Chief Executive's review: Investing in technology capability and infrastructure

World-leading research

Our network of 29 University Technology Centres is a dedicated resource funded by the Group. Through it we access the very best talents across a range of science and technology disciplines.

Twenty years ago, almost all our research and technology (R&T) activity took place in the UK. By 2007, 32 per cent was conducted outside this country, with our centres of engineering excellence spread across the world. We have developed a global network of University Technology Centres (UTCs), with nine of our 29 UTCs located outside the UK.

Some things, however, have not changed. Our commitment to improving the environmental performance of our products is as strong today as it was in 1987. We believe that technology, applied on an industrial scale, is central to developing an effective response to climate change.

In 2007, we continued to work with customers, governments and other stakeholders to help develop solutions. Central to our approach is our contribution to international research programmes aimed at halving aircraft noise and carbon dioxide emissions by 2020 from their 2000 levels. Further details of the Group's environmental policies are set out in our recently published environmental report, 'Powering a better world', available on the Group's website or on request from the Company.

Our manufacturing capabilities, like our R&T activity, have become far less UK-centric since 1987. In the past year we have continued to invest globally in new manufacturing capability. Our priorities have been to modernise our facilities, introduce more efficient working practices, improve our business processes and simplify our supply chain. In September, we announced plans to open a major new assembly facility in Singapore to build and test large civil aero-engines. We will also be further increasing our already strong presence in the US by building a facility in Virginia to assemble and test our new RB282 engine for the next generation of corporate jets.

Over the past five years we have invested around £850million in new capital projects in the UK as part of our programme to improve the operational performance of our manufacturing facilities.

We clearly intend to maintain a strong UK manufacturing presence. However, as the Group continues to grow, our investments and capability will reflect the global spread of our activities.

Chart: Investment in technology, capability and infrastructure £m: Gross research and development: 2003, 619; 2004, 601; 2005, 663; 2006, 747; 2007, 824; Capital expenditure excluding IT: 2003, 178; 2004, 171; 2005, 225; 2006, 268; 2007, 252; Net IT investment: 2003, 19; 2004, 43; 2005, 49; 2006, 88; 2007, 122;

We have University Technology Centres in the US, Canada, UK, Germany, Sweden, Norway, Italy, India, China, Singapore, Korea, and Japan. The latest University Technology Centre to open is at Pusan National University in Korea.