Rolls-Royce has developed a world-leading marine business, serving customers in global commercial and naval markets. Today more than 20,000 commercial and naval vessels use Rolls-Royce equipment and our engines power 400 ships in 30 navies. The marine market has similar characteristics to civil aerospace, where we provide high capital-value products, services and systems, and develop long-term relationships with customers.

The acquisition of Vickers in 1999 added a range of complementary products and services and expanded our routes to market. These products are market-leading brands in the commercial marine business and include Ulstein, Kamewa and Brown Brothers. These additions to our portfolio, coupled with our diesel and gas turbine propulsion technologies, enable us to offer a complete product and systems capability.

The integration of the commercial marine businesses into Rolls-Royce is proceeding well and is on target. We are now able to act as a full system supplier to both the commercial and naval sectors and this will enable us to grow our share of the global marine market, estimated to be worth some £60 billion over the next 20 years.

This growth will be driven by three factors: re-equipment by navies; a strong recovery in the commercial offshore vessel sector; and our ability to address the whole of the marine market with our comprehensive product range and systems integrated capability.

In the naval market, the WR-21 intercooled and recuperated marine gas turbine, developed in partnership with Northrop Grumman Corporation of the US, has been selected for the first three ships of a new fleet of up to 12 Type 45 air defence destroyers for the Royal Navy. The WR-21 is the only advanced cycle marine gas turbine being developed in the world today. The engine can achieve fuel economies of 30 per cent compared with existing systems and has the advantages of smaller size and reduced maintenance.

In the commercial offshore service sector, Rolls-Royce equipment and designs were selected for 53 offshore vessels during 2000 - a record order intake. These vessels represent 70 per cent of all orders placed by the industry over this period. We are beginning to exploit new market opportunities in the cruise and cargo markets where gas turbines are increasingly becoming an attractive option. The Rolls-Royce marine Trent has been selected to power the first of a new generation of cargo vessels called FastShip. These will also employ our Kamewa water jets.