Appendices
“Trusted to deliver excellence”
Broadening our portfolio
Underpinning long-term growth
“Trusted to deliver excellence”
Balanced business portfolio 2011 HY £5.5bn underlying revenues
“Trusted to deliver excellence”
Civil 19%
Defence 9%
Marine 13%
Energy 6%
Aftermarket services: 53% £2.9bn
Original equipment: 47% £2.6bn
-100
0
100
200
300
400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Order book Revenue EPS Avg cash
Managing challenges An increasingly resilient portfolio
Gulf War Weakening US$
Programme delays
SARS Commodity inflation
Financial crisis
9/11
Index
“Trusted to deliver excellence”
Investing for future growth
“Trusted to deliver excellence”
Investing for growth and productivity Underlying revenue per employee*
0
50
100
150
200
250
300
2001 2003 2005 2007 2009 2011
£000’s 182
115 128
140 150 169
194 211
233
259
“Trusted to deliver excellence”
Trent XWB Seletar test bed
Services network Tognum Crosspointe
Investing in long-term growth drivers
Broadening the portfolio, better balanced
“Trusted to deliver excellence”
Germany Brazil USA
UK Singapore Norway UK Singapore Norway
Globalising operational capability Enabling growth and productivity
“Trusted to deliver excellence”
Financial data
“Trusted to deliver excellence”
-250
250
750
1250
1750
FY 07 FY 08 FY 09 FY 10 HY 11
Cash balance Average net cash
£m
A strong balance sheet
“Trusted to deliver excellence”
0
100
200
300
400
500
600
700
800
900
1000
2011 2012 2013 2014 2015 2016 2017 2018 2019
Drawn Undrawn
£m
Debt maturities well spread Gross facilities of £1.1bn outstanding
Gross cash 30 June 11 – £2.6bn
Gross debt 30 June 11 – £1.1bn
Undrawn facilities – £1.2bn
RCF – £250m
RCF – £750m
EIB – £200m
“Trusted to deliver excellence”
Customer finance – delivered (Contingent liabilities)
Not a core activity
Gross and net relatively stable since 2002
At 30 June 2011 – gross $959m, net $181m, stressed $313m
Credit Backstops – gross $366m, net $89m, stressed $111m
- 14 customers and 134 aircraft
AVG’s – gross $593m, net $92m, stressed $202m
- 12 customers and 179 aircraft over 12 years
“Trusted to deliver excellence”
Business reviews
“Trusted to deliver excellence”
Civil Aerospace portfolio
*The V2500 is manufactured by IAE International Aero Engines AG
(a multinational consortium led by senior shareholders Rolls-Royce
and Pratt & Whitney, together with JAEC and MTU Aero Engines)
Broadest civil product range of any manufacturer
“Trusted to deliver excellence”
60%
40%
60%12%
28%
Civil – well-balanced portfolio HY 2011 underlying revenues – £2.6bn
Market leader – large Corporate and Widebody
Large and increasing installed thrust
Young, fuel efficient fleet
V2500
OE
Small Engines
Trent & RB211 Services
Growing despite delayed major new programmes
Increasing penetration of TotalCare and CorporateCare
“Trusted to deliver excellence”
Growing market and improving share Delivering significant growth in installed thrust
2011 HY
0
100
200
300
400
500
600
700
800
1987 1991 1995 1999 2003 2007 2011 2015 2019
RB211 Trent V2500 @ 50% Corporate & Regional
m/lbs o
f in
sta
lled thru
st
392 m/lbs
“Trusted to deliver excellence”
Customers:
Predictable costs
Supports outsourcing
Flexible contract design
Risk transfer
Rolls-Royce:
Expand revenue opportunity
Manage overhaul load
Incentivise cost reduction
Best positioned to manage risk
TotalCare – a powerful model Adding value for Rolls-Royce and our customers
“Trusted to deliver excellence”
TotalCare – risk management
Major assumptions
Utilisation
Material and labour cost assumptions, inflation, FX
Frequency and scope of overhaul
Contract management
Ongoing fleet management
Contract reviews on every contract each 6 months
Experience over a decade
TotalCare for the Widebody since 1997
Contracts delivering against expectations
Margin recognition increasing as contract matures
“Trusted to deliver excellence”
Contract accounting methodology
Margins booked progressively over time
reflecting latest view of contract outturn
Cash flow reflects:
Progress through the contract
Lumpy overhaul spend
Contract
Profits
“Trusted to deliver excellence”
Defence Aerospace portfolio
“Trusted to deliver excellence”
54%
8%
38% 40%
50%
10%
Defence – a broad portfolio 2011 HY underlying revenues – £1.1bn
Broadly based portfolio
>18,000 engines in service
Well-positioned on global programmes
Combat, Transport, Helicopters, UAV’s,
Trainers
Transport
OE
UAV / Trainer
Combat Services
Development
“Trusted to deliver excellence”
Customer focused Defence solutions From traditional through to integrated service
solutions
Growing high value service offerings, that
leverage group capabilities
Increasing coverage, availability & value whilst
reducing costs
Providing greater global reach and capability
Innovation enabling greater customer value
“Trusted to deliver excellence”
Marine portfolio
“Trusted to deliver excellence”
Ship design and
integrated systems
Diesel and gas
engines Propellers & gears
Azimuth thrusters
Waterjets Gas turbines Propulsion &
steering systems
Podded propulsors Automation &
DP systems Stabilising systems Tunnel thrusters Automated
handling systems
2,500 customers, including 70 navies, around 9,500 employees
Equipment – 30,000 vessels, sales / service activities in 34 countries
Strong positions in offshore, merchant and naval sectors
System integration capabilities enabled revenue CAGR of around 20%
since 2005
Marine capabilities Underpinning growth
“Trusted to deliver excellence”
Leveraging skills into adjacent markets Merchant – opportunities in technology intensive markets
1. ‘Mission critical’
products and parts
2. Systems offering
(pulling through other
products)
3. Lifetime service
revenues
“Trusted to deliver excellence”
Integrated propulsion solutions
Product on 30,000 vessels
Improving position in Naval
Leading position in Offshore
Services growing quickly
- major opportunity
41%
59%
34%
23%
43%
OE
Specialist
vessels
Services
Marine – continuing strong growth 2011 HY underlying revenues – £1.2bn
Offshore
O&G
Naval
“Trusted to deliver excellence”
Energy portfolio
“Trusted to deliver excellence”
Over 4,000 gas turbines and more than 500 reciprocating engines
sold to customers in nearly 120 countries
Strong positions in Oil & Gas upstream and midstream markets
Growing position in distributed power generation
System integration & through-life support capabilities enabled revenue
CAGR of 18% since 2005
Energy capabilities Strong O&G position, investing in power generation capability
“Trusted to deliver excellence”
Energy – a growing opportunity Investing in low carbon and power generation technologies
Profit *
Advantaged by technology
Developing low carbon
technologies
Accessing global demand
“Trusted to deliver excellence”
43%
57% 58%42%
Energy – investing for the future 2011 HY underlying revenues – £0.6bn
Strong, well-positioned Oil & Gas
Evolving Power Generation
Growing importance of long-term
services support
Low carbon – fuel cells, tidal, nuclear
Power
Generation
OE Oil and Gas
Services
“Trusted to deliver excellence”
Tognum AG
“Trusted to deliver excellence”
24%
19%
29%
28%
Germany
Revenues ~ €2.5bn, services ~ 31%, adjusted EBIT €199m
Employees ~ 8,700, circa 85% in Germany
Services ~ Provided through network of more than 1,200 agents
and distributors in more than 130 countries
Europe
Americas
32%
35%17%
16%
Marine
Industrial
Energy Defence /
Other Asia /
RoW
Tognum ~ A broadly based business 2009 FY underlying revenues €2.5bn
“Trusted to deliver excellence”
Marine
• Yachts
• Commercial
• Naval
Industrial
• Rail
• Agric.
Defense
• Light and
Medium Vehicles
• Heavy Vehicles
Oil & Gas
• C&I
• Mining
• Onshore
• Offshore
Business Unit Engines
Diesel
Engines
& Systems
Injection
Systems
• Emergency Power
• Prime Power
• Continuous Power
Gas & Fuel
Cell
Systems
• Prime Power
• Continuous Power
• Highspeed
Engines
• Medium Speed
Engines
Business Unit Onsite Energy & Components
Source: Tognum materials
Tognum – extending core capabilities Products for a broad range of applications
“Trusted to deliver excellence”
Creating a world class franchise Strength in technology, product and systems capabilities
Core
characteristics
Rolls-Royce Tognum Daimler Markets
Technology
and products
Systems
solutions
Through life
service and
support
Operational
excellence
Market access
Ma
rin
e p
rop
uls
ion
O&
G a
nd
Defe
nce
Dis
trib
ute
d p
ow
er
ge
n
Medium Speed –
Diesel & Gas
High value
added
manufacturing
High volume
manufacturing
System integration
Through-life
service solutions
Product portfolio
Service network
Engine technology
Logistics
Hybrid
Global Global
High Speed Diesel
Fuel injection /
Turbochargers
Services network
Product
pull-through
Manufacturing
footprint and
supply chain
Mainly USA and
Europe
“Trusted to deliver excellence”
Complementary product and technology
Global access
Through life service and support
Systems integration
Compelling industrial combination Technology, solutions and services portfolio
High-Speed and
Medium-Speed
Diesel & Gas
Hybrid
Europe
US
BRIC
Asia
Marine
Powergen
O&G
Direct Sales
Long-term
service
Engine Health
Monitoring
“Trusted to deliver excellence”
IAE
“Trusted to deliver excellence”
Current status in the narrowbody sector Partner in IAE on V2500 for almost 30 years
32.5% equity share, similar work share
including compressor, fans and discs
and assembly in Dahlewitz
Highest volume engine programme
400+ deliveries p.a.
Approx. 4,500 engines in service
Further 2,000 engines in order book
Circa 56m lbs of installed thrust
(14% of RR total)
13% of Civil Aerospace business revenues
Small Engines
V2500 Trent &
RB211
Civil Revenues – 2010
“Trusted to deliver excellence”
Long-term collaboration with P&W in the mid-size sector Re-engining not seen as compelling proposition for RR
Next generation aircraft programmes provide significant opportunity
for improved market position and scale
JV builds on successful 30 year partnership with P&W
Venture to be equally owned by P&W and Rolls-Royce
Focus on high bypass geared technologies
Rolls-Royce to make modest investment in GTF for A320 NEO
“Trusted to deliver excellence”
Restructuring IAE participation
*EFH = Engine Flying Hours
Restructuring IAE participation to align stakeholders’ interests with
the A320 and A320 NEO
RR to dispose of 32.5% shareholding and programme share to P&W
Consideration of $1.5bn at close, subject to NWC adjustments
$/EFH* for each engine in service for 15 years from close
Continued engineering, component manufacture and assembly
Implications for Civil Aerospace of the transaction
Modestly lower annual revenues
Significant improvement in operating profits over next few years
Modest impact on Civil Aerospace order book
Timing of close will be subject to regulatory approvals
“Trusted to deliver excellence”
Safe Harbour Statement
“Trusted to deliver excellence”
This presentation 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 presentation, and will not be updated during the year. Nothing in this presentation should be construed as a profit forecast.