#1ROLLS R ROYCE 2023 Half Year Results 3 August 2023 ROLLS R ROYCE © 2023 Rolls-Royce#2Safe harbour statement 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 Interim Financial Statements section of the 2023 Half Year Results Statement. ROLLS R ROYCE Page 2 © 2023 Rolls-Royce#3Welcome Tufan Erginbilgic CEO seaqx FRONT ROLLS R ROYCE 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 the year Underlying operating profit Free Cash Flow EBIT Margin Total Cash Cost / Gross Margin* Credit Rating £673m £356m 9.7% 0.6 Moody's Ba3 / 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#6Half Year 2023 Results Panos Kakoullis CFO ROLLS R ROYCE BELL O N280BH Page 6 © 2023 Rolls-Royce#72023 Half Year underlying results. Underlying results £m Revenue 2023 Hi 2022 Hồ 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 7 © 2023 Rolls-Royce#8Civil 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) 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 32% 19% 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 8 © 2023 Rolls-Royce#9Defence 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 9 © 2023 Rolls-Royce#10Power 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 10 © 2023 Rolls-Royce#11New 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 Rolls-Royce 47% Equity Investment UKRI Government Grant 45% 55% RR Electrical RR SMR 32% 168% Page 11 © 2023 Rolls-Royce#12Summary 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 12 © 2023 Rolls-Royce#13Stronger Future Tufan Erginbilgic CEO ROLLS R ROYCE Page 13 © 2023 Rolls-Royce#14Our 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 14 © 2023 Rolls-Royce#15Transformation programme Governance Efficiency & Simplification ROLLS R ROYCE Efficiency & Simplification Working Capital Business Improvement Commercial Optimisation Strategic Review Performance Management Purpose & Culture . Reduce indirect costs and control headcount Third party cost savings Productivity improvements Commercial Optimisation • LTSA margin improvements and T&M pricing Focus on onerous contracts Business aviation pricing and customer segmentation Power Systems pricing actions Working Capital • • Focus on overdue and unbilled debt Inventories expected to unwind from H2 Targeting a multi-year sustainable reduction Page 15 © 2023 Rolls-Royce#16Guidance 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 Page 16 © 2023 Rolls-Royce#17Q&A Questions will be taken live in the room. For those on the webcast please use the questions functionality to submit your questions which will be read out if time allows or responded to by the IR team after the call. ROLLS R ROYCE Page 17 © 2023 Rolls-Royce#18ROLLS R ROYCE