22 Aug 02. “We have today announced results for the first half of
2002 in line with earlier guidance. We have a balanced business portfolio, strong market positions as evidenced by our record order intake, a growing aftermarket and a lower cost base.
“The business has continued to perform as predicted. Average net debt was similar to the level of the first half last year, our liquidity position has been substantially improved and we anticipate the average net debt for the full year to be lower than that given in our earlier guidance.
“We have made excellent progress with our restructuring programme, which we accelerated as a result of the events of 11 September 2001. I thank our employees and unions for their support during this difficult task.” Sir Ralph Robins, Chairman Rolls-Royce plc.
Results for the half year ended 30 June 2002 were in line with the guidance provided in October 2001 and repeated in March 2002. Underlying profit before tax was £104m, reflecting the expected reduction in civil aerospace business following the events of 11 September 2001.
Net debt at the half-year end was £770m, (2001:£748m). Average net debt for the first half was £990m (2001 £940m). The company now expects average net debt for
2002 to be modestly better than that given in its earlier guidance.
The company successfully refinanced maturing borrowing facilities in the first half, with a five-year revolving credit facility of £750m, which was oversubscribed. Total committed borrowing facilities now stand at £2.4bn.
Rolls-Royce operates in four growth markets. The success of these products is demonstrated by the company’s rapid and substantial gains in market share
over recent years. As a result, engine deliveries have grown to the point where Rolls-Royce now has an installed base of 53,000 gas turbines in service across all its businesses. Most of the engines in service will have operational lives of 25 years or more, generating an assured aftermarket demand for the provision of spare parts and services. Aftermarket service revenues accounted for 41 per cent of sales in the half year.
Further visibility is provided through the forward order book, which has now reached a record level of £16.7bn, having grown by £2.6bn in the first half of the year. A further £1.9bn of orders have been announced but not yet signed. Aftermarket service revenues accounted for 29 per cent of the order book, including long term service agreements, which accounted for 20 per cent.The company is on target to achieve annual cost savings of £250m.
The sale of Vickers Defence Systems to Alvis was announced in August and will be reflected in the year end results. Rolls-Royce acquired Vickers in 1999 to create a world-leading marine business. This has been achieved by the successful integration of the marine activities and the disposal of the non-core businesses.
Defence: Sales £659m; underlying profit before interest £85m. Rolls-Royce is the world number two in the defence aerospace sector and has a growing services opportunity with a 26 per cent share of military installed engines in 160 armed forces world-wide. With a leading position in Europe and a share of over 25 per cent of the US Department of Defense planned aircraft engine purchases, Rolls-Royce is participating in a wide range of programmes, including Eurofighter, Joint Strike Fighter, transport, trainer, unmanned air vehicles (UAVs), unmanned combat air vehicles (UCAVs) and helicopter programmes.
Defence profits increased during the half year, reflecting a higher contribution from Vickers Defence Systems as the Challenger 2 contract was completed and a small improvement in