD 2018: decrease of €77m). We believe our liquidity risk is now minimal and the Group is well placed to take advantage of investment and market opportunities. Taxation The Q3 2019 tax charge relating to continuing operations is €6m (Q3 2018: €6m).

4 Net debt is a non-GAAP measure which we have calculated as;

30 September 2019 30 Dec 2018

Total borrowings, gross 1,780 1,818

Currency derivatives (71) (40)

Deferred fees 44 55

Lease liabilities (IFRS 16 adjustment) (85) (99)

Target Lodging debt (classified as held for sale in 2018) - 19

Cash (275) (84)

Total 1,393 1,669


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Adoption of IFRS in 2018 and change of consolidating entity The Group adopted IFRS in the Algeco Investments 2 S.à r.l. financial statements for the year ended 31 December 2018. The differences in the accounting policies are set out in the 2018 financial statements in note 25 to the consolidated financial statements. The major change that affected the previously reported US GAAP Q3 2018 income statement is the impact of IFRS 16 ‘Leases’. The impact of adopting IFRS 16 on our results for Q3 2018 wsa additional underlying EBITDA of €9m, depreciation of €6m and interest of €4m resulting in a net decrease in the loss before tax of €1m. In addition, €4m related to the settlement of share schemes was recorded in Q3 2018 as restructuring expense under US GAAP. This expense was recorded in periods prior to 2018 under IFRS. The published results for the Group for Q3 2018 were consolidated into Algeco Global S.à r.l., an indirect parent of Algeco Investments 2 S.à r.l. The main difference to the comparatives for Q3 2018 presented in this document compared to the previously published results for the Algeco Global S.à r.l. Group for Q3 2018, aside from the adoption of IFRS, relates to preference shares in the Algeco Global S.à r.l. Group. The net proceeds of the preference shares were contributed as equity to the Algeco Investments 2 S.à r.l. Group. Consequently, €25m of ‘income attributable to noncontrolling interest’ that is recorded in the published results for the Algeco Global S.à r.l. Group for Q3 2018 is not recorded in the Algeco Investments 2 S.à r.l. Group.


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Condensed Consolidated Financial Statements

Table of contents of consolidated financial statements

Consolidated Income Statements 10 Consolidated Statements of Comprehensive Loss 11 Consolidated Balance Sheets 12 Consolidated Statements of Changes in Shareholders’ Equity 13 Consolidated Statements of Cash Flows 15 Notes to the financial statements 16

Algeco Investments 2 S.à r.l. Consolidated Income Statements

(Euro in millions)

See the accompanying notes which are an integral part of these Condensed Consolidated Financial Statements

Note Three months ended 30 September

Nine months ended 30 September

2019 2018 2019 2018

Revenues

Leasing and services 177 182 505 521

Sales of modular units and buildings 83 71 201 183

Total revenues 5 260 253 706 704

Costs

Costs of sales of goods and providing services

(138) (126) (361) (355)

Depreciation of rental equipment (22) (24) (68) (70)

Gross profit 100 103 277 279

Expenses

Administrative expenses (61) (60) (200) (185)

Operating Profit 39 43 77 94

Analysed as;

Depreciation, amortisation and impairments

32 33 98 99

Separately disclosed items 2 4 2 19 1

Underlying EBITDA 75 78 194 194

Finance expense, net 6 (61) (32) (143) (135)

Currency (losses) gains, net 6 (10) (2) (13) 22

Loss before income tax (32) 9 (79) (19)

Income tax expense (6) (6) (13) (6)

Net loss from continuing operations (38) 3 (92) (25)

Net income from discontinued operations - 12 19 21

Net income (loss) (38) 15 (73)

(4)

Net income attributable to non-controlling interest

1 1 1 1

Attributable to Algeco Investment 2 S.à r.l. (39) 14 (74) (5)

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Algeco Investments 2 S.à r.l. Consolidated Statements of Comprehensive Loss

(Euro in Millions) Three months

ended 30 September

Nine months ended 30

September 2019 2018 2019 2018

Net loss for the period (38) 15 (73) (4)

Other comprehensive income (loss), net of tax

Items that may be reclassified to profit or loss:

Foreign currency translation (6) (3) (3) (18)

Change in unrealized gains (losses) on cash flow hedge 3 (1) 8 (7)

Other reserves 1 - 4 -

Items that will not be reclassified to profit or loss:

Defined benefit plan actuarial gain, net of tax - - - -

Other comprehensive loss (gain), net of tax (2) (4) 9 (25)

Comprehensive income (loss) (40) 11 (64) (29)

Less: comprehensive income (loss) attributable to non-controlling interest

- - 1 -

Comprehensive income (loss) attributable to Algeco Investments 2 S.à r.l.

(40) 11 (65) (29)

See the accompanying notes which are an integral part of these Condensed Consolidated Financial Statements.

Algeco Investments 2 S.à r.l. Consolidated Balance Sheets

(Euro in Millions) 30

September 31

December Note 2019 2018 Assets Non Current assets Goodwill 262 262 Other intangible assets, net 114 114 Rental equipment, net 8 831 822 Other property, plant and equipment, net 9 147 166 Other non-current assets 10 326 50 Total non current assets 1,680 1,414 Current assets Cash and cash equivalents 275 84 Trade receivables and contract assets, net 214 206 Inventories 48 43 Income tax receivables - 2 Prepaid expenses and other current assets 30 29 Financial assets at fair value 4 98 - Current assets of discontinued operations - 317 Total current assets 665 681 Total assets 2,345 2,095

Equity Share capital 1 1 Share premium 605 605 Accumulated other comprehensive income 179 169 Accumulated reserves (641) (1,010) Equity (Deficit) attributable to the owners of the Company 144 (235) Non-Controlling interests 8 7 Total Equity (Deficit) 152 (228) Liabilities Non-current liabilities Long-term debt 10 1,727 1,760 Deferred tax liabilities 64 58 Deferred revenue and customer deposits 1 3 Other non-current liabilities 40 41 Total non current liabilities 1,832 1,862 Current liabilities Trade payables and accrued liabilities 229 212 Income tax payable 20 14 Accrued interest 16 42 Deferred revenue and customer deposits 43 39 Current portion of long-term debt 10 53 58 Current liabilities of discontinued operations - 96 Total current liabilities 361 461 Total liabilities 2,193 2,323 Total liabilities and deficit 2,345 2,095

See the accompanying notes which are an integral part of these Condensed Consolidated Financial Statements.

13

Algeco Investments 2 S.à r.l. Consolidated Statements of Changes in Equity

(Euro in millions)

Accumulated other

comprehensive income

Predecessor

share capital

Owner share

capital

Predecessor share

premium

Owner Share

premium

Other reserves

Foreign currency

translation

Accumulated deficit

Total shareholders’

equity

Non controlling

interest (NCI)

Total Equity

Balance at 1 January 2018 680 - 1,486 - 81 125 (2,876) (504) 5 (499) Net loss - - - - - - (5) (5) 1 (4) Other comprehensive income - - - - (7) (17) - (24) (1) (25) Total comprehensive income - - - - (7) (17) (5) (29) - (29) Issue of new shares by contribution in kind - - - 279 - - - 279 - 279

Issue of new shares by contribution in cash - 1 - 326 - - - 327 - 327

Transfer between predecessor and owner (680) - (1,486) - - - 1,887 (279) - (279)

Balance at 30 September 2018 - 1 - 605 74 108 (994) (206) 5 (201)

In February 2018, the Group completed a refinancing and restructuring of the Group companies’ shareholding. As part of the restructuring, at an extraordinary general meeting on 15 February 2018, the Company’s shareholder, Algeco Investment 1 S.à r.l. , approved the issue of an additional 1,000,000 ordinary shares, each with a par value of €1: 900,000 shares for a total subscription price of €326,625,000 contributed in cash; and 100,000 shares for a total subscription price of the € equivalent of US$344,856,178 (€279,280,999) contributed in kind, consisting of shareholdings in Algeco Group companies. On the same day, the cash raised by the Company and the shareholdings were contributed to Algeco Investments B.V., the Company’s Dutch subsidiary, in consideration for the issue of shares.

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Algeco Investments 2 S.à r.l. Consolidated Statements of Changes in Equity (continued)

(Euro in millions)

Accumulated other comprehensive income

Share capital Share

premium Other

reserves

Foreign currency

translation

Accumulated deficit

Total shareholders’

equity

Non controlling

interest (NCI)

Total Equity

Balance at 1 January 2019 1 605 79 90 (1,010) (235) 7 (228) Net loss - - - (74) (74) 1 (73) Other comprehensive income - - 12 (3) - 9 - 9 Total comprehensive income

- - 12 (3) (74) (65) 1 (64)

Disposal of Target Lodging - - - 1 443 444 - 444

Balance at 30 September 2019 1 605 91 88 (641) 144 8 152

See the accompanying notes which are an integral part of these consolidated financial statements.

15

Algeco Investments 2 S.à r.l. Consolidated Statements of Cash Flows

(Euro in millions) Three months

ended 30 September


September 2019 2018 2019 2018

Operating activities Net (loss) income (38) 15 (73) (4) Adjustments :

Depreciation, amortization and impairments 32 33 98 99 Expected Credit Loss Allowance - - - 1 Loss on sale of other property, plant and equipment - 4 1 5 Foreign currency adjustments 10 2 13 (22) Income tax expense (credit) 6 6 13 6 Other Finance costs – Net 61 32 143 135 Discontinued operations - 9 6 25

Changes in operating assets and liabilities: Net trade receivables (10) (28) (8) (40) Inventories 4 (1) (5) (12) Prepaid expenses and other current assets - (6) - (7) Accounts payable and other accrued liabilities 11 (6) 13 (34)

Cash flows from operating activities 76 60 201 152 Income tax (paid) received - (5) (3) (18)

Net cash flows from operating activities 76 55 198 134

Investing activities Purchase of rental equipment (29) (53) (88) (133) Proceeds from sale of rental equipment 3 - 8 2 Proceeds from the sale of property, plant and equipment 1 1 1 1 Purchase of property, plant and equipment (4) (4) (8) (6) Related party loans (155) (2) (155) (2) Expenses paid on behalf of affiliates - - - (18) Proceeds from sale of business net of related expenses (5) - 454

Net cash flows from investing activities (189) (58) 212 (156) Financing activities

Receipts from borrowings 2 - 1 1,468 Receipts from related party borrowings - 12 - 27 Repayment of borrowings (11) (1) (81) (1,644) Principal payments on lease obligations (6) (6) (21) (30) Interest paid (57) (47) (115) (129) Payment of financing costs - - (2) (72) Share issuance - - - 327

Net cash flows from financing activities (72) (42) (218) (53) Effect of exchange rate changes on cash and cash equivalents - 2 (1) (2) Net change in cash and cash equivalents (185) (43) 191 (77) Cash and cash equivalents at start of the period 460 84 84 118 Cash and cash equivalents hold for sale - 2 - 2 Cash and cash equivalents at the end of the period 275 43 275 43

See the accompanying notes which are an integral part of these consolidated financial statements. Note that Target Hospitality was part of the Group until 15 March 2019 and cash flows related to Target Hospitality are included in the columns for the 9 months ended 30 September 2019 and for the 3 months and 9 months ended 30 September 2018.

Algeco Investments 2 S.à r.l. Notes to the Condensed Consolidated Financial Statements for the three and nine months ended 30 September 2019

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Notes to Consolidated Financial Statements

1. Basis of preparation of the Condensed Consolidated Financial Statements

1.1 General Algeco Investments 2 S.à r.l. (the “Company”) is a limited liability Company (société à responsabilité limitée) incorporated under the laws of Luxembourg. The ultimate parent of the Algeco Group is Algeco Holding S.à r.l., a limited liability company principally owned by TDR Capital LLP (“TDR”). The Company, a wholly owned subsidiary of Algeco Global S.à r.l, (“AG”) was incorporated on 8 December 2017. As part of a legal restructuring (the “Legal Restructuring”) completed in February 2018, the Company became the parent company of the Group. The Group, through its operating subsidiaries, engages in the leasing and sale of mobile offices, modular buildings and storage products and their delivery and installation throughout Europe and Asia Pacific. The Group also provided full-service remote workforce accommodation solutions in North America. The North America business, Target Lodging, was sold on 15 March 2019. The results of this business have been shown as discontinued in the Condensed Consolidated Income Statements for the three months ended 30 September 2019 and 2018, and the assets and liabilities as held for sale in the 31 December 2018 Condensed Consolidated Balance Sheet. The Group carries out its business activities principally under the names Algeco in Europe other than the United Kingdom (“UK”), Elliot in the UK, Ausco in Australia, Portacom in New Zealand and Algeco Chengdong in China. Impact of seasonality Our business is impacted by seasonality. Sales of new units tend to be delivered over the summer months and new leasing contracts are less likely to start in the winter months.

1.2 Basis of preparation of the three months ended 30 September 2019 Condensed Consolidated Financial

Statements The Condensed Consolidated Financial Statements for the three months ended 30 September 2018 have been prepared using the predecessor accounting basis of preparation. The consolidated financial statements of the Company and the legal entities and businesses that it now controls directly and that its predecessor, Algeco Global S.à r.l., controlled (the “Consolidated Subsidiaries” and together with the Company the “Algeco Group” or the “Group”) are consolidated as if all these entities had always been consolidated, using historic valuations. Predecessor accounting was considered appropriate as the ultimate control of the Group remained the same before and after the reorganization. The Condensed Consolidated Financial Statements have been prepared on a going concern basis in accordance with Accounting Standard IAS 34 Interim Financial Reporting. The interim report does not include all the notes of the type normally included in annual consolidated financial statements. Accordingly, this report is to be read in conjunction with the Groups’s Consolidated Financial Statements for the year ended 31 December 2018 and any public announcements made by the Group during the interim reporting period.

The accounting policies adopted are consistent with those of the previous financial year. No new standard or amendment to existing standards and interpretations published by the IASB applicable in 2019 have any material impact on the Condensed Consolidated Financial Statements for the three and nine months ended 30 September 2019. The comparatives for the Condensed Consolidated Income Statements and the Condensed Consolidated Balance Sheets have been prepared using the published US GAAP consolidated financial statements of Algeco Global S.à r.l and applying the IFRS transition adjustments (see note 25 of the annual report and financial statements).

2. Significant changes in the current reporting period Target Lodging disposal: In March 2019, the Group completed the disposal of our North American remote accommodations business, Target Lodging. Further details are set out in note 4. UK restructuring: In Q3 2019, the expense related to the UK restructuring plan is €1m, bringing the total expense related to the UK restructuring plan in 2019 to €9m. The provision related to the restructuring plan is €6m. The total costs for the restructuring plan will be approximately €15m to €25m, with a significantly lower cash outflow.


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3. Segment information Description of segments and principal activities The Chief Operating Decision Maker examines the Group’s performance based on 5 reportable segments which are the Group’s operating segments:

France Business Unit (“France”); The United Kingdom Business Unit (“UK”); Germany Business Unit (“Germany”), which includes Germany, Switzerland, Austria and Slovenia; Eastern, Northern, and Southern Europe Business Unit (“ENSE”), which includes

o In Eastern Europe: Poland, Czech Republic, Romania, Slovakia, Russia, Hungary. o In Northern Europe: Belgium, Netherlands, Finland, Sweden; o In Southern Europe: Spain, Portugal, Italy. These entities share similar economic characteristics and the businesses provide similar products and services.

APAC Business Unit, which includes Australia, New Zealand and China Nine months ended 30 September 2019

France APAC UK ENSE Ger-many

Eliminations Corporate Total

Revenue 185 147 146 143 100 (15) 706

Depreciation and amortisation on continuing operations

(20) (18) (20) (21) (19) (98)

Fleet (14) (11) (13) (16) (14) (68)

Other (6) (7) (7) (5) (5) (30)

Underlying EBITDA including IFRS 16

69 30 27 45 42 (1) (18) 194

IFRS 16 3 8 8 3 4 26

Underlying EBITDA excluding IFRS 16

66 22 19 42 38 (1) (18) 168

Nine months ended 30 September 2018


Eliminations Corporate Total

Revenue 180 160 140 131 112 (19) 704


(21) (20) (23) (16) (19) (99)

Fleet (16) (12) (16) (13) (13) (70)

Other (5) (8) (7) (3) (6) (29)


61 35 35 39 45 (1) (20)

194

IFRS 16 3 11 8 3 4 29


58 24 27 36 41 (1) (20) 165


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Three months ended 30 September 2019


Eliminations

Corporate

Total

Revenue 72 51 52 57 36 (8) 260


(7) (6) (4) (8) (7) (32)

Fleet (5) (4) (2) (6) (5) (22)

Other (2) (2) (2) (2) (2) (10)


28 10 9 18 16 (5) 75

IFRS 16 1 3 3 0 1 8


27 7 6 18 15 (5) 67

Three months ended 30 September 2018


Eliminations

Corporate

Total

Revenue 66 53 54 50 37 (7) 253


(7) (7) (8) (5) (6) (33)

Fleet (6) (4) (5) (4) (5) (24)

Other (2) (3) (2) (1) (1) (9)


27 12 13 16 16 (6) 78

IFRS 16 1 3 3 1 1 9


26 9 10 15 15 (6) 69

Underlying EBITDA This is a non-GAAP measure which we have defined as net income from discontinued operations before income tax expense, net finance expense, net currency gains and losses, depreciation and amortisation (“EBITDA”), adjusted to exclude certain non-cash items and the effect of what we consider to be transactions or events not related to our core business operations. The reconciliation of our consolidated operating profit to underlying EBITDA for the three and nine months ended 30 September 2019, and 2018, is set out below:


September 2019 €m


September 2018 €m

Net profit (loss) (73) (4) Net income from discontinued operations (19) (21) Income tax expense 13 6 Finance expense, net 143 135 Currency gains, net 13 (22) Depreciation and amortisation 98 99 EBITDA 175 193 Share-based payments 3 (2) Touax integration costs 2 2 Restructuring 13 2 Other 1 (1) Total separately disclosed items 19 1 Underlying EBITDA 194 194 Impact of IFRS 16 26 29 Underlying EBITDA excluding IFRS 16 impact 168 165


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Three months ended 30

September 2019 €m

Three months ended 30

September 2018 €m

Net profit (loss) (38) 15 Net income from discontinued operations - (12) Income tax expense 6 6 Finance expense, net 61 32 Currency gains, net 10 2 Depreciation and amortisation 32 33 EBITDA 71 76 Share-based payments - - Touax integration costs - 2 Restructuring 3 - Other 1 - Total separately disclosed items 4 2 Underlying EBITDA 75 78 Impact of IFRS 16 8 9 Underlying EBITDA excluding IFRS 16 impact 67 69

Management believes that underlying EBITDA provides useful information to investors because it is a measure used by our management team to evaluate our operating performance, to make day-to-day operating decisions, and is frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results across companies in our industry. The items adjusted are:

Share based payments: the share-based payments expenses are non-cash. Touax Integration: the costs of integrating the Touax business that are not included in restructuring costs

such as legal costs of integrating legal entities and implementing new IT systems. Restructuring costs: The Group incurs costs associated with restructuring plans designed to streamline

operations and reduce costs. The 2019 restructuring costs relate to the UK restructuring and streamlining the head office.

Other: The Group has incurred third-party costs of implementing a significant new customer relationship management system and in evaluating potential acquisitions.

Impact of IFRS 16: IFRS 16 is new to investors and has not yet been adopted by many comparable Groups. It is also not yet a measure used by our management team to evaluate our operating performance or to make day-to-day operating decisions. Securities analysts, investors and other interested parties may use this measure as a common performance measure to compare results across companies in our industry.

4. Divestiture of Target Lodging (Algeco US Holdings LLC) On 13 November 2018, the Group entered into a definitive agreement (the “Stock Purchase Agreement”) with Platinum Eagle Acquisition Corp. (“PEAC”), a publicly traded special purpose acquisition company, to sell the Algeco Group’s North American remote accommodations business, Target Lodging, to Target Lodging Holdings Corp. (“Holdco”), a newly-formed subsidiary of PEAC (the “Target Lodging Sale”). Simultaneously with the Target Lodging Sale, TDR Capital LLP sold its Signor Holdings business to PEAC. On 15 March 2019, the Group successfully disposed of Target Lodging and its subsidiaries (“Target Lodging”, our former US remote accommodation division). The sale proceeds were $820m (or €725m), of which $563m (or €498m), was received in cash and the remaining $257m, (or €227m), as shares in Target Hospitality Corp. The results of Target Lodging have been classified as discontinued operations. The disposal of Target Lodging triggered a historical earn-out obligation in a parent entity of the Algeco Group (Algeco Holding S.à r.l.). As a result, shares of Target Hospitality Corp. with a value of $101m (or €89m), at 15 March 2019, were transferred by Algeco Investments B.V., a subsidiary of Algeco Investments 2 S.à r.l., to Algeco Holding S.à r.l. in April 2019. The Group has recognised a receivable from Algeco Holding S.à r.l. in return for the shares.


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The results of the Target Lodging business are classified as discontinued operations in the consolidated financial statements. The divestiture of the business represents a strategic shift that has a major effect on the Group’s operations and financial results.

Financial performance and cash flow information The assets of Target Lodging that were classified as assets or liabilities of the disposal group held for sale at 31 December 2018 were: Assets €m

Goodwill 7

Other intangible assets, net 30

Rental equipment, net 191

Other property, plant and equipment, net 21

Other non-current assets 13 Cash & cash equivalents 2

Trade receivables and contracts assets 44

Prepaid expenses and other currents assets 9

Total assets 317

Financial debt 30

Other non-current liabilities 19

Trade payables 13

Accrued liabilities 18

Deferred revenue and customer deposits 16

Total Liabilities 96

The financial performance and cash flow information presented are for the period to 15 March 2019 and for the nine months ended 30 September 2018 were:

Period ended 15 March 2019

€m


September 2018 €m

Total revenues 56 122 Total costs (32) (70)

Gross profit 24 52 Selling, general and administrative expense (6) (21) Other depreciation and amortisation - (3) Operating income 18 28

Finance expense (income) (1) -

Income before income tax 19 28

Income tax expense - (7)

Net income 19 21


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Period ended 15 March 2019

€m


September 2018 €m

Net cash inflow from operating activities 24 13 Net cash outflow from investing activities (8) (34) Net cash (outflow) inflow from financing activities (13) 16 Net increase (decrease) in cash from Target Lodging 3 (5)

The net cash outflow from investing activities is due to the purchase of rental equipment.

Net gain on disposal of Target Lodging

$m €m

Shares of Target Hospitality Corp. 257 227

Cash received 563 498

Total disposal consideration 820 725

Carrying amount of Target Lodging on date of disposal – including recycling of currency translation reserves 276 244

Transaction fees 43 38

Income tax expense on gain - -

Net Gain on disposal of Target Lodging 501 443

The gain on disposal is recognised directly in reserves and not in the income statement as TDR, the ultimate owner of Algeco, retains a controlling interest in Target Lodging.

Investment in Target Hospitality Corp. The shares held in Target Hospitality Corp. are classified as current financial assets and are fair valued at each Balance Sheet date. At 30 September 2019, the value based on the share price of $6.81 was €97.7m. The change in valuation is recorded within net finance expense. In the three-month and the nine-month periods to 30 September 2019 there was a loss of €27m and €40m, respectively.

5. Revenue from contracts with customers Disaggregation of Revenues

Our primary revenue streams are generated by;

Modular space leasing and services which comprise:

o Delivering, installing and leasing our fleet of modular and portable storage units and leasing value-

added products and services (“VAPS 360°”), such as steps, ramps, furniture, fire extinguishers, air

conditioning, wireless internet access points, damage waivers and extended warranties;

o Remote accommodation services providing remote facility management solutions to customers

working in remote environments through turnkey lodging, catering, transportation, security and

logistical services; and

New and used modular space and portable storage units sales, which can include construction-type contracts

primarily located in the UK.

The disaggregation of our revenues by categories we use to evaluate our financial performance within each of our

reportable segments is provided below:


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Leasing and services

Sales of units Total Revenue

Nine-month period ended 30 September 2019

France 140 43 183

APAC 89 58 147

UK 81 64 146

Germany 87 12 99

ENSE 107 24 131

Group 505 201 706

Nine-month period ended 30 September 2018

France 135 38 173

APAC 103 57 160

UK 90 50 140

Germany 92 19 111

ENSE 101 19 120

Group 521 183 704

For the three months ended 30 September 2019 and 30 September 2018, total revenue from contracts with

customers excluding lease contracts totalled €318m and €334m respectively.

6. Finance income and expenses Three months

ended 30 September


September 2019

€m 2018

€m 2019

€m 2018

€m Finance income - - - - Finance expense Interest and finance charges 31 29 92 108 Deferred financing costs amortisation 3 3 11 14 Other financial costs 27 - 40 13

Net finance expense 61 32 143 135

Realised and unrealised exchange gains 10 2 13 (22)

Other financial costs includes the loss on revaluation of the shares in Target Hospitality Corp. In the three and nine months periods to 30 September 2019, there was a loss of €27m and €40m, respectively. Other finance costs incurred in 2018 include the cost of early redemption of certain of our bonds following the refinancing in February 2018.

7. Income Taxes The Group operates in 22 countries across Asia Pacific and Europe. For quarterly reporting purposes, income tax expense is recognised based on the Group’s forecast effective tax rate per territory for the full financial year applied to the actual results of each territory. This results in a €6m tax charge equivalent to an overall effective tax rate of –18.75% for the quarter ended 30 September 2019 (Q3 2018: €6m tax charge equivalent to an overall effective tax rate of 66.7%). The change in the effective tax rate is mainly attributable to tax losses that are not recognised for deferred tax purposes and non-deductible, principally financing, expenses.


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8. Rental equipment The changes in the cost and depreciation for rental equipment were as follows:

Cost 2019 €m

Balance at 1 January 1,712 Additions 88 Disposals (54) Effect of movements in foreign exchange rates 2 Balance at 30 September 1748

Accumulated depreciation Balance at 1 January (890) Depreciation on continuing operations (68) Disposals 42 Effect of movements in foreign exchange rates (1) Balance at 30 September (917)

Carrying amounts

At 1 January 822

At 30 September 831

In addition to the above, there was €8m of additions and €6m of depreciation in the discontinued operations.

9. Other property, plant and equipment The changes in cost, depreciation and impairment losses for other property, plant and equipment were as follows:

Land and buildings

€m

Plant, computer and other equipment

€m

Total

€m Cost Balance at 31 December 2018 256 108 364

Additions 7 9 16 Disposals (15) (11) (26)

Effect of movements in foreign exchange rates - - - Balance at 30 September 2019 248 106 354

Depreciation and impairment losses Balance at 31 December 2018 (123) (74) (197)

Depreciation on continuing operations (16) (10) (26) Disposals 8 9 17 Effect of movements in foreign exchange rates (1) - (1)

Balance at 30 September 2019 (132) (75) (207)

Carrying amounts

At 31 December 2018 133 33 166 At 30 September 2019 116 31 147


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10. Financial assets and liabilities The Group holds the following financial instruments:

30 September

2019 €m

31 December 2018 €m

Financial assets

Trade receivables 214 206 Loans and receivables 2 1 Restricted cash 5 - Cash and cash equivalent 270 84

At amortised cost 491 291

Financial assets at fair value 98 -

Currency derivatives held for hedging 2 5 Current financial assets 591 296

Non-current loans & receivables at amortised cost 257 15 Currency derivatives held for hedging 69 35 Non-current financial assets 326 50

Financial liabilities

Trade and other payables 229 212 Third party loans and borrowing 53 58 Loans and payables due to affiliates - - Accrued interest 16 42 Customer deposits 12 10

At amortised cost 310 322 Currency derivatives held for hedging - - Current financial liabilities 310 322

Third party loans and borrowing 1,727 1,760 Other liabilities 9 3 At amortised cost 1,736 1,763 Currency derivatives held for hedging - - Non-current financial liabilities 1,736 1,763

Borrowings The carrying value of debt consisted of the following: 30 September 2019

Interest rates

Total €m

Current €m

Non-current €m

Borrowings

Senior secured fixed rate notes - EUR 6.50% 667 - 667

Senior secured fixed rate notes - USD 8.00% 467 - 467

Senior secured floating rate notes - EUR Varies 185 - 185

Senior unsecured notes - USD 10.00% 273 - 273

ABL facility - GBP varies 35 - 35

ABL facility - AUD varies 26 - 26

Related party debt 3 - 3

Lease liability 93 23 70

Other debt 31 30 1

Total borrowings 1,780 53 1,727


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Borrowings are presented at their relative carrying values, net of deferred financing fees. Deferred financing fees are summarised below:

30 September 2019

€m

31 December 2018 €m

Deferred fees – Notes 40 51

Deferred fees - ABL 4 4

Deferred fees – Finance leases - -

Total 44 55

New Senior Secured Notes, Senior Notes On February 15, 2018, certain subsidiaries of the Group closed notes offerings (the “Initial Notes Offering”) and issued €600,000,000 6.5% Senior Secured Fixed Rate Notes due 2023, $520,000,000 8% Senior Secured Fixed Rate Notes due 2023, €150,000,000 Senior Secured Floating Rate Notes due 2023 (together, the “New Senior Secured Notes”), and $305,000,000 10% Senior Notes due 2023 (the “New Senior Notes” and, together with the New Senior Secured Notes, the “Notes”). Additionally, a subsidiary of the Group obtained three-year cross currency swaps for the US dollar-denominated Notes into euro, which will swap into euro the coupon and principal amount of 100% of the New Senior Notes, the principal amount of $230m of the US dollar-denominated 8% New Senior Secured Notes and the coupon of $290m of the US dollar-denominated 8% New Senior Secured Notes. Giving effect to the swaps, the weighted average interest rates for the New Senior Secured Notes and New Senior Notes are respectively 6.64% and 7.74% per annum. The Initial Notes Offering formed part of a comprehensive refinancing of the Group’s capital structure (the “Refinancing”). The Refinancing additionally included a new $400m syndicated senior secured asset-based credit facility (see the section entitled “ABL Revolver” below). The proceeds of the Initial Notes Offering and equity issuance were used to redeem the prior senior secured notes and prior senior unsecured notes, to refinance the prior ABL Revolver and to pay for certain costs, fees and expenses. The Group recognised a €13m loss on extinguishment of debt as a result of redemption fees payment. In December 2018, the Group issued €125m additional New Senior Secured Notes. €85m is fungible with the 6.5% Senior Secured Fixed Rate Notes due 2023 and €40m is fungible with the Senior Secured Floating Rate Notes due 2023. ABL Revolver Certain subsidiaries of the Group maintain the syndicated senior secured asset-based credit facility (the “ABL Revolver”). Certain of the Group’s subsidiaries in the UK, Australia and New Zealand are borrowers (the “Borrowers”). As part of the Initial Notes Offering and comprehensive refinancing, the prior ABL Revolver was refinanced to provide for a maximum availability of the equivalent of $400m and a maturity date of February 15, 2023. The amount which the subsidiaries of the Group can borrow is based on a defined formula of available assets, principally certain receivables, inventory and rental equipment calculated monthly and is secured by a first lien on substantially all assets held by the Borrowers and any other obligors under the ABL Revolver located in the UK, Australia and New Zealand. At 30 September 2019 and 31 December 2018, available capacity under the ABL Revolver was $72m (€66m) and $152m (€133m), respectively. Borrowings under the ABL Revolver bear interest payable on the first day of each quarter for the preceding quarter at a variable rate based on LIBOR or another applicable regional bank rate plus a margin. Subsequent to the Refinancing, the margins vary based on the amount of average daily excess availability under the ABL Revolver with the margins increasing as the average daily excess availability decreases. The margin on base rate loans ranges from 1.5% to 2.0%. The margin on LIBOR, or similar, loans ranges from 2.5% to 3.0%. The ABL Revolver requires the payment of an annual commitment fee on the unused available borrowings of between 0.375% and 0.5% per annum.


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The ABL Revolver includes certain financial covenants, requiring that the obligors under the ABL Revolver maintain a minimum fixed charge coverage ratio and a maximum total net leverage ratio, each calculated on a consolidated basis if, on the last day of the month immediately preceding fiscal quarter, excess availability was below a certain amount. None of the covenants were breached in the year or to the date of these consolidated financial statements. Subject to available borrowing capacity, the ABL Revolver includes an aggregate letter of credit sublimit of $60m. Letters of credit and bank guarantees carry fees equal to the applicable margin and reduce the amount of available borrowings. At 30 September 2019, subsidiaries of the Group had issued letters of credit under the ABL Revolver in the amount of €29m (31 December 2018: €14m). On November 13, 2018, the ABL Revolver was amended to permit the sale of Target Lodging and consequently pay down and terminate the US facility. Subsequent to closing of the Target Lodging disposal, the ABL Revolver provides a maximum availability equivalent of $255m and is secured by a first lien on substantially all assets held by the borrowers and any other obligors under the ABL Revolver located in the UK, Australia and New Zealand. Subject to available borrowing capacity, the ABL Revolver letter of credit sublimit reduced to $40m. The maturity date, rates of interest, and financial covenants remain the same. Covenants Under the terms of the major borrowing facilities, the Group is not required to test any financial covenants as long as the Group has $32m of headroom available on the ABL (reduced from $50m following the disposal of Target Lodging in March 2019). The Group has not breached these limits throughout the reporting period. The springing covenants tests are a fixed charge coverage and a net leverage ratio. Other debt At 30 September 2019 and 31 December 2018, other debt is mainly comprised of third-party debt associated with the Group’s subsidiaries that are not guarantors under the New Senior Secured Notes and the New Senior Notes of €31m and €32m, respectively. This included accounts receivable factoring agreements for €30m at 30 September 2019 (31 December 2018: €32m). France factoring agreement The Group has two accounts receivable factoring agreements in France. The terms of the agreements provide that the Group can assign up to approximately €32m of accounts receivable in exchange for cash, less a reserve fund, which is controlled by the counterparty. The reserve fund is either 8 or 12 percent of the transferred accounts receivables and serves to cover accounts receivable transferred that are uncollectible due to claims, invoicing errors, and advance payments. The full right of payment for each of the receivables is transferred. The Group incurs an annual commission expense of 0.14 percent of the receivables exchanged, which can be adjusted annually based on the actual amounts assumed by the counterparty. As the terms and conditions of the factoring agreements and the specific nature of the accounts receivables transferred preclude de-recognition from the Group’s Consolidated Balance Sheets, the agreement is treated as a secured financing. Related party debt and financing obligations At 30 September 2019 and 31 December 2018, related party debt included loans from a holding company to one of the Group’s affiliates. The Group made a loan to Algeco Holdings S.à r.l totalling €89 in Q2 2019. In the quarter ended 30 September 2019, the Group made a loan to Algeco Investments 2 S.à r.l totalling €154m. Capital lease and other financing obligations The Group’s leases primarily relate to real estate, equipment and vehicles and have interest rates ranging from 1.0% to 20.7%.


27 | P a g e

Fair values The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Group has assessed that the fair value of cash and short-term deposits, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The following table shows the carrying amounts and fair values of financial liabilities, including their levels in the fair value hierarchy. The only financial assets and liabilities measured by the Group at fair value are the currency derivatives. The Group's foreign currency forward contracts are measured on a recurring basis utilising foreign currency spot rates and forward rates quoted by banks or foreign currency dealers. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value

are observable, either directly or indirectly Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not

based on observable market data As at 30 September 2019

Level 1

€m

Level 2 €m

Level 3 €m

Currency derivatives - Assets - 71 - Currency derivatives - Liabilities - - -

As at 31 December 2018 Level 1 Level 2 Level 3

Currency derivatives - Assets - 40 - Currency derivatives - Liabilities - - -

11. Related parties The divestment of Target Lodging is a related party transaction as TDR remain a majority shareholder in Target Lodging. Details of the divestment are set out in note 4. Details of loans to related parties are set out in note 10 above.

12. Subsequent events On 31 October, we acquired the modular space businesses, BUKO Huisvesting and BUKO Bouw & Winkels (collectively “BUKO”), which are both based in the Netherlands. The businesses are spread over five sites in the Netherlands, with the largest locations in Beverwijk and Zaltbommel. In completing the acquisition, we welcomed 195 new colleagues and have grown our fleet in the Netherlands from 3,000 to more than 15,000 units. BUKO has a strong position and very good client relationships in the Netherlands, especially in the construction, education, healthcare and government sectors. BUKO provides temporary and semi-permanent buildings.


28 | P a g e

13. Material differences between the consolidated financial statements of Algeco Investment B.V. (“DutchCo”) and Algeco Investments 2 S.à r.l.

As permitted by the indentures governing the Notes, DutchCo has elected to provide in this report consolidated financial statements of the Company, as a parent entity, in lieu of consolidated financial statements of DutchCo. The material difference between the consolidated financial condition and results of operations at the level of the Company and a consolidation at the level of Algeco Scotsman Limited Partnership SLP relates to the preference shares issued by Algeco Investments 1 S.à r.l totalling €326m of principal amount which were a capital contribution to the Group as opposed to a loan with interest accruing. In Q3 2019, Algeco Investments 1 S.à.r.l received a loan from a subsidiary of Algeco Investments 2 S.à.r.l and used €50m of this loan to redeem €50m of its issued preference shares. In compliance with the credit agreement governing the ABL, the indentures governing the Notes and the investment agreement governing our privately-placed preferred stock facility, we set forth below a description of the material differences between the consolidated financial results of DutchCo, Algeco Investments 2 S.à r.l. and Algeco Investments 1 S.à r.l.

DutchCo (consolid

ated)

Algeco Investments

2 S.à.r.l (standalone)

Adjustments

Algeco Investments 2

S.à.r.l (consolidated)

Algeco Investments 1 S.à.r.l

(standalone)

Adjustments

Total Algeco Investments 1

S.à.r.l (consolidated)

€m €m €m €m €m €m €m

Operating profit 71 - - 71 (0) - 71

Net financial loss

155 - - 155 22 - 177

Net income (loss)

(74) - - (74) (22) - (96)

Total assets 2,338 606 (606) 2,338 711 (761) 2,288

Total liabilities 2,187 - - 2,187 538 (155) 2,570

Total equity 151 606 (606) 151 173 (606) (281)

The amounts adjusted for total assets, total liabilities and total equity relate to the carrying value of investments that are eliminated on consolidation, and to the elimination of the loan of €154m from DutchCo to Algeco Investments 1 S.à.r.l made in September 2019. Algeco Investments 1 S.à.r.l repaid €50m of the preference shares in September 2019. Some of the financial information set forth above has not been audited, reviewed or compiled, nor have any procedures been performed by the Group’s independent auditors with respect thereto. Accordingly, you should not place undue reliance on it, and no opinion or any other form of assurance is provided with respect thereto.

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