President - Civil Aerospace
|Underlying profit before financing costs*
£m (see note 2)
|Net assets £m||1,278||1,343||1,099||1,219||1,124|
|Order book - firm £bn||17.6||14.1||13.4||12.2||10.0|
|Installed engine base||11,500||10,970||10,450||9,910||9,212|
*for background to the change from UK GAAP accounting to IFRS in 2005, and retrospective adjustments made to the 2004 accounts, see the relevant section on IFRS in the Finance Director's review and note 33 to the financial statements. 2003 and earlier figures are as reported under UK GAAP.
Sales analysis 2005:
- Original equipment - Airline
- Original equipment - Corporate and regional
Highlights of the year
Orders for 246 Trent engines worth approximately US$3 billion were announced.
The Airbus A380, powered by the Trent 900 engine, made a successful maiden flight and good progress through its comprehensive flight-test programme.
Agreement was reached with Airbus for Rolls-Royce to supply the Trent 1700 to power the new A350 airliner.
The 1,000th BR710 engine was delivered to Gulfstream to power its G550 long-range business jet.
International Aero Engines (IAE) achieved a record order intake of approximately 600 engines worth over US$1.5 billion to Rolls-Royce.
Rolls-Royce has established a strong market position in civil aerospace through its portfolio of competitive aero engines, powering a broad range of aircraft from corporate jets to the largest airliners.
We made good progress with the development of our product range. The Trent 900 engine powered the Airbus A380 on its maiden flight and has now accumulated 4,000 hours of flying experience. The first Trent 1000 engine build, for the Boeing 787, was commenced on schedule in November and the Trent 1700 became the sixth member of the Trent engine family, following its selection by Airbus to power the A350. The Trent family celebrated the tenth anniversary of its entry into service and passed the milestone of 15 million flying hours during the year.
We extended our links with Japanese industry on the Trent 1000 programme by selecting Sumitomo Precision Products to supply the heat management system for the engine. Carlton, the US forging and machining specialist, also became a risk and revenue sharing partner on the Trent 1000 engine.
International Aero Engines (IAE), in which Rolls-Royce is a principal shareholder, took an increasing share of the strong single-aisle market, with a record order intake of approximately 600 engines worth over US$1.5 billion to Rolls-Royce. This included significant success in the rapidly growing Indian low-cost airline market where the V2500 engine was selected by a number of new operators.
IAE also launched V2500SelectSM, a combined engine upgrade and aftermarket service programme, which improves fuel burn, reduces operating costs and offers time-on-wing improvements. By the end of 2005, contracts for aftermarket-service agreements with IAE were covering almost 1,000 engines.
Civil engine deliveries increased by seven per cent, to 881, reflecting strong growth in V2500 deliveries and continuing recovery in the corporate jet market, partially offset by a decline in regional airline engine deliveries. While the decline in regional deliveries is expected to continue, the Group expects total civil engine deliveries to grow in 2006 as the Trent 900 enters service, V2500 deliveries increase and the corporate sector remains strong.
The Rolls-Royce civil fleet flying hours increased by 11 per cent compared to 2004 as a result of a combination of world traffic growth and increased fleet size.
The installed base of civil jet engines grew to 11,500. This provides a significant aftermarket-services opportunity, which the Group is addressing with innovative long-term service arrangements for its customers. TotalCare contracts worth more than US$13 billion have now been signed, covering 80 per cent of new customers since 2001. The Group achieved record growth for its CorporateCare programme, signing 90 contracts in 2005. TotalCare contracts covered 77 per cent of all the engines ordered in 2005.
Services sales increased by 14 per cent to £2.1 billion, representing 59 per cent of civil aerospace sales. We expect services sales to continue growing at a double-digit rate.