Rolls-Royce Holdings plc · LSE:RR.

Rolls-Royce — Investor Day (June 2014)

14 slides from Rolls-Royce's investor day presentation, Jun 19, 2014

  1. Slide 1: Financial framework

    Financial framework Mark Morris - CFO 19 June 2014 © 2014 Rolls-Royce plc The information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent o

  2. Slide 2: Agenda

    Agenda • Linking strategy to our financial decision framework • Capital allocation drivers • Future guidance framework Trusted to deliver excellence 2

  3. Slide 3: Strategy: evolution not revolution

    Strategy: evolution not revolution Measured steps to improvement Our strategy Delivering shareholder value  Execute on organic growth programmes Customer  Exit non-core and underperforming assets  Drive financial performance (the 4C’s) Innovation  Integrate RR Power Systems (Tognum)  Clear stra

  4. Slide 4: Our decision framework

    Our decision framework Where we invest How we invest Strategic framework Financial framework Growth markets The balancing act Growth metrics  Revenue growth  RoS  EPS Strategic vs. financial Technology Products Capital efficiency Routes to market Short-term vs. long-term  ROCE  ROIC Growth vs.

  5. Slide 5: Importance of credit rating

    Importance of credit rating Considerations  Long cycle capital intensive business  Long term contracts  Provide confidence to customers and governments  Access to long term finance (debt capital markets) Criteria  Maintain an investment grade credit rating  Normal target range: A- to A+ throug

  6. Slide 6: Disciplined approach to capital allocation: investing for growth

    Disciplined approach to capital allocation Investing for growth Net R&D spend Capex and R&D Spend  Currently 4.9%  Ease as a % of revenue as business grows Sustainable Dividend Policy Capex spend  3% - 5% of revenue through cycle Disciplined M&A Policy  Driving to 4% Returns of Capital MaintainT

  7. Slide 7: Disciplined approach to capital allocation: investing for growth

    Disciplined approach to capital allocation Investing for growth Capex and R&D Spend  Progressive dividend policy in line with underlying growth Sustainable Dividend Policy  Returned £1.65 billion to shareholders over last 5 years  C Shares maintained for tax efficiency and return flexibility Disc

  8. Slide 8: Disciplined approach to capital allocation: M&A focus and criteria

    Disciplined approach to capital allocation M&A focus and criteria Capex and R&D Spend Likely areas of focus Criteria  Composites  Strategic fit Sustainable Dividend Policy  Ceramics  Synergies quantified and committed to  Gearboxes  Target ROIC > WACC within 3 years  Medium speed  IRR to exc

  9. Slide 9: Maintaining balance sheet flexibility and efficiency

    Disciplined approach to capital allocation Maintaining balance sheet flexibility and efficiency Capex and R&D Spend Sustainable Dividend Policy  Strong and efficient balance sheet Disciplined M&A Policy  Net Debt/EBITDA <=1.5x through cycle  Surplus capital to be returned to shareholders  £1 bil

  10. Slide 10: Disciplined approach to capital allocation: in summary

    Disciplined approach to capital allocation In summary Capex 3%–5% through the cycle; driving to 4% Capex and R&D Spend Net R&D 5%; will ease over time Progressive dividend policy in line with underlying growth Sustainable Dividend Policy Focus areas for medium term M&A Disciplined M&A Policy Target

  11. Slide 11: Future guidance framework: what we will give

    Future guidance framework What we will give Medium term In year Next year outlook (3-5 years) Revenue Revenue Revenue Group PBT PBT RoS Cash flow FCF Cash flow Revenue Segments PBFCT Civil RoS Capex R&D spend/charge Civil peak TCA debtor Other Civil TCA net debtor + REC and year FX Tax rate Trusted

  12. Slide 12: Future guidance framework: how we will give

    Future guidance framework How we will give Medium term In year Next year outlook (3-5 years) Banded range of Banded range of Banded range of Group figures figures figures or %s (Xm to Ym etc.) (Xm to Ym etc.) Banded range of % Banded range of % Segments (X% to Y%) (X% to Y%) Approximate figures Appr

  13. Slide 13: Future guidance framework: when we will give

    Future guidance framework When we will give Medium term In year Next year outlook (3-5 years) February Prelims - - May IMS - - July Interims - - November IMS (Annual Budget cycle) (Annual 10 year planning cycle) Trusted to deliver excellence 13

  14. Slide 14: Summary

    Summary • Clear on our strategy • Clear on our priorities • Disciplined approach to capital allocation • More guidance going forward Trusted to deliver excellence 14

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