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Trusted to deliver excellence 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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STRICTLY PRIVATE & CONFIDENTIAL

Trusted to deliver excellence

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.

2 Privileged and confidential - prepared at the request of outside counsel

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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

Co

mm

erc

ial

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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Source: International Energy Agency (IEA) - World Energy Outlook

Growing energy demand

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Sources: International Energy Agency (IEA) - World Energy Outlook and Rystad

Oil & gas market Prospects for 2035

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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

Mexico

400-1,000

1,000-5,000

5,000-7,500

7,500+

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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Source: IHS Jane’s Defence Budgets

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.

14 18

94108

111

0

50

100

150

200

250

2004 - 2013 2014 - 2023

Services opportunity

Equipment and systems opportunity

Equipment and systems adjacency*

Mar

ket

op

po

rtu

nit

y[ £

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

STRICTLY PRIVATE & CONFIDENTIAL

Trusted to deliver excellence

Customer

21 October 2014

John Knudsen, President - Commercial 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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Customer

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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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Shipyards - Offshore

Top 10 offshore companies

Ship owners - Offshore

Samsung Heavy Industries Co 9%

Daewoo Shipbuilding & Marine 6%

Zhejiang Shipbuilding Co Ltd 4%

Fujian Southeast Shipyard 4%

Hyundai Heavy Industries Co 3%

Fujian Mawei Shipbuilding Ltd 3%

Damen Shipyards Group 2%

Jurong Shipyard Pte Ltd 2%

IHC Offshore & Marine 1%

Guangzhou Huangpu Shipbuilding 1%

Bourbon SA 4%

Seadrill Ltd 2%

Tidewater Inc 2%

ENSCO International Inc 2%

Edison Chouest Offshore LLC 2%

Pacific Drilling Services Inc 2%

Odfjell JO 2%

China Govt 2%

Nam Cheong Dockyard Sdn Bhd 2%

Atwood Oceanics Inc 1%

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

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Shipyards - Merchant

Top 10 merchant companies

Ship owners - Merchant

Hyundai Heavy Industries Co 8%

Daewoo Shipbuilding & Marine 6%

Samsung Heavy Industries Co 5%

Hyundai Samho Heavy Industries 3%

STX Shipbuilding Co Ltd 3%

Hyundai Mipo Dockyard Co Ltd 2%

Imabari Shipbuilding Co Ltd 2%

Sungdong Shipbuilding & Eng 2%

HHIC-Phil Inc 2%

Dalian Shipbuilding Industry 2%

COSCO 5%

Moller-Maersk A/S 3%

Seaspan ULC 2%

Mitsui OSK Lines Ltd 2%

Evergreen Marine Corp 2%

Neptune Orient Lines Ltd 2%

United Arab Shipping Co 1%

NYK Line 1%

Zodiac Maritime Agencies Ltd 1%

Peter Doehle Schiffahrts-KG 1%

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

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Customer requirements Diverse, with common themes

Technical performance

Through-life

Matched to mission:

Quality and reliability of

equipment & systems

Quality and responsiveness of

aftersales support

Installation availability:

Capital expenditure

Operational expenditure

Value for money:

Seamless interfaces and

functional integrity

Efficiency-optimised

Systems:

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Value proposition Creating high barriers to entry

System

integration Innovative

products and

technology

Product quality

and reliability

In-service

upgrades

Training, incl.

simulation

Responsive

global aftersales

support

Domain

knowledge

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Value proposition Domain knowledge

System

integration Innovative

products and

technology

Product quality

and reliability

In-service

upgrades

Training, incl.

simulation

Responsive

global aftersales

support

Domain

knowledge

“UT 731 CD has proven to be very efficient in daily operations,

reducing fuel consumption and cutting harmful emissions”

Børge Nakken, VP T&D Farstad Shipping

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Innovative products and technology

System

integration Innovative

products and

technology

Product quality

and reliability

In-service

upgrades

Training, incl.

simulation

Responsive

global aftersales

support

Domain

knowledge “With the number of LNG-fuelled ferries operating in Norway and the

years of experience, the Rolls-Royce Solution was low risk”

Ingvald Fardal, CEO Fjord Line

Value proposition

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Product quality and reliability

System

integration Innovative

products and

technology

Product quality

and reliability

In-service

upgrades

Training, incl.

simulation

Responsive

global aftersales

support

Domain

knowledge

“Far Seeker 5 years of operation with only 9 hours off hire”

Captain Svein-Åge Vadset

Value proposition

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System integration

System

integration Innovative

products and

technology

Product quality

and reliability

In-service

upgrades

Training, incl.

simulation

Responsive

global aftersales

support

Domain

knowledge Long experience in system integration and ship design;

40th anniversary of UT ship design

Value proposition

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Responsive global aftersales support

System

integration Innovative

products and

technology

Product quality

and reliability

In-service

upgrades

Training, incl.

simulation

Responsive

global aftersales

support

Domain

knowledge

Global service network with more than 1,000 well-trained service

engineers in 54 service centres in 32 countries

Value proposition

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Training, incl. simulation

System

integration Innovative

products and

technology

Product quality

and reliability

In-service

upgrades

Training, incl.

simulation

Responsive

global aftersales

support

Domain

knowledge

Latest:

Offshore and marine services company C-MAR Group

has installed our Icon dynamic positioning simulators

at its dynamic positioning training centres in London and Mumbai

Value proposition

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In-service upgrades

System

integration Innovative

products and

technology

Product quality

and reliability

In-service

upgrades

Training, incl.

simulation

Responsive

global aftersales

support

Domain

knowledge Ships have a 25 - 30 year lifecycle

Value proposition

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Two of our latest achievements Based on true domain knowledge and customer intimacy

UT 777 top hole drilling, light well-intervention

and subsea construction vessel Unified bridge

Award winning World class operability

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Examples

UT design anchor handling vessel

1,600 passenger LNG-powered ferry Frigate

Drilling semi-submersible

Offshore Offshore

Naval Merchant

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Example for the offshore market Large anchor handling vessel

Value of vessel (c. £77m)

Maximum R-R value

100%

42%

Engines (6%)

Propulsion equipment (14%)

Deck machinery (16%)

Other equipment (6%)

Engines High- and medium-speed

Automation & Control

Lifetime support:

• 24/7 technical support

• Field service

• Spare parts

• Repair & overhaul

• Upgrades

• Energy monitoring

• Equipment health

monitoring

• Training

Deck Machinery

Propulsion

Electrical System

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Example for the offshore market Drilling semi-submersible

Value of vessel (c. £370m) 100%

7%

Engines (2%) Propulsion equipment (3%) Deck machinery (2%)

Maximum R-R value

Lifetime support:

• 24/7 technical support

• Field service

• Spare parts

• Repair & overhaul

• Upgrades

• Energy monitoring

• Equipment health

monitoring

• Training

Propulsion equipment; 3-6 months drilling campaigns: dynamic positioning

longer drilling campaigns: mooring

Deck machinery

Engines medium-speed

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“Troll A” gravity based production platform The largest structure ever moved on earth

All ten vessels featuring Rolls-Royce deck machinery winches

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Deep water mooring From 200 to 3,000 metres

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Mooring of an FPSO Floating Production Storage & Offloading

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Example for the merchant market 1,500 passenger / 600 car LNG-powered ferry

Value of vessel (c. £80m) 100%

20%

Engines (16%)

Propulsion equipment (4%) Other equipment (0.4%)

Rudder

Propeller

Reduction gear

Gas engine medium-speed

Gas tanks

Maximum R-R value Lifetime support:

• 24/7 technical support

• Field service

• Spare parts

• Repair & overhaul

• Upgrades

• Energy monitoring

• Equipment health

monitoring

• Training

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Example for the naval market Frigate

Propulsion equipment

Handling systems

Value of vessel (c. £300m)

Maximum R-R value

100%

Engines / gas turbines (5%) Propulsion equipment (0.5%)

Handling (1.5%) Power Electrics (3%)

10%

Lifetime support:

• 24/7 technical support

• Field service

• Spare parts

• Repair & overhaul

• Upgrades

• Energy monitoring

• Equipment health

monitoring

• Training

Engines gas turbine and high-speed reciprocating

Power Electrics

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Competition Fragmented and diverse landscape

Global competitors

aiming for systems

capability

Global competitors

aiming for technology

/ product leadership

Regional competitors

aiming for cost

leadership

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Going forward In parallel

Continuous improvement of our

strong value proposition

Relentless focus on cost and

operational efficiency

Raise quality of business:

Grow with addressable market

Grow share in addressable

market

Expand addressable market

Raise quantity of business:

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Trusted to deliver excellence Trusted to deliver excellence

Innovation

21 October 2014

Sauli Eloranta, EVP - Marine Engineering & Technology

© 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.

61 Privileged and confidential - prepared at the request of outside counsel

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Marine trends

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Well positioned to meet these challenges

Prize winning ship designs

2008, 2009, 2012, 2013

Automation & Control

& Data Integration

Azimuth

Thrusters Permanent Magnet

Thrusters Power Systems LNG & Hybrids

Special Winches &

Safer deck equipment

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Trusted to deliver excellence Trusted to deliver excellence

Future innovations

Ship Intelligence

BETTER POWER FOR A CHANGING WORLD DISRUPTIVE CHANGE

Efficiency Leader

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Trend from products to technology

Wide product portfolio and integrated systems are key enablers for the next step

Long tradition of collaboration with

leading ship-owners

The best way to predict the future

is to create the future

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Profitable Growth

Mark Alflatt, Finance Director - Marine

21 October 2014

© 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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Grow market share + installed fleet

Competitive portfolio – products & services

Focus on Cost & Cash

”Trusted to deliver excellence”

Profitable growth

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Growth and capital allocation Building on our strengths

Building on

opportunities with

Land & Sea Strong positions

on key products

and Sectors

Improving

Competitive

Positioning

Grow Services

Innovation – key

technologies

Rationalise

Product Portfolio

Delivering Growth

and Value

Creation

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Balanced business model

• Barriers to entry: innovation, systems, long service lives

• Fragmented industry – suppliers, customers, regulators

• Modest investment and short time-to-market

• Short cycle for new OE, aftermarket primarily Time & Materials

• Strong return profile

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”Trusted to deliver excellence”

A comparison with Aerospace

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A decade of growth

1.0

2.0

2004 2013

OE Services

Revenue (£bn) – 8% CAGR

78

233

2004 2013

UPBFCT (£m) – 13% CAGR

8.1% 11.4%

2004 2013

RoS (%) – +330bps

6% 32%

2004 2013

ROCE (%)

A track record of success

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Focus on the 4C’s

• Transformation programmes underway

• Product portfolio

• Business processes and systems

• Footprint and supply chain consolidation

• Lower cost sourcing and engineering

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Bedrock that drives profitable growth

Cash Cost Customer Concentration

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”Trusted to deliver excellence”

£1.8bn cost by region: £1.8bn cost by type:

• Over 90% of our cost/supply chain and headcount in High Cost Countries

• Make / Buy similar to Aerospace (80: 20)

• Key programmes addressing footprint, LCC sourcing (material/headcount)

Todays Marine cost base

Europe 79%

Americas 12%

Asia 9%

Material 50%

Indirect spend 10%

Headcount 25%

Other op costs 15%

Significant opportunity to drive competitive positioning

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Trusted to deliver excellence

Transforming footprint and supply chain Dispersed services network

Regional Service LocationProduct Centre Training Centre

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Trusted to deliver excellence

Regional Service LocationProduct Centre Training Centre

12%

75%

13%

Transforming footprint and supply chain 6,500 employees, 70 locations, 30 countries

Percentage of headcount

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Trusted to deliver excellence

Addressable 44%

Partners / Naval /

Services 44%

No LCC options today

12%

Material cost: £0.9bn

• Re-sourcing key commodity groups to LCC

• Addressable spend ~ £0.4bn

• LCC spend doubled in 3 years to 30%

• Target of 40% of addressable by 2016

Engineering resources: Headcount

• 1,600 engineers globally - Nordics, EU, USA

• Increasing capability in India, Croatia,

Poland, Asia

Low cost sourcing and engineering A significant opportunity

Americas 10%

Nordics / Europe

84%

Asia 6%

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Trusted to deliver excellence

• Strong track record of growth – doubled revenue over the last decade

• Strong positions in growth markets

• Opportunities to improve cost and competitive position

• Strong growth potential in the next decade

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”Trusted to deliver excellence”

Summary

STRICTLY PRIVATE & CONFIDENTIAL

Trusted to deliver excellence

Summary

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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Trusted to deliver excellence

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