#1ROLLS R ROYCE Investor Presentation August 2023 ROLLS R ROYCE © 2023 Rolls-Royce#2Our markets - Full Year 2022 ROLLS R ROYCE CIVIL AEROSPACE + Civil Aerospace is a major manufacturer of aero engines for the large commercial aircraft, regional jets and business aviation markets. The business uses its engineering expertise, in-depth knowledge and capabilities to provide through life service solutions for its customers. £5,686m Underlying revenue £143m Underlying operating profit DEFENCE Defence is a market leader in aero engines for military transport and patrol aircraft with strong positions in combat and trainer applications. It has significant scale in naval and designs, supplies and supports the nuclear propulsion plant for all of the UK Royal Navy's nuclear submarines. POWER SYSTEMS 5% 4% Underlying revenue ■Large engines ▲ 23% 21% ■Business Aviation ▲ 20% 70% ■Regional ■V2500 ▲ 16% ▲ 116% 13% £3,660m Underlying revenue 33% ■Transport 4% Underlying revenue 21% ■Combat ▲ 2% Naval (19)% £432m 9% Underlying operating profit Submarines Other 18% (6)% 24% Power Systems, with its product and solutions brand mtu, is a world-leading provider of integrated solutions for onsite power and propulsion, developing sustainable solutions to meet the needs of its customers. £3,347m Underlying revenue £281m Underlying operating profit NEW MARKETS New Markets are early-stage businesses. They leverage our existing, in-depth engineering expertise and capabilities to develop sustainable products for new markets, focused on the transition to net zero. £3m Underlying revenue £(132)m Underlying operating loss 34% 38% 10% 31% Underlying revenue Marine Industrial ▲ 18% ▲ 21% Power Gen ▲ 26% Defence ▲ 32% 25% R&D spend 62% ■RR Electrical ■RR SMR ▲ 29% ▲ 156% Page 2 © 2023 Rolls-Royce#3Our philosophy ROLLS R ROYCE Significantly improve operating profit and cash Focus on the quality of earnings and cash not market share Deliver efficiency improvements Achieve best in class operating leverage levels Safety is our priority Take care of our people and products Generate cash, reduce debt and improve shareholder returns Target cash as an input not as an outcome Develop a clear and granular strategy Allocate capital to the best projects group-wide Play a key role in the energy transition Achieve our Net Zero by 2050 commitment £ Engage our people and build capability Have the belief and ability to win Page 3 © 2023 Rolls-Royce#4Half Year 2023: Highlights ROLLS R ROYCE Operational delivery Improved operational metrics across the group Time-on-wing increases progressing well Growing order book and future. growth • • Transformation Stronger H1 performance and full year guidance helped by transformation Commercial optimisation and cost efficiencies helped deliver performance improvements CMD: 28 November 2023 in London Financial Accelerated financial delivery with materially higher underlying operating profit and FCF year on year Margin improvement led by Civil and Defence FY23 guidance raised to reflect underlying performance improvements Page 4 © 2023 Rolls-Royce#5Financial metrics improved in the first half of 2023. Underlying operating profit Free Cash EBIT Margin Flow Total Cash Cost / Gross Margin* Credit Rating £673m £356m 9.7% 0.6 Moody's Ba2 / Positive Fitch BB- Positive S&P BB* / Positive HY22: £125m; FY22: £652m HY22: £(68)m; FY22: £505m HY22: 2.4%; FY22: 5.1% HY22: 0.9; FY22: 0.8 All now positive outlook ROLLS R * Calculation: (968 / 1,515) TCC/GM (R&D + C&A) / Gross profit ROYCE All results are shown for Group continuing operations, on an underlying basis, excluding discontinued operations (ITP Aero). *S&P increased from BB- Page 5 2023 Rolls-Royce#62023 Half Year underlying results. Underlying results £m Revenue 2023 Hi 2022 H1 6,950 5,308 Organic Change¹ 1,487 Organic Change %1 28% Gross profit 1,515 942 535 55% Gross margin % 21.8% 17.7% 3.9pts Operating profit 673 125 531 382% Operating margin % 9.7% 2.4% 7.1pts Profit/(loss) after taxation 404 (188) 575 nm £m Free cash flow £m Net debt 2023 H1 2022 H1 Change 356 (68) 424 2023 Hồ (2,845) 2022 FY Change (3,251) 406 ROLLS R All results are shown for Group continuing operations, on an underlying basis, excluding discontinued operations (ITP Aero). 1 Organic change is the measure of change at constant translational currency applying full year 2022 average rates to 2023 H1 and 2022 H1. All underlying income statement commentary is provided on an organic basis unless otherwise stated. ROYCE nm is defined as not meaningful. Improved financial results reflected continued end market growth, commercial improvements and cost efficiencies Higher operating profit, led by Civil Aerospace and Defence. Power Systems margins are expected to improve in H2 Free cash flow improved as a result of higher profit and strong growth in EFH receipts, partly offset by a working capital outflow Lower net debt reflects free cash flow improvements as we continue to drive towards to an investment grade rating Page 6 © 2023 Rolls-Royce#7Summary funds flow ROLLS R ROYCE £m 2023 H1 2022 H1 Change Underlying operating profit 673 125 548 Operating profit from discontinued operations 68 (68) Depreciation, amortisation and impairment 489 455 34 1 Movement in provisions (95) (116) 21 Movement in Civil LTSA balance 727 433 294 Working capital (excluding Civil LTSA balance) (576) (269) (307) 2 Capital element of lease payments (157) (85) (72) £0.8bn Operating performance improvement • £(0.3)bn Working capital movements Capital expenditure and investment (268) (161) (107) Settlement of excess derivatives (210) (265) 55 3 Tax and interest Other (158) (254) 96 • £(0.1)bn Other impacts (69) (8) (61) Free Cash Flow 356 (77) 433 ...of which is continuing operations 356 (68) 424 Page 7 © 2023 Rolls-Royce#8Guidance and outlook ROLLS R 2023 group guidance Operating profit £1.2bn - £1.4bn FCF £0.9bn - £1.Obn Based on... Civil large EFH at 80%-90% of 2019 level Total Civil shop visits approx. 1,200-1,300 ROYCE Additional guidance details on page 3 of appendices slides - 2023 Half Year Results Page 8 © 2023 Rolls-Royce#9How we are transforming Regular Governance 1. Efficiency & Simplification (1a) Organisation Design (1b) Footprint Optimisation (1c) 3rd Party Spend 2. Commercial Optimisation Contract profitability Commercial edge 3. Business Improvement • Higher operating margins Improved operational performance ROLLS R ROYCE 6. Purpose & Culture 7. Performance Management 4. Working Capital • Significant near- term reduction Discipline to sustain improvement 5. Strategic Review Differentiated and executable strategies Measurable medium-term targets Page 9 © 2023 Rolls-Royce#10Key building blocks - strategic review Our new capital allocation framework Higher priority on deleveraging the balance sheet and shareholder payments. ROLLS R ROYCE . • . Prioritise investment opportunities Central capital allocation to market spaces and programmes Focus on profitable opportunities Performance management of strategic plan Cash flow Safety capex and engineering spend Contractual committed investment Practical available cash flow Priorities Deleverage 1 Shareholder payments 2 Discretionary investments 3 Strategic fit Attractive market Carbon impact Competitive position Financial fit Profitability Expected returns Payback Investment risk Execution Delivery risk Probability of success Timing and environment ESG Page 10 © 2023 Rolls-Royce#11ROLLS R ROYCE Civil Aerospace Page 11 © 2023 Rolls-Royce#12Civil Aerospace ✈ Large engine operational inputs 115 144 6.2m Total Civil Aerospace operational inputs 188 591 7.7m OE deliveries Major LTSA engine shop visits flying hours (EFH) OE deliveries Total LTSA LTSA engine shop visits flying hours (EFH) 32% 19% Underlying results 2023 Hồ 2022 H1 £m Organic Change Organic Change % Underlying revenue splits Revenue 3,257 2,339 892 38% Gross profit 690 256 425 162% Gross margin % 21.2% 10.9% 10.0pt Operating profit/(loss) 405 (79) 479 nm 68% Operating margin % 12.4% (3.4)% 15.6pt O Trading cash flow 401 63 338 ROLLS R ROYCE LTSA Long-Term Service Agreements OE Original Equipment T&M Time & Materials 4% 4% 73% Large engines 47% ■ OE Services 58% 30% Business Aviation 23% Regional 21% V2500 8% Page 12 © 2023 Rolls-Royce#13Leading products in growing markets Widebody Portfolio Market leading legacy large engine*** Civil Aerospace 2022 underlying revenue 30% business aviation & regional 70% large engines Airbus A330 Trent 700 1,322 Trent 700 engines average age: 11 years ROLLS R ROYCE 35% Sole-source Sole-source Sole-source market share Boeing 787 Trent 1000 696 engines average age: 6 years Airbus A350-900 Trent XWB-84 864 engines average age: 3 years OSTAN A350-1000 & A350F Trent XWB-97 148 engines average age: 3 years Freighter launched Airbus A330neo Trent 7000 196 engines average age: 2 years Business Aviation Portfolio In Service In Production In Flight Test In Development Bombardier Gulfstream Tay* BR710 * AE3007 Gulfstream G650 BR725 Bombardier 5500/6500 Pearl 15 6,300+ engines in service 1000 BR725 & 144 Pearl 15 engines in service Gulfstream G700 Pearl 700 Strong order book © Dassault Dassault Falcon X Pearl 10X Positive market response * Tay | Gulfstream IV, G300, G400, G350 and G450. BR710 | Bombardier GX, Global 5000 & 6000, Gulfstream V, G500 & G550 ** Legacy large engine fleet also includes: RB211, Trent 500, Trent 800 & Trent 900 (-1850 engines in service or stored) Page 13 © 2023 Rolls-Royce#14Key drivers of Civil Aerospace value Creating value from a growing and maturing fleet as the market for international passenger Rolls-Royce travel recovers Retaining the operational efficiency and productivity gains already delivered to drive further margin expansion Maximise Services service receipts cost reduction OE margin improvement • Market recovery • Contract extensions and aircraft transitions • Service scope and pricing • Extend time on wing • Reduce shop visit cost ROLLS R ROYCE Business Aviation Investment cycle growth • . Reduce component and assembly costs · Productivity and cost base improvement Purchasing strategy Pearl engine programme ramp- up and OE cost reduction • Less intense new product introduction • Focus on cost reduction and product maturity ⚫ Capital light approach utilising partnerships Page 14 © 2023 Rolls-Royce#15Time On Wing improvement drivers Product improvements (-40%) Life limited parts extensions (-50%) Better aircraft operation (-10%) ROLLS R ROYCE Business improvement potential IntelligentEngine digital platform - powerful insights, better decisions Using engine digital twins, big data analytics and artificial intelligence Page 15 © 2023 Rolls-Royce#16Winning Together on Shop Visit Cost ROLLS R ROYCE Lean engine overhaul (10%) Re-use of parts (40%) Part repair (15%) Advance repair tech (5%) Lower part cost (30%) Business improvement potential Service Management digital platform - powerful insights, better decision Page 16 © 2023 Rolls-Royce#17UltraFan- the ultimate TurboFan The technologies that we have developed through the UltraFan programme will provide us with solutions for the here and now in offering new ways to improve our existing engines, further enhancing their performance and efficiency ROLLS R ROYCE Conducted using 100% Sustainable Aviation Fuel Technology demonstrator - successful first tests Scalable technology from -25,000- 110,000lb thrust 10% efficiency improvement over the Trent XWB World-record breaking power gear box Page 17 © 2023 Rolls-Royce#18ROLLS R ROYCE Defence Page 18 © 2023 Rolls-Royce#19Defence Order intake £2.7bn Up 87% 1.4x book to bill Order backlog £8.9bn 2023 sales cover c.100% Underlying results 2023 Hồ 2022 H1 £m Organic Change Organic Change % Underlying revenue splits Revenue 1,913 1,609 244 15% Gross profit 379 326 43 13% 12% 32% Gross margin % 19.8% 20.3% (0.3)pt 44% 21% 56% Operating profit 261 189 65 33% 9% Operating margin % 13.6% 11.7% 1.9pt 26% Trading cash flow 76 89 (13) Transport Combat 10% 37% OE 17% Naval 2% Services 13% Submarines 14% Other 1% ROLLS R ROYCE Page 19 © 2023 Rolls-Royce#20Defence Rolls-Royce is a key trusted supplier to governments to power defence for the protection of society, preservation of peace and to underpin economic and social stability ROLLS R ROYCE -50% US DoD -30% UK MOD -20% Export 米 • • Long-term drivers of defence spending US: large new programmes for US DoD (including B-52 and FLRAA) UK: commitment to maintain fighting capability through Project Tempest and UK-led Next- Generation fighter programmes (GCAP) Export Markets: continued growth including naval products, transport aero engines and Eurofighter typhoon exports and potential involvement in Australian submarines (AUKUS) Geopolitical tensions Page 20 © 2023 Rolls-Royce#21Once sold our products stay in production for decades and our customers use them for decades Development Product Development Customer funding available for Defence R&D Lifecycle Growth Maturity Production -38% of product revenues from Original Equipment . Stable production volumes Services -62% of product revenues from Services • Defence fleets stay in-service for decades Winning a position during the development phase supports long-term favorable financial returns Page 21 © 2023 Rolls-Royce#22GLOBAL COMBAT AIR PROGRAMME (GCAP) In December 2022, Italy, Japan, and the UK launched the Global Combat Air Programme (GCAP) to jointly develop a next generation fighter, due to enter into service in 2035. Co-operation under GCAP allows us to share advanced technologies to get the best military capabilities, share the cost of development to get the best value for money, and strengthen the industrial base of each country. Future combat aircraft will need to have greater flexibility than previous generations of fighter, and Tempest will ensure the UK, Japan and Italy keep ahead of those adversaries. ROLLS R ROYCE The UK already has in excess of 2,800 people working on this programme. Over 600 of these at Rolls-Royce alone. We are making rapid progress and driving even greater pace in programme delivery, along with our international partners. Delivering our ambitious in- service date of 2035 requires much faster delivery than conventional programmes. Page 22 © 2023 Rolls-Royce#23F130 For the B-52 “B-52 modernization is our most important program" -USAF global Strike Command Timeline 2024 | CDR 2026 | Mil. Cert 2034 | -650 engine deliveries Development Schedule Programme of Record ROLLS R ROYCE ☐ First two F130 engines delivered and in test at NASA Stennis Space Center, US Cross-wind tests to determine final nacelle design; Critical Design Review (CDR) for engines in early 2024 F130 programme proceeding well, on schedule and within budget, no change to engine pricing New production line under development in RR Indianapolis Integration onto B-52 is managed by Boeing, along with other aircraft upgrades HOLLS R LONCES American Made Jel Engines Page 23 © 2023 Rolls-Royce#24ROLLS R ROYCE AE 1107F powering V-280 for FLRAA "This down-select represents a strategic pivot for Army Aviation to the transformational speed and range our Army needs to dominate future battlefields" - Maj. Gen. Walter Rugen, director of the Future Vertical Lift Cross-Functional Team. Timeline 2024 | PDR 2027 | Cert 2030 | First Unit Equipped V200 N280BH Middle Tier of Acquisition Programme of Record ☐ ☐ ☐ Future Long-Range Assault Aircraft programme will replace Army Blackhawks (not a 1-1 replacement) Competitor lost USG protest and announced they would no longer fight selection of V-280 RR focused on executing the program on schedule to achieve key milestone in mid-2024 Page 24 © 2023 Rolls-Royce#25Next generation submarine: The Dreadnought Alliance The new SSBN Dreadnought ballistic deterrent submarine (SSBN), which will replace the Vanguard Class, is in production and due to be operational in the early 2030s. Rolls-Royce will provide reactors for Australia's nuclear powered submarines as part of the AUKUS trilateral agreement between Australia, the UK and the US (AUKUS). Our most advanced reactor cores operate for over 20 years without needing to be refuelled. The dived endurance of nuclear powered submarines is only limited by the amount of food that can be carried and the endurance of the crew. ROLLS R ROYCE For over 60 years we have provided the power to the Royal Navy's nuclear submarines. Page 25 © 2023 Rolls-Royce#26ROLLS R ROYCE Power Systems The information in this document is proprietary and confidential to Rolls-Royce and is available to authorised recipients only - copying and onward distribution is prohibited other than for the purpose for which it was made available. Rolls-Royce content only. Page 26 2023: Rolls-Royce#27Power Systems O Order intake £1.9bn Down 14% 1.1x book to bill Order backlog £3.9bn 2023 sales cover c.100% Underlying results 2023 Hồ 2022 H1 £m Organic Change Organic Change % Underlying revenue splits Revenue 1,774 1,371 334 24% Gross profit 452 401 32 8% 34% Gross margin % 25.5% 29.2% (3.8)pt Operating profit 125 119 Operating margin % 7.0% 8.7% (1.7)pt Trading cash flow 22 (76) 98 ROLLS R ROYCE 40% 66% 9% 26% 25% ■Marine 0% ■OE 33% Industrial 17% Services 10% Power Gen 54% Defence 22% Page 27 © 2023 Rolls-Royce#28Power Systems Power Generation 34% of Sales Marine 31% of Sales Record order book and order intake in 2022 Diversified end markets and mission critical services 40,000+ customers Energy transition opportunity • Mission critical backup . power for data centres, hospitals and other infrastructure Government focused customer base with stable, robust demand • Large yacht propulsion and systems Industrial 25% of Sales Defence 10% of Sales • Oil & Gas, mining, construction and transport • Defence end markets driven by Government spending and political stability ROLLS R ROYCE • Sustained driven by economic recovery • Data centre usage • Trend towards decentralized power • grid Digitalization trend driving data centre demand Medium and Long Term Outlook · Long term demand in • yachts driven by UHNWIS • Structural trend towards low emissions in commercial vehicles to benefit the group Potential growth opportunities over the medium term through focus on efficient, lower carbon solutions, e.g. hybrid rail power pack Page 28 Sustained growth with a view to being a global power company based on low carbon technologies © 2023 Rolls-Royce#29ROLLS R ROYCE New Markets The information in this document is proprietary and confidential to Rolls-Royce and is available to authorised recipients only - copying and onward distribution is prohibited other than for the purpose for which it was made available. Rolls-Royce content only.#30New Markets Employees c.1,200 (+11% vs FY22) R&D Spend £64m (+£27m vs HY22) (FTE at period end) Underlying results Organic 2023 H1 2022 H1 £m Change Organic Change % £490m SMR committed funds £64m R&D spend Revenue 1 1 10% Gross loss (2) 2 Operating loss (78) (48) (29) 60% 43% Trading cash flow (42) (30) (12) ROLLS R ROYCE 47% Rolls-Royce Equity Investment UKRI Government Grant 45% 55% RR Electrical RR SMR 32% 168% Page 30 © 2023 Rolls-Royce#31New Markets G.NXIE Rolls-Ray HHL HILL Rolls-Royce Electrical Complete power and propulsion systems for all-electric and hybrid-electric applications. Our research and portfolio stretches from electric motors across power electronics, control systems and battery systems to power generation. Rolls-Royce SMR Small Modular Reactors are 470MW, 50Hz, nuclear power stations designed to help decarbonise global power generation Factory production of modules lowers cost and risk with repeatable precision engineering and predictable build programme with just 500 days on site for the modular build. ROLLS R ROYCE#32ROLLS R ROYCE Sustainability & ESG The information in this document is proprietary and confidential to Rolls-Royce and is available to authorised recipients only - copying and onward distribution is prohibited other than for the purpose for which it was made available. Rolls-Royce content only. Page 32 © 2023 Rolls-Royce#33Safety Rolls-Royce provides mission critical products that people's lives depend on. Our commitment to the safety of our products is therefore at the heart of our 'Operate Safely' core value. The Rolls-Royce Product Safety Policy sets out the five principles which we have established to ensure we keep our products safe and our customers, operators and the general public free from danger, injury and loss. These are implemented and overseen by the Rolls-Royce Company Product Safety Review Board and governed by the Board Safety and Ethics Committee. ROLLS R ROYCE Leadership Commitment and Accountability Level of Product Safety Maintaining and Improving Product Safety Conforming Product Safety Awareness and Competence Rolls-Royce Product Safety Management System Page 33 © 2023 Rolls-Royce#34Our people We work to create an environment where everyone at Rolls-Royce can be at their best. Progress on gender diversity (% female representation) 22% 18% 33% Board level Senior leaders All company • safety, health and wellbeing of our people; TRI RATE (PER 100 EMPLOYEES) 2025 TARGET • • • 2022 2021 2020 BASELINE creating an environment of inclusion and belonging; Headcount by location 0.33 Headcount by business 0.41 0% 2% 0.43 8% 0.35 33% 26% 7% 2% 2% 4% 14% 48% 00 31% 23% promoting a learning environment by continuing to directly engage our colleagues with digital content and enhanced learning tools; leadership capability; listening and engagement - hear what we do well and what areas we need to focus on, and do better; and community investment and focus on STEM. ■Civil Aero Power Systems ■Corporate Defence New Markets Discontinued ■ UK US & Canada ■Italy Rest of world ■Germany ■Spain Singapore ROLLS R ROYCE Page 34 © 2023 Rolls-Royce#35Ethics We are committed to maintaining high ethical standards underpinned by our values and behaviours to create a working environment where everyone at Rolls-Royce and those we work with can be at their best. Our code of conduct (Our Code) and associated Group policies form a key part of the Rolls-Royce framework. In 2022, 76 employees (vs 45 in 2021) left the business for reasons related to breaches of Our Code. Anti-bribery and corruption Our Code and associated anti-bribery and corruption policy clearly set out our commitment to zero tolerance of bribery and corruption in any form. In 2022, we embedded our Group policies into our digital Code to improve accessibility for our employees. We have continued to make improvements on our bribery and corruption risk assessment and controls, following recommendations made by an independent review of our ethics and compliance programme undertaken in 2021. Human rights and anti-slavery We operate in accordance with human rights requirements through strict compliance with strategic export laws and sanctions regulations in the countries where we operate. Our due diligence activities are embedded within our ethics, people, export control and procurement programmes. Human rights risks in our value chain are identified and assessed through a range of channels including our speak up line, country and sector risk analysis, screening platforms and self-assessment questionnaires. ROLLS R ROYCE Page 35 © 2023 Rolls-Royce#36Our sustainability approach We focus on areas where we can make the most material contributions to a sustainable future, informed by our impacts as a business, supported by global frameworks such as the United Nations Sustainable Development Goals, and the expectations of our all stakeholders. We look to operate and act in an ethically, environmentally and socially responsible manner, by: Managing and minimising environmental impacts across our value chain ROLLS R ROYCE Creating a positive social impact for our people, our partners, and communities. Maintaining the highest standards of ethics and compliance Underpinned by our values and behaviours Page 36 © 2023 Rolls-Royce#37ROLLS R ROYCE Governance COMMITTEE STRUCTURE ROLLS-ROYCE HOLDINGS PLC NOMINATIONS & GOVERNANCE COMMITTEE AUDIT COMMITTEE REMUNERATION COMMITTEE SAFETY, ETHICS & SUSTAINABILITY COMMITTEE EXECUTIVE TEAM ENVIRONMENT & SUSTAINABILITY COMMITTEE INVESTMENT REVIEW COMMITTEE CLIMATE STEERING COMMITTEE The Board has oversight of climate-related risks and opportunities impacting the Group and all Board Committees have climate-related issues as part of their remit. SCIENCE & TECHNOLOGY COMMITTEE The Executive Team is responsible for managing climate-related risks and opportunities on a day-to-day basis and for delivering the roadmaps to achieve our decarbonisation strategy. INDEPENDENT ENVIRONMENTAL ADVISORY COMMITTEE The Independent environmental advisory committee comprises world-class external experts and academics in climate science, materials science and environmental policy, and provides input and independent critique of our sustainability and environment policy and strategy. Page 37 © 2023 Rolls-Royce#38State of the art facilities We continue to invest in developing state of the art manufacturing and production environments that enable us to reduce the environmental impact of our operations. Energy consumption (MWh/£m) Total solid and liquid waste (t/£m) -35% 3.41 Recycling & recovery rate (%) 61.4 2022 vs 2014 vs target 3.31 vs target 68% Revert Programme: Our closed loop recycling programme • • We use over 20,000 tonnes of high value metal alloys each year. Almost 95% of a used aero engine can now be recycled and around half of the recovered material is of such high quality it can be safely used again to make a new engine. We save 300,000 MWh of energy and 80,000 tonnes of CO2 each year compared to using virgin materials.#39ROLLS R ROYCE Appendix The information in this document is proprietary and confidential to Rolls-Royce and is available to authorised recipients only - copying and onward distribution is prohibited other than for the purpose for which it was made available. Rolls-Royce content only. Page 39 © 2023 Rolls-Royce#40Drivers of Civil LTSA balance change Deferred revenue reflects difference between invoiced EFH receipts and P&L revenues traded Invoiced EFH receipts Reflects invoiced EFH receipts on long-term contracts across entire Civil LTSA-covered fleet P&L LTSA Invoiced EFH receipts £2,337m revenue (pre-catch-ups) £1,587m LTSA contract catch-ups £23m FX & other £130m + P&L revenue Driven by cost (e.g. shop visits) across large engine, business aviation and regional fleets Recognised by contract, as costs incurred, at relevant contract margins 2023 Opening balance (LTSA net creditor) £7,372m LTSA revenue post catch-ups £1,610m ROLLS R ROYCE 2023 HY Closing balance (LTSA net creditor) £8,229m Page 40 © 2023 Rolls-Royce#41FY 2023 guidance Operating profit Free cash flow from continuing operations Significant profit items: **Civil targeted contract improvements Significant cash flow items: LTSA creditor growth Net OE engine concession payments Over-hedge costs Disruption due to supplier fires Legal judgement Civil Aerospace drivers: Total engine deliveries Large LTSA EFH as % of 2019 New* 2023 guidance £1.2bn - £1.4bn £0.9bn £1.Obn - Guidance at FY 2022 £0.8bn - £1.Obn £0.6bn - £0.8bn £200m - £250m £100m - £200m - £1.0bn £1.2bn c£(200)m £500m £700m c£(200)m £(389)m c£(100)m £(389)m £(150)m £(100)m 400-500 80% - 90% 1,200 - 1,300 400-500 80%-90% 1,200 - 1,300 Total shop visits Other guidance: Interest paid (FY 2022: £(352)m) Cash tax (FY 2022: £(174)m) Pensions in excess of PBT charge (FY 2022: £(32)m) c£25m - £75m lower - £(160)m (£190)m Broadly stable c£25m - £75m lower £(160)m (£190)m Broadly stable Divisional guidance • • • • Civil Aerospace operating profit in the second half is expected to be broadly similar to the first half (H1 2023: £405m) Defence revenue growth in FY 2023 is expected to be modest vs 2022 (H1 2023: +15%) Defence cash conversion is expected to be better in the second half (H1 2023: 29%) Power Systems operating profit margin in FY 2023 is expected to be higher than FY 2022 (FY 2022:8.4%) Power Systems cash conversion expected to be better in the second half (H1 2023: 18%) ROLLS R ROYCE *As disclosed on 26 July 2023 ** Civil targeted contract improvements includes contract catch ups and onerous contract improvements Page 41 © 2023 Rolls-Royce#42Transactional foreign exchange % cover of forecast net US$ income £/$ exchange rate Rolls-Royce hedges transactional FX Transactional exposure arises when revenue currencies differ from cost currencies 100% Achieved rate is not typically affected by short-term spot rate movements unless new cover is taken; this impact is usually diluted 80% . $16 billion GBP:USD hedge book (average rate £/$1.54) • $2 billion EUR:USD hedge book (average rate €/$1.17) 60% • Each 1 $ cent change in the £/US$ hedge rate impacts pre-tax cash by c£20-30m 1.6 1.5 1.4 40% 1.3 USD hedge book cash costs of closing out over-hedge positions Costs are included in Group FCF definition 20% 1.2 Total cash outflow 2020 to 2026 £1,674m, of which £1,174m already paid H1 H2 2025- £m 2020 2021 2022 2023 2023 2024 2026 0% 1.1 2023 2024 2025 2026 2027 2028 Cash cost 186 452 326 210 179 146 175 1% Hedged 1% Unhedged -Blended rate (RHS) -Market rate (RHS) ROLLS R ROYCE Page 42 © 2023 Rolls-Royce#43Translational foreign exchange The impact of translational foreign exchange is driven by period average spot rates Period average rates 2023 Hồ 2022 H1 USD 1.23 1.31 EUR 1.14 1.19 • Underlying revenue Exposure impact Underlying operating profit impact . 2023 vs. 2022 £m Revenue/Profit Including FX FX Including FX FX Group 6,950 155 673 17 Civil Aerospace Defence Power Systems USD, EUR 3,257 26 405 5 Rolls-Royce does not hedge against the impact of translational FX • Translational exposure varies by source of revenues and profits Translational FX impact is driven by period average spot rates Translational impact increases as rate reduces Translational impact of 0.01 unit of currency change in half-year period average rates USD, EUR 1,913 60 261 7 EUR, USD 1,774 69 125 6 Revenue Profit New Markets EUR, USD 1 (78) (1) USD £9 million £2 million Other Businesses Corporate and Inter-segment EUR 5 I (5) EUR £19 million £1 million I (35) I ROLLS R ROYCE Page 43 © 2023 Rolls-Royce#44Civil Aerospace revenues by engine type £m 2023 Hồ 2022 H1 Organic change' Original Equipment 1,055 660 58% Large engine 828 478 73% Business aviation 221 175 21% V2500 6 7 (14)% Service 2,202 1,679 30% Large engine 1,547 1,135 36% Business aviation 407 329 20% Regional 122 100 17% V2500 126 115 9% Total 3,257 2,339 38% ROLLS R ROYCE 1 Organic change is the measure of change at constant translational currency applying full year 2022 average rates to H1 2023 and H1 2022. Page 44 © 2023 Rolls-Royce#45Trent engine products Large engines backlog and market share Airframe Market share* Engines in service Engines on order Trent 7000 Airbus A330neo 100% 196 358 gine Trent XWB Airbus A350 100% 1012 929 Trent 1000 Boeing 787 31% 696 118 000 Trent 900 Airbus A380 48% 280 Trent 800 Boeing 777 40% 200 Trent 700 Airbus A330 60% 1,322 Trent 500 Airbus A340 100% 96 Total 3,802 1,405 ROLLS R POWERING SUSTAINABLE FLIGHT ROYCE * Share of total firm and announced programme sales with an engine decision (excludes cancelled orders) Page 45 © 2023 Rolls-Royce#46Civil Aerospace engine deliveries By engine 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Hồ Trent 500 Trent 700 181 184 140 88 Trent 800 Trent 900 42 35 6 30 Trent 1000 59 79 Trent XWB-84 ཡd 106 122 109 13 56 117 196 ' ༅་。 3 g་ 110 65 63 10 2 - 44 34 15 125 126 82 184 178 109 Trent XWB-97 1 45 56 34 29 8 106 22 31 Trent 7000 Civil Large Engines 282 311 308 357 483 469 510 264 125028 IN1-22255 1 1 - 13 96 55 23 11 63 190 35 115 Tay 67 46 38 28 AE3007 78 48 34 20 28 10 4 BR700 326 334 332 244 190 205 191 112 70 77 34 2 24 72 44 88 39 Pearl Civil Small Engines 471 428 404 292 200 217 219 184 114 165 73 Civil Total 753 739 712 649 683 686 729 448 309 355 188 ROLLS R ROYCE Page 46 © 2023 Rolls-Royce#47Civil Aerospace in-service installed fleet* By engine 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Hồ RB211 22B 3 3 3 3 3 3 3 3 3 RB211 524 455 352 302 278 266 242 210 82 80 85 77 RB211 535 1,026 1,012 908 868 826 850 824 576 658 682 714 RB211 Total 1,484 1,367 1,213 1,149 1,095 1,095 1,037 661 741 767 791 Trent 500 440 388 352 336 280 284 240 68 92 80 96 Trent 700 1,114 1,288 1,388 1,460 1,590 1,636 1,606 1,054 1,146 1,178 1,322 Trent 800 436 422 362 352 330 334 320 134 176 184 200 Trent 900 244 280 304 332 360 400 428 68 168 252 280 Trent 1000 84 164 260 384 476 546 658 538 604 662 696 Trent XWB-84 2 30 124 278 432 590 562 666 762 864 Trent XWB-97 28 70 96 98 124 148 Trent 7000 2 80 90 130 170 196 Trent 2,318 2,544 2,696 2,988 3,314 3,662 3,992 2,610 3,080 3,412 3,802 Civil Large Engines 3,802 3,911 3,909 4,137 4,409 4,757 5,029 3,271 3,821 4,179 4,593 Spey 580 506 460 430 404 360 284 252 236 210 190 Tay 2,019 2,011 2,035 2,027 1,993 2,009 1,946 1,892 1,866 1,838 1,846 AE3007 2,598 2,534 2,468 2,326 2,302 2,448 2,472 2,028 2,124 1,954 1,986 BR700 2,696 2,964 3,388 3,642 3,858 4,098 4,322 4,314 4,382 4,442 4,488 36 84 120 144 Pearl Civil Small Engines 7,893 8,015 8,351 8,425 8,557 8,915 9,024 8,522 8,692 8,564 8,654 Civil Total 11,695 11,926 Fleet growth 5% 2% 12,260 3% 12,562 2% 12,966 3% 13,672 14,053 11,793 12,513 5% 3% -16% 6% 12,743 2% 13,247 4% ROLLS R ROYCE * Installed engine base is net of retirements and excludes aircraft which are parked or in storage. Fleet growth for HY2023 is vs FY2022 Page 47 © 2023 Rolls-Royce#48Civil in-service thrust base (millions lbs)* Thrust per engine (lbs) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 H1 RB211 22B 60,000 RB211 524 60,000 RB211 535 40,000 RB211 Total 69 Trent 500 56,000 Trent 700 72,000 80 Trent 800 92,000 Trent 900 70,000 Trent 1000 71,000 22% 2 = 6 27 21 18 17 16 15 41 40 36 35 33 34 62 55 52 49 49 46 25 22 20 19 16 16 93 100 105 114 118 116 40 39 33 32 17 20 21 23 12 18 27 Trent XWB-84 84,000 3 10 NWNW 30 31 25 28 34 39 23 36 < རྦེ8 8 ཚ+ཆེ8 ྤ 13 5 33 23 28 31 4 76 83 29 30 12 5 38 43 50 47 Trent XWB-97 97,000 3 9 Trent 7000 72,000 6 7 9 5225 50 100 1 22 525562160 LO 5 27 29 32 33 5 85 95 17 18 18 20 47 49 64 73 12 14 12 14 Trent 168 185 196 217 243 270 297 198 233 260 289 Civil Large Engines 237 247 251 269 292 319 343 226 265 292 322 Spey 11,000 6 6 5 Tay 15,000 30 30 31 AE3007 7,500 19 19 BR700 15,000 40 44 25 19 51 5075 4 4 3 3 3 30 30 30 29 28 28 17 17 18 18 15 16 58 61 65 65 66 2856 2 28 15 15 67 67 1 2 2 Pearl 15,000 Civil Small Engines 97 99 105 107 109 114 116 112 114 114 114 Civil Total 333 346 356 376 402 433 459 338 378 406 436 Thrust Growth 5% 4% 3% 6% 7% 8% 6% -26% 12% 7% 7% ROLLS R ROYCE * Installed engine base is net of retirements and excludes aircraft which are parked or in storage. Thrust growth for HY2023 is vs FY2022. Total numbers may not add up due to rounding. Page 48 © 2023 Rolls-Royce#49Safe harbour statement and contact details Isabel Green Head of Investor Relations +44 7880 160976 [email protected] Jeremy Bragg Investor Relations Director +44 7795840875 [email protected] This announcement contains certain forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing to the Company, anticipated cost savings or synergies and the completion of the Company's strategic transactions, are forward-looking statements. By their nature, these statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. The forward-looking statements reflect the knowledge and information available at the date of preparation of this announcement, and will not be updated during the year. Nothing in this announcement should be construed as a profit forecast. All figures are on an underlying basis unless otherwise stated - for the definition see note 2 to the condensed consolidated financial statements section of the 2022 Full Year Results Statement. ROLLS R ROYCE Page 49 © 2023 Rolls-Royce#50ROLLS R ROYCE