Key financial data	2008	2007	2006	2005	2004
Underlying revenue £m	1,686	1,673	1,601	1,420	1,374
	+1%	+4%	+13%	+3%	-2%
Underlying profit before financing £m	223	199	193	180	179
	+12%	+3%	+7%	+1%	+22%
Net assets £m	(197)	(172)	20	55	131
Other key performance indicators
Order book £bn	5.5	4.4	3.2	3.3	3.3
	+25%	+38%	-3%	0%	+22%
Engine deliveries	517	495	514	565	548
Underlying services revenues £m	947	877	853	787	768
Underlying services revenues %	56	52	53	55	56
% of fleet under management	12	11	11	8	5
Underlying revenue		Market opportunity over 20 years
£1.7bn		US$450bn

Rolls-Royce is Europe’s largest defence aeroengine company, serving 160 customers in 103 countries and with 18,000 engines in service.

We have a product range of 25 engines that power aircraft across the key market sectors of combat, transport, helicopters, trainers, patrol, maritime and reconnaissance.

During 2008, the business continued to strengthen its market position, winning key contracts across its product and service range, particularly in the growing transport aircraft and military support sectors. This included the development of our innovative range of aftermarket services, known as MissionCare®, which enables Rolls-Royce to tailor support services solutions to customers’ individual requirements.

The new operations facility in Bristol, UK, opened in the first quarter of 2008. It delivers a step change in engine assembly, development and logistics and, in combination with more flexible working practices, brings greater efficiencies to the manufacturing process.

In the combat aircraft market, the EJ200 powerplant for the Typhoon aircraft achieved several landmarks, with the 500th engine delivery and 100,000 flying hours in operational service.

We also made progress on both engine programmes for the Joint Strike Fighter. First flight of the F-35 STOVL (short take off and vertical landing) version, fitted with the Rolls-Royce LiftSystem®, took place in May and the first LiftSystem production contract was secured in December at a value of US$131 million.

The F136 engine, jointly developed with GE for all F-35 variants, achieved US Government funding for 2009 and passed its test milestones prior to delivery of the first production standard engine in early 2009.

We also consolidated our market lead in the transport aircraft market, signing a US$915 million agreement with Alenia Aeronautica for the AE 2100 engine in the C-27J military transport aircraft. This engine also won further orders for its application in the C-130J.

Defence aerospace’s other major collaborative programme – the TP400 engine for the A400M military transport aircraft – made progress in the year. It has completed more than 2,000 hours of ground testing and has successfully undertaken its first flights on the flying testbed.

As a shareholder and sub-contractor of the AirTanker consortium, we secured a 27-year engine and support contract worth over £700 million from the UK Ministry of Defence (MoD) for the UK’s Future Strategic Tanker Aircraft under an innovative private finance scheme. This Airbus A330M aircraft is powered by the civil Trent 700, representing new aftermarket opportunities for this engine in a defence environment.

Orders for our innovative aftermarket solutions included a US$90 million engine availability contract for the T-45 Goshawk trainer with the US Navy, and the UK MoD’s first full availability contract to support its Gnome-powered Sea King helicopter fleet at a value of £258 million.

In the helicopter sector, the RR300 was certified ahead of schedule and the first Rolls-Royce Honeywell LHTECT800 engine was delivered to Agust Westland for the UK Future Lynx Battlefield Reconnaissance programme.

Looking to the future, we are working on two important research and technology programmes for the US Air Force, Adaptive Versatile Engine Technology (ADVENT) and the Highly Efficient Embedded Turbine Engine (HEETE).

In the unmanned vehicle sector, we have been selected to provide the Integrated Power System for the UK’s Mantis demonstrator, while we continue to work on the MoD Taranis unmanned combat vehicle demonstrator. The Rolls-Royce AE 3007 engine, which powers the Global Hawk high altitude unmanned aerial reconnaissance system, was selected for the new US Broad Area Maritime Surveillance programme.

Significant opportunities exist in the global defence market, particularly in the combat, transport, unmanned and helicopter sectors. The business also continues to develop innovative aftermarket solutions, with services now generating over 50 per cent of sales.

Further strong growth in engine deliveries for the military transport sector is expected to support another year of profit growth in 2009.