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Appendices

“Trusted to deliver excellence”

Broadening our portfolio

Underpinning long-term growth


Balanced business portfolio 2011 HY £5.5bn underlying revenues


Civil 19%

Defence 9%

Marine 13%

Energy 6%

Aftermarket services: 53% £2.9bn

Original equipment: 47% £2.6bn

-100

0

100

200

300

400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Order book Revenue EPS Avg cash

Managing challenges An increasingly resilient portfolio

Gulf War Weakening US$

Programme delays

SARS Commodity inflation

Financial crisis

9/11

Index


Investing for future growth


Investing for growth and productivity Underlying revenue per employee*

0

50

100

150

200

250

300

2001 2003 2005 2007 2009 2011

£000’s 182

115 128

140 150 169

194 211

233

259


Trent XWB Seletar test bed

Services network Tognum Crosspointe

Investing in long-term growth drivers

Broadening the portfolio, better balanced


Germany Brazil USA

UK Singapore Norway UK Singapore Norway

Globalising operational capability Enabling growth and productivity


Financial data


-250

250

750

1250

1750

FY 07 FY 08 FY 09 FY 10 HY 11

Cash balance Average net cash

£m

A strong balance sheet


0

100

200

300

400

500

600

700

800

900

1000

2011 2012 2013 2014 2015 2016 2017 2018 2019

Drawn Undrawn

£m

Debt maturities well spread Gross facilities of £1.1bn outstanding

Gross cash 30 June 11 – £2.6bn

Gross debt 30 June 11 – £1.1bn

Undrawn facilities – £1.2bn

RCF – £250m

RCF – £750m

EIB – £200m


Customer finance – delivered (Contingent liabilities)

Not a core activity

Gross and net relatively stable since 2002

At 30 June 2011 – gross $959m, net $181m, stressed $313m

Credit Backstops – gross $366m, net $89m, stressed $111m

- 14 customers and 134 aircraft

AVG’s – gross $593m, net $92m, stressed $202m

- 12 customers and 179 aircraft over 12 years


Business reviews


Civil Aerospace portfolio

*The V2500 is manufactured by IAE International Aero Engines AG

(a multinational consortium led by senior shareholders Rolls-Royce

and Pratt & Whitney, together with JAEC and MTU Aero Engines)

Broadest civil product range of any manufacturer


60%

40%

60%12%

28%

Civil – well-balanced portfolio HY 2011 underlying revenues – £2.6bn

Market leader – large Corporate and Widebody

Large and increasing installed thrust

Young, fuel efficient fleet

V2500

OE

Small Engines

Trent & RB211 Services

Growing despite delayed major new programmes

Increasing penetration of TotalCare and CorporateCare


Growing market and improving share Delivering significant growth in installed thrust

2011 HY

0

100

200

300

400

500

600

700

800

1987 1991 1995 1999 2003 2007 2011 2015 2019

RB211 Trent V2500 @ 50% Corporate & Regional

m/lbs o

f in

sta

lled thru

st

392 m/lbs


Customers:

Predictable costs

Supports outsourcing

Flexible contract design

Risk transfer

Rolls-Royce:

Expand revenue opportunity

Manage overhaul load

Incentivise cost reduction

Best positioned to manage risk

TotalCare – a powerful model Adding value for Rolls-Royce and our customers


TotalCare – risk management

Major assumptions

Utilisation

Material and labour cost assumptions, inflation, FX

Frequency and scope of overhaul

Contract management

Ongoing fleet management

Contract reviews on every contract each 6 months

Experience over a decade

TotalCare for the Widebody since 1997

Contracts delivering against expectations

Margin recognition increasing as contract matures


Contract accounting methodology

Margins booked progressively over time

reflecting latest view of contract outturn

Cash flow reflects:

Progress through the contract

Lumpy overhaul spend

Contract

Profits


Defence Aerospace portfolio


54%

8%

38% 40%

50%

10%

Defence – a broad portfolio 2011 HY underlying revenues – £1.1bn

Broadly based portfolio

>18,000 engines in service

Well-positioned on global programmes

Combat, Transport, Helicopters, UAV’s,

Trainers

Transport

OE

UAV / Trainer

Combat Services

Development


Customer focused Defence solutions From traditional through to integrated service

solutions

Growing high value service offerings, that

leverage group capabilities

Increasing coverage, availability & value whilst

reducing costs

Providing greater global reach and capability

Innovation enabling greater customer value


Marine portfolio


Ship design and

integrated systems

Diesel and gas

engines Propellers & gears

Azimuth thrusters

Waterjets Gas turbines Propulsion &

steering systems

Podded propulsors Automation &

DP systems Stabilising systems Tunnel thrusters Automated

handling systems

2,500 customers, including 70 navies, around 9,500 employees

Equipment – 30,000 vessels, sales / service activities in 34 countries

Strong positions in offshore, merchant and naval sectors

System integration capabilities enabled revenue CAGR of around 20%

since 2005

Marine capabilities Underpinning growth


Leveraging skills into adjacent markets Merchant – opportunities in technology intensive markets

1. ‘Mission critical’

products and parts

2. Systems offering

(pulling through other

products)

3. Lifetime service

revenues


Integrated propulsion solutions

Product on 30,000 vessels

Improving position in Naval

Leading position in Offshore

Services growing quickly

- major opportunity

41%

59%

34%

23%

43%

OE

Specialist

vessels

Services

Marine – continuing strong growth 2011 HY underlying revenues – £1.2bn

Offshore

O&G

Naval


Energy portfolio


Over 4,000 gas turbines and more than 500 reciprocating engines

sold to customers in nearly 120 countries

Strong positions in Oil & Gas upstream and midstream markets

Growing position in distributed power generation

System integration & through-life support capabilities enabled revenue

CAGR of 18% since 2005

Energy capabilities Strong O&G position, investing in power generation capability


Energy – a growing opportunity Investing in low carbon and power generation technologies

Profit *

Advantaged by technology

Developing low carbon

technologies

Accessing global demand


43%

57% 58%42%

Energy – investing for the future 2011 HY underlying revenues – £0.6bn

Strong, well-positioned Oil & Gas

Evolving Power Generation

Growing importance of long-term

services support

Low carbon – fuel cells, tidal, nuclear

Power

Generation

OE Oil and Gas

Services


Tognum AG


24%

19%

29%

28%

Germany

Revenues ~ €2.5bn, services ~ 31%, adjusted EBIT €199m

Employees ~ 8,700, circa 85% in Germany

Services ~ Provided through network of more than 1,200 agents

and distributors in more than 130 countries

Europe

Americas

32%

35%17%

16%

Marine

Industrial

Energy Defence /

Other Asia /

RoW

Tognum ~ A broadly based business 2009 FY underlying revenues €2.5bn


Marine

• Yachts

• Commercial

• Naval

Industrial

• Rail

• Agric.

Defense

• Light and

Medium Vehicles

• Heavy Vehicles

Oil & Gas

• C&I

• Mining

• Onshore

• Offshore

Business Unit Engines

Diesel

Engines

& Systems

Injection

Systems

• Emergency Power

• Prime Power

• Continuous Power

Gas & Fuel

Cell

Systems

• Prime Power

• Continuous Power

• Highspeed

Engines

• Medium Speed

Engines

Business Unit Onsite Energy & Components

Source: Tognum materials

Tognum – extending core capabilities Products for a broad range of applications


Creating a world class franchise Strength in technology, product and systems capabilities

Core

characteristics

Rolls-Royce Tognum Daimler Markets

Technology

and products

Systems

solutions

Through life

service and

support

Operational

excellence

Market access

Ma

rin

e p

rop

uls

ion

O&

G a

nd

Defe

nce

Dis

trib

ute

d p

ow

er

ge

n

Medium Speed –

Diesel & Gas

High value

added

manufacturing

High volume

manufacturing

System integration

Through-life

service solutions

Product portfolio

Service network

Engine technology

Logistics

Hybrid

Global Global

High Speed Diesel

Fuel injection /

Turbochargers

Services network

Product

pull-through

Manufacturing

footprint and

supply chain

Mainly USA and

Europe


Complementary product and technology

Global access

Through life service and support

Systems integration

Compelling industrial combination Technology, solutions and services portfolio

High-Speed and

Medium-Speed

Diesel & Gas

Hybrid

Europe

US

BRIC

Asia

Marine

Powergen

O&G

Direct Sales

Long-term

service

Engine Health

Monitoring


http://upload.wikimedia.org/wikipedia/de/3/31/Tognum_Logo.svg

IAE


Current status in the narrowbody sector Partner in IAE on V2500 for almost 30 years

32.5% equity share, similar work share

including compressor, fans and discs

and assembly in Dahlewitz

Highest volume engine programme

400+ deliveries p.a.

Approx. 4,500 engines in service

Further 2,000 engines in order book

Circa 56m lbs of installed thrust

(14% of RR total)

13% of Civil Aerospace business revenues

Small Engines

V2500 Trent &

RB211

Civil Revenues – 2010


Long-term collaboration with P&W in the mid-size sector Re-engining not seen as compelling proposition for RR

Next generation aircraft programmes provide significant opportunity

for improved market position and scale

JV builds on successful 30 year partnership with P&W

Venture to be equally owned by P&W and Rolls-Royce

Focus on high bypass geared technologies

Rolls-Royce to make modest investment in GTF for A320 NEO


Restructuring IAE participation

*EFH = Engine Flying Hours

Restructuring IAE participation to align stakeholders’ interests with

the A320 and A320 NEO

RR to dispose of 32.5% shareholding and programme share to P&W

Consideration of $1.5bn at close, subject to NWC adjustments

$/EFH* for each engine in service for 15 years from close

Continued engineering, component manufacture and assembly

Implications for Civil Aerospace of the transaction

Modestly lower annual revenues

Significant improvement in operating profits over next few years

Modest impact on Civil Aerospace order book

Timing of close will be subject to regulatory approvals


Safe Harbour Statement


This presentation contains certain forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing to the Company, anticipated cost savings or synergies and the completion of the Company's strategic transactions, are forward-looking statements. By their nature, these statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. The forward-looking statements reflect the knowledge and information available at the date of preparation of this presentation, and will not be updated during the year. Nothing in this presentation should be construed as a profit forecast.

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