Download the 2012 full year results appendices data ... - Rolls-Royce

2012 Full-Year Results
Data pack
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Table of contents
Section
Page
1. About the Group 03
2. Financials 13
3. Key Performance Indicators 26
4. Details by Business Sector 28
5. Additional Information 60
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1. About the Group
Data pack
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Consistent strategy
Place the customer at the heart of the organization
Customer
Understand and shape their requirements
Focus on responsiveness
Connect innovation to our customers
Innovation
Help our customers do more with less
Develop technology, capability and infrastructure
Grow our market share
Grow Profitably
Expand competitive portfolio
Focus on cost and cash
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Four global markets
Civil Aerospace Defence Aerospace Marine Energy
• 12,500 engines
• Powers 30 types of aircraft
• 300 airline & leasing customers
• 20 million flying hours in 2012
• 18,000 engines
• 24 engine programmes
• 103 countries
• 160 armed forces
• 25,000 propulsion units
• 4,000 customers
• 70 navies
• Products on 30,000 vessels
• 4,000 power systems
• 1,600 customers
• 120 countries
• 73% of service revenue
covered by LTSAs – TotalCare
• 25% of service revenue covered
by LTSAs - MissionCare
• 5% of service revenue covered
by LTSAs – mainly Naval
• 25% of service revenue
covered by LTSAs
FY 2012 revenue £6,437m FY 2012 revenue £2,417m FY 2012 revenue £2,249m FY 2012 revenue £962m
OE
46%
Services
49%
Development
5%
Services
43%
OE
36%
Services
54%
OE
46%
OE
57%
Services
64%
FY 2012 ROS 11.3% FY 2012 ROS 16.7% FY 2012 ROS 13.1% FY 2012 ROS 2.2%
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Broadening our portfolio
Underpinning long-term growth
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Substantial order book*
Order Book
(£bn)
FY 2012
£60.1bn
70
60
50
40
30
20
10
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Europe North America Asia / Middle East ROW IAE Removal*
Substantial order book provides long-term visibility
*Firm and announced order book stated on a constant currency basis
**£4.6bn orders removed from Order book on completion of IAE restructuring
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Balanced business portfolio
£m FY 2012 FY 2011
Underlying revenue 12,209 11,277
Underlying services revenue 6,316 6,019
Aftermarket Services
52%
Engine Holding
1%
Energy
3%
Marine
10%
Defence
10%
Civil
24%
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Managing challenges
600%
500%
400%
300%
200%
100%
SARS
9/11
Programme Delays
Weakening US$
Commodity Inflation
Gulf War II
Financial Crisis
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Order Book Revenue EPS
An increasingly resilient portfolio
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Growing Group revenues
£bn
14
12
10
8
10Y CAGR
OE 6%
Services 10%
%
100%
80%
60%
6
4
2
40%
20%
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
0%
Underlying Services Revenues Underlying OE Revenues Services as % of Total
Growing installed based provides decades of aftermarket opportunities
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Research & development
1,200
1,000
800
600
400
200
0
£m £m
Total gross R&D spend (10Y) 7,954 Total net R&D spend (10Y) 4,302
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Gross R&D Net R&D Net R&D as a % of Sales
7%
6%
5%
4%
3%
2%
1%
0%
• Our capabilities reflect continuous R&D investment over decades
• R&D is a major structural competitive advantage, securing a market-leading position in wide body aircraft
• R&D improves ongoing engine performance, reducing LTSA costs and improving profitability
• 2013 guidance is for a modest decrease in P&L charge due to capitalisation of Trent XWB
Continuous investment in future technology protects barriers to entry
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Average net cash
(£m)
1500
A strong balance sheet
Debt maturities
(£m)
1,500
1000
1,000
500
500
0
-500
2005 2006 2007 2008 2009 2010 2011 2012
-
2013 2014 2015 2016 2017 2018 2019 2020
Drawn
Undrawn
Strong liquidity position – Total liquidity £3.5bn
• S&P raised its long and short term R-R credit ratings to ‘A/A-1’ from ‘A-/A-2’, with a stable outlook
• ‘A’ credit rating and liquidity all provide confidence for:
• Customers signing long-term service agreements
spanning decades
• Customer and supplier financing
• Investing in opportunities at the right time
• Suppliers and JV partners making long-term
investments
• Weathering financial market uncertainties
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2. Financials
Data pack
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Historic financial highlights
Full Year
FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Underlying revenue (£m) 9,147 10,108 10,866 11,277 12,209
Underlying profits before tax (£m) 880 915 955 1,157 1,429
Underlying EPS 36.70p 39.67p 38.73p 48.54p 59.27p
Cash flow (£m) 570 (183) 258 (1,310) 1,094
Average net cash (£m) 375 635 960 320 (145)
Order intake (£bn) 20.4 14.1 12.3 16.3 16.1
Order book (£bn) 55.5 58.3 59.2 62.2 60.1*
Dividend per share 14.3p 15.0p 16.0p 17.5p 19.5p
*£4.6bn orders removed from Order book on completion of IAE restructuring
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Headline to underlying adjustment
Revenues
Profit before financing
(£m) FY 2012 FY 2011 FY 2012 FY 2011
Headline 12,161 11,124 2,072 1,189
FX gain/(loss) 48 153 48 117
Pensions (164)
Acquisition accounting 69 64
Other (699)*
Underlying 12,209 11,277 1,490 1,206
*Headline profit on restructuring of IAE
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Underlying income statement
(£m) FY 2012 FY 2011
Underlying revenue 12,209 11,277
Underlying gross profit 2,796 2,393
Commercial and administrative costs (981) (970)
Net R&D charge (589) (463)
Other Income & costs 264 246
UPBFCT 1,490 1,206
Net financing charge (61) (49)
UPBT 1,429 1,157
Tax (318) (261)
Minority interests (14) 2
UPAT 1,097 898
Underlying EPS (p/share) 59.27p 48.54p
Payment to shareholders (p/share) 19.5p 17.5p
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Underlying financing costs
(£m) FY 2012 FY 2011
UPBFCT 1,490 1,206
Interest (payable) / receivable (41) (31)
Financial RRSPs (10) (11)
Other (10) (7)
Underlying net finance charge (61) (49)
UPBT 1,429 1,157
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Summary balance sheet
(£m) FY 2012 FY 2011
Intangible assets 2,901 2,882
Property, plant and equipment 2,564 2,338
Net post retirement scheme deficits (545) (397)
Net working capital (1,100) (1,098)
Net funds 1,317 223
Provisions (461) (502)
Net financial assets and liabilities (127) (718)
Share of results of joint ventures and associates 1,800 1,680
Assets held for sale 4 178
Other net assets and liabilities (248) (67)
Net assets 6,105 4,519
Other items FY 2012 FY 2011
USD hedge book ($m) $22,500 $22,000
Net TotalCare assets (£m) 1,312 956
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Group cash flow
(£m) FY 2012 FY 2011
Group UPBT 1,429 1,157
Depreciation and Amortisation 487 410
Net Working Capital (175) 253
Capital Expenditure and Intangibles (685) (775)
Other (142) (110)
Trading Cash Flow 914 935
Pension / Tax / Other (459) (410)
Shareholder Payments (318) (315)
Base cash flow (exc. Acquisitions & FX) 137 210
Acquisitions / FX 957 (1,520)
Gross cash flow 1,094 (1,310)
Period end cash balance 1,317 223
Average net cash (145) 320
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Half year analysis
Year on Year
Half on Half
H2 2012 H2 2011 Change H1 2012 Change
Order book* (£bn) 60.1 57.6 4% 60.1 0%
Underlying revenue (£m) 6,452 5,814 11% 5,757 12%
Underlying OE revenue (£m) 3,170 2,667 19% 2,723 16%
Underlying Services revenue (£m) 3,282 3,147 4% 3,034 8%
UPBT (£m) 792 562 41% 637 24%
Net cash (£m) 1317 223 869
Average Net cash (£m) 300 (140) (590)
*2011 order book restated to exclude IAE orders of £4.6bn
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Research & development
Full Year
£m 2008 2009 2010 2011 2012
Gross R&D (885) (864) (923) (908) (919)
Net R&D (490) (471) (506) (520) (577)
Net R&D expenditure as a percentage of underlying revenues 5.4% 4.7% 4.7% 4.6% 4.7%
Capitalised 113 121 111 93 38
Amortised (26) (29) (27) (36) (50)
R&D charged to Income Statement (403) (379) (422) (463) (589)
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Foreign exchange
FY 2012 FY 2011 FY 2012 FY 2011
Period average rates
Period end-spot rate
USD 1.59 1.60 USD 1.63 1.55
Euro 1.23 1.15 Euro 1.23 1.20
NOK 9.21 8.99 NOK 9.05 9.27
Translation effects (Revenue and Profit)
• Changes in average FX rates (mainly EUR) caused a
(1.2%) headwind on Group Revenue
• Segmental revenue headwinds:
• Civil (1.4%); Marine (2.2%)
• Translation impact on Group UPBT of (£28m); mainly
caused by EUR
• Segmental effect concentrated in Civil and Marine
Balance Sheet effects
• Changes in period end FX rates cause overseas cash
balances to be valued differently at the B/S date
• FX rates at FY12 vs FY11 caused a (£54m) reduction in
the value of cash balances held
Transaction Effects
Good visibility of improving achieved rates
30
Cover (£bn)
Average rate in book (RHS)
1.8
• Continuing to take US$ cover
• US$ hedge book at $22.5bn with average rate of $1.6 at
31 December 2012
• On average the net exposure is around $4bn per annum –
approx 5 years cover in place
20
10
0
2008 2009 2010 2011 2012
1.7
1.6
1.5
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Pension risks substantially reduced
• UK pension schemes make up around 90% of gross liabilities; 95% of gross assets
• Significantly reduced risk and volatility over the last five years
• UK defined benefit schemes closed to new members in 2007
• £500m special injection in 2007
• More than 80% of assets in lower risk, liability driven investments (LDI)
• Longevity swap provides greater certainty over future funding requirements
• UK schemes
• Surplus of £180m (calculated on an IAS19 basis*)
• 2012 contributions of £250m including £101m of deficit reduction payments
• Level of contributions expected to continue in 2013
• Triennial review underway on RRPF
• Overseas Schemes
• Deficit of (£725m) (IAS19 basis*) principally made up of unfunded US healthcare schemes (£481m)
• 2012 contributions of £47m
• Contributions expected in 2013 around £40m
Prudent pension management has reduced risk
*IAS19 reporting basis discounts liabilities using a AA bond rate – while this is the required reporting method it does not match the
method used to manage the pension schemes which discounts liabilities using a swap curve to match the LDI portfolio.
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Customer finance
Strong financial position allows the Group to provide financing support to customers in the
form of guaranteed financing, asset-value guarantees and leasing transactions
• Selective and designed to minimize risk:
• Board guidelines limit gross and net exposures by counterparty, product type and year
• Commitments continually monitored with suitable management policies in place
• Exposures audited twice yearly with independent asset value appraisals
• Stable contingent liabilities – as of December 31 st 2012:
• Total Gross Exposure: US$925m;
• Total Net Exposure (less security): US$114m;
• Total Stressed Exposure (assumes 20% asset discount): US$216m
• Liabilities are spread across multiple geographies, customers and aircrafts
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Group guidance - 2013
Revenue Growth
Profit Growth
Group Modest Good
Civil Modest Strong
Defence Modest Modest reduction
Marine Modest Modest
Energy Some improvement Some improvement
Foreign Exchange
Neutral
Tax Rate Underlying tax rate 22% - 23%
R&D
Capital Expenditure
Pensions
Modest increase in expenditure
Modest decrease in P&L charge due to capitalisation of Trent XWB
c. £100m increase in expenditure
No material changes expected to funding levels
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3. Key performance indicators
Data pack
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Group KPIs
Selection of Group KPIs FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Capital Expenditure (£m) 283 291 361 467 491
Engine Deliveries 1,621 1,600 1,657 1,853 1,922
Installed Thrust* (m/lbs) 348 367 382 400 360
Percentage of Civil Fleet Under
Management
57% 59% 70% 68% 73%
Return on Capital Employed** 17.1% 17.2% 17.3% 17.8% 18.1%
* 60m/lbs of thrust removed from the installed base on completion of IAE restructuring
** Return on capital employed is calculated as the after-tax underlying profit, divided by the average net
assets during the year, adjusted for net cash, net post-retirement deficits, and goodwill previously written off.
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4a. Details by business sector – Civil
Data pack
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Civil Aerospace
FY 2012 underlying revenues = £6,437m
OE
46%
Wide-body
58%
Narrow-body
6%
Services
54%
Corporate
& Regional
36%
OE volume drives revenue growth
• Growth coming from >50% market share of the largest wide-body fleet replacement cycle and market expansion in history
• Trent engine family powers most major wide-body platforms; over 2,200 in service with around 2,400 in the order book
• Further order book growth potential via sole share of A350, with an opportunity for an additional 2,500 Trent engine units
Operational leverage in OE and Services
• Significant increase in Trent unit volumes provides better opportunity to absorb fixed costs
• Operational leverage applies not only to OE but also to services that represented 54% of FY12 Civil Aerospace revenue
Competitive advantage of high LTSA coverage
• LTSAs allow better matching of load vs. capacity by managing the timing and scope of maintenance
• LTSAs rising from 73% 2012 services revenue to over 90% over the next decade
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m/lbs of installed thrust
Growth in the installed base
OE volume drives revenue growth
• Growth coming from >50% market share of the largest wide-body fleet replacement cycle and market expansion in history
• Trent engine family powers most major wide-body platforms; over 2,200 in service with around 2,400 in the order book
• Further order book growth potential via sole share of A350, with an opportunity for an additional 2,500 Trent engine units
700
600
FY 2012
500
400
360 m/lbs
300
200
100
0
1988 1992 1996 2000 2004 2008 2012 2016 2020
Narrow-body Corporate & Regional Trent RB211
*Installed thrust is shown net of retirements and includes 50% of the V2500 programme up to to H1 2012
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Market leader in large aircraft
Market leader
Launch engine
Engine
Trent 700
Trent 800 Trent 500 Trent 900 Trent 1000 Trent XWB
Market share
(Aircraft)
57% 40% 100% 44% 41% 100%
Engines in
service
980 450 524 216
52
= 2,222
50% market share of firm backlog on wide-body platforms
Trent order book around 2,400 engines
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The mid-size strategy
• IAE restructuring completed
• $1.5bn cash received on completion (excluded from Group level guidance)
• Headline profit on disposal of £699m (excluded from underlying profit figures)
• Order Book – Civil order book reduced by £4.6bn
• Ongoing revenue based on a $/EFH basis for 15 years
• Rolls-Royce continues engineering, component manufacturing and final assembly
activities
• Civil Aerospace operating profit benefitted from a £92m uplift in H2 2012
• Joint venture announced with P&W to develop new engines for
future generation mid-size aircraft
• Focus on high bypass geared technologies
• Equal partnership with both bringing unique capabilities
• Subject to regulatory approval
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Civil engine deliveries
Delivered
Engines
1200
1000
800
600
400
200
Delivered
Thrust* (m/lbs)
35
30
25
20
15
10
5
0
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Wide-body Narrow-body* Corporate & Regional Delivered Thrust* m/lbs
• Rolls-Royce powers over 30 types of commercial aircraft
• With around 3,100 engines in the Civil Order book, deliveries will grow strongly
*Delivery of engines and thrust are shown net of retirements and includes 50% of the V2500 programme until completion of IAE restructuring
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Civil engine deliveries
Number of engines
2003 2004 2005 2006 2007 2008 2009 2010 2011
HY
2012
2012
Wide-body 169 171 170 203 145 193 225 185 224 125 275
Narrow-body* 216 237 327 319 308 351 347 371 418 220 220
Corporate and Regional 361 416 384 334 398 443 272 290 320 188 393
Civil Total 746 824 881 856 851 987 844 846 962 533 888
*Engine Deliveries are shown net of retirements and includes 50% of the V2500 programme until completion of IAE restructuring
*2012 Narrowbody deliveries include V2500 until completion of IAE restructuring
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TotalCare – A powerful model
Value to Customers
Predictable costs
Supports outsourcing strategies
Flexible contract design
Risk transfer
Value to Rolls-Royce
Expand revenue opportunity
Manage overhaul load and capacity effectively
Incentivises cost reduction
Best positioned to manage risk
Features
• Key assumptions: Utilisation of engines; material and labour costs; inflation; FX; frequency and scope of overhaul
• TotalCare has been available on wide-body since 1997
• Growing installed base of products with useful lives of >25+ years results in stable, long-term annuity of services
revenue = 54% FY2012 revenue
• The OEM is best placed to own and manage life-cycle product costs leading to improved cost efficiencies in
LTSAs and reduced customer disruption
• LTSAs allows better matching of load vs. capacity by managing the timing and type of maintenance performed
• LTSAs rising from 73% FY2012 installed fleet to over 90% over the next decade
• We can use decades of Civil LTSA experience to better serve customers in Defence, Marine and Energy
Adding value for Rolls-Royce and our customers
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TotalCare – A powerful model
Example below shows a launch customer with OE losses linked to an LTSA, and a stable margin assumed
throughout the contract.
Contract Profits
• Margin booked progressively reflecting latest view of actual performance compared with assumptions
• Cash flow reflects a combination of steady flying hour ($/EFH) receipts through the contract and periodic overhaul spend
• Difference between cash received and profit booked is recorded as either a trade receivable or payable depending on the
position of the contract
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Civil installed thrust
Millions of pounds (m/lbs) of installed thrust* in service
2003 2004 2005 2006 2007 2008 2009 2010 2011
HY
2012
2012
Wide-body 175 183 193 202 209 215 226 235 246 253 260
Narrow-body* 27 30 33 37 41 45 49 54 58 0 0
Corporate and Regional 72 75 78 81 84 88 91 93 96 97 100
Civil Total 274 288 305 320 334 348 367 382 400 350 360
*Installed thrust is shown net of retirements and includes 50% of the V2500 programme until completion of IAE restructuring
In 2012 approximately 60 m/lbs of V2500 installed thrust was excluded from the installed fleet total
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Installed base by age
Total installed thrust* – 360 m/lbs – December 2012
50%
40%
30%
20%
10%
0%
0-10 years 11-20 years >20 years
Age of Aircraft
Wide-body
Corporate & Regional
Younger, more fuel efficient aircraft are typically parked last
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4b. Details by business sector – Defence
Data pack
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Defence Aerospace
FY 2012 underlying revenues = £2,417m
OE
46%
Combat
36%
UAV/Trainer
10%
Development
5%
Services
49%
Transport
54%
Broad and Diverse Portfolio
• Installed base of 18,000 engines includes 24 engine programmes in 103 countries with 160 armed forces
• Broad portfolio and large installed fleet positions the Defence business well to meet the challenges of customer
budget pressures
Resilient characteristics of military transport market
• Market leader in military transport market with stable customer flying hours experienced over the last 5 years
Opportunities to increase LTSA coverage
• Budgetary pressures and customers’ requirements for increased value and more flexible contracts provide
opportunities for additional services and collaboration
• Such contracts will increase LTSA coverage and drive operational efficiencies
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Defence portfolio
Combat Jets
>1,500 engines in service
Trainers
>1,200 engines in service
Transport
>9,000 engines in service
Helicopters
>5,000 engines in service
Engine
Platform(s)
EJ200
Eurofighter Typhoon
Adour SEPECAT Jaguar BAE Hawk Mitsubishi F-1
Pegasus
Harrier
RB199
Tornado
Rolls-Royce LiftSystem F35-B
Adour BAE Hawk T-45 Goshawk
FJ44
Saab SK60
AE1107C
V22 Osprey
AE2100
C130 J Hercules
T56 C130 A-H Hercules P-3C Orion E-2C Hawkeye
TP400
A400M
AE3007 Global Hawk EMB45
MTR390
Eurocopter Tiger
RTM322 Blackhawk Apache NHI NH90
CTS800 Super Lynx 300
Gem
Lynx
Gnome
Augusta Westland Sea King
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Developing the Defence business
Tranche
3a
Typhoon
contract
signed
AV-8B enters service
Allison purchase
brings T-56 & AE
2100 markets
EJ200
enters
service
Deal to power 72 aircraft with
EJ200 from Saudi Arabia
AirTanker
awarded
UK Tanker
contract
EJ200 engine
in first combat
deployment
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
T800 engine
launched
GE & Rolls-
Royce team for
JSF
RTM322 enters
service with
Royal Navy
Oakland R&O base
purchased in US
Full production of
AE1107C for V-22
Global Hawk
UAV passes
10,000 hours
service
First flight of
A400M powered
by TP400
Engine certification
for TP400 in A400M
STOVL - 1st
Vertical
Engagement of
LiftSystem
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Defence engine deliveries
Number of Engines
1000
900
800
700
600
500
400
300
200
100
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Transport Helicopters Combat Trainers / Other
• Installed base of 18,000 engines includes 24 engine programmes in 103 countries with 160 armed forces
• Market leader in military transport market with stable customer flying hours experienced over the last 5 years
Increasing installed base delivers aftermarket revenues for decades
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Defence engine deliveries
2003 2004 2005 2006 2007 2008 2009 2010 2011
HY
2012
2012
Transport 124 121 120 117 134 133 218 265 289 131 296
Helicopters 257 242 332 285 271 264 323 343 412 197 447
Combat 73 94 80 71 64 93 103 102 103 62 113
Trainers / Other 56 52 33 41 26 27 18 0 10 3 8
Defence Total 510 509 565 514 495 517 662 710 814 393 864
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4c. Details by business sector – Marine
Data pack
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Marine
FY 2012 underlying revenues = £2,249m
Services
43%
Merchant
20%
Naval
33%
OE
57%
Offshore
47%
Ship design capability
• Rolls-Royce designs ships, selecting products from its own market-leading portfolio to create integrated ship solutions
• Rolls-Royce design + OE capabilities = c. 60% ship contract value
• Recent investment in global network of 38 services centres = opportunity to capture better share of services market
Opportunities from stricter emissions requirements
• International Maritime Organisation beginning strict emissions limits in 2016
• Drives OE and services opportunities for ship designers with broad product portfolios
Long-standing nuclear capabilities in Naval
• Unique capabilities in pressurised water reactors for the UK MoD’s nuclear powered submarine fleet
Price of oil
• High price of oil drives significant activity around deepwater offshore exploration for oil, increasing demand for
products and services in developing markets, such as Brazil
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Marine – Business overview
Market Sector Description Products
Offshore
Supply of vessels benefit from cutting-edge
technology, providing safe, flexible and
reliable solutions - purpose fitted to support
the offshore oil & gas drilling industry
Full ship design, allowing integration of
propulsion, motion control, winches and deck
handling and power plant systems
Merchant
Decades of experience in designing,
developing and equipping vessels in the
cargo, tugs and workboats, passenger, and
luxury yacht sectors
World leading range of propulsion and
manoeuvring systems for tugs and workboats
Environmental rules are driving innovation in
low emissions
Naval
Supply of power systems and auxiliary
equipment to a range of naval applications;
from patrol and supply vessels to
conventional combatants and more recent
fast attack craft
Pioneered the development of nuclear power
for the UK submarine fleet
Active role in developing new technologies
for the future
Requirements for more power and greater
flexibility. Rolls-Royce MT30 gas turbine
selected for US Littoral Combat Ship and two
new UK aircraft carriers
Supply and support of nuclear power
systems on the entire UK submarine fleet,
including the new Astute class
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Marine Order Trends
£bn
3
2.5
2
1.5
1
0.5
£bn
6
5
4
3
2
1
0
H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012
Order intake OE Sales Order Book (Right hand axis)
0
Order intake is a lead indicator for revenue growth
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Unique capabilities for Offshore
Rolls-Royce designs and integrates complex systems
100%
80%
60%
40%
Steel
Labour
Ship Design
Engine
Commissioning
Propulsion
• Ship Design is a key enabler
• Design stage allows Rolls-Royce to fully
integrate all high technology systems
• Rolls-Royce supplies the highest value-add
components
• Integrated systems and deep product
knowledge strengthens long-term service
offerings
20%
0%
Deck Machinery
Rolls-Royce Scope
Non Rolls-Royce Scope
Rolls-Royce Key Enabler
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4d. Details by business sector – Energy
Data pack
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Energy
FY 2012 underlying revenues = £962m
Services
64%
OE
36%
Oil & Gas
64%
Power
Generation
25%
Civil
Nuclear
11%
Global energy demand outstripping available supply
• Global demand will require a range of energy solutions
Price of oil
• High price of oil drives demand for gas turbines, compression and pumping engines in the oil & gas sector
Power generation in developing markets
• Well-positioned to capture demand for localised energy production in less developed regions where power generation
infrastructure is nascent
Long-term opportunities in Civil Nuclear
• Rolls-Royce has acquired over many years unique instrumentation & controls, inspection and component capabilities
in Civil Nuclear to support the growing ambitions of the major primes
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Energy – Business overview
Oil & Gas Power Generation Civil Nuclear
Market Sector Description Products
Oil & Gas
Rolls-Royce utilises its gas
turbine technology, coupled
with its centrifugal
compressors, to provide a full
product range for gas
compression and oil pumping
duties both on and offshore.
RB211
Aero-derivative
Avon
Aero-derivative
Barrel compressors
Pipeline
compressors
650 units
worldwide
1,200 units
>700 units
24 million hours
operational experience
60 million hours
operational experience
Huge experience in
natural gas handling
950 units Up to 90% efficiency
Power
Generation
Rolls-Royce offers a wide
range gas turbine based
solutions for the power
generation market, backed up
by a comprehensive range of
service solutions
More than 130 million hours of
operating experience with
industrial gas turbines.
501-K
Aero-derivative
Trent 60
500 customers
40 countries
60 million hrs operating
experience
The most advanced aeroderivative
industrial gas turbine available today.
Delivering up to 64MW of electric power in
simple cycle service, the Trent 60 has
established a new benchmark for fuel
economy and cost savings.
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Energy – Business overview
Oil & Gas Power Generation Civil Nuclear
Market Sector Description Products
Civil Nuclear
Instrumentation and Control
Systems
Mechanical Systems and
Component Engineering
Safety, Licensing and
Environmental Engineering
Delivering technology and services to improve the reliability,
availability and safety of nuclear plants. Rolls-Royce systems are
installed in over 200 nuclear reactors across 20 countries worldwide
Rolls-Royce offers full engineering service, including analysis,
design, manufacturing, specialist procurement and supply of key
components for steam supply and
An integrated approach to environmental management is a key part
of our project delivery, encompassing radiological and
environmental impact assessment and radiation dose modelling.
Reactor Support Services
Rolls-Royce aims to maximise safety and plant availability, minimise
unplanned outages and achieve optimal performance for our
customers.
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Energy – Civil Nuclear
• MoUs with AREVA, Westinghouse, EdF, Larsen & Toubro (India) and Rosatom
(Russia)
• World-leader in safety-critical digital instrumentation and control systems (I&C) for
nuclear reactors, Rolls-Royce has nuclear I&C systems installed in over 200
reactors across 20 countries.
• Rolls-Royce has I&C systems in all 58 reactors in France and contracts in place to
supply systems to more than 70% of reactors in operation or under construction in
China today
• Through our teaming arrangement with Westinghouse, we provide reactor
inspection services to 70% of all pressurised water reactors in the US
• Growing demand for safety systems and service on existing reactors.
Rolls-Royce is a critical supplier in the Civil Nuclear market
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4d. Details by business sector –
Engine Holding
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Engine Holding
Bergen AG
Tognum
Description
Products
Bergen
Bergen AG is a leading
developer and producer of
medium speed diesel and gas
propulsion engines
and generator sets.
Diesel Engines
Gas Engines
Our medium-speed Bergen diesel engine
portfolio comprises established and newly
developed models in the 1.8 to 8MW power
range.
Bergen lean-burn gas engines are meeting
the emerging market for low-emission
propulsion and are the cleanest and most
efficient on the market available in powers
from 1.4 to 7MW.
Tognum
Engines
On-site Energy and
Components
The product portfolio of the Engines business unit comprises MTU
engines and propulsion systems for ships, for heavy land, rail and
defence vehicles and for the oil and gas industry.
The On-site Energy business unit supplies distributed power
generation systems carrying the MTU Onsite Energy brand. These
comprise diesel engines for emergency power, prime power and
continuous power, as well as cogeneration power plants based on
gas engines and gas turbines that generate both power and heat.
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Tognum joint venture
In March 2011 Rolls-Royce and Daimler announced JV offer for Tognum, a leading
manufacturer of high speed diesels used in Marine, Energy and industrial applications
• Engine Holding (JV) today owns over 99% of Tognum
• Court has granted the right to “squeeze out” the minority shareholders, subject to customary court
appeals process, which is ongoing
• Rolls-Royce and Daimler have appointed representatives to the supervisory board
Tognum JV provides strong growth opportunities
• Our Marine ship design business and service business model provide opportunities to grow the
aftermarket business
• Tognum’s Energy solutions business complements our power generation business
• We see further synergy opportunities in oil & gas markets
• Daimler brings expertise in high volume manufacturing and global market access
• Preliminary 2012 financials – EBIT of €296m
Future Plans
• Develop the roadmap for growth
• Fully consolidated from 01 January 2013
• No financial guidance for Tognum while independently listed
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Bergen – Transfer to Engine Holding
Rolls-Royce’s Full Year 2011 financial results reflected management of the Bergen AS within the Marine and Energy
business segments.
On 2 nd January 2012 Bergen transferred to Engine Holding. Rolls-Royce’s 2011 full year business segment results have
been restated to allow comparison with the performance of the business segments as they are reported in Rolls-
Royce’s 2012 results..
Bergen – Business Mechanics
Marine
• Bergen sells diesel engines to Rolls-Royce Marine
• Rolls-Royce Marine sells engines as part of a
package to the end customer
• Transfer of Bergen from Marine moves profit earned
to Bergen (Engine Holding) segment
• Marine revenues unchanged as sales to end
customer are unchanged
• Intersegment sales (Bergen to Marine) are
eliminated at Group level
Energy
• Bergen sells diesel engines direct to power
generation customers - all revenue and profit are
realised in Bergen.
• Before the Bergen transfer, revenues and profits
flowed through Energy segment results
• Transfer of Bergen into Engine Holding removes all
related revenue and profit from Energy results
• There is no intersegment trading between Energy
and Bergen
Bergen diesel engine business transfers into Engine Holding
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Bergen – Results Restatement
FY 2011 restatement
Underlying Turnover
Underlying Profit
FY2011
As reported
Impact of
Restatement
FY2011
Restated
FY2011
As reported
Impact of
Restatement
FY2011
Restated
Civil Aerospace 5,572 5,572 499 499
Defence Aerospace 2,235 2,235 376 376
Marine 2,271 0 2,271 323 (36) 287
Energy 1,199 (116) 1,083 24 (8) 16
Engine Holding 331 331 36 44 80
Intersegment Elimination (215) (215) - - -
Central Costs (52) (52)
Rolls-Royce Holdings 11,277 0 11,277 1,206 0 1,206
Effect of new Bergen trading set up as part of Engine Holding
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5. Additional information
Data pack
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Investor Relations
Simon Goodson
Director – Investor Relations
Tel +44(0)207 227 9237
simon.goodson@rolls-royce.com
Graeme Barnes
Manager – Investor Relations
Tel +44 (0)1332 823821
graeme.barnes@rolls-royce.com
Jilinda Crowley
Assistant Director – Investor Relations
Tel: +44(0)207 227 9282
jilinda.crowley@rolls-royce.com
Jacinta Francis
Programme Coordinator – Investor Relations
Tel +44(0)207 227 9237
jacinta.francis@rolls-royce.com
For more information:
www.rolls-royce.com/investors
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Investor Relations - iPad App
Available as a free
download on iTunes
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Safe harbour statement
This Results Announcement contains certain forward-looking statements. These
forward-looking statements can be identified by the fact that they do not relate only
to historical or current facts. In particular, all statements that express forecasts,
expectations and projections with respect to future matters, including trends in
results of operations, margins, growth rates, overall market trends, the impact of
interest or exchange rates, the availability of financing to the Company, anticipated
cost savings or synergies and the completion of the Company's strategic
transactions, are forward-looking statements. By their nature, these statements
and forecasts involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future. There are a
number of factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking statements
and forecasts. The forward-looking statements reflect the knowledge and
information available at the date of preparation of this Results Announcement, and
will not be updated during the year. Nothing in this Results Announcement should
be construed as a profit forecast.
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