#1Melrose Th E bild 7 September 2023 a B Melrose Industries PLC Half Year Results Six months ended 30 June 2023 Strictly private and confidential#2Disclaimer This presentation has been prepared by or on behalf of Melrose Industries PLC ("Melrose"). The information set out in this presentation is not intended to form the basis of any contract. By attending (whether in person, by telephone or webcast) this presentation or by reading the presentation slides, you agree to the conditions set out below. This presentation (including any oral briefing and any question-and-answer session in connection with it) is for information only. The presentation is not intended to, and does not constitute, represent or form part of any offer, invitation, inducement or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in the US or any other jurisdiction. 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Unless expressly stated otherwise, no statement in this presentation is intended as a profit forecast or estimate for any period and no statement in this presentation should be interpreted to mean that cash flow from operations, free cash flow, earnings or earnings per share for Melrose for the current or future financial years would necessarily match or exceed the historical published cash flow from operations, free cash flow, earnings or earnings per share of Melrose. Statements of estimated cost savings relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, any cost savings referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. By attending the presentation to which this document relates and/or by accepting this document you will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this notice. This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Melrose. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Melrose to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions including as to future potential cost savings, synergies, earnings, cash flow, return on average capital employed, production and prospects. These forward-looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "objectives", "outlook", "probably", "project", "will", "seek", "target", "risks", "goals", "should" and similar terms and phrases. There are a number of factors that could affect the future operations of Melrose and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) changes in demand for Melrose's products; (b) currency fluctuations; (c) loss of market share and industry competition; (d) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; and (e) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as at the specified date of the relevant document within which the statement is contained. Melrose does not undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. Certain financial data has been rounded. As a result of this rounding, the totals of data presented in this presentation may vary slightly from the actual arithmetic totals of such data. Melrose 2#3Contents Melrose 1 Highlights 2 Group results 3 Business overview 4 Appendices The revenue and profit numbers included in this presentation are shown in round millions and unless otherwise stated growth metrics are at constant currency 3#4Melrose Highlights Trading ahead, upgraded outlook; buyback to start early 4#5Highlights: trading ahead, upgraded outlook; buyback to start early ■ Melrose performing very well ■ Buyback to be started early £500 million in next 12 months and well placed to continue thereafter Decades of strong cash flow to come; comfortable leverage Disciplined approach to capital In addition, a progressive dividend policy is continued I Restructuring, repricing and reorganising of Aerospace on track and on plan ■ I ■ Melrose - GTF P&W part as they were very clear about -historical issue P&W are working on assessing this Will be a successful engine with great future Management - - Upgrading 2023 expectations - new guidance Promises being delivered and future very exciting Full quality of Aerospace being realised and value released Further underpins 2025 guidance - - Right time and team for change to a "pureplay" aerospace business Seamless transition Acknowledgement of the contribution of all those involved over 20 years Confidence in the tremendous future ahead for Melrose 01 5#6Melrose Group results Trading ahead of expectations and upgraded outlook. 6#7Results overview: trading ahead of expectations Melrose 1. 2. £m Revenue EBITDA (pre-PLC costs) EBITDA margin % Operating profit (pre-PLC costs) Operating margin % PLC costs Operating profit (post-PLC costs) Trading ahead of expectations Restructuring and Defence repricing going well Adjusted ¹ results H1 2023 1,633 245 15.0% 175 10.7% (16) 159 Growth vs H1 2022 Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance At constant currency and excluding businesses being exited 19% 2 Engines 2023 margins outperforming 68% 4.8 ppts 146% 5.8 ppts £6m less End markets enjoying strong structural growth 220% 7#8Melrose Group cash generation: leverage¹ reducing Melrose Free cash flow 1 Cash flow £m Adjusted¹ operating profit Depreciation and amortisation Lease obligation payments Non-cash impact from loss-making contracts Movement in working capital: Inventory Receivables & payables Adjusted operating cash flow (pre-capex)¹ Net capital expenditure Defined benefit pension contributions - ongoing Trading net other Restructuring Free cash flow pre-interest and tax¹ Net interest and net tax paid Free cash flow ¹ Adjusted free cash flow ¹ H1 2023 159 ■ 71 (16) (13) (53) (116) 32 (40) (2) (53) (69) (49) (118) (65) Reconciliation of net debt¹ £m Net debt¹ as at 1 January 2023 Net cash outflow from Dowlais businesses to date of demerger² Reduction in net debt following the demerger of Dowlais Demerger related costs and pension buy-in³ Dividends paid to shareholders Proforma net debt¹ as at 1 January 2023 Free cash flow in the period Foreign exchange and other non-cash movements ³ Net debt¹ at 30 June 2023 H1 2023 (1,139) (54) 1. Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance Includes £17 million of finance costs on demerger settled net debt 2. 3. Includes £16 million of demerger related costs unpaid at 30 June 2023, reversed through non-cash movements 885 (118) (61) (487) (118) 52 ■ Net debt of £553 million in line with expectations ▪ Leverage¹ reduced to 1.5x at 30 June 2023 in line with expectations, and moving towards 1x at 2023 year end (prior to share buybacks) Working capital movements consistent with sales growth of 15%: inventory up 10%, receivables & payables up 6% (553) 8#9Upgraded 2023 full year guidance Melrose £m Revenue Adjusted¹ operating profit Adjusted¹ operating margin EBITDA ¹ Margin by division: Engines Structures Total Aerospace Profit upgrade of >8% Adjusted¹ results H1 2023 1,633 175 10.7% 245 24.5% 2.5% 10.7% Aerospace total (assuming US$ = 1.25) 2023 upgraded 2025 unchanged guidance guidance 3,350 to 3,450 375 to 385 11.2% 525 to 535 11.2% New target for Engines margins >30% post 2025 4,000 1. Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance 700 17% to 18% 870 28% 9% Further underpins 2025 targets 17% to 18% 9#10Early share buyback and annual dividend Melrose Early share buyback Annual dividend policy I ■ Higher confidence and strong progress Early start of October 2023 Starting with a £500 million buyback over 12 months and being well placed to continue thereafter Leverage comfortably within previous guidance of up to 2.5x A continuation of the progressive annual dividend ■ An interim dividend of 1.5 pence per share declared 10#11Melrose Business overview Strong margin progression and structurally growing aftermarket. 11#12Unique Tier 1 technology supplier Melrose Established positions * of the world's high volume aircraft¹ 123456 on ALL 3. >85% future Engines profit from aftermarket³ >70% 4. Risk and revenue sharing partnerships revenue from sole source positions² Engines RRSP4 aftermarket entitlement on 1. All of the world's high-volume platforms based on Airbus and Boeing narrowbody/widebody fleets, plus F-35 and major rotorcraft >70% sole source positions based on 2022 revenue mix Expected profit split of Engines division in 2025 100% of legacy narrowbody global flying hours 5 5. GKN Aerospace's 19 RRSPs are on engines that power 100% of legacy narrowbody hours through CFM56 and V2500 contracts >650 global patents granted £ £20bn future cash flow from Engines RRSPs6 6. Forecast (undiscounted) pre-tax future cash flow from 19 RRSP engines contracts (based on OEM projections) and using a foreign exchange rate of USD GBP of 1.25:1 12#13Encouraging H1 progress ▪ Two market-leading Aerospace divisions: exceptional Engines portfolio and design-led Structures business ■ ■ Key themes from recent Capital Markets Event¹ Melrose Strong market growth: accelerated recovery with long-term structural growth expected to follow Huge Engines aftermarket: entitlement to share of aftermarket profits with £20 billion of lifetime net cash inflow² Significant positive momentum: profit expected to double from 2022 to 2023, and then double again from 2023 to 2025 1. 2. I Strong growth and margin progression from both divisions ▪ Good commercial and operational progress ■ ■ H1 2023 update ■ Aftermarket delivered 46% revenue growth vs H1 2022 ▪ On track for Engines margins to exceed 30% post 2025 ■ Global air travel at 94% of 2019 levels Record order book levels following Paris Air Show Operating margin above 2019 levels on lower sales Upgraded guidance issued for 2023 Confidence reflected in share buybacks starting early World-class business with superior margins and strongly growing aftermarket Capital Markets Event showcasing Aerospace business held on 17 May 2023 Forecast (undiscounted) pre-tax future cash flow from 19 RRSP engines contracts (based on OEM projections) and using a foreign exchange rate of USD GBP of 1.25:1 13#14Structurally growing market ■ Flight hours returning strongly Million 250 200 150 100 50 0 2018 2019 Source: Cirium 2020 Melrose 2021 23-25 CAGR: 10% 2022 2023 2024 2025 2026 2027 Narrowbody ■Widebody In H1 2023, domestic available seat kilometres were at 106% of 2019, international at 84% 2028 Full recovery expected during 2023 with strong structural growth thereafter 2029 ■ Global air travel (revenue passenger kilometres) 94% of 2019 levels with domestic travel surpassing 2019 levels by 5% 1. Estimated US defence budget 2030 2,500 OEM deliveries ramping up fast 2,000 1,500 1,000 ■ ■ 500 0 Source: Teal bol 2018 23-25 CAGR: 15% 2019 2020 2021 2022 2023 Narrowbody 2024 2025 2026 ■Widebody 2027 2028 ■ Civil backlog of >12,000 aircraft, underpinned by A320 and B737 2029 Airline demand for new aircraft increasing as flight hours ramp-up on ageing fleet Airbus net new orders increased fourfold versus H1 2022, Boeing more than doubled OEM ramp-up underway, still constrained by supply chain issues 2030 $bn Defence spending increasing¹ 1,000 ■ ■ 800 600 400 200 0 2019 2020 2021 Source: Statista 2022 23-25 CAGR: 5% 2023 2024 2025 2026 2027 2028 2029 ■ US State Department has approved Foreign Military Sales c.40% up year-on-year 2030 EU spend rising in response to Ukraine conflict; NATO countries stepping up to 2% of GDP commitment F-35 near full production phase, with 156/year rate and slots being booked into 2030s ▪ Development of new platforms such as US Army helicopter, Bell V-280 14#15Positive earnings momentum Adjusted ¹ operating margin (%) 10.6% 2019 Full-year revenue2 £3.4bn Melrose 1234 0.5% 4. 2020 £2.4bn (2) 4.4% 2021 £2.3bn 3 6.3% 2022 £2.7bn 4 10.7% 5 17-18% H1 2023 £3.1bn³ £4.0bn 2025 1) Achieved breakeven on 27% lower sales ■ Immediate actions to reduce costs based on lower demand 2 Delivered 390bps operating margin expansion on broadly flat sales ▪ Accelerated restructuring and focused cost reduction 3) Margin expansion of 190bps on 11% sales growth ■ Ramping up production while overcoming challenging supply chain Extensive restructuring and operational improvements underway 4) 580bps margin expansion in H1 2023 v H1 2022 ▪ Strong margin progression from 19% 4 sales growth and business improvements initiatives ▪ Margin above 2019 levels on lower revenue 5) Clear path to 17-18% operating margin target I On track to achieve 2025 margin targets 1. Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance 2. Total revenue adjusted for divestments of Fokker Services, Fokker Techniek and Santa Ana and the future site closure of St Louis Based on H1 2023 revenue annualised for the full year and adjusted for the future site closure of St Louis At constant currency and excluding businesses being exited Increased confidence in margin expansion from market recovery, platform positions and business improvements 15#16Divisional results Adjusted¹ results H1 2023 £m Engines Structures. Aerospace Aerospace Engines Structures Melrose 1. 2. I I ■ I I H1 2023 Revenue 608 1,025 1,633 H1 2023 Operating profit 149 26 175 H1 2023 Operating margin 24.5% 2.5% 10.7% H1 2022 Revenue 484 880 1,364 H1 2022 Operating profit/(loss) 77 (10) 67 H1 2022 Operating margin 15.9% (1.1)% 4.9% Sales growth of 19% 2, largely from civil OEM engines aftermarket and ramp-up 146% increase in operating profit, margins more than doubled to 10.7% Strong margin progression in both divisions Sales growth of 18% ² as customer deliveries ramp-up; returned to profit versus H1 2022 Good progress with operational improvements, restructuring and new Defence pricing Growth vs H1 2022 Operating profit 82% Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance At constant currency and excluding businesses being exited n/a Sales growth of 19% despite supply chain challenges constraining sales; 82% increase in operating profit Continued RRSP growth, specific growth initiatives and business improvements reading through 146% Operating margin 8.6ppts 3.6ppts 5.8 ppts 16#17Engines: results £m Melrose Revenue EBITDA EBITDA margin % Operating profit Operating margin % Driver Explanation Adjusted¹ results H1 2023 H1 2023 progress 608 173 28.5% 149 24.5% Growth vs H1 2022 19% 60% Path to 28% target margin in 2025 7.4ppts 82% 8.6ppts ■ ■ E ■ I Sales growth of 19% including strong RRSP market growth and growing aftermarket repair Aftermarket sales up 46% led by 56% growth in civil engines aftermarket 82% increase in operating profit and 24.5% operating margin delivered Improvements in quality and productivity being realised, driving H1 margin expansion Restructuring plans well advanced and on track to be largely completed this year Market outlook strong with global flight hours already approaching pre-COVID-19 levels (1) RRSP market growth Impact of 19 RRSP contracts entering highly profitable aftermarket phase Aftermarket ahead of expectations with margins reading through 2) Growth initiatives Growth from target expansion opportunities On track with parts repair growth of 21% in H1 2023 1. Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance 3 Business improvements Restructuring gains and productivity improvements On track for one further closure before year-end, resulting in footprint reducing to 9 sites 17#18Engines: increasing RRSP contribution ■ ■ H OEM decision to invest I Melrose Programme launch Technology development 7 years Portfolio value Portfolio of RRSPs hitting aftermarket 'sweet spot' RRSPs provide GKN Aerospace entitlement to aftermarket profits Light investment 1. 2. | CFMI RISE1 I P&W GTF Next Gen¹ Product development 7 years Entry into service Heavy investment GKN Aerospace has an exceptional RRSP portfolio Diverse mix of contracts with all major OEMs Engines are maturing and majority are de-risked Highly accretive to margins in the years to come Long-term predictable cash flows for decades to come RRSP lifecycle OE production 15 years Turns cash positive P&W GTF 24/30k Production ends I Aftermarket services years High profit and cash Future potential RRSPs Remaining two RRSPS reach cash generation phase in next five years (P&W GTF 24/30k) RRSP market growth CFM56, V2500, GEnx, Trent XWB, 13 other engines H1 2023 update Cash positive engines driving strong performance CFM56- continues to perform well, with utilisation 4% ahead of early 2019 V2500 - some disruption due to fire at a supplier site, but performance strong GEnx, Trent XWB - benefitting from widebody market recovery New engines to be cash positive in next 5 years P&W GTF - fundamentally strong with issues being addressed Next generation engines at technology demonstration phase Only tier 1 partner currently on both CFMI RISE¹ and P&W GTF Next Gen¹; well positioned due to longstanding relationships and technology capabilities 17 of 19 RRSPs already in cash generation phase² 18#19Engines: GTF overview GTF engine Melrose 1. Two variants: 4-7% programme shares Source: Pratt & Whitney website RRSP market growth Fundamentally excellent engine platform Powers 1,600 aircraft with 60+ operators; 10,000 engines ordered by 90+ customers ¹ 23 million hours flown, carrying 860 million passengers ¹ Market leading fuel efficiency makes GTF valuable, especially for longer range A320 usage and A321XLR Issues being addressed at pace Durability in harsh environments improved through block D upgrades and GTF Advantage ■ P&W recently announced rare manufacturing process issue, which requires accelerated inspection of some PW 1100G engines GKN Aerospace parts not directly impacted; P&W currently working through responsibilities and costs Issues not impacting current production; challenge is shop visit capacity and spare part availability 19#20£m 750 650 550 450 350 250 150 50 -50 Engines: outstanding future cash flows 1980 1982 1984 Melrose you 000 1986 ■OE delivery forecast² 1988 ■AM current fleet forecast³ Actual ■AM delivery forecast4 www 1. 2. 3. 4. 5. 6. 666 1992 1994 GKN Engines RRSP net cash inflow 900k 1996 000k 1998 0007 2000 2002 20 www 2004 0003 2006 0007 2008 2010 0107 7107 2012 Significant upturn in cash flow underway 2014 2016 P 2018 2010 2020 0707 2022 2022 2024 2024 2026 2026 Be 2028 2028 2030 2032 2034 2036 2038 2040 2042 3103 LLOZ 2044 Net present values of future expected cash flow 5 £5.5bn D 2046 2048 CLOT 2007 2050 2052 2002 2054 2056 2058 2060 Pre-tax Original equipment (OE) delivery forecast represents the OE sale of expected future engine deliveries on current programmes Aftermarket (AM) current fleet forecast includes AM on delivered engines ■ RRSP market growth 19 RRSP programmes across OEMs 17 programmes already cash positive annually ▪ ~55% of Engines sales from RRSPs, -20% of GKN Aerospace ▪ High share of narrowbody engines at the optimal place in their lifecycle ■ £20 billion total expected cash flows from 2023, with net present value of £5.5 billion 5 ▪ Well placed for new programmes (CFMI RISE and P&W GTF Next Gen); excluded from cash flow outlook Aftermarket (AM) delivery forecast represents associated AM of expected future engine deliveries on current programmes Using a foreign exchange rate of USD:GBP of 1.25:1 and calculated using a discount rate of 7.5% which is between a debt related discount rate and a GKN Aerospace pre-tax weighted average cost of capital Based on 2023 expected sales 20#21Engines: expansion plan on track ■ ■ Melrose Outstanding growth opportunity in parts repair with 21% growth in H1 2023 - - (2) Growth initiatives Major capacity increase underway through new standalone engine component repair centre in California, US Extending defence governmental partnerships Final RM12 engine upgrade contract secured with the Swedish Armed Forces for the JAS 39 Gripen C/D - Johor, Malaysia facility now CAAC¹ certified, enabling rapid expansion in Asia - - - Swedish Armed Forces investing £16 million into an engine test facility at our Trollhättan site Growing profitable commercial contract portfolio On track to bring Additive Manufacturing parts into serial production in H2 2023 Significant (£40+ million) investment in Additive Manufacturing to facilitate low rate initial production approved ■ 1. CAAC = Civil Aviation Administration of China ■ 3 Business improvements Operational excellence to improve productivity Cost of poor quality reduced by 19% due to ongoing adoption of Lean practices - Projects to improve production flow, increase automation and implement digitalisation / Industry 4.0 ongoing Commercial actions Portfolio actions to exit non-core business such as unprofitable manufacturing contracts in the US - Price/value alignment as demonstrated by recent pricing success on military work Restructuring to optimise Engines manufacturing footprint Substantial reshaping of current footprint will be largely completed in 2023 e.g. Manchester, US, site closed Consolidation of key product lines into global Centres of Excellence e.g. shaft production in Norway Strong progress gives confidence to exceed 30% operating margin post 2025 21#22Structures: results £m Melrose Revenue EBITDA EBITDA margin % Operating profit Operating margin % Driver Explanation H1 2023 progress Adjusted ¹ results H1 2023 1. 2. 1,025 72 7.0% 26 Path to 9% target margin in 2025 2.5% Growth vs H1 2022 18% 2 2.8ppts 92% 1 3.6ppts n/a ■ I ■ · Sales growth of 18%2 as customer deliveries ramp-up despite supply chain constraints Structures division profitable after loss-making H1 2022 Benefits of revised pricing arrangements and operational gains beginning to take effect, more to come Restructuring plans advanced and yielding benefits Very strong demand and backlogs building; new widebody orders returning Civil ramp-up Positive impact of narrowbody (A320 & B737) and widebody (A350 & B787) recovery On track; constrained by OEMs supply chain challenges (2) Defence repricing and rationalisation Repricing and right-sizing portfolio and focus on increased design-to-build work Ahead of plan with further 25% of required renegotiations completed Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance At constant currency and excluding businesses being exited 3 Restructuring and operations Significant footprint consolidation and improvements in quality and scrap On track for two further closures before year-end 22#23Structures: margin expansion drivers on track I ■ ■ Melrose 1 Civil ramp-up Strong volume growth, led by narrowbody (40% of Civil) revenue up 24% and widebody (24% of Civil) up 29% in H1 2023 GKN Aerospace well-placed on all key platforms; Civil Structures sales to Airbus 4x vs Boeing New 5-year extension signed for sole- source production of A220 wiring New China site (JV with COMAC) under construction. Start of production expected Q2 2024 with first work packages agreed New contracts in emerging air mobility market with Supernal and Joby covering both composites and EW IS1 123 ■ 1. 2 Defence repricing and rationalisation Defence multi-year contract renegotiation progress ahead of schedule as further 25% completed in last few months Signed MoU with Netherlands MoD and Airbus for new helicopter developments New GTC in Fort Worth, US on track for initial operations in H2 2023 with new production scale R&D cell² Well positioned for future differentiated defence work in composites and Additive Manufacturing EW IS Electrical Wiring Interconnectivity Systems Focused on Additive Manufacturing with production cell enabling 5 metre structures to be manufactured 3. Customer quality escapes relate to product that is shipped to customers that does not meet all quality criteria On track to achieve 9% margin in 2025 ■ ■ 3 - Restructuring and operational excellence Footprint rationalisation well underway and will be complete during 2024 Netherlands consolidation ➤ Helmond and Hoogerheide transfers on track Creates Papendrecht Centre of Excellence with ~2,000 employees St Louis finished all non-Boeing production in August Operational gains with 15% reduction in cost of poor quality and 44% reduction in customer quality escapes³ 23#24Sustainability Refocusing as Aerospace 'pureplay' I Melrose ■ ■ Improved scores with the ESG rating agencies - MSCI 'A' and Sustainalytics management score New targets to be set to be published in March 2024 in alignment with UN SDG Evolution of TCFD report, expanded Scope 3 reporting, submitting SBTi targets for validation in H2 Focus on improvement in operational emissions, waste, water and diversity & inclusion - progress made Increased R&D on products which contribute to the decarbonisation of the sector Thermoplastics technology Additive manufacturing GKN Aerospace selected in 2 EU Projects Safran-led 'OFELIA' programme to demonstrate open fan engine concept MTU-led 'SWITCH' hybrid electric and water-enhanced engine concept GKN Aerospace additive manufacturing capabilities are key enablers for both Target applications: ■ Next gen commercial engines in 2030s 1. EVTOL Electric Vertical Take-Off and Landing ■ Multi-year contract covering design and build of flight control surfaces for Joby ■ Advanced thermoplastic composites enable significant weight reduction and have a high recyclability ▪ Design and build for initial production at our all-new GTC in the Netherlands Target applications: Wings and empennage for EVTOL¹ market ■ Hydrogen propulsion Successful demonstration of a ground- based liquid hydrogen fuel cell system for the first time during H1 (H2GEAR) New £40 million multi-partner fuel system programme 'HyFIVE' to be launched in H2 2023, benefiting from further ATI funding Embraer MoU signed to explore validation of these capabilities in flight Target applications: Regional (~100 person) flights in 2030s 24#25A compelling equity case Strong market growth Huge Engines aftermarket Multiple profit growth Regular share buybacks Melrose 1. 2. ■ ■ ■ ■ I H ■ Rapid aerospace market recovery, followed by long-term structural growth 1 Technology embedded on the world's most successful, highest volume platforms ¹ RRSP work largely done on engine build, but with entitlement to lifetime share of aftermarket profits £20 billion of lifetime net cash inflow (£5.5 billion NPV2) coming increasingly from Engines aftermarket Profit on track to more than double in 2023; and then expected to expand significantly again to reach 2025 targets Increasingly higher profit drop through from strong Engines aftermarket growth Shareholders to enjoy decades of harvesting cash flows from Engines aftermarket Melrose to commence early its share buyback programme at the start of October 2023 All of the world's high-volume platforms based on Airbus and Boeing narrowbody/widebody fleets, plus F-35 and major rotorcraft Using a foreign exchange rate of USD:GBP of 1.25:1 and calculated using a discount rate of 7.5% which is between a debt related discount rate and a GKN Aerospace pre-tax weighted average cost of capital 25#26Melrose Q&A 26#27Melrose Appendices 27#28Reconciliation between statutory and adjusted ¹ results 1 Melrose Continuing operations £m Statutory operating loss Amortisation of intangible assets acquired in business combinations Restructuring costs Equity settled compensation scheme charges Exchange movements not hedge accounted Net release of fair value items Adjustments to statutory operating loss Adjusted¹ operating profit Statutory results ▪ The IFRS measure of results includes certain items which are significant in size or volatility or by nature are non-trading or non-recurring, or are items released to the Income Statement that were previously a fair value item booked on an acquisition Adjusted¹ results ▪ The Melrose Board considers the adjusted results to be an important measure to monitor how the businesses are performing because they achieve consistency and comparability when all businesses are held for the complete reporting periods Restructuring costs £m Engines Structures. Corporate Total 1. Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance Total (18) 131 49 26 (28) (1) 177 159 Income Statement charge 12 36 1 49 Cash spent H1 2023 53 53 Cash spent in H1 2023 12 40 1 53 28#29Some helpful data for H1 2023 Melrose Income Statement Revenue: Engines Structures Aerospace Adjusted¹ operating profit (pre-PLC costs) Engines Structures Aerospace PLC costs Adjusted¹ effective tax rate Income Statement cash interest: Interest cost of gross drawn debt Commitment fee on undrawn debt Other cash interest Income Statement non-cash interest: Amortisation of financing fees Other non-cash interest² 1. 2. 3. H1 2023 £608 million £1,025 million £1,633 million £149 million £26 million £175 million £16 million c. 21% c. 5% c. 0.5% £3 million £2 million £9 million Cash flow Depreciation: Owned assets. Leased assets (pre-PLC) Total depreciation (pre-PLC) Capital expenditure ratio to owned asset depreciation Restructuring Defined benefit pension contributions - ongoing Bank facilities and bond 3 year term loan: $300 million. €100 million 3 year revolving credit facility: $250 million 3-5 year revolving credit facility³: £300 million $550 million €300 million £130 million bond due to mature in May 2032 Described in the glossary to the 2023 Interim Financial Statements and considered by the Board to be a key measure of performance Includes pension interest, lease interest and unwind of discount on provisions Three year facility that can be extended for two one-year periods at the Company's option H1 2023 £59 million £11 million £70 million 0.7x £53 million £2 million. £m at US$1.27 and €1.16 £236 million £86 million £197 million £300 million £433 million £259 million £130 million £1,641 million 29