#1December 2023 ROLLS-ROYCE INVESTOR PRESENTATION ROLLS R ROYCE#2ROLLS-ROYCE PROPOSITION w 1. HIGH PERFORMING, COMPETITIVE AND RESILIENT BUSINESS 2 GROWING SUSTAINABLE 3 CASH FLOWS STRONG BALANCE SHEET AND GROWING SHAREHOLDER RETURNS © 2023 Rolls-Royce Not Subject to Export Control 2#3DIFFERENTIATED GROUP STRENGTHENED THROUGH TRANSFORMATION BUILDING ON.... ■ Civil Aerospace | Leading positions in Business Aviation, and exclusivity on the latest Airbus widebody aircraft ■ Defence | Long-term pipeline and leading position in Transport, Combat and Submarines ■ Power Systems | Structural advantages ■ Nuclear | Broadest capability portfolio in the industry, fuelling growth in defence and commercial applications ■ Group | Global brand, deep customer relationships and experienced partner ...TRANSFORMING INTO ... ■ A more resilient and efficient business with - - Quality of earnings - cash expansion focused More rateable and growing cash flows ■ One Rolls-Royce with - - - Different ways of working and mind-set Differentiated performance culture A new organisation - re-organising for efficiency, synergies and capability building Strategic clarity - focused and aligned organisation External focus and benchmarking SAFETY PEOPLE Foundations TECHNOLOGY © 2023 Rolls-Royce 3 Not Subject to Export Control#4DIFFERENTIATED AND ADVANTAGED TECHNOLOGIES Advantaged technologies Systems integration Control systems Advanced manufacturing Electrical systems UltraFan Nuclear Leading technologies for next generation aircraft Trusted and proven reactor design Next generation technology Vertically integrated © 2023 Rolls-Royce Not Subject to Export Control 4#5CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Strategic framework 1. Portfolio choices & partnerships 2. Advantaged businesses & strategic initiatives. 3. Efficiency & simplification 4. Lower carbon & digitally enabled businesses High performing Operating profit Competitive Operating margin Growing Sustainable cash flow Resilient Return on capital © 2023 Rolls-Royce Not Subject to Export Control 5#6CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Group mid-term targets Operating profit £2.5bn-£2.8bn Operating margin Free cash flow 13-15% +₤1.8bn-£2.1bn +8-10pts £2.8bn-₤3.1bn 1 Return on capital 16-18% +£2.3bn-£2.6bn +11-13pts £0.65bn Haa 5.1% £0.5bn 4.9% 2022 2023 Mid- 2022 2023 Mid- 2022 2023 Mid- 2022 2023 term term term Mid- term © 2023 Rolls-Royce Not Subject to Export Control. со 6#7CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Divisional mid-term targets Divisional operating margin, % CIVIL AEROSPACE 2.5% ARBUS's we A350% +12-14 pts DEFENCE +2-4pts 11.8% POWER SYSTEMS 1 +4-6pts 84% 2022 2023 15-17% Mid- 14-16% 12:14% 2022 2023 Mid- 2022 2023 Mid- term term term © 2023 Rolls-Royce Not Subject to Export Control 7#8POWER SYSTEMS DEFENCE CIVIL AEROSPACE 1. PORTFOLIO CHOICES & PARTNERSHIPS Focused and granular approach Key investment areas for performance and growth BOLLS PRICE Business Aviation Transport Governmental 400M A400M Rolls-Rover Widebody ART Partnerships Exits Narrowbody Combat Submarines Micro-Reactors SMR Marine Power Generation & Battery Storage Focused on ■ Non-core businesses ☐ Valued higher outside portfolio Electrical Advanced Air Mobility £1.0bn-₤1.5bn Gross disposal proceeds across all divisions © 2023 Rolls-Royce Not Subject to Export Control 8#92. ADVANTAGED BUSINESSES & STRATEGICINITIATIVES Positioned in attractive and growing markets 2022-2030 annual market growth rates¹ COMMERCIAL AVIATION 3-5% Business Aviation 5-7% Widebody DEFENCE 0-2% Combat & Transport UK & AUKUS Submarines POWER SYSTEMS T 5-7% Power Generation 4-6% Mobile Application 2 1.2022-2030 Growth Rate assumptions - Commercial Aviation market growth rates based on volumes | Widebody growth based on estimated increase in aircraft in service, Business Aviation growth based on estimated increased deliveries of Ultra and Very Long Range aircraft. Defence and Power Systems growth rates are value based | Estimated based on growth in revenue of Original Equipment and Services in Defence and Power Systems sub-segments. | 2. Power Systems mobile application includes Governmental, Marine and Industrial © 2023 Rolls-Royce Not Subject to Export Control 6 9#102. ADVANTAGED BUSINESSES & STRATEGIC INITIATIVES Sustainably expanding earnings potential Group operating profit improvement £0.65bn £2.5bn-£2.8bn Strategic initiatives driving margin improvements CIVIL AEROSPACE 15-17% Mid-term operating margin target 2022 Business Widebody Aviation Efficiency & simplification Portfolio & other Mid- term DEFENCE 14-16% Mid-term operating margin target 2022 Transport Combat Submarines Efficiency & simplification POWER SYSTEMS 12-14% Mid-term operating margin target 2022 Civil Aerospace Defence Power Systems New Markets Portfolio Mid-term 2022 Power Generation BESS¹ Governmental Marine & other 1. Battery Energy Storage Solutions Portfolio & other Efficiency & simplification Portfolio & other Mid-term Mid-term © 2023 Rolls-Royce Not Subject to Export Control. 10#113. EFFICIENCY & SIMPLIFICATION Sustainable cost efficiency to improve competitiveness and resilience Key drivers Right-sizing the organisation ■ Reduction of 2,000-2,500 roles proposed worldwide ■ Focus on efficiency, simplification and enterprise-wide synergies to create a more agile business £200m annual benefits Procurement Excellence ■ ~£1bn procurement interventions ■ Consolidation of Group spend, leverage scale and develop consistent best-in-class standards Zero-based budgeting ■ 10-15% reduction in targeted areas Total Cash Cost / Gross Margin (TCC/GM) 0.8x (40-50% 04-05x 2022 2023 Mid-term 11#124. LOWER CARBON & DIGITALLY ENABLED BUSINESSES Transition to lower carbon, supporting our customers on their journey to net zero Committed to 2050 net zero ambition AEROSPACE AND DEFENCE POWER ☐ All in-production commercial aero engines 100% SAF compatible SYSTEMS Foundations in place for lower carbon transition NUCLEAR ENGINE EFFICIENCY ALTERNATIVE FUELS AND HYBRID SUSTAINABLE AVIATION FUEL BATTERY ENERGY STORAGE SOLUTIONS EnergyPack SMALL MODULAR REACTORS MICRO- REACTORS © 2023 Rolls-Royce Not Subject to Export Control 12#134. LOWER CARBON & DIGITALLY ENABLED BUSINESSES Differentiated customer experience and greater operational efficiency CUSTOMER Differentiated service and experience DESIGN Digitally-integrated design, build and operate MANUFACTURE Improved operational performance 1848 WIRD GROUP Leveraging Al across all businesses and functions **** PEOPLE Digitally connected workforce © 2023 Rolls-Royce Not Subject to Export Control 13#14LONG-TERM GROWTH MOMENTUM Continued material growth opportunities beyond mid-term Rolls-Royce long-term growth prospects Mid-term For illustrative purposes. Not to be used as guidance Long-term New business Additional upside potential from narrowbody and nuclear micro-reactors SMR Poised to play major role in the civil nuclear market Power Systems Grow in line with markets and above GDP with competitive product portfolio Defence Significant benefits of recent wins, such as B-52, FLRAA, AUKUS and GCAP Civil Aerospace Continue to lead in Business Aviation, Widebody Engines growing above GDP and ready for the next generation platform © 2023 Rolls-Royce 14 Not Subject to Export Control#15TRANSFORMING THE BUSINESS FOR SUSTAINABLE GROWTH OUR TRANSFORMATION STRATEGIC FRAMEWORK ■ Portfolio choices & partnerships ■ Efficiency & simplification 1. ■ Advantaged businesses & strategic initiatives HIGH PERFORMING, COMPETITIVE AND RESILIENT BUSINESS ■ Lower carbon & digitally enabled businesses 2 GROWING SUSTAINABLE CASH FLOWS DELIVER AS ONE ROLLS-ROYCE ■ Embrace new ways of working and mind-set Establish a differentiated performance culture ■ Execute with strategic clarity Externally focused and benchmarking Simplified organisation and strengthened capabilities 3. STRONG BALANCE SHEET AND GROWING SHAREHOLDER RETURNS 15 15#16FINANCIALS 2023 Rolls-R#17CAPITAL FRAMEWORK Driving shareholder value Strong balance sheet and investment grade credit profile Committed to growing shareholder returns Disciplined investment Improved net debt/EBITDA Reduced gross debt Once strong balance sheet and investment grade profile are assured Group-wide prioritisation Strong liquidity Rigorous capital allocation process Strategically aligned Clear and differentiated hurdle rates © 2023 Rolls-Royce Not Subject to Export Control 17#18SUSTAINABLE AND GROWING FREE CASH FLOW Driven by higher operating profit and stronger balance sheet £2.8bn-£3.1bn mid-term Free Cash Flow (FCF) +£2.3bn-£2.6bn FCF growth £0.5bn £2.8bn-₤3.1bn 2022 2023 Mid-term Improvement in FCF to mid-term driven by - Operating profit growth (£1.8bn-£2.1bn) with an operating margin of 13-15% - Focused investments aligned to strategy - Civil LTSA balance growth - Disciplined working capital management - Increased cash tax costs reflecting higher profit - Lower financing costs and debt reduced - Absence of over-hedge costs © 2023 Rolls-Royce 18 Not Subject to Export Control.#19CIVIL LTSA BALANCE GROWTH £0.8bn-£1.2bn per annum growth Civil LTSA balance growth' 2022 2023 growth Mid-term 'Civil net LTSA liability less Risk and Revenue Sharing Partners (RRSP) prepayments for LTSA parts Growing cash receipts ahead of shop visits costs driven by - " Widebody EFH growth reaching 120-130% of 2019 levels Business Aviation growth " Higher average EFH rate - Time on wing improvements " Legacy hedge book consumption drives improved FX rate © 2023 Rolls-Royce Not Subject to Export Control 19#20WORKING CAPITAL OPTIMISATION c.£2bn of sustainable improvements more than offset the impact of headwinds Net Working Capital management Disciplined working capital management 2022 Inventories Receivables & Payables Portfolio INVENTORIES Concessions Growth & Other Mid-term c. £2bn optimisation actions Significant improvement in Days Inventories Outstanding Improved demand planning and supply chain management Optimised buffer stock RECEIVABLES & PAYABLES Improvement in Days Sales Outstanding New behaviours and tools drive improved collections and billing Unbilled invoice backlog cleared CONCESSIONS • Legacy agreements outflows GROWTH Modest working capital build to support business growth 1. Net Working Capital includes inventories, receivables, payables, and contract assets and liabilities but excludes the Civil Net LTSA creditor and associated Risk and Revenue Sharing Partners prepayments for LTSA parts 20#21FINANCIAL RESULTS SUMMARY FINANCIAL PERFORMANCE FOR PAST 5 YEARS £m Underlying revenue Underlying operating profit/(loss) Profit/(loss) for the year from continuing operations Group FCF Shareholder payments DEBT 2022 2021 2020 2019 2018 12,691 10,947 11,430 15,450 15,067 652 414 (2,008) 808 616 158 10 (3,997) 306 305 505 (1,485) (4,255) 873 568 (4) (92) (224) (219) 31 December (£m) 30 June 2023 Net debt Credit ratings 2022 Issued Bond Notes¹ 3,995 3,995 HY23 £(2.8)bn Moody's6: Ba2 UKEF £1bn loan (undrawn) 2 1,000 1,000 FY22 £(3.3)bn Fitch7: BB UKEF £1bn loan (undrawn)³ 1,000 1,000 FY21 £(5.2)bn S&P8: BB Revolving Credit Facility (undrawn) 4 2,500 2,500 All now positive outlook Bank Loan Facility (undrawn)5 1,000 1. May 2028 2. March 2026 4. April 2025 5. January 2024 7. 4th October 2023 8. 13th March 2023 3. September 2027 6. 8th August 2023 © 2023 Rolls-Royce Not Subject to Export Control 21#22REVENUE BY BUSINESS AND GEOGRAPHY Full year 2022 Power Systems £3,347m Defence £3,660m BUSINESS Civil Aerospace £5,686m Asia/Middle East 25% Our New Markets business contributed £3m underlying revenue to the Group North America 34% ROW 6% GEOGRAPHY Europe 35% The Group's revenue by destination of the ultimate operator © 2023 Rolls-Royce Not Subject to Export Control. 22#23GUIDANCE GROUP GUIDANCE FOR MID-TERM (BASED ON 2027) Operating profit Operating margin Free cash flow Return on capital DIVISIONAL GUIDANCE FOR MID-TERM (BASED ON 2027) Operating margin Civil Aerospace Defence Power Systems GROUP GUIDANCE FOR 2023 Mid-term guidance Change FY22 £2.5bn-£2.8bn +£1.8bn-£2.1bn £652m 13-15% +8-10%pts 5.1% £2.8bn £3.1bn +£2.3bn-£2.6bn £505m 16-18% +11-13%pts 4.9% Mid-term guidance Change FY22 15-17% +12.5-14.5%pts 2.5% 14-16% +2.2-4.2%pts 11.8% 12-14% +3.6-5.6%pts 8.4% FY23 guidance HY23 FY22 Operating profit £1.2bn - £1.4bn £673m £652m Free cash flow from continuing operations £0.9bn £1.Obn £356m £505m © 2023 Rolls-Royce Not Subject to Export Control 23#24CIVIL AEROSPACE Page 24#25CIVIL AEROSPACE Advantaged products and services in growing markets Underlying revenue (2022) £5,686m BUSINESS AVIATION WIDEBODY REGIONAL/V2500 Business Aviation - 21% Widebody - 72% Regional - 4% V2500-3% Market leading position ~70% Aircraft in service market share¹ 8-9% Rolls-Royce delivery growth² 120-130% Forecast Rolls-Royce EFH mid-term vs 20193 Capitalise on Power of the Trent ~55% Widebody delivery share4 7-9% Rolls-Royce powered aircraft in service growth5 120-130% Forecast Rolls-Royce EFH mid-term vs 20196 Strength in legacy programmes -2,000 Rolls-Royce powered aircraft in service -180m Rolls-Royce EFH to date 35m-40m Forecast Rolls-Royce EFH over mid-term 1. Large aircraft in service 2022 | 2. Annual growth of powered Very Long Range (VLR) / Ultra Long Range (ULR) aircraft deliveries 2022 and 2030 | 3. VLR/ULR Engine Flying Hours (EFH) mid-term vs 2019 | 4. New passenger widebody delivery share 2022 15. Annual growth of passenger aircraft in service between 2022 and 2030 | 6. Long Term Service Agreement widebody Engine Flying Hours © 2023 Rolls-Royce Not Subject to Export Control 25#26LEADING PRODUCTS IN GROWING MARKETS Widebody Portfolio Market leading legacy large engine** 35% market share Sole-source Sole-source 787 Airbus A330 Trent 700 Boeing 787 Trent 1000 1,322 Trent 700 engines average age: 11 years 696 engines average age: 6 years Airbus A350-900 Trent XWB-84 864 engines average age: 3 years Business Aviation Portfolio In Service In Production Gulfstream Bombardier Gulfstream Bombardier Tay* BR710* AE3007 6,300+ engines in service G650 BR725 5500/6500 Pearl 15 1000 BR725 & 144 Pearl 15 engines in service QATAN Sole-source A350-1000 & A350F Trent XWB-97 148 engines average age: 3 years Freighter launched Airbus A330neo Trent 7000 196 engines average age: 2 years ** Legacy large engine fleet also includes: RB211, Trent 500, Trent 800 & Trent 900 (-1850 engines in service or stored) In Flight Test In Development Gulfstream G700 Pearl 700 Strong order book Dassault Falcon X Pearl 10X Positive market response © Dassault Tay | Gulfstream IV, G300, G400, G350 and G450. BR710 | Bombardier GX, Global 5000 & 6000, Gulfstream V, G500 & G550 26#27CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Strategic initiatives driving margin improvements Civil Aerospace operating profit improvements (£bn) 15-17% Mid-term operating margin targets £143m 2022 Business Aviation Widebody Efficiency & simplification Portfolio & other Mid-term 10 Business Aviation Grow market share, aftermarket growth and commercial optimisation wwwwwww US A350 WB Widebody Keep Engines Earning, Contractual Rigour, Value-Driven pricing, Time on Wing, Shop Visit cost, Product Cost, Volume & Mix Efficiency & simplification Simplifying and optimising our business © 2023 Rolls-Royce Not Subject to Export Control 27#28BUSINESS AVIATION Strategic initiatives driving margin improvements 5500 GROW MARKET SHARE WITH PEARL ■ Leaders in resilient and growing market ■ Pearl is today's engine family of choice ■ Won the last three major campaigns ☐ ☐ SIGNIFICANT SERVICES GROWTH Highly profitable services model with CorporateCare ■ Continued growth of EFH 8-9% Annual growth of Rolls-Royce powered aircraft deliveries¹ 2-3% Annual growth of invoiced EFH² ◉ Large and growing installed fleet COMMERCIAL OPTIMISATION ■ Cost reduction ☐ ■ Improving commercial terms ☐ Implementing new pricing strategy 1. Very Long Range / Ultra Long Range aircraft deliveries, 2022 to 2030 | 2. Rolls-Royce Very Long Range / Ultra Long Range EFH, 2022 to 2030 | 3. Rolls-Royce data >100% Mid-term operating profit growth³ © 2023 Rolls-Royce Not Subject to Export Control 28#29WIDEBODY Strategic initiatives driving margin improvements 1. Cirium data | 2. Rolls-Royce data KEEP ENGINES EARNING Improve engine performance and earning through extensions, transitions and passenger to freighter conversions Powering 80% of A330 committed freighter conversions¹ COMMERCIAL OPTIMISATION ☐ Drive contractual rigour ■ Implementing value-driven pricing strategy ◉ Embedding a culture of commercial acumen Drive towards value driven pricing INSTALLED ENGINES AND AFTERMARKET GROWTH ■ Growth driven by engine deliveries, major refurbishments and shop visit volumes ■ EFH forecast 120-130% over mid-term 300-350 Engine deliveries p.a. 700-750 Major refurbishments p.a. 1,100-1,200 Total shop visits p.a.² © 2023 Rolls-Royce Not Subject to Export Control 29 29#30WIDEBODY Strategic initiatives driving margin improvements 1. Weighted Average Increase of Trent Engines over mid-term | 2. Rolls-Royce data EXTEND TIME ON WING Improve product durability ■ Extend life and component limits ■ Optimise aircraft operations and maintenance -40% Time on Wing increase over mid-term¹ REDUCE SHOP VISIT COST ■ Greater control workscope ☐ Optimise MRO build/strip Repair and re-use of parts -50% Trent XWB Shop visit cost reduction PRODUCT COST REDUCTION ■ Concentrate activity to high-performing suppliers Improve contracts to protect value ■ Advanced technical cost out 200 Technical cost out engineers © 2023 Rolls-Royce Not Subject to Export Control 30#31TRANSITION TO LOWER CARBON Supporting our customers on their journey to net zero Maximise efficiency of current fleet All in-production engines compatible with 100% SAF UltraFan technologies for current and next generation widebody and narrowbody aircraft © 2023 Rolls-Royce Not Subject to Export Control. 31#32DEFENCE Page 32#33DEFENCE Advantaged and resilient business operating in attractive markets. Underlying revenue (2022) TRANSPORT £3,660m COMBAT¹ SUBMARINES NAVAL HELICOPTER Transport -33% Combat -31% Submarines - 21% Naval - 9% Helicopter - 6% Versatile core Global solutions with leading technology Full value chain capability Power-dense engines 25-30% Market share 2,500+ Aircraft in service T56 60+ years in service to date 10-20% Market share 2,500 Aircraft in service RB199 40+ years in service to date 100% Market share (UK submarine power) 10 Boats in service PWR1 60 years in service to date 15-30% Market share (gas turbines & generators) 250+ Ships in service (engines) Decades of small engine experience 10-15% Market share 3,200² Aircraft in service Marine Spey M250 40+ years in service to date 60+ years in service to date 1. Includes Trainers | 2. Military helicopters | Market share relates to 2023-2030 33#34ONCE SOLD OUR PRODUCTS STAY IN PRODUCTION FOR DECADES AND OUR CUSTOMERS USE THEM FOR DECADES Development Product Development Growth Production Lifecycle Maturity Customer funding available for -38% of product revenues from Original Equipment Services -62% of product revenues from Services • Defence fleets stay in-service for decades Defence R&D • Stable production volumes Winning a position during the development phase supports long-term favorable financial returns © 2023 Rolls-Royce Not Subject to Export Control 34#35CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Strategic initiatives driving margin improvements Defence operating profit improvements (£bn) 14-16% Operating margin mid-term target £432m 2022 Transport Combat Submarines Efficiency & Portfolio & simplification other Mid-term Transport Continuing support for a growing Transport & Patrol fleet Combat Pursuing new, funded Combat programmes Submarines Increase in funded Submarines activity Efficiency & simplification Simplifying and optimising our business © 2023 Rolls-Royce 35 Not Subject to Export Control.#36CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Key drivers of operating profit improvements Defence operating profit improvements (£bn) 14-16% Operating margin mid-term target 2022 Volume & mix Commercial Investment Cost optimisation prioritisation management Mid-term VOLUME & MIX • Moving from legacy to new, funded programmes Profitable aftermarket volume growth 22% Increase in AE shop visits COMMERCIAL OPTIMISATION Mitigating external impacts with regular contractual updates enabling value recognition & risk mitigation All Material contracts renew in medium term INVESTMENT PRIORITISATION Prioritising spend for strategic markets ⚫ Pursuing customer-funded programmes COST MANAGEMENT - Simplifying the organisation Managing efficiencies across the business 150% Increase in customer-funded R&D 30% Improvement in TCC/GM © 2023 Rolls-Royce Not Subject to Export Control 36#37SUBMARINES COMBAT TRANSPORT LONG-TERM GROWTH MOMENTUM Recent wins underpin long-term growth in Transport, Combat and Submarines RECENT WINS Future Long Range Assault Aircraft (FLRAA) FUTURE OPPORTUNITIES Grow market share by leveraging FLRAA position for additional Transport & Patrol opportunities Global Combat Air Programme and B-52 Grow in existing and new markets by developing next-gen technologies and pursuing autonomous platform opportunities SSN-AUKUS for UK Royal Navy and Royal Australian Navy Grow into new markets by developing micro-reactor technology utilising our proven nuclear capabilities © 2023 Rolls-Royce Not Subject to Export Control 37#38POWER SYSTEMS Page 38#39POWER SYSTEMS Resilient business model in attractive growth markets Revenue split (2022)1 POWER GENERATION £3,347m GOVERNMENTAL MARINE INDUSTRIAL A 37 Mission-critical power Stable, high-power solutions Complete integrated systems Efficient, long-lasting engines Power Gen - 34% Governmental -29% Marine - 12% Industrial -25% 15-20% Market share +5-7% Market growth p.a. -85,000 Units installed base >30% Market share +2-4% (>10%) Market growth p.a. (Mid-term p.a.) -30,000 15-20% Market share +3-5% Market growth p.a. -25,000 Units installed base 10-15% Market share +4-6% Market growth p.a. -25,000 Units installed base² Units installed base 1. Revenue split reallocated compared to annual report - Governmental includes Defence and Naval, which was previously reported under Marine 2. Excluding lowerpowerrange engines Note: Market shares and installed unit base, based on 2022 figures; Market growth reflecting p.a. Original Equipment growth from 2022 to 2030 (Mid-term: 2022 to 2027) © 2023 Rolls-Royce Not Subject to Export Control 39#40CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Strategic initiatives driving margin improvements Power Systems operating profit improvements (£bn) 12-14% Operating margin mid-term target £281m 2022 Power Governmental Marine Generation BESS¹ Efficiency & simplification 1. Battery Energy Storage Solutions Granular Strategic Initiatives Portfolio & Mid-term other Power Generation Strengthen position with increased profitability in growing market Governmental Capture strong growth in highly attractive markets Marine Strengthen #1 position in Yacht and grow in Commercial Marine Battery Energy Storage Solutions Expand market reach and increase scale for profitable growth Efficiency & Simplification Simplifying and optimising our business © 2023 Rolls-Royce 40 Not Subject to Export Control.#41POWER GENERATION PERFORMANCE IMPROVEMENT Strategic initiatives driving margin improvements Power Generation operating profit improvements (bn) 2022 Service Commercial Mid-term Leverage high growth growth optimisation LEVERAGE HIGH GROWTH MARKETS Build on strong position in data centre market and focus on growth with strategic key accounts SERVICE GROWTH Achieve significant service growth through extended offering such as upgrade & retrofit kits and digital solutions COMMERCIAL OPTIMISATION Optimise cost structure building on increasing scale and better leverage global production footprint >20% Al-related data centre spend growth p.a. 2x Service business >100% Mid-term operating profit growth markets © 2023 Rolls-Royce Not Subject to Export Control 41#42PROFITABLE GOVERNMENTAL GROWTH Strategic initiatives driving margin improvements Governmental operating profit improvements (£bn) 2022 Capture market Grow Expand Mid-term growth product technology scope leadership CAPTURE MARKET GROWTH Leverage technology leadership and close customer relationships to capture current market dynamics and service upside GROW PRODUCT SCOPE Further expand product scope towards integrated solutions incl. automation and new digital services >10% Mid-term revenue growth per annum 3x Automation revenue EXPAND TECHNOLOGY LEADERSHIP Invest in platform updates and new technologies leveraging customer funding opportunities Strong long-term growth potential © 2023 Rolls-Royce Not Subject to Export Control. 42#43PROFITABLE MARINE GROWTH Strategic initiatives driving margin improvements Marine operating profit improvements (£bn) 2022 Expand Secure Grow solution leading Service offering portfolio business position Mid-term EXPAND SOLUTION OFFERING Grow integrated propulsion solution offering in line with Bridge to Propeller strategy 2x Sales potential SECURE LEADING PORTFOLIO POSITION Develop methanol solutions and strengthen sustainable fuel-ready portfolio GROW SERVICE BUSINESS Offer new digital service solutions such as equipment health monitoring Sustainable fuel-ready engines >40% Service share © 2023 Rolls-Royce Not Subject to Export Control. 43#44TRANSITION TO LOWER CARBON Supporting our customers on their journey to net zero Alternative fuels Further advance engines certified for alternative fuels to support energy transition Hybrid offerings Expand portfolio to support our customers on their path towards net zero and enhance customer experience (e.g. silent drive, emission reduction) Battery Energy Storage Solutions Strengthen existing portfolio and expand offering into additional markets 7 LOCATION Digital initiatives Drive development of digital solutions and connect digital solutions offering with life-cycle services © 2023 Rolls-Royce Not Subject to Export Control. 44#45SAFETY, ETHICS AND , SUSTAINABILITY Page 45#46OUR 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 Creating a positive social impact for our people, our partners, and communities ROLLS R ROYCE Underpinned by our values and behaviours. Maintaining the highest standards of ethics and compliance Page 46 © 2023 Rolls-Royce#47SAFETY 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 47 © 2023 Rolls-Royce#48OUR PEOPLE We work to create an environment where everyone at Rolls-Royce can be at their best. Progress on gender diversity (% female representation) 22% 33% 18% Board level Senior leaders All company • safety, health and wellbeing of our people; TRI RATE (PER 100 EMPLOYEES) 2025 TARGET 2022 2021 2020 BASELINE 0.33 Headcount by business 0.41 0% 2% 0.43 8% 0.35 Headcount by location 7% 2% 2% 4% 33% 26% 14% 48% . • • creating an environment of inclusion and belonging; 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 ROLLS R community investment and focus on STEM. ROYCE ■Civil Aero Power Systems ■Corporate 31% ■ Defence ■New Markets Discontinued ■ UK 23% ■US & Canada ■Italy ■Rest of world Page 48 ■Germany ■Spain Singapore 2023 Rolls-Royce#49ETHICS 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 49 © 2023 Rolls-Royce#50STATE OF THE ART FACILTIES 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. Total solid and liquid waste (t/£m) Recycling & recovery rate (%) Energy consumption (MWh/£m) -35% 2022 vs 2014 vs target 3.31 vs target 68% 3.41 61.4 • 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. 50 50#51APPENDIX Page 51 CMD R 23#52GROUP MID-TERM TARGETS AND GUIDANCE Mid-term targets Operating profit Operating margin Free Cash flow Return on Capital Other guidance TCC/GM Gross disposal proceeds Net investments Working capital Net interest Tax paid FX - achieved rate Headcount Severance costs Rightsizing benefits (annualised) £2.5bn-£2.8bn 13-15% £2.8bn-£3.1bn 16-18% 0.4-0.5× £1.0bn-£1.5bn over 5 years Investments > D&A in the mid-term vs. £300m below in 2022 c.£2bn released 2022 - mid-term; partly offset by headwinds/growth Reduces as we pay down debt Increases in line with profit growth c. $1.36/£ 2,000-2,500 roles reduced globally £200m-£250m through 2024/25 c.£200m annualised benefit by the end of 2025 © 2023 Rolls-Royce Not Subject to Export Control#53DIVISIONAL MID-TERM TARGETS AND GUIDANCE Civil Aerospace Operating margin mid-term target Market growth: Widebody Market growth: Business Aviation Large engine deliveries Business Aviation deliveries Large engine refurbs Large engine total shop visits Widebody LTSA engine flying hours (EFH) Business Aviation EFH LTSA balance (net of risk & revenue partners) Defence Operating margin mid-term target Market growth: Combat and Transport Power Systems Operating margin mid-term target Market growth: Power Generation Market growth: Mobile applications 15-17% 5-7% (CAGR 2022 - 2030) 3-5% (CAGR 2022 - 2030) 300-350 250-300 700-750 1,100-1,200 120-130% of 2019 vs. 80-90% 2023 120-130% of 2019 vs. 110% 2023 £0.8bn-£1.2bn growth p.a. 14-16% 0-2% (CAGR 2022 - 2030) 12-14% 5-7% (CAGR 2022 - 2030) 4-6% (CAGR 2022 - 2030) © 2023 Rolls-Royce Not Subject to Export Control#542023 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 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) 2023 guidance £1.2bn - £1.4bn £0.9bn £1.Obn - £200m - £250m £1.0bn £1.2bn c₤(200)m £(389)m £(150)m £(100)m 400 - 500 80% - 90% 1,200 - 1,300 c£25m - £75m lower £(160)m (£190)m Broadly stable Guidance at FY 2022 - £0.8bn £1.Obn £0.6bn -£0.8bn £100m - £200m £500m £700m c₤(200)m £(389)m c₤(100)m 400-500 80% - 90% 1,200 - 1,300 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%) * Civil targeted contract improvements includes contract catch ups and onerous contract improvements Page 54 © 2023 Rolls-Royce#55Drivers 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 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 ROLLS R ROYCE + P&L LTSA Invoiced EFH revenue (pre-catch-ups) receipts £2,337m £1,587m LTSA contract catch-ups £23m FX & other £130m II LTSA revenue post catch-ups £1,610m 2023 HY Closing balance (LTSA net creditor) £8,229m Page 55 © 2023 Rolls-Royce#56Transactional foreign exchange Rolls-Royce hedges transactional FX • Transactional exposure arises when revenue currencies differ from cost currencies • % cover of forecast net US$ income £/$ exchange rate 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 £m 2020 2021 H1 2022 2023 2023 H2 2024 2025- 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 56 © 2023 Rolls-Royce#57Translational 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 • Exposure Underlying revenue 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 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 Defence USD, EUR 1,913 60 261 7 Power Systems EUR, USD 1,774 69 125 6 Revenue New Markets EUR, USD 1 (78) (1) USD £9 million Profit £2 million Other Businesses Corporate and Inter-segment EUR 5 (5) EUR £19 million £1 million (35) ROLLS R ROYCE Page 57 © 2023 Rolls-Royce#58Civil Aerospace revenues by engine type £m 2023 H1 2022 H1 Organic change¹ 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 58 © 2023 Rolls-Royce#59Trent 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 000000 Trent 900 Airbus A380 48% 280 Trent 800 Boeing 777 40% 200 0 Trent 700 Airbus A330 60% 1,322 Trent 500 Airbus A340 100% 96 Total 3,802 1,405 ROLLS R ROYCE * Share of total firm and announced programme sales with an engine decision (excludes cancelled orders) Page 59 POWERING SUSTAINABLE FLIGHT © 2023 Rolls-Royce#60Civil Aerospace engine deliveries 42 59 By engine 2013 2014 2015 2016 2017 Trent 500 Trent 700 181 184 140 88 110 Trent 800 Trent 900 Trent 1000 2018 2019 2020 2021 2022 2023 H1 35 6 30 67 79 106 122 109 Trent XWB-84 13 56 117 65 ་ ༄་。 2 8 196 63 10 2 12 1 1 - 44 34 15 1 125 126 82 12 184 178 109 120 96 Trent XWB-97 1 45 56 34 29 23 8 106 22 31 63 125028 13 55 11 35 Trent 7000 Civil Large Engines 282 311 308 357 483 469 510 264 195 190 115 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 Civil Total 753 739 712 649 683 686 729 448 309 355 188 78 73 ROLLS R ROYCE Page 60 © 2023 Rolls-Royce#61Civil Aerospace in-service installed fleet* By engine RB211 22B 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 H1 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 Pearl 36 84 120 144 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 12,743 13,247 5% 3% -16% 6% 2% 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 61 © 2023 Rolls-Royce#62Civil 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 27 21 RB211 535 40,000 41 40 RB211 Total 69 62 Trent 500 56,000 25 Trent 700 72,000 80 93 Trent 800 92,000 40 39 Trent 900 70,000 17 20 Trent 1000 71,000 6 12 Trent XWB-84 84,000 05283200 3 2222322 18 17 16 15 13 5 5 5 5 36 35 33 55 52 49 49 19 16 105 114 118 33 32 30 21 23 25 18 27 34 39 10 23 Trent XWB-97 97,000 w wy w N WW 34 33 23 26 27 29 46 28 31 32 33 16 13 4 5 5 5 116 76 83 85 95 31 29 12 16 17 18 28 30 5 12 18 20 47 38 43 47 49 36 50 47 56 64 73 3 7 9 10 12 14 6 7 9 12 14 Trent 7000 72,000 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 19 BR700 15,000 40 44 51 535 4 4 3 3 3 2 2 30 30 30 29 28 28 28 28 17 17 18 18 15 16 15 15 55 58 61 65 65 66 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 62 © 2023 Rolls-Royce#63DEFINITIONS AND CALCULATIONS CMD R23 Return on Capital: RoC = net operating profit after tax / average invested capital Net operating profit is defined as underlying operating profit after tax (where the tax charge reflects the group tax charge after removing the estimated tax shield on net financing costs). Invested capital is defined as total assets (excluding cash and cash equivalents and any surplus on post-retirement schemes) minus current liabilities (excluding debt), with an average calculated as the difference between opening and closing balance sheets. Total cash costs / Gross margin: TCC/GM = (self-funded R&D expenditure + C&A costs) / underlying gross profit Self-funded research and development (R&D) expenditure excludes the impact of contributions (government funding, amortisation and impairment of capitalised costs and amounts capitalised during the year) and fees. Free Cash Flow is cash from operating activities including capital expenditure and movement in investments, capital elements of lease payments, interest paid and excluding amounts spent or received on activity relating to business acquisitions or disposals, financial penalties paid and exceptional restructuring payments. © 2023 Rolls-Royce Not Subject to Export Control 63 33#64Safe 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 64 © 2023 Rolls-Royce#65ROLLS R ROYCE