Rolls-Royce Group plc 2010 Full-Year Results

— Order book remains strong at £59.2bn (2009 £58.3bn), having booked £12.3bn in new orders in 2010.
— Group revenues increased to £11,085m (2009 £10,414m).
— Revenues on an underlying basis increased by seven per cent to £10,866m.
— Services revenues increased by 13 per cent to £5,544m on an underlying basis.
— Profit before financing was £1,134m (2009 £1,172m).
— Underlying profit before taxation increased by four per cent to £955m (2009 £915m).

The Group’s financial position has been further strengthened:
— Average net cash for the period improved by £325m to £960m.
— Robust balance sheet with net cash of £1,533m at the period-end (2009 £1,275m) after a cash inflow in the period of £258m.
— Final payment to shareholders increased 6.7 per cent to 9.60 pence per share, making 16.00 pence per share for the full year.

Sir John Rose, Chief Executive, said:
“Rolls-Royce has delivered a strong performance in 2010 with record underlying revenues and profits. This reflects our global customer base and the balanced portfolio of products and services that we offer. It is a measure of progress that the Civil, Defence and Marine businesses now each generate underlying profits of more than three hundred million pounds. During 2011 the Group expects good profit growth and a modest cash inflow.

“At the end of March I will retire as Chief Executive of Rolls-Royce after fifteen years. It has been an extraordinary privilege to work with so many outstanding people and to contribute to the development of a business that has been at the forefront of engineering and technology for over 100 years.

“John Rishton will take over from me as Chief Executive. I wish him and all the team at Rolls-Royce continued success.”


Rolls-Royce performed well in 2010. The order book grew in the period to a record £59.2bn. Underlying revenues rose to £10.9bn, underlying profit increased to £955m and average net cash to £960m. This robust performance was achieved despite significant challenges.

These results demonstrate the Group’s resilience. The breadth and balance of our portfolio and the Group’s strong position in global markets have made the business more flexible and better able to deal with economic shocks and unexpected events. This has allowed Rolls-Royce to maintain progress throughout the global financial crisis and subsequent disruption to the world economy which began in 2007. During this three year period the business has grown underlying revenues by 39%, profits by 19% and average net cash by £610m whilst increasing payments to shareholders by 23%.

We have continued to invest for the long-term, spending more than £4bn since 2007 in facilities, plant, IT, training and product development. These investments are funding world class facilities in all major geographies, providing capacity for future growth, contributing to improved productivity and delivering products with operational lives most of which are expected to extend to thirty years and more.

Recovery in the global economy remains uneven, with growth subdued in a number of developed countries. This makes it particularly important that Rolls-Royce has the ability to access those markets where demand remains strong for the complex integrated power systems and services that we supply and which others cannot easily replicate because of high barriers to entry.

During 2010 the Group has made good progress with a number of the key development programmes which underpin our future growth. These include the Trent 1000 for the Boeing 787, the Airbus A400M, where the TP400 engine has now accumulated more than three thousand hours of flying time, and the Gulfstream G650, on which the BR725 successfully met all project milestones during the year. The engine for the Airbus A350 XWB, which is due to enter service in 2013, ran for the first time in June.

The submarine HMS Astute was accepted into service by the Royal Navy, with a second submarine, HMS Ambush launched recently. The Type 45 destroyer, HMS Daring successfully completed its programme of sea trials during the year.

The first Rolls-Royce powered Littoral Combat Ship (LCS) entered active duty with the US Navy, with a second vessel launched in December. Importantly, in January 2011, the US Navy confirmed an order for propulsion systems for a further ten Rolls-Royce powered Littoral Combat Ships, representing the most valuable naval surface ship order the Group has received.

In April, the Marine business completed the acquisition of ODIM ASA (ODIM), acquiring the remaining 67 per cent of shares for a cost of £147m, bringing the total cash investment in ODIM to £218m. ODIM adds capability to our strong marine systems portfolio in target markets such as seismic towing, oceanographic survey and subsea and deep-water installation systems.

An uncontained disc release occurred on a Trent 900 engine on board a Qantas operated Airbus A380 in November 2010. This regrettable incident attracted widespread attention. Uncontained disc failures happen with a frequency of about once a year on the world’s large civil aircraft fleet. However this was the first time an event of this nature had occurred on a large civil Rolls-Royce engine since 1994.

The safety of our products is our highest priority, and each time a serious incident happens, Rolls-Royce and the aviation industry learn lessons. These are embedded in the rigorous certification requirements, safety procedures and standards of regulation which make flying an extraordinarily safe form of transport. In line with this regime, Rolls-Royce worked closely with the regulators, Airbus and our customers to put in place an effective inspection programme, to identify root cause and to achieve a rapid return of the Trent 900 fleet to normal operation.

The bulk of the anticipated costs associated with this event have been recognised in the 2010 results. This is in line with the Interim Management Statement of November 2010.

Source: Rolls-Royce


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