Preliminary Results Sir John Rose Andrew Shilston Mike Terrett

Transcription

1 Preliminary Results 2007 Sir John Rose Andrew Shilston Mike Terrett 1

2 Financial highlights Order book Firm and announced order book up 76% to 45.9bn in 2007 Revenue Sales 7.8bn - 6% underlying growth Services revenues 4.3bn - 9% underlying growth Profit Underlying PBT 800m - 13% growth Underlying EPS 34.06p - 14% growth Average net cash 350m (2006: 150m) Cash inflow 62m, after 500m pensions (2006: 491m inflow) Net cash balance 888m (2006: 826m) Shareholder payments Rebased shareholder payments up by 35% to 13p for

3 Financial performance Andrew Shilston Underlying profit is a non-ifrs measure. Definitions and reconciliations of underlying profits and additional disclosures and provided in the Group s press release dated 7 February

4 900 Components of profit growth 2007 (92) m (11) UPBT Operating Margin FX USD R&D Investment Finance Costs 2007 UPBT 4

5 Civil aerospace 2007 m Sales * Profit * m m 2006 m Order Book bn bn 4,038 3, Strong order activity across all programmes Expanding the portfolio and capabilities Flying hours up 5%, with services revenues up 11% Services revenues represent 63% of sales Managing significant headwinds on currency and material costs *Underlying sales and profit before financing costs 5

6 Defence aerospace 2007 m Sales * Profit * m m 2006 m Order Book bn bn 1,673 1, Extending access to international programmes AE2100, ADVENT & HEETE Strong order book providing revenue visibility Good balance of development, production and services programmes Services revenues represent 52% of sales * Underlying sales and profit before financing costs 6

7 Marine 2007 m Sales * Profit * m m 2006 m Order Book bn bn 1,548 1, Commercial and offshore order intake remains robust Strong revenue growth across products and services Naval business stable accessing global programmes Margins lower in H2 as a result of programme provisions Services revenues represent 35% of sales * Underlying sales and profit before financing costs 7

8 Energy 2007 m Sales * Profit * m m 2006 m Order Book bn bn (18) Oil & gas markets remain strong Industrial Trent gaining position in Power Generation Fee income - 18m benefit Fuel Cells - 25m spend, key milestone in 2008 Services revenues represent 52% of sales * Underlying sales and profit before financing costs 8

9 Underlying financing costs Interest Financial RRSPs Other 2007 m (6) (26) m (18) (27) 2 Underlying financing costs (32) (43) 9

10 Cash flow Trading cash generation Capital/intangible expenditure Working Capital Customer Deposits Tax Payments Payments to shareholders Cash flow (Before Pensions) Additional pensions contribution Cash inflow Net Cash at 1 Jan Net Cash at 31 Dec Average Net Cash 2007 m 1,037 (598) (41) 332 (71) (97) 562 (500) m 870 (517) (40) 296 (25) (93)

11 Strategic Financial Review Pension scheme restructuring completed - increased annual funding in 2008 Business model continues to be cash generative Resilient balance sheet is crucial Flexibility to respond to investment opportunities Shareholder payments for % higher that

12 Operational performance Mike Terrett 12

13 Operations 2007 review Continued strong load growth across all businesses Driven by changing mix and increasing services Ramp-up on Trent 900 and Trent 1000 Product costs increased by almost 7% Increasing commodity costs Escalation of cost in the external supply chain Facility disruption Improving productivity and focus on support costs 13

14 Global operations Domestic operations UK facility modernisation complete Modern Working Practices established at all UK facilities USA and Singapore enabling future growth and dollarisation Continuing to focus on make-buy strategy Supply chain simplification Providing greatly simplified supplier interfaces Now fully aligned to commodity Significant new IT implementation Moving to global purchasing 14

15 Sales per employee Compound growth of 7.4% pa over past 10 years Sales at constant currency 15

16 Operations summary Further impact from increased material costs and disruption from facility restructuring incurred in Continued progress with SAP implementation in the year creates opportunities for improving productivity. Evolution of our supply chain to deliver improved productivity will continue. Optimisation of global support functions in Challenges within supply chain reducing - not eliminated. 16

17 Summary Sir John Rose 17

18 Resilience in a challenging environment Strong market positions and improving market share Extending our product and service portfolio Developing our global footprint Focus on improved productivity and reducing costs Continued profitable growth despite challenges Outcome of financial review reflects our confidence 18

19 Addressing four global markets Civil Aerospace (US$1,250 billion) Defence Aerospace (US$480 billion) Marine (US$350 billion) Energy (US$120 billion) A global 20 year market opportunity for products and services worth around US$2 trillion 19

20 Investing in technology and capability and infrastructure 11 billion over 10 years 1.07bn 1.07bn 0.90bn 0.91bn 1.02bn 0.88bn 0.93bn 1.05bn 1.30bn 1.45bn Training Intangibles Capex and IT Gross R&D

21 Broadening our portfolio Tay 611C Trent 1000 LiftFan for JJF Bergen Diesels 2007 BR710 BR715 Trent 700 Industrial Trent F136 for JSF MT30 Trent XWB Trent 900 AE 1107C Trent Rolls-Royce is privatised Trent 800 AE 3007 RR300 AE 2100 TP400 RB282 21

22 Growing our market share and installed base globally 11% Compound growth 20.3bn Europe 12% Compound growth 12.7bn 12.9bn Americas 5.0bn 4.7bn 2.9bn 24% Compound growth Asia and Middle East Europe Americas Asia and Middle East Compound growth of order book 15% and increased global reach 22

23 Improved Market Access: Rolls-Royce Powered Aircraft in China ACI: 13 x Boeing 757 Total: 41 Aircraft CHENGDU CYH: 3 x Boeing 767 KUNMING GUANGZHOU XIAMEN CXA: 5 x Boeing 757 CSN: 20 x Boeing

24 Rolls-Royce Powered Aircraft in China CXJ: 13 x Boeing 757 CKK: 3 x Tu204 CAA: 15 x Boeing 787 CAA: 14 x A330 CAA: 13 x A320 CGQ: 3 x A320 CHH: 7 x A330 CHH: 3 X A CHH: 20 x A319 CES: 5 X A CAA: 13 x Boeing 757 CAA: 6 x A330 URUMQI CHH: 50 x Emb 145 BEIJING TIANJIN CES: 20 x A330 CES: 30 x A320 CSC: 40 x A320 CSC: 5 x Emb 145 CYH: 3 x Boeing 767 CSN: 13 x MD90 CSN: 5 x A380 CSN: 127 x A320 XIAN CHONGQING WUHAN CHENGDU Total: 504 Aircraft KUNMING SHANGHAI NANJING GUANGZHOU CSN: 24 x A330 CSN: 6 x Emb 145 XIAMEN CKK: 2 x Tu204 CES: 9 x MD90 CES: 10 x Emb 145 CXA: 9 x Boeing 757 CHH(HK): 20 x A330 CSN: 16 x Boeing

25 Adding value for customers through product related services Changed business model (TCA, MRMS, LTSA) Intelligent services engine health monitoring, predictive maintenance Adding value to customers and Rolls-Royce 1.8bn 1.9bn 2.2bn 2.4bn 2.5bn 2.8bn 3.3bn 3.5bn 3.9bn 4.3bn % Compound growth of services revenues 25

26 Future Our consistent investment in technology and capability has created value, global market access and options for the Group 4.3 Our confidence in the future reflected in the 35% increase in payments to shareholders For 2008, we expect underlying profit growth and positive cash flow generation 26

27 Summary Sir John Rose 27

28 Rolls-Royce Group plc (the Group ) is providing the following cautionary statement. This document contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of the Group. These statements are sometimes, but not always, identified by the words may, anticipates, believes, expects or estimates. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to (i) changes to the current outlook for global power systems markets, (ii) changes in tax laws and regulations, (iii) the risks associated with the introduction of new products and services, (iv) significant global disturbances such as terrorism or prolonged healthcare concerns, (v) the termination or delay of key contracts and (vi) long-term fluctuations in exchange rates, (vii) regulatory and shareholder approvals, (viii) unanticipated liabilities and (ix) actions of competitors. Subject to the Listing Rules of the UK Listing Authority, Rolls-Royce Group plc assumes no responsibility to update any of the forward looking statements herein. 28

29 Supplementary data 29

30 Consistent strategy Addressing four global markets Investing in technology, capability and infrastructure Developing a competitive product portfolio Growing market share / installed base Adding value for our customers through the provision of product-related services 30

31 Balanced business portfolio Total sales: 7.8bn Aftermarket services: 55% ( 4.3 bn) Energy: 3% Marine: 13% Defence: 10% Civil: 19% Original equipment: 45% ( 3.5bn) 31

32 Rolls-Royce Order book bn Sales bn Employees % Aftermarket Aftermarket sales bn Net cash m (300) 18 (501)

33 Research & Development Gross spend Funded externally Net R&D spend* * Net R&D spend % Sales Capitalised Amortised R&D Charged to Income Statement 2007 m (824) 370 (454) 5.8% 91 (18) (381) 2006 m (747) 352 (395) 5.4% 41 (16) (370) 33

34 Cash flow Cashflow from operating activities Special Pension injection Foreign Exchange Working Capital Net Investment in businesses Other Trading Cash Generation 2007 m (291) , m 1,072 - (49) (256)

35 Foreign exchange management Forward cover of $9.4bn with an average rate ~$1.83 Opening spot rate ~$1.96 Average spot rate ~$2.00 Closing spot rate ~$1.99 Hedging policy offers visibility of ~$ rate allowing planned transition Managing exposure through Utilisation of hedge book Dollarisation of supply chain Cost reduction Coverage 2008 and 2009 ~ 100%, 2010 ~ 60% 35

36 2007 Shareholder Payments 2007 payments increased to 13p/share, increased by 35.5% over Interim payment of 4.04p/share 2007 Final payment of 8.96p/share increased by 51% Elimination of scrip option following 2007 final payment New C class shares issued redeemable for cash 36

37 The broadest civil product range 37

38 Civil engine deliveries Units Corporate & Regional engines Airlines engines

39 Civil engine (Millions/lbs of delivered thrust) Corporate & Regional engines Airlines engines

40 Installed engine fleet % /12/04: installed engines 31/12/05: installed engines 31/12/06: installed engines 31/12/07: installed engines AE 3007 Tay Spey BR700 V2500 (@100%) Trent RB211 0 Other

41 Installed engine fleet % /12/04: installed engines 31/12/05: installed engines 31/12/06: installed engines 31/12/07: installed engines AE 3007 Tay Spey BR700 V2500 (@50%) Trent 2000 RB211 0 Other

42 Engine Flying Hours and Service Revenues Index (Jan 2001=100) Rolls-Royce engine flying hours World capacity * * 6-month moving average ATA+AEA+AAPA airlines 42

43 A competitive portfolio Defence aerospace 12 43

44 Defence engine deliveries Helicopters Fixed wing aircraft 500 Units

45 The widest range of marine products and services from a single supplier 45

46 Energy Portfolio Oil & Gas production (onshore and offshore) Oil production Gas production Oil transmission Gas gathering Secondary oil/gas recovery Gas transmission Gas pipelines Gas storage Power Generation Industrial Commercial Municipal 501s and RB211s provide 4-32 MW of power Trent 60 provides up to 58 MW of power Developing a 1MW Fuel Cell 46