Rolls-Royce Holdings plc · LSE:RR.
Rolls-Royce — Investor Day (June 2014)
14 slides from Rolls-Royce's investor day presentation, Jun 19, 2014
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
Slide 2: Agenda
Agenda • Linking strategy to our financial decision framework • Capital allocation drivers • Future guidance framework Trusted to deliver excellence 2
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
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.
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
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
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
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
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
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
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
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
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
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