Our energy business recorded a small loss in 2006, after expensing an investment of £22 million in fuel cell technology.

The oil and gas market remains robust, primarily driven by strong fuel prices. In Asia, we won orders worth over US$100 million for projects in Indonesia, Malaysia and Thailand and, for the first time, Vietnam. Orders valued at over US$100 million were secured from customers in Africa and the Middle East, including equipment for the next pipeline to bring natural gas from Algeria to Spain. The existing pipeline is already wholly driven by Rolls-Royce equipment.

In power generation, we are building momentum and, encouragingly, had a record year for order intake. Whilst the market has been stabilising in Europe, the US marketplace is continuing to show signs of recovery.

In 2006, we received our first order for two Trent 60 power generation packages to be installed in the US; our first order, from a customer in Belgium, for Trent gas turbines featuring our new power-enhancing Inlet Spray Intercooling technology; and our first order for an industrial Trent power generation package to be installed in Israel.

Our continued progress in the power generation segment will increase our installed base of engines and aftermarket services revenues.

It was a record year for aftermarket order intake. Aftermarket service activities for the energy business now account for 46 per cent of our total segment sales and, with last year's strong performance, our order book for Long-Term Service Agreements has grown to over US$270 million.

We also continue to enhance customer value through product upgrades for increased power, better efficiency and reliability, lower emissions and greater ease of maintenance.

Our fuel cell programme continued to meet its milestones. In October, we dedicated as our US fuel cell headquarters, a new, purpose-built fuel cell facility on the campus of Stark State College of Technology in Canton, Ohio. The Group also announced an agreement with the US utility, American Electric Power, to test and evaluate the first two fuel cell prototype systems at their Dolan Technology Center and Walnut Test Facility near Columbus, Ohio. With our additional presence in the UK and Singapore, this business is making progress in solid oxide fuel cell systems for megawatt scale, stationary power applications, with the goal of introducing a competitive product by the end of this decade.