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Introduction to Marine

21 October 2014

Mikael Mäkinen, President - Marine

© 2014 Rolls-Royce plc The information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc. This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc or any of its subsidiary or associated companies.

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Introduction to Marine

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Aerospace Power Systems

Marine

Nuclear

Rolls-Royce Marine An important member of the family

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“Offshore exploration & production is expected to grow to 45% (from 35%) of exploration & production

over the next decade.” Barclays

“Over 90% of the world’s goods by weight and volume are transported by sea.”

International Maritime Organization (IMO)

“Over 50% of countries worldwide have an ocean-going naval fleet.”

IHS Jane’s

Marine industry A strong contributor to the global economy

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Environmental efficiency

Ship sizes growing

Flexibility increases in ship design

Ship intelligence is the new way to sell

Fuel diversity will increase

Markets continue shifting towards Asia

Increasing activities in harsh environments

Towards electric ships and systems

Business models changing towards asset management

Major trends A large business opportunity

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1) Including > 25,000 fishing vessels and > 23,000 tugs & workboats, excluding inland waterway vessels and pleasure craft 2) > 20 metres

Offshore

> 10,000 vessels

Naval

> 11,000 vessels2)

Merchant

> 111,000 vessels1)

Search for and extraction of natural resources.

Transportation of cargo and people.

Protection of state interests.

Purpose Market segments

Com

mer

cial

Market segments Every fifth ship has Rolls-Royce equipment

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Seismic vessels Drill ships & semi-subs Shuttle tankers

Exploration & Production

Supply & Service

Subsea & Construction

Vessel segments Vessel types

Platform supply vessels Anchor handling vessels Safety standby vessels

Construction vessels Subsea vessels Cable layers

Offshore Vessel segments and ship types

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Cyclicality by ship type

Source: Internal, vessel contracting

Offshore Supply / demand balance at a ship type / size level

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Seismic vessel Drill ship Drilling semi-submersible

Construction vessel Platform supply vessel Anchor handling vessel

Offshore Wide range of vessel types

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Seismic vessel

Platform supply vessel

Anchor handling vessel

Drill ship / semi-sub

Subsea construction vessel

Pipe layer

Production & storage vessel

Shuttle tanker

Well intervention vessel

Inspection / maintenance vessel

Decommissioning vessel

Illustrative

Oil field life-cycle Rolls-Royce equipment used throughout

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Trusted to deliver excellence Source: International Energy Agency (IEA) - World Energy Outlook

Growing energy demand

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Trusted to deliver excellence Sources: International Energy Agency (IEA) - World Energy Outlook and Rystad

Oil & gas market Prospects for 2035

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Trusted to deliver excellence Sources: Barclays E&P Spending Update

Actual Forecast

2009-13 13%

2014-17 11%

$3.9 Trillion

35%

$9.0 Trillion 45%

Global E&P capex spending growth Low-double digits with offshore c. 5 to 10%

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Proven offshore oil reserves beyond 400 ft With new discoveries increasingly in deep water

Source: Based on RS Platou data, water depth > 400 ft

400-1,0001,000-5,0005,000-7,5007,500+

Reserve Water Depth

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Vessel segments Vessel types

Others

Cargo vessels

Passenger vessels

Merchant

Tankers Bulk carriers Container vessels

Cruise ships Ferries Yachts

Tugs & workboats Fishing vessels Dredgers

Vessel segments and ship types

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Cyclicality by ship type

Source: Internal, vessel contracting

Merchant Supply / demand balance at a ship type / size level

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Tanker (medium) Tanker (large) Container vessel

Bulk carrier Ferry Tug

Merchant Wide range of vessel types

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GDP and seaborne trade growth relationship

Sources: IHS World Industry and DnV Shipping 2020

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World fleet

Sources: IHS Fairplay and Internal 1) Including all commercial & naval vessels > 100 gross tonnes, excluding tugs, yachts and inland waterway vessels

Number of vessels contracted and scrapped

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Constabulary vessels

Navy vessels

Coast guard vessels

Vessel segments Vessel types

Combatants Offshore patrol vessels Amphibious vessels Auxiliaries

Patrol vessels Search & rescue vessels Tugs & tenders

Police vessels Customs vessels

Naval Vessel segments and ship types

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Fast attack craft Coast guard vessel Frigate

Littoral combat ship Aircraft carrier Replenishment vessel

Naval Wide range of vessel types

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Global military ship market

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Large number of market players

Oil companies Subsea construction companies

Charterers Cargo owners Governments

Ship owners Ship operators Ship managers

Navies Government agencies

Shipyards

Equipment & system suppliers

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MARINE VIDEO

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Key facts

Rolls-Royce Marine - Global footprint

Land & Sea - Revenue 2013 Rolls-Royce Marine - Revenue 2013 Total: £5.5bn Total: £2.0bn

Rolls-Royce Marine

6,500 employees

12%

75%

13%

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Source: Internal, 2008 - 2013, addressable market, vessel contracting, by value

China 29% South Korea 19% Singapore 8% Norway 6% USA 6% Brazil 4% Netherlands 4% Japan 3% Malaysia 3% Indonesia 2%

USA 18% Norway 13% Singapore 9% Malaysia 6% Brazil 6% China 5% France 5% United Arab Emirates 4% Bermuda 3% Netherlands 2%

Shipyard countries - Offshore Ship owner countries - Offshore

Top 10 offshore countries

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Shipyard countries - Merchant Ship owner countries - Merchant

China 34% South Korea 32% Japan 18% Philippines 2% Netherlands 2% Taiwan 2% Malaysia 1% Indonesia 1% Vietnam 1% Italy 1%

Japan 14% China 11% Greece 10% Singapore 6% Germany 6% United Kingdom 4% South Korea 4% Denmark 4% Hong Kong 3% Taiwan 3%

Top 10 merchant countries

Source: Internal, 2008 - 2013, addressable market, vessel contracting, by value

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Major trends

Rolls-Royce strength

A large business opportunity

Environmental efficiency

Ship sizes growing

Flexibility increases in ship design

Ship intelligence is the new way to sell

Fuel diversity will increase

Markets continue shifting towards Asia

Increasing activities in harsh environments

Towards electric ships and systems

Business models changing towards asset management

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Concentration

Geographical presence

Market and vessel segments Equipment & systems

Choices have been made

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Ship systems Large number of different systems

Steering gear

Stabilisers

Thrusters

Propulsors

Gears and shaft lines

Main engines

Auxiliary engines

Winches

Fuel system

Ramps

Electric drives

Switchboards Automation & controls

Navigation Communication

Ventilation

Sewage treatment Ballast water treatment Ballast systems

Steam system

Exhaust gas treatment

Cargo deck

Elevators Lightning

Electric distribution Life saving equipment Food stores

Air Conditioning

Bridge automation

Outdoor deck systems

Generators Fire fighting systems Energy management

Laundry

Rudders

Bearings and seals

Deck equipment

Launch & recovery systems Replenishment / fuelling systems

Rolls-Royce scope Adjacent to Rolls-Royce scope

Distant to Rolls-Royce scope

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Our market approach

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Offshore market positioning

propulsion & engines

operational functionality

electrical, automation & control

Illustrative

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A sizeable market opportunity

Source: Internal data based on 2014 market pricing with no adjustment for inflation, vessel contracting * For power, transmission, propulsion, automation & control, ship design, motion control and work systems.

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2004 - 2013 2014 - 2023

Services opportunity

Equipment and systems opportunity

Equipment and systems adjacency*

Mar

ket o

ppor

tuni

ty[ £

bn]

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Our integrated strategy

Profitable growth Continuously improve our

operational efficiency Grow our aftersales support

business Grow into attractive market segments and geographies

Innovation

Create a winning offering for future customer needs

Customer

Fully understand our customers’ requirements to create compelling offerings