|Order book (£bn)||1.2||1.3|
|Underlying revenues (£m)||1,233||1,028|
|Underlying OE revenues (£m)||691||558|
|Underlying services revenues (£m)||542||470|
|Underlying profit/(loss) before financing (£m)||27||24|
The Energy business supplies gas turbines, compressors and diesel power units to customers around the world. The business is a world leader in the supply of power for onshore and offshore oil and gas applications. In addition, we continue to invest in low carbon technologies including fuel cells, tidal power generation and civil nuclear.
Revenues in the Energy division grew strongly in the period. We reported growth of 24 per cent in original equipment revenues and 15 per cent service revenue growth in the period – total revenues have grown more than 60 per cent over the last two years. However, a £26m one-off charge relating to retrofit costs across the industrial Trent fleet of Dry Low Emissions (DLE) engines reduced underlying profit growth in the year.
Order intake of £0.9bn ensured a stable order book which ended the period at £1.2bn.
The oil and gas sector continued to move ahead with substantial investment plans, especially in Brazil, West Africa and Asia. It remains too early to judge how the Macondo well incident in the Gulf of Mexico will impact our business, but we have seen no significant changes in customer behaviour to date.
The Group continues to focus on improving operating performance. Investments in new assembly facilities and testbeds have helped improve execution whilst managing exceptional load growth.
In low carbon technology programmes, the tidal power demonstrator project in the Pentland Firth, Scotland successfully exported electrical power to the UK National Grid. Further trials and an expansion of the unit from 500kW to 1 MW are planned. Ongoing development of the fuel cell technology programme continued, although with investment at a lower level than in prior years.
The Group made good progress in the civil nuclear area with the announcement of a memorandum of understanding with Larsen & Toubro in India focusing on light water reactors in India and internationally. A separate memorandum of understanding was signed with the UK consortium (Nuclear Power Delivery) to support the Westinghouse AP1000™ nuclear reactor. Orders for instrumentation and controls systems for customers in Slovakia and China were completed.
Significant revenue growth in the year, up by 20 per cent overall, lower spend on R&D and modest foreign exchange benefits helped offset one-off industrial Trent retrofit charges in the period.
Continued original equipment revenue growth and improving operational performance 2010 are expected to support further progress in margins and underlying profits in 2011.