Rolls-royce Holdings Plc · LSE:RR.
Rolls-royce — FY2011 Earnings Presentation
59 slides from Rolls-royce's earnings presentation, 2012
Slide 1: 2011 Full Year Results Data pack
2011 Full Year Results Data pack Trusted to deliver excellence Rolls-Royce 5
Slide 2: Table of contents
Table of contents Section Page 1. About the Group 03 2. Financials 14 3. Key Performance Indicators 26 4. Details by Business Sector 29 5. Additional Information 56 Trusted to deliver excellence ik Rolls-Royce >
Slide 3: 1. About the Group
1. About the Group Data pack Trusted to deliver excellence Rolls-Royce ,
Slide 4: Consistent power systems strategy
Consistent power systems strategy Address four global markets Invest in technology, capability and infrastructure Develop a competitive portfolio of power systems and services Grow market share and installed base Add value for customers through product-related services ed to deliver excellence ik Ro
Slide 5: Four global markets
Four global markets ont alist pelbse | marine | eneray | Aerospace ai ne nae + 14,000 engines + 24 products + 25,000 power & + 4,000 power systems. + 500 airlines + 18,000 engines propulsion units + 1,600 customers + 1,700 business jets + 160 armed forces + 75,000 deck units + 120 countries + 103 co
Slide 6: Broadening our portfolio
Broadening our portfolio Trent XWB family F136 + LiftSystem Trent900 — Trent 1000 Trent 700 wr21 TP400 RTM322 EJ200 MT30 RB211-524G/H Model 250 Industrial Trent . V2S500A1 AE 3007 BR710 AE 1107 V2500-A5/D5 BR715 Trent 500 | RB211-535E4-B Trent 800 Adour 951 . | AE 2100 RB211-535E4-C 800 RR300 Tay 65
Slide 7: Record order book
70 60 “Firm and announced order book stated on a constant currency basis Record order book* FY2011 order Book £62.2bn (Ebn) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 mEurope sNorthAmerica sAsia/ Middle East mROW Order book provides long-term visibility ‘ed to deliver excellence Rolls- R
Slide 8: Balanced business portfolio
Balanced business portfolio FY2011 underlying revenues = £11.3bn Aftermarket services: 53% £6bn Energy 5% Marine 15% Civil 20% Defence 10% Original equipment: 47% £5.3bn Trusted to deliver excellence Rolls-Royce ,
Slide 9: Managing challenges
Managing challenges 200% 100% 0% 2000 2001 2002 2003 2004 #2005 2006 2007 «(2008 #2009 2010 2011 Order Book @Revenue @EPS An increasingly resilient portfolio Trusted to deliver excellence Rolls-Royce 3
Slide 10: Growing Group revenues
Growing Group revenues €bn % 12 100% 10Y CAGR% 40 OE 5% Services 9% 80% 60% 40% 20% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 @=m Underlying Services Revenues G™Underlying OE Revenues ——Services as % of Total (RHS) Growing installed based provides decades of aftermarket opportunities Trus
Slide 11: Research & development
Research & development Total gross R&D spend (10Y) =£7,462m _—‘ Total net R&D spend (10Y) = £4,021m Spend (£m) R&D per Sales 1,000 12% 900 800 10% 700 8% 600 500 6% 400 300 4% 200 2% 100 0 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 @=aGross R&D m™m—iNetR&D -——Gross R&D/ Sales (RHS) ——Net R
Slide 12: A strong balance sheet
A strong balance sheet Average net cash Debt maturities (Em) (£m) = Drawn 1,200 4,500 = Undrawn 1,000 800 1,000 600 400 500 Oo” 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Strong liquidity positi is £2.5bn ‘A’ credit rating and liquidity all provide confidence for: Trusted to
Slide 13: Tognum joint venture
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 industri + JV today owns 99% of Tognum + Court has granted the right to “squeeze out” the minority shareholders, subject to customary cour
Slide 14: 2. Financials
2. Financials Data pack Trusted to deliver excellence Rolls-Royce * 14
Slide 15: Historic financial highlights
Historic financial highlights FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Underlying revenue (£m) 7,817 9,147 10,180 10,866 11,277 Underlying profits before tax (£m) 800 880 915 955 1,157 Underlying EPS 34.06p 36.70p 39.67p 3873p 48.54p Net cash flow (£m)* 62 570 (183) 258 (1,310) Average net cash (£m)*
Slide 16: Headline to underlying adjustment
Headline to underlying adjustment Revenues (£m) FY 2011 FY2010 Headline 11,124 11,085 FX gaini(loss) 153 (219) Pensions Acquisition accounting Other Underlying 11,277 10,866 Trusted to deliver excellence ik Rolls-Royce Gx 16 Profit before financing FY 2011 FY 2010 1,189 1,134 112 (124) (164) 64 . 5
Slide 17: Summary income statement
Summary income statement (em) FY 2014 Underlying revenue Underlying gross profit FY 2010 Commercial and administrative costs (970) Net R&D charge (463) Other Income & costs 245 UPBFCT 1,206 Net financing charge (49) UPBT 1,157 Tax (261) Minority interests 2 UPAT 898 Underlying EPS (p/share) 48.54p P
Slide 18: Underlying financing costs
Underlying financing costs (£m) FY 2011 FY 2010 UPBFCT 1,206 1,010 Interest (payable) / receivable (31) (40) Financial RRSPs (11) (13) Interest rate swaps - (2) Other (7) - Underlying financial costs (49) (55) UPBT 1,157 955 Trusted to deliver excellence ik Rolls-Royce Gx 18 18
Slide 19: Summary balance sheet
Summary balance sheet (£m) FY 2011 FY 2010 Intangible assets 2,882 2,884 Property, plant and equipment 2,338 2,136 Net post retirement scheme deficits (397) (856) Net working capital (1,099) (973) Net funds 223 1,533 Provisions (502) (544) Net financial assets and liabilities (717) (627) Share of re
Slide 20: Group cash flow
Group cash flow Cash flow during the year (£m) FY 2011 FY 2010 Net cash inflow from operating activities 1,177 1,378 Net cash outflow from investing activities (2,078) (759) Net cash outflow from financing activities (655) (743) Net decrease in cash and cash equivalents (1,556) (124) Other changes i
Slide 21: Half year analysis
Half year analysis H2 2011 H1 2011 Change Order book (£bn) 62.2 61.4 +5% Underlying revenue (£m) 5,814 5,463 46% UPBT (£m) 562 595 -6% Net cash (£m) 223 1,451 -1,288 H1 2011 H1 2010 Change Order book (£bn) 61.4 58.4 +5% Underlying revenue (£m) 5,463 5,259 +4% UPBT (£m) 595 465 +28% Net cash (£m) 1,4
Slide 22: Research & development
Research & development £m 2007 2008 2009 2010 2011 Gross R&D (824) (885) (864) (923) (908) Gross R&D spend as a percentage of underlying revenues 10.5% 9.7% 8.6% 8.5% 8.0% Funded Externally 313 337 340 369 332 Net R&D (511) (547) (524) (554) (576 Net R&D spend as a percentage of underlying revenues
Slide 23: Foreign exchange
Foreign exchange Headline profit before tax of £1,105m Fy 2011 FY 2010 (rr 2010» £702) + Impact of USD spot rate changes in 2011 very low USD 1.55 1.57 compared to 2010. Euro 1.20 1.17 + Revaluations of financial instruments NOK 9.27 9.10 + Overseas businesses impacted by translation rates (€ $ and
Slide 24: Pension risks substantially reduced
Pension risks substantially reduced * 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
Slide 25: Customer finance
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 + Highly selective and designed to minimize risk: + Governed by strict board guidelines that limit gross and net
Slide 26: 3. Key performance indicators
3. Key performance indicators Data pack Trusted to deliver excellence Rolls-Royce Pe 26
Slide 27: Group KPIs
Group KPIs Selection of Group KPIs FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Capital Expenditure (£m) 304 283 291 361 467 Engine Deliveries 1,439 1,621 1,600 1,657 1,853 Installed Thrust (m/Ibs) 334 348 367 382 400 Percentage of Civil Fleet 55% 57% 59% 70% 68% Under Management Underlying Revenue per 1
Slide 28: Investing for growth and productivity
Investing for growth and productivity Underlying revenue per employee* £k 300 240 180 120 ; ll t) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 “Underiying revenue per employee based on three year rolling average Trusted to deliver excellence Rolls- Royce 28 28
Slide 29: 4a. Details by business sector — Civil
4a. Details by business sector — Civil Data pack Trusted to deliver excellence Rolls-Royce os 29
Slide 30: Civil — Well balanced portfolio
Civil — Well balanced portfolio FY 2011 underlying revenues = £5,572m Small Engines Services Trent & RB211 + Market leader — large Corporate and + Growing despite delayed major new Widebody programmes * Large and increasing installed thrust + Increasing penetration of TotalCare and + Young, fuel eff
Slide 31: Growing market and improving share
Growing market and improving share Delivering significant growth in installed thrust 2011 700 600 500 400 milbs 400 milbs of installed thrust 1987 1991 1995 1999 2003 2007 2011 2015 2019 =RB211 =Trent mV2500 @ 50% = Corporate & Regional ‘installed thrust is shown net of retirements and includes 50%
Slide 32: Market leader in large aircraft
Market leader in large aircraft Market leader Launch engine RRRRASL Engine Trent 700 Trent800 Trent500 Trent900 Trent1000 Trent XWB prime 58% | 40% 1100%) 43% | 43% |100%| irom 840 | 450] 524) 152] 14 | BRL 55% market share of firm backlog on widebody platforms Firm Trent order book > 2,400 engines
Slide 33: The mid-size strategy
The mid-size strategy ¢ Joint venture 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 ¢ Restructuring our participation in IAE Better aligns interests of the partners Approx $1.5
Slide 34: Civil engine deliveries
Civil engine deliveries Thrust delivered* Engines delivered (milbs) 1400 30 1200 25 1000 20 800 15 600 10 400 200 5 0 t) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 mmm Trent and RB211 | mamV2500 semCorporate and Regional ——Delivered Thrust* mi/lbs (RHS) + Rolls-Royce powers more than 30 types
Slide 35: Civil engine deliveries
Civil engine deliveries Number of engines 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Trent and RB211 151 169 171 170 203 145 193 225 185 224 2500 224 216 237 327 319 308 351 347 371 418 Corporate and Regional 481 361 416 384 334 398 443 272 290 320 Civil Total 856 746 824 881 856 851 987 844
Slide 36: TotalCare — A powerful model
TotalCare — A powerful model Adding value for Rolls-Royce and our customers Predictable costs Expand revenue opportunity Supports outsourcing Manage overhaul load effectively Flexible contract design Incentivises cost reduction Risk transfer Best positioned to manage risk Utilisation of engines Tota
Slide 37: TotalCare — A powerful model
TotalCare — A powerful model + Margins booked progressively over time reflecting latest view of contract outturn + Cash flow reflects: Progress through the contract Lumpy overhaul spend @ Cumulative Revenue BE Cumulative Costs @ Cumulative Margin = Cumulative Cashflow Contract Profits Contract years
Slide 38: Civil installed thrust
Civil installed thrust Millions of pounds (milbs) of installed thrust* in service 2001 2002 2003 +2004 +2005 ©2006 ©2007 + «2008 ~=—«2009 «2010-2011 TrentandRB211 157s 164.—=i«s«175°=*i«183C*=««193-—=—«- 202-209-215 «226-285 (246 v2500* Pa 2 yA 7 Corporate and 6 68 72 75 78 81 84 88 9% 93 96 Regiona
Slide 39: Installed base by age
Installed base by age Installed thrust* — 400 m/lbs - December 2011 60% 50% 40% 30% 20% 10% 0% 0-10 years 11-20 years >20 years Age of Aircraft @RB211/Trent ™V2500 @ 50% =C&RA “installed thrust is shown net of retirements and includes 50% of the V2500 programme Trusted to deliver excellence Rolls- R
Slide 40: 4b. Details by business sector — Defence
4b. Details by business sector — Defence Data pack Trusted to deliver excellence Rolls-Royce re 40
Slide 41: Defence — A broad portfolio
Defence — A broad portfolio FY 2011 underlying revenues = £2,235m UAV / Trainer Development Services Transport + Broadly based portfolio + Well-positioned on global programmes * Combat, Transport, Helicopters, UAVs, + Approximately 18,000 engines in service Trainers Trusted to deliver excellence Rol
Slide 42: Defence portfolio
Defence portfolio Combat Jets >1,500 engines in service Trainers Adour 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 35 BAE Hawk
Slide 43: Developing the Defence business
Developing the Defence business Tranche - a E200 — 2 a 4 Typhoon engine in contract first £y200 = AirTanker $!9"€4 combat ——_ oniers: awarded loyment ‘gaevice’ UK Tanker |AV-8B enters service contract Allison purchase brings T-56 & AE Deal to power 72 aircraft 2100 markets with EJ200 from Saudi 1998
Slide 44: Continued strength in Defence
Continued strength in Defence Our Products Deliver Value + Fuel efficiency upgrades and engine overhauls extend product life and reduce costs + Delays in new programs will require longer service and more spares for existing fleets We are the market leader in Transport * Demand for Transport remains
Slide 45: Defence engine deliveries
Defence engine deliveries Number of Engines 900 800 700 600 500 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Transport sHelicopters sCombat smTrainers / Other + Continued growth in engine deliveries in 2011 + Transport market resilience expected as forces downsize and become more manoeuvrable T
Slide 46: Defence engine deliveries
Defence engine deliveries 2002 2003 2004 2005 2006 2007 2008 Transport 115 124 121 120 117 134 133 Helicopters 268 257 242 332 285 271 264 Combat 74 73 94 80 71 64 93 Trainers / Other 48 56 52 33 41 26 27 Defence Total 505 509 565 514 495 517 Trusted to deliver excellence Rolls-Royce 46
Slide 47: 4c. Details by business sector — Marine
4c. Details by business sector — Marine Data pack Trusted to deliver excellence Rolls-Royce craze} 47 47
Slide 48: Marine
Marine FY 2011 underlying revenues = £2,271m Services OE Offshore Oil & Gas Specialist vessels + — Integrated propulsion solutions + Leading position in Offshore + Product s on 30,000 vessels . . . * Services growing quickly + Improving position in Naval - major opportunity Trusted to deliver excell
Slide 49: Marine — Business overview
Market Sector Description Marine — Business overview Products Supply of vessels benefit from cutting-edge technology, providing safe, flexible and reliable solutions - purpose fitted to support the offshore oil & gas drilling industry Offshore Full ship design, allowing integration of propulsion, mo
Slide 50: Unique capabilities for Offshore
Unique capabilities for Offshore Rolls-Royce designs and integrates complex systems 100% + Ship Design is a key enabler 80% . + Design stage allows Rolls-Royce to fully integrate all high technology systems =» + Rolls-Royce supplies the highest value-add components 60% + Integrated systems and deep
Slide 51: 4d. Details by business sector — Energy
4d. Details by business sector — Energy Data pack Trusted to deliver excellence Rolls-Royce A 51
Slide 52: Energy — Investing for the future
Energy — Investing for the future FY 2011 underlying revenues = £1,199m Civil Nuclear Services Oil & Gas Power Generation * Strong, well-positioned Oil & Gas + Growing importance of long-term services support + Evolving Power Generation + Low carbon — fuel cells, tidal, nuclear Trusted to deliver ex
Slide 53: Energy — Business overview
Energy — Business overview ww Carbon Market Sector Description Products RB211 650 units 24 million hours Rolls-Royce utilises its gas Aero-derivative worldwide operational experience turbine technology, coupled _ with its centrifugal Avon 4,200 units 60 million hours compressors, to provide a Aero-d
Slide 54: Energy — Business overview
Market Sector Description Energy — Business overview Power Generation Civil Nuclear cane Technology Products Instrumentation and Control Systems Delivering technology and services to improve the reliability, availability and safety of nuclear plants. Rolls-Royce systems are installed in over 200 nuc
Slide 55: Energy — Civil Nuclear
Energy — Civil Nuclear + MoUs with AREVA, Westinghouse, EdF, Larsen & Toubro (India) and Rosatom (Russia) + World-leader in safety-critical digital instrumentation and control systems (I1&C) for nuclear reactors, Rolls-Royce has nuclear |&C systems installed in over 200 reactors across 20 countries.
Slide 56: 5. Additional information
5. Additional information Data pack Trusted to deliver excellence Rolls-Royce 56
Slide 57: Investor relations contacts
Simon Goodson Director — Investor Relations Tel +44(0)207 227 9237 simon.goodson@rolls-royce.com Jilinda Crowley Assistant Director — Investor Relations Tel: +44(0)207 227 9282 ilinda.crowley@rolls-royce.com Jacinta Francis Programme Coordinator — Investor Relations Tel +44(0)207 227 9237 jacinta. f
Slide 58: Safe harbour statement
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
Slide 59: Restatement of FY 2011 business segment reporting
Rolls-Royce Holdings plc & Bergen AS – Restatement of FY 2011 business segment reporting In 2011, Rolls-Royce and Daimler set up a joint venture, Engine Holding GmbH to acquire Tognum AG and Bergen AS. Rolls-Royce nd therefore transferred its Bergen diesel engine business into Engine Holding on Janu