REG - Rolls-Royce Holdings - 2025 Half Year Results
Thu 07:01
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RNS Number : 2880T Rolls-Royce Holdings plc 31 July 2025
This announcement contains inside information.
ROLLS-ROYCE HOLDINGS PLC - 2025 Half Year Results
31 July 2025
Strong first half performance, demonstrating our transformation in action;
FY25 guidance raised
- Strong first half performance driven by continued progress in our multi-year
transformation, despite challenges from the supply chain and tariffs
- Underlying operating profit rose by 50% to £1.7bn with a margin of 19.1%,
reflecting the impact of our strategic initiatives, operational effectiveness,
and performance management
- Free cash flow of £1.6bn driven by higher operating profit and continued LTSA
balance growth
- Full year 2025 guidance raised: we now expect £3.1bn-£3.2bn underlying
operating profit and £3.0bn-£3.1bn free cash flow
- Growing resilience: Net cash balance stood at £1.1bn and TCC/GM ratio
improved to 0.35x
- Shareholder returns: An interim dividend of 4.5p per share to be paid in
September; and, in addition, we completed £0.4bn of our planned £1bn share
buyback programme for 2025 during the period
Tufan Erginbilgic, CEO said: "Our multi-year transformation continues to
deliver. Our actions led to strong first half year results, despite the
challenges of the supply chain and tariffs. We are continuing to expand the
earnings and cash potential of Rolls-Royce.
We delivered continued strong operational and strategic progress in the first
half of 2025. In Civil Aerospace, we achieved significant time on wing
milestones and delivered improved aftermarket profitability. In Power Systems,
where we now see further growth potential, we continued to capture profitable
growth across data centres and governmental. In addition, Rolls-Royce SMR was
selected as the sole provider of the UK's first small modular reactor
programme. We expect Rolls-Royce SMR to be profitable and free cash flow
positive by 2030.
A strong start to the year gives us confidence to raise our guidance for 2025.
We now expect to deliver underlying operating profit of £3.1bn-£3.2bn and
free cash flow of £3.0bn-£3.1bn. This builds further conviction in our
mid-term targets, which include underlying operating profit of £3.6bn-£3.9bn
and free cash flow of £4.2bn-£4.5bn. We see these targets as a milestone,
not a destination, with substantial growth prospects beyond the mid-term."
Half Year 2025 Group Results
Underlying Underlying Statutory Statutory
H1 2025
H1 2024
H1 2025 (1) H1 2024 (1)
£ million
Revenue 9,057 8,182 9,490 8,861
Operating profit 1,733 1,149 2,074 1,646
Operating margin % 19.1% 14.0% 21.9% 18.6%
Profit before taxation 1,689 1,035 4,841 1,416
Basic earnings per share (pence) (2) 15.74 8.95 52.38 13.71
Free cash flow 1,582 1,158
Return on capital (%) (2, 3) 16.9% 13.8%
Net cash flow from operating activities 2,018 1,669
30 Jun 2025 31 Dec 2024
Net cash 1,084 475
(1) All underlying income statement commentary is provided on an organic basis
unless otherwise stated. A reconciliation of alternative performance measures
to their statutory equivalent is provided on pages 43 to 46
(2) In H1 2025, the Group recognised a £277m credit to underlying profit after
tax (PAT) in respect of deferred tax assets on UK tax losses. This £277m
credit has been adjusted in the calculation of the dividend per share,
earnings per share and return on capital. For further details, see note 5,
page 29
(3) Adjusted Return on Capital is defined on page 46 and is abbreviated to return
on capital
Half Year 2025 performance summary
· Strategic delivery: The first half of 2025 has been another period of
strong strategic delivery, with significant year on year improvement across
all key financial metrics. Driving this improvement were our strategic
initiatives, including commercial optimisation and cost efficiency benefits.
Strong financial performance was achieved despite an uncertain external
environment, including continued supply chain challenges and tariffs. We
expect to fully offset the impact of the announced tariffs through the
mitigating actions we are taking. We are closely monitoring the potential
indirect impact on economic growth, foreign exchange rates, and inflation and
we will continue to take the necessary actions. We have seen some improvement
in the supply chain, notably the availability of finished parts, helped by our
actions, although we continue to see inflationary pressure in product costs.
· Significant operating profit and margin growth: Underlying operating
profit was £1.7bn (H1 2024: £1.1bn) with an operating margin of 19.1% (H1
2024: 14.0%). The largest margin improvement was in Civil Aerospace, which
delivered an operating margin of 24.9% (H1 2024: 18.0%). This was driven by
strong large engine aftermarket performance, contractual margin improvements,
and higher spare engine profit. Defence delivered an underlying operating
margin of 15.4% (H1 2024: 15.5%), driven by improved performance in transport
offset by the continued impact of supply chain challenges. Power Systems
reported an operating margin of 15.3% (H1 2024: 10.3%), primarily driven by
continued profitable growth in power generation, notably in data centres, and
governmental. Across all divisions, our cost efficiency actions have helped to
mitigate the impact of inflation.
· Sustainable free cash flow growth: Free cash flow was £1.6bn (H1
2024: £1.2bn), driven by strong operating profit and continued long-term
service agreement (LTSA) balance growth. Civil net LTSA balance growth net of
risk and revenue sharing agreements (RRSAs) of £472m (H1 2024: £544m) in the
period was supported by higher large engine flying hours (EFH) at 109% of 2019
levels (H1 2024: 101%) and an improved EFH rate, partly offset by higher shop
visit volumes. The actions we are taking to improve LTSA contracts are driving
both higher margins and stronger cash flows.
· Building further resilience: As well as strengthening the balance
sheet, we are delivering a more robust and less volatile free cash flow that
is more resilient to the external environment. Net cash increased by £609m to
£1.1bn (2024 FY: £475m). Gross debt stood at £3.5bn, of which $1.0bn
matures in October 2025 and will be repaid from free cash flow, and lease
liabilities were £1.4bn. Together with cash and cash equivalents of £6.0bn,
we have a robust liquidity position of £8.5bn at 30 June 2025 (2024 FY:
£8.1bn). In addition, total underlying cash costs as a proportion of
underlying gross margin (TCC/GM) continued to improve to 0.35x (H1 2024:
0.49x).
· Growing shareholder returns: In line with our capital framework, we
will pay an interim dividend per share of 4.5p in September(1). We are making
good progress with our £1bn share buyback programme for 2025, having
completed £0.4bn by the end of June. Taken together, the 6p dividend per
share in respect of the full year 2024, the interim dividend, and the share
buyback will see us return £1.9bn to shareholders through 2025.
(1) Further information on the dividend and the Company's Dividend Reinvestment
Programme can be found in Note 7 to the condensed consolidated interim
financial statements, page 30
Transformation programme and strategic initiatives
Our strategic framework is founded on four strategic pillars. We continue to
make strong progress against each of these pillars.
· Portfolio choices & partnerships:
o ČEZ Group became a shareholder in Rolls-Royce SMR in March. Alongside a
commitment to buy up to six Small Modular Reactors (SMRs), ČEZ Group brings
significant experience as a nuclear power plant operator with an established
nuclear supply chain.
o Rolls-Royce and Turkish Technic announced plans to establish a
state-of-the-art maintenance, repair, and overhaul (MRO) facility at Istanbul
Airport which will help address growing long-term aftermarket demand. This
facility will be operational by the end of 2027, providing maintenance
services for Trent XWB-84, Trent XWB-97, and Trent 7000 engines.
o In Power Systems, we are continuing to invest in our next generation engine
that will offer higher power density, lower emissions, and improved fuel
consumption compared to its peers, and will enter into service in 2028. We are
also significantly upgrading our military engines, with higher power density,
to capture growing demand.
o In July, we completed the sale of our naval propulsors business to Fairbanks
Morse Defence (FMD) and we expect to close the sale of the naval handling
business, also to FMD, at a later date.
· Advantaged businesses & strategic initiatives:
o In Civil Aerospace, we continue to drive for improved commercial terms and
lower costs across our widebody and business aviation contracts, which will
deliver a significant benefit to underlying operating profit and cash flow to
the mid-term and beyond. All our original equipment (OE) contracts have now
been successfully renegotiated. We have also now renegotiated the most
significant onerous aftermarket contracts and expect to largely conclude the
remainder through 2025 and 2026.
o Our time on wing programme, which will deliver more than an 80% improvement
on average across modern Trent engines by 2027, is progressing well. We have
now either delivered or secured more than half of the targeted improvement. A
significant milestone achieved in the period, supporting this target, was on
the Trent XWB-84 where the analysis of millions of hours of operating data
will allow us to systematically raise the cycle limit of critical parts, and
combined with a compressor blade modification, further increases the time on
wing of this engine. The achievement of this milestone, combined with the
renegotiations of onerous contracts, supported total gross contractual margin
improvements of £402m in the period.
o In June, the improved high-pressure turbine (HPT) blade for the Trent 1000
TEN, that will more than double the time on wing of the engine, was certified.
We remain on track to deliver improvements for the Trent 1000 and Trent 7000
that will deliver a further 30% time on wing benefit by the end of this year.
In addition, the Airbus A350-900 powered by the new Trent XWB-84EP variant,
which will improve fuel consumption by more than 1% relative to the baseline
engine and deliver a further time on wing benefit, entered into service in
May.
o In business aviation, the Pearl 700-powered Gulfstream G800 was certified by
the FAA and EASA in April, ahead of the aircraft's entry into service later
this year. On the Pearl 10X engine, for the Dassault Falcon 10X, we have
successfully completed all major engine certification tests and will submit
the certification reports to the regulators for approval.
o In Defence, we were awarded a £0.5bn five-year support contract with the UK
Ministry of Defence for maintenance and service of the EJ200 engine that
powers the UK Royal Air Force's Typhoon aircraft. We also secured orders for
Trent 7000 engines for the new upgraded Airbus MRTT+ (multi role tanker
transport plus) aircraft. In addition, we signed a sustainment contract worth
£1.0bn with the US Air Force for the AE 2100 engines.
o In Power Systems, we have made focused investments in our production
capacity in the US that will support continued data centre growth. Demand for
our backup power generators for data centres remains very strong, and we now
expect higher revenue growth, at around 20% per year to the mid-term in the
power generation segment (previously 15%-17%). Our governmental business is
also well positioned to capture the benefits from increased European defence
spending. As a result, we now expect higher governmental revenue growth of
12%-14% per year to the mid-term, mainly driven by growth in land defence.
· Efficiency & Simplification:
o Our TCC/GM ratio further improved to 0.35x. This represents a best-in-class
ratio and a competitive advantage as we transform Rolls-Royce into a more
resilient business.
o We have delivered more than £450m of Efficiency & Simplification
benefits since the start of 2022 and remain on track to deliver more than
£500m by the end of this year. Our Efficiency & Simplification targets
are supported by zero-based budgeting and our Group Business Services (GBS)
strategy. GBS efficiencies are scaling up: we have opened a new GBS centre in
Poland and are expanding our centre in India.
o We have delivered more than £850m of gross third-party cost savings since
the start of 2022 which has helped to partially offset inflationary pressures,
and we remain on track to deliver more than £1bn by the end of this year.
· Lower carbon & digitally enabled businesses:
o In June, Rolls-Royce SMR was chosen as the sole provider in the Great
British Energy - Nuclear (GBEN) SMR competition to build three SMR units in
the UK. Contractual terms are expected to be finalised in the fourth quarter
of 2025, resulting in a two-stage contract that will see the first SMR
connected to the grid by the mid-2030s. This project will start to generate
revenues and profit from late 2025 onwards, with positive cash flows
throughout. We expect Rolls-Royce SMR to be profitable and free cash flow
positive by 2030. We continue to see significant international interest in
Rolls-Royce SMRs, including in Sweden where we have been shortlisted as one of
two potential SMR providers by Vattenfall.
o In Power Systems, our battery energy storage systems (BESS) business has won
major orders, including for the Ignitis Group in Lithuania, which are
supporting strong revenue growth and our ambition to achieve breakeven
performance in the near-term.
o We are increasingly adopting Artificial Intelligence (AI) across the Group
as part of our digital strategy. We are testing our own Generative AI platform
for a variety of use cases including accelerating new product introductions
and more efficient MRO processes. We are also working to provide greater
transparency across our supply chain through digital, data and AI.
o Our Engine Health Monitoring (EHM) has moved to the cloud for key widebody
and business aviation engines. This offers improved performance, scalability,
and resilience as well as advanced AI capabilities that can be used for
improvements in engine performance.
These strategic initiatives are continuing to expand the earnings and cash
potential of the business.
Outlook and 2025 guidance
A strong first half delivery gives us confidence to raise our full year 2025
guidance, despite a challenging and uncertain external environment. This
reflects the continued execution of our strategic initiatives, notably
commercial optimisation and cost efficiencies.
2025 financial guidance Updated Previous
Underlying operating profit £3.1bn-£3.2bn £2.7bn-£2.9bn
Free cash flow £3.0bn-£3.1bn £2.7bn-£2.9bn
Operating profit guidance for the full year 2025 now stands at
£3.1bn-£3.2bn. Compared to an operating profit of £1.7bn in the first half,
we expect a slightly lower delivery in the second half of 2025 due to a lower
contribution from net contractual margin improvements (H1 2025: £288m), an
increased number of OE deliveries and higher MRO investment related costs in
Civil Aerospace.
Free cash flow guidance for the full year 2025 now stands at £3.0bn-£3.1bn.
We expect a slightly lower free cash flow in the second half compared to the
first half of 2025. This reflects a slightly lower operating profit in the
second half of the year, alongside an increased number of large engine major
shop visits with a significant increase in Trent 1000 major shop visits.
Investments across the Group will also be higher in the second half as we
continue to support growth to the mid-term and beyond.
As guided in February, our free cash flow guidance for full year 2025 still
includes a £150-200m cash impact related to the aerospace supply chain. Our
actions have resulted in some improvements in parts availability across the
supply chain. However, we anticipate challenges to persist through 2025 and
2026.
Our guidance assumes Civil net LTSA creditor growth at the low end of the
range of £0.8bn-£1.2bn. In Civil Aerospace, we continue to expect large EFH
in the range of 110-115% of 2019 levels and 1,400-1,500 total shop visits. We
now expect total OE deliveries at the low end of the 540-570 range.
Mid-term targets
We are making good progress towards our mid-term targets, which were set in
February 2025 and are based on a 2028 timeframe. These mid-term targets remain
significantly underpinned by our actions, investments, and strategic
initiatives, including the benefits of efficiency and simplification across
the Group. The performance improvements that underpin these targets and the
actions required to deliver them are owned across the Group and supported by
rigorous performance management.
Mid-term targets (2028)
Group targets:
Underlying operating profit £3.6bn-£3.9bn
Underlying operating margin 15%-17%
Free cash flow £4.2bn-£4.5bn
Return on capital 18%-21%
Divisional margin targets:
Civil Aerospace 18%-20%
Defence 14%-16%
Power Systems 14%-16%
We continue to see our mid-term targets as a milestone, not a destination, and
we see strong growth prospects beyond the mid-term across the Group.
Financial performance by business
£ million Underlying revenue Organic change (1) Underlying operating profit/(loss) Organic change (1) Underlying operating margin Organic margin change (1)
Civil Aerospace 4,786 17% 1,193 63% 24.9% 7.1pt
Defence 2,223 1% 342 0% 15.4% (0.2)pt
Power Systems 2,042 20% 313 89% 15.3% 5.6pt
All Other Businesses (2) 6 nm (3) (78) nm (3) nm (3) nm (3)
Corporate/eliminations - nm (3) (37) 6% nm (3) nm (3)
Total 9,057 13% 1,733 50% 19.1% 4.9pt
Trading cash flow
£ million H1 2025 H1 2024
Civil Aerospace 1,111 1,038
Defence 327 234
Power Systems 425 121
All Other Businesses (2) 17 (71)
Corporate/eliminations (33) (33)
Total trading cash flow 1,847 1,289
Underlying operating profit charge exceeded by contributions to defined (6) (18)
benefit schemes
Taxation (259) (113)
Total free cash flow 1,582 1,158
(1) Organic change is the measure of change at constant translational currency
applying full year 2024 average rates to 2024 and 2025 and excludes M&A
and business closures. All underlying income statement commentary is provided
on an organic basis unless otherwise stated
(2) All Other Businesses include the financial results of Rolls-Royce SMR (also
referred to as Rolls-Royce SMR Limited), electrical power solutions and the UK
Civil Nuclear business (see note 2 for further details)
(3) nm is defined as not meaningful
Civil Aerospace
H1 2025 key Civil Aerospace operational metrics: Large engine Business aviation/ regional Total Change
OE deliveries 122 115 237 1
LTSA engine flying hours (millions) 8.1 1.5 9.6 0.6
Total LTSA shop visits 494 202 696 72
…of which major shop visits 217 189 406 12
Significantly improved Civil Aerospace operating profit reflects strong large
engine aftermarket performance, across both LTSA and time and materials, net
contractual margin improvements, and higher spare engine profit.
In the first half of 2025, a total of 349 large engines were ordered (H1 2024:
273) with a gross book-to-bill of 2.9x (H1 2024: 2.3x). The Trent XWB-97 and
Trent 7000 were our bestselling engines in the period, with 163 and 148
orders, respectively. Significant new orders included Riyadh Air, Vietjet Air,
STARLUX and AviLease. As a result of strong order inflow, our large engine
order book increased by 12% and now stands at 2,056 engines at the end of June
2025.
Total OE deliveries of 237 engines were broadly similar to the prior period
(H1 2024: 236), with 115 business aviation deliveries (H1 2024: 116) and 122
total large engine deliveries (H1 2024: 120). In the first half of 2025 we
delivered 23 large spare engines (H1 2024: 21), which represented 19% of total
large engine deliveries (H1 2024: 18%). Total shop visits increased by 12%
versus the prior period to 696 (H1 2024: 624); of these 217 were large engine
major shop visits (H1 2024: 195).
Underlying revenue of £4.8bn increased 17%, driven by higher shop visit
volumes and commercial optimisation. Underlying OE revenue grew by 12% in the
period to £1.5bn and services revenue grew by 19% to £3.3bn. LTSA revenue
catch-ups were £126m (H1 2024: £258m).
Underlying operating profit was £1.2bn (24.9% margin) versus £740m in H1
2024 (18.0% margin). The significant increase in operating profit was driven
by stronger large engine aftermarket performance, with higher LTSA volumes and
margins alongside increased time and materials profit, a larger contribution
from contractual margin improvements, and improved spare engine profits.
Our efforts to improve the commercial terms and reduce costs across our large
engine and business aviation contracts supported gross contractual margin
improvements of £402m. These were primarily driven by the continued
successful renegotiation of onerous contracts in the period, alongside the
achievement of key time on wing milestones on the Trent XWB-84.
These benefits were partially offset by £114m of additional charges
associated with the impact of prolonged supply chain challenges, which were
booked across onerous provisions and contract catch-ups. As a result, net
contractual margin improvements were £288m (H1 2024: £223m), comprising
contract catch-ups of £107m (H1 2024: £216m) and onerous provision releases
of £181m (H1 2024: £7m).
Trading cash flow of £1.1bn was slightly higher than the prior period (H1
2024: £1.0bn). Cash flow in the period was largely driven by operating profit
alongside continued net LTSA balance growth. LTSA balance growth net of RRSAs
of £472m (H1 2024: £544m) was supported by continued EFH growth, a higher
normalised EFH rate due to our commercial actions, with LTSA invoiced flying
hour receipts of £3.0bn (H1 2024: £2.9bn). This was offset by an increased
number of shop visits. Large EFH rose by 8% versus the prior period to 109% of
2019 levels, driven primarily by new aircraft deliveries. Business aviation
and regional EFH were broadly unchanged in the period.
Defence
Operating profit was similar to the prior period, with improved performance in
transport offset by the absence of a one-off benefit in submarines and the
impact of continued supply chain challenges.
Demand remains high, with an order intake of £4.0bn and a book-to-bill ratio
of 1.8x. Combat and transport order intake was particularly strong, and with
improved profitability. Order backlog now stands at £18.8bn, equivalent to
around four years of revenue, with order cover approaching 100% for the
remainder of 2025.
Revenues of £2.2bn were flat compared to the prior period(1). Transport
revenues grew by 29%, with strong growth across both OE and aftermarket. This
was offset by lower submarines revenues(1), which fell by 19% due to the
absence of a one-off benefit in the prior period of £180m. Key milestones in
the period included the first engine delivery for the MQ-25 programme and the
first MV-75 FLRAA engine entering development testing.
Operating profit was £342m (15.4% margin) compared to £345m (15.5% margin)
in the prior period. This reflects improved performance in transport, across
both OE and aftermarket, offset by the absence of the submarines one-off
benefit in the prior period and the continued impact of supply chain
constraints, notably in naval.
Trading cash flow was £327m compared to £234m in the prior period, with a
similar operating profit alongside an improved working capital performance.
Power Systems
In Power Systems, significantly improved operating profit and margins
primarily reflects profitable growth in both power generation, driven by data
centres, and governmental.
Order intake was £2.9bn with a book-to-bill ratio of 1.4x. This represents a
32% increase compared to the prior period, driven by strong power generation
demand where order intake rose by 68%, which included an 85% year on year
increase in data centre orders. As a result of strong order intake, the order
backlog now stands at a record level, with OE order coverage of 100% for the
remainder of 2025 and 43% for 2026. Order coverage ratios are high relative to
history, with increased coverage in both power generation and governmental.
Underlying revenue was £2.0bn, an increase of 20% versus the prior period.
Power generation revenue growth was 26%, including data centre revenue growth
of 45%. Governmental revenue growth was 19%, driven by higher demand in land
defence and services. Underlying OE revenues grew by 21% to £1.4bn.
Underlying services revenue grew by 17% to £661m.
Underlying operating profit grew by 89% to £313m. Underlying operating margin
rose by 5.6pts to 15.3% (H1 2024: 10.3%). The increase in underlying operating
profit reflects profitable growth in power generation, driven by data centres,
governmental growth, and improved BESS profitability.
Trading cash flow was £425m with a conversion ratio of 136% versus £121m and
64% last year. The increase in trading cash flow was mainly due to higher
operating profit alongside an improved working capital performance, reflecting
the benefits or our working capital initiatives alongside some timing benefits
associated with customer advances in H1 2025.
(1) Defence revenues in H1 2024 included a £180m benefit of a one-off capital and
lease transaction. Excluding this, Defence revenues in H1 2025 grew 10%,
submarine revenues grew 6%
Statutory and underlying Group financial performance
H1 2025 H1 2024
£ million Statutory Impact of hedge book(1) Impact of acquisition accounting Impact of other non-underlying items Underlying Underlying
Revenue 9,490 (433) - - 9,057 8,182
Gross profit 2,927 (102) 7 (260) 2,572 1,977
Operating profit 2,074 (102) 8 (247) 1,733 1,149
Gain arising on disposal of businesses 679 - - (679) - -
Profit before financing and taxation 2,753 (102) 8 (926) 1,733 1,149
Net financing income/(costs) 2,088 (2,163) - 31 (44) (114)
Profit before taxation 4,841 (2,265) 8 (895) 1,689 1,035
Taxation (433) 572 (2) (230) (93) (298)
Profit for the period 4,408 (1,693) 6 (1,125) 1,596 737
Basic earnings per share (pence) (2) 52.38 15.74 8.95
Revenue: Underlying revenue of £9.1bn was up 13%, with strong growth in Civil
Aerospace and Power Systems. Statutory revenue of £9.5bn was 7% higher
compared with the prior period. The difference between statutory and
underlying revenue is driven by statutory revenue being measured at average
prevailing exchange rates (H1 2025: GBP:USD 1.30; H1 2024: GBP:USD 1.27) and
underlying revenue being measured at the hedge book achieved rate during the
period (H1 2025 GBP:USD 1.44; H1 2024:GBP:USD 1.48).
Operating profit: Underlying operating profit of £1.7bn (19.1% margin) versus
£1.1bn (14.0% margin) in the prior period. The largest increase in underlying
operating profit was in Civil Aerospace, driven by strong large engine
aftermarket performance, contractual margin improvements and higher spare
engine profit. Power Systems delivered significantly higher profit as a result
of continued profitable growth in power generation, notably in data centres,
and governmental. Statutory operating profit was £2.1bn, higher than the
£1.7bn underlying operating profit due to a £102m negative impact from
currency hedges in the underlying results, and items excluded from the
underlying results, being: £8m relating to the amortisation of intangible
assets arising on previous acquisitions; £247m of other non-underlying items
comprising a £185m impairment reversal related to a Civil Aerospace programme
asset impairment previously recorded, £83m onerous provision release, and
charges relating to transformation and restructuring costs of £21m.
Gain arising on disposal of businesses: During the period, ČEZ Group made a
strategic investment into Rolls-Royce SMR. As a result, Rolls-Royce SMR was
deconsolidated as it transitioned from a subsidiary to an equity-accounted
investment, resulting in a profit on disposal of the subsidiary of £679m.
Profit before taxation: Underlying profit before taxation of £1.7bn included
£(44)m net financing costs comprising £147m interest receivable, £(125)m
interest payable and £(66)m of other financing charges and costs of undrawn
facilities. Statutory profit before tax of £4.8bn included £1.6bn net fair
value gains on derivative contracts, net foreign exchange gains of £529m,
£(64)m other financing charges, costs of undrawn facilities and pension
scheme financing and £(11)m net interest payable.
Taxation: Underlying tax charge of £(93)m (H1 2024: £(298)m) reflects an
overall tax charge on profits of Group companies, offset by a tax credit of
£31m relating to utilisation of a previously unrecognised deferred tax asset
on UK tax losses against profits in the period, and a further £277m relating
to recognition of a previously unrecognised deferred tax asset on UK tax
losses. These are reflected in the statutory tax charge of £(433)m (H1 2024:
£(280)m) which also includes a further tax credit of £286m on recognition of
a previously unrecognised deferred tax asset on UK tax losses, a £170m tax
credit relating to the deconsolidation of Rolls-Royce SMR from the Group, and
a £13m tax credit relating to other non-underlying items.
(1) Reflecting the impact of measuring revenue and costs at the average exchange
rate during the period and the valuation of assets and liabilities using the
period end exchange rate rather than the rate achieved on settled foreign
exchange contracts in the period or the rate expected to be achieved by the
use of the hedge book
(2) In H1 2025, the underlying profit attributable to ordinary shareholders has
been adjusted for the one-off non-cash impact of £277m related to the
recognition of deferred tax assets on UK tax losses, see note 5, page 29 for
further details
Free cash flow
H1 2025 H1 2024
£ million Cash flow Impact of hedge book Impact of acquisition accounting Impact of other non-underlying items Funds flow Funds flow
Operating profit 2,074 (102) 8 (247) 1,733 1,149
Depreciation, amortisation and impairment 256 - (8) 185 433 427
Movement in provisions (395) (8) - 109 (294) (106)
Movement in Civil Aerospace LTSA balance 440 1 - - 441 715
Movement in RRSA prepayments for LTSA parts 46 (15) - - 31 (171)
Movement in cost to obtain contracts (48) - - - (48) 7
Settlement of excess derivatives (116) - - - (116) (75)
Interest received 150 - - - 150 124
Other operating cash flows 64 - - 64 (10)
Operating cash flow before working capital and income tax 2,471 (124) - 47 2,394 2,060
Working capital (1) 226 (247) - (1) (22) (228)
Cash flows on other financial assets and liabilities held for operating (389) 358 - - (31) (5)
purposes
Income tax (290) - - 31 (259) (113)
Cash from operating activities 2,018 (13) - 77 2,082 1,714
Capital element of lease payments (91) 13 - - (78) (112)
Capital expenditure (349) - - - (349) (291)
Cash received on maturity of share based payment schemes 38 - - - 38 -
Investments 31 - - - 31 17
Interest paid (136) - - - (136) (157)
Other 71 - - (77) (6) (13)
Free cash flow 1,582 - - - 1,582 1,158
Free cash flow in the period was £1.6bn, an improvement of £0.4bn compared
with the prior period driven by:
Underlying operating profit of £1.7bn, £0.6bn higher than the prior period.
This reflects higher underlying operating profit in Civil Aerospace and Power
Systems, driven by our strategic initiatives, including commercial
optimisation and cost efficiency benefits.
Movement in provisions of £(294)m driven by utilisation across several
provisions held, including onerous contracts, warranty and guarantees,
transformation and restructuring.
Movement in Civil LTSA balance was £441m, driven by continued EFH growth and
a higher normalised EFH rate due to our commercial actions, offset by an
increased number of shop visits.
Movements in prepayments to RRSAs for LTSA parts of £31m (H1 2024: £(171)m)
arises as amounts recognised in the income statement (as parts supplied by
RRSA partners are used) have been in excess of payments to RRSA partners in
the period, where the RRSA partner receives a share of the cashflows the Group
has received from its customers.
Interest received of £150m, £26m higher than the prior period. This reflects
a higher average cash balance through the period.
Other operating cash flows of £64m include share of results and dividends
received from joint ventures and associates, flows relating to our defined
benefit post-retirement schemes, and share based payments.
Working capital outflows of £(22)m, compared to £(228)m in the prior period.
A net inflow of £586m from receivables, payables and contract liabilities
reflecting the benefits from our working capital initiatives was offset by a
£(608)m increase in inventories to meet demand across the Group.
(1) Working capital includes inventory, trade and other receivables and payables,
and contract assets and liabilities (excluding Civil Aerospace LTSA balances,
prepayment to RRSAs and costs to obtain contracts)
Income tax of £(259)m, net cash tax payments for the first half of 2025 were
higher than the prior period of £(113)m due to higher profit and some timing
impacts, including final payments made in respect of the prior year.
Capital expenditure of £(349)m, includes £(202)m of property, plant and
equipment additions and £(167)m of intangibles additions. The combined
additions were higher than the prior period as a result of investment in
R&D, technology and site improvements across the Group.
Interest paid of £(136)m, including lease interest payments, is £21m lower
than the prior period. The reduction in interest charges is across interest
paid, interest element of lease payments and fees paid on undrawn facilities.
Balance Sheet
£ million 30 June 2025 31 December 2024 Change
Intangible assets 4,488 4,402 86
Property, plant and equipment 3,732 3,724 8
Right-of-use assets 785 761 24
Joint ventures and associates 1,244 592 652
Civil Aerospace LTSA (1) (10,693) (10,184) (509)
RRSA prepayments for parts (1) 1,836 1,668 168
Costs to obtain contracts (1) 183 135 48
Working capital (1) (1,816) (1,731) (85)
Provisions (1,617) (1,994) 377
Net cash (2) 1,084 475 609
Net financial assets and liabilities (2) 75 (1,980) 2,055
Net post-retirement scheme deficits (192) (191) (1)
Taxation 3,249 3,383 (134)
Assets and liabilities held for sale (3) 69 53 16
Other net assets and liabilities 7 6 1
Net assets/(liabilities) 2,434 (881) 3,315
Other items
US$ hedge book (US$bn) 21 19
Key drivers of balance sheet movements were:
Joint ventures and associates: The £0.7bn increase was largely a result of
Rolls-Royce SMR being recognised at its fair value as an equity-accounted
investment following the strategic investment by ČEZ Group (ČEZ) in
Rolls-Royce SMR during the period.
Civil LTSA: The £(509)m movement in the net liability balance was mainly
driven by an increase in invoiced LTSA receipts exceeding revenue recognised
in the period.
Working capital: The £(1.8)bn net working capital position increased by
£(85)m compared to the prior period. The movement comprised an increase in
contract liabilities of £(495)m and £(109)m increase in net payables due to
changes in operational volumes and timing of supplier payments. This was
partly offset by a £519m increase in inventory reflecting higher sales
volumes.
Provisions: The £377m net reduction in provisions was due to onerous contract
loss reversals and utilisation being greater than onerous contract loss
charges in the period, supported by continued efforts to renegotiate our most
significant onerous contracts.
Net cash: Increased from £475m to £1.1bn driven by a free cash inflow of
£1.6bn. Our liquidity position is strong with £8.5bn of liquidity including
cash and cash equivalents of £6.0bn and undrawn facilities of £2.5bn. Net
cash included £(1.4)bn of lease liabilities (2024 FY: £(1.6)bn).
(1) The total of these lines represent inventory, trade receivables and payables,
contract assets and liabilities and other assets and liabilities in the
statutory balance sheet
(2) Net cash includes £(50)m (2024: £33m) of the fair value of derivatives
included in fair value hedges and the element of fair value relating to
exchange differences on the underlying principal of derivatives in cash flow
hedges
(3) Assets and liabilities held for sale relate to the sale of the naval
propulsors & handling business
Net financial assets and liabilities: A £2.1bn increase in the net financial
assets primarily driven by fair value gains on foreign exchange and commodity
contracts due to the impact of the movement in GBP:USD exchange rates.
Taxation: The net tax asset reduced by £(134)m to £3.2bn. The decrease
primarily relates to a £(502)m reduction in deferred tax related to foreign
exchange derivatives, which moved from a net financial liability to a net
financial asset position, and a £(200)m reduction in deferred tax assets
driven by a reactivation of previously disallowed interest and asset
impairment reversals. These are partly offset by the recognition of a £563m
deferred tax asset relating to UK tax losses that was previously not
recognised. Deferred tax liabilities have decreased by £7m.
Results meeting and webcast
Our results presentation will be held at UBS, 5 Broadgate, London EC2M 2QS and
webcast live at 09:00 (BST) today. Attendance is by pre-registration only.
Downloadable materials will also be available on the Investor Relations
section of the Rolls-Royce website:
https://www.rolls-royce.com/investors/results-and-events.aspx
(https://www.rolls-royce.com/investors/results-and-events.aspx)
To register for the webcast, including Q&A participation, please visit the
following link:
https://app.webinar.net/bmy0V0Qnd1o (https://app.webinar.net/bmy0V0Qnd1o)
Please use this same link to access the webcast replay which will be made
available shortly after the event concludes. Photographs and
broadcast-standard video are available at www.rolls-royce.com
(http://www.rolls-royce.com)
Enquiries:
Investors: Media:
Jeremy Bragg +44 7795 840875 Richard Wray +44 7810 850055
Ruchi Malaiya +44 7900 189184
The person responsible for arranging the release of this announcement on
behalf of Rolls-Royce Holdings plc is Claire-Marie O'Grady, Chief Governance
Officer.
This results announcement contains forward-looking statements. Any statements
that express forecasts, expectations and projections are not guarantees of
future performance and will not be updated. By their nature, these statements
involve risk and uncertainty, and a number of factors could cause material
differences to the actual results or developments. This report is intended to
provide information to shareholders, is not designed to be relied upon by any
other party, or for any other purpose and Rolls-Royce Holdings plc and its
directors accept no liability to any other person other than under English
law.
LSE: RR.; ADR: RYCEY; LEI: 213800EC7997ZBLZJH69
Condensed Consolidated Interim Financial Statements
Condensed consolidated income statement
For the half-year ended 30 June 2025
( )
Half-year to 30 June 2025 Half-year to
30 June 2024
Notes £m £m
Revenue 2 9,490 8,861
Cost of sales (1,2) (6,563) (6,753)
Gross profit 2 2,927 2,108
Commercial and administrative costs 2 (631) (641)
Research and development (2) 2, 3 (246) 101
Share of results of joint ventures and associates 24 78
Operating profit 2,074 1,646
Gain arising on disposal of business (3) 20 679 -
Profit before financing and taxation 2,753 1,646
Financing income 4 2,342 306
Financing costs 4 (254) (536)
Net financing income/(costs) (4) 2,088 (230)
Profit before taxation 4,841 1,416
Taxation 5 (433) (280)
Profit for the period 4,408 1,136
Attributable to:
Ordinary shareholders 4,416 1,149
Non-controlling interests (NCI) (8) (13)
Profit for the period 4,408 1,136
Other comprehensive (expense)/income (OCI) (330) 123
Total comprehensive income for the period 4,078 1,259
Earnings per ordinary share attributable to ordinary shareholders: 6
Basic 52.38p 13.71p
Diluted 52.15p 13.63p
(1)( ) Cost of sales includes a net release for expected credit losses of
£13m (30 June 2024: £19m charge). Further details can be found in note 11
(2) In the period ended 30 June 2025, the impact of an exceptional
impairment reversal was included within both cost of sales, £176m (30 June
2024: £132m), and research and development, £9m (30 June 2024: £413m).
Further details can be found in notes 2 and 8
(3) An exceptional gain on disposal was recognised as a result of the
deconsolidation of Rolls-Royce SMR Limited during the period. Further details
can be found in note 20
(4) Included within net financing are fair value changes on derivative
contracts. Further details can be found in notes 2, 4 and 15
Condensed consolidated statement of comprehensive income
For the half-year ended 30 June 2025
Half-year to 30 June 2025 Half-year to 30 June 2024
Notes £m £m
Profit for the period 4,408 1,136
Other comprehensive (expense)/income (OCI)
Actuarial movements in post-retirement schemes 17 (20) 124
Revaluation to fair value of other investments 1 (3)
Share of OCI of joint ventures and associates (1) (6)
Related tax movements 9 35
Items that will not be reclassified to profit or loss (11) 150
Foreign exchange translation differences on foreign operations (296) (24)
NCI disposed through disposal of business 20 (23) -
Movement on fair values charged to cash flow hedge reserve (58) (16)
Reclassified to income statement from cash flow hedge reserve 51 15
Share of OCI of joint ventures and associates 5 (2)
Related tax movements 2 -
Items that will be reclassified to profit or loss (319) (27)
Total other comprehensive (expense)/income (330) 123
Total comprehensive income for the period 4,078 1,259
Attributable to:
Ordinary shareholders 4,109 1,272
NCI (31) (13)
Total comprehensive income for the period 4,078 1,259
Condensed consolidated balance sheet
At 30 June 2025
30 June 31 December 2024
2025
Notes £m £m
ASSETS
Intangible assets 8 4,488 4,402
Property, plant and equipment 9 3,732 3,724
Right-of-use assets 10 785 761
Investments - joint ventures and associates (1) 1,244 592
Investments - other 6 5
Other financial assets 15 777 126
Deferred tax assets 3,475 3,660
Post-retirement scheme surpluses 17 750 790
Non-current assets 15,257 14,060
Inventories 5,611 5,092
Trade receivables and other assets 11 8,717 8,713
Contract assets 12 1,703 1,813
Taxation recoverable 51 71
Other financial assets 15 400 209
Cash and cash equivalents 6,044 5,575
Current assets 22,526 21,473
Assets held for sale 20 157 153
TOTAL ASSETS 37,940 35,686
LIABILITIES
Borrowings and lease liabilities 13 (2,071) (1,097)
Other financial liabilities 15 (416) (642)
Trade payables and other liabilities 14 (8,105) (8,009)
Contract liabilities 12 (7,048) (6,309)
Current tax liabilities (53) (117)
Provisions for liabilities and charges 16 (525) (589)
Current liabilities (18,218) (16,763)
Borrowings and lease liabilities 13 (2,838) (4,035)
Other financial liabilities 15 (736) (1,640)
Trade payables and other liabilities 14 (1,766) (1,965)
Contract liabilities 12 (9,602) (9,447)
Deferred tax liabilities (224) (231)
Provisions for liabilities and charges 16 (1,092) (1,405)
Post-retirement scheme deficits 17 (942) (981)
Non-current liabilities (17,200) (19,704)
Liabilities associated with assets held for sale 20 (88) (100)
TOTAL LIABILITIES (35,506) (36,567)
NET ASSETS / (LIABILITIES) 2,434 (881)
EQUITY
Called-up share capital (2) 1,691 1,701
Share premium (2) - 1,012
Capital redemption reserve (2) 2 168
Cash flow hedge reserve 13 13
Translation reserve 307 603
Retained earnings / (accumulated losses) (2) 395 (4,409)
Equity attributable to ordinary shareholders 2,408 (912)
Non-controlling interest (NCI) 26 31
TOTAL EQUITY 2,434 (881)
(1) An equity-accounted investment was recognised at fair value on the
balance sheet as a result of the deconsolidation of Rolls-Royce SMR Limited
during the period. Further details can be found in note 20
(2) On 1 May 2025 Rolls-Royce Holdings plc performed a bonus issue of one
share from its merger reserve for £6,962m. This merger reserve was presented
within retained earnings / (accumulated losses) within the consolidated
statement of changes in equity. The company subsequently performed a capital
reduction against share capital, share premium, and capital redemption reserve
Condensed consolidated cash flow statement
For the half-year ended 30 June 2025
Notes
Half-year to Half-year to
30 June 2025
30 June 2024
£m
£m
Reconciliation of cash flows from operating activities
Operating profit 2,074 1,646
Loss on disposal of property, plant and equipment 4 1
Share of results of joint ventures and associates (24) (78)
Dividends received from joint ventures and associates 30 15
Amortisation and impairment of intangible assets 8 111 (287)
Depreciation and impairment of property, plant and equipment 9 132 205
Depreciation and impairment of right-of-use assets 10 13 129
Impairment of and other movements on investments - 4
(Decrease)/Increase in provisions (395) 38
Increase in inventories (608) (641)
Movement in trade receivables/payables and other assets/liabilities 300 573
Movement in contract assets/liabilities 972 497
Cash flows on other financial assets and liabilities held for operating (389) (410)
purposes (1)
Cash flows on settlement of excess derivative contracts (2) (116) (75)
Interest received 150 124
Net defined benefit post-retirement cost recognised in profit before financing 17 33 21
Cash funding of defined benefit post-retirement schemes 17 (39) (39)
Share-based payments 60 59
Net cash inflow from operating activities before taxation 2,308 1,782
Taxation paid (290) (113)
Net cash inflow from operating activities 2,018 1,669
Cash flows from investing activities
Additions of intangible assets 8 (167) (165)
Disposals of intangible assets 1 -
Purchases of property, plant and equipment (202) (133)
Disposals of property, plant and equipment 6 7
Disposal of right-of-use assets 13 -
Disposal of business 20 (85) -
Movement in investments in joint ventures and associates (4) (16)
Cash flows on other financial assets and liabilities held for non-operating - (12)
purposes
Net cash outflow from investing activities (438) (319)
Cash flows from financing activities
Repayment of loans (176) (475)
Proceeds from increase in loans 176 4
Settlement of swaps hedging fixed rate borrowings - (11)
Capital element of lease payments (91) (122)
Net cash flow from decrease in borrowings and lease liabilities (91) (604)
Interest paid (96) (103)
Interest element of lease payments (38) (42)
Fees paid on undrawn facilities (2) (12)
Cash received on maturity of share-based payment schemes 38 -
Transactions with NCI (3) 35 33
Redemption of C Shares (1) -
Share buyback (380) -
Dividend 7 (507) -
Net cash outflow from financing activities (1,042) (728)
Change in cash and cash equivalents 538 622
Cash and cash equivalents at 1 January 5,573 3,731
Exchange losses on cash and cash equivalents (69) (40)
Cash and cash equivalents at 30 June (4) 6,042 4,313
(1) Predominantly relates to cash settled on derivative contracts held for
operating purposes
(2) In 2020, the Group took action to reduce the size of the USD hedge book
by $11.8bn across 2020-2026 to reflect the fact that at that time, future
operating cash flows were no longer forecast to materialise. To achieve the
necessary reduction in the hedge book, a separate and distinct set of foreign
exchange derivative instruments were entered into to buy $11.8bn which had the
impact of fixing the fair value of the over-hedged position and provided
certainty over when the cash flows to settle the position would occur in
future periods. The associated cash outflow of these transactions is £1,674m
and occurs over the period 2020-2026. During the period, the Group incurred a
cash outflow of £116m (30 June 2024: £75m) and estimates that future cash
outflows of £32m will be incurred during the remainder of 2025 and £27m
during 2026
(3)( ) Relates to NCI investment received in the period in respect of
Rolls-Royce SMR Limited
(4)( ) The Group considers overdrafts (repayable on demand) and cash held
for sale to be an integral part of its cash management activities and these
are included in cash and cash equivalents for the purposes of the cash flow
statement
Condensed consolidated cash flow statement continued
For the half-year ended 30 June 2025
In deriving the condensed consolidated cash flow statement, movements in
balance sheet line items have been adjusted for non-cash items. The cash flow
in the period includes the sale of goods and services to joint ventures and
associates - see note 19.
Half-year to 30 June 2025 Half-year to
30 June 2024
£m £m
Reconciliation of movements in cash and cash equivalents to movements in net
cash/(debt)
Change in cash and cash equivalents 538 622
Cash flow from decrease in borrowings and lease liabilities 91 604
Less: settlement of related derivatives included in fair value of swaps below - (11)
Change in net debt resulting from cash flows 629 1,215
Lease additions, modifications and other non-cash adjustments on borrowings (63) (62)
and lease liabilities
Exchange gains/(losses) on net debt 89 (26)
Fair value adjustments 37 17
Movement in net cash/(debt) 692 1,144
Net cash/(debt) at 1 January excluding the fair value of swaps 442 (1,975)
Net cash/(debt) at 30 June excluding the fair value of swaps 1,134 (831)
Fair value of swaps hedging fixed rate borrowings (50) 9
Net cash/(debt) at 30 June 1,084 (822)
The movement in net cash/(debt) (defined by the Group as including the items
shown below) is as follows:
At Funds flow Exchange differences Fair value adjustments Reclassifi-cations Other movements At
30 June
1 January
£m £m £m £m £m £m £m
2025
Cash at bank and in hand 714 121 (20) - - - 815
Money market funds 1,900 1,548 6 - - - 3,454
Short-term deposits 2,961 (1,131) (55) - - - 1,775
Cash and cash equivalents (per balance sheet) 5,575 538 (69) - - - 6,044
Overdrafts (2) - - - - - (2)
Cash and cash equivalents (per cash flow statement) 5,573 538 (69) - - - 6,042
Other current borrowings (799) - (19) 61 (988) (1) (1,746)
Non-current borrowings (2,776) - 68 (24) 988 (1) (1,745)
Lease liabilities (1,555) 91 109 - - (61) (1,416)
Lease liabilities included within liabilities held for sale (1) - - - - - (1)
Financial liabilities (5,131) 91 158 37 - (63) (4,908)
Net cash excluding the fair value of swaps 442 629 89 37 - (63) 1,134
Fair value of swaps hedging fixed rate borrowings (1) 33 - (48) (35) - - (50)
Net cash 475 629 41 2 - (63) 1,084
2024
Cash at bank and in hand 739 9 (6) - - - 742
Money market funds 1,077 437 (4) - - - 1,510
Short-term deposits 1,968 129 (30) - - - 2,067
Cash and cash equivalents (per balance sheet) 3,784 575 (40) - - - 4,319
Overdrafts (53) 47 - - - - (6)
Cash and cash equivalents (per cash flow statement) 3,731 622 (40) - - - 4,313
Other current borrowings (478) 471 - 2 - 1 (4)
Non-current borrowings (3,568) - 13 15 - (2) (3,542)
Lease liabilities (1,660) 122 1 - - (61) (1,598)
Financial liabilities (5,706) 593 14 17 - (62) (5,144)
Net (debt) excluding fair value of swaps (1,975) 1,215 (26) 17 - (62) (831)
Fair value of swaps hedging fixed rate borrowings (1) 23 11 (13) (12) - - 9
Net (debt) (1,952) 1,226 (39) 5 - (62) (822)
(1)( ) Fair value of swaps hedging fixed rate borrowings reflects the impact
of derivatives on repayments of the principal amount of debt. Net cash/(debt)
therefore includes the fair value of derivatives included in fair value hedges
(30 June 2025: £28m, 31 December 2024: £62m) and the element of fair value
relating to exchange differences on the underlying principal of derivatives in
cash flow hedges (30 June 2025: £(78)m, 31 December 2024: £(29)m)
Condensed consolidated statement of changes in equity
For the half-year ended 30 June 2025
Attributable to ordinary shareholders
Notes Share capital Share premium Capital redemption reserve Cash flow hedging reserve Translation reserve Retained earnings/ (accumulated losses)(1) Total NCI Total equity
£m £m £m £m £m £m £m £m £m
At 1 January 2025 1,701 1,012 168 13 603 (4,409) (912) 31 (881)
Profit for the period - - - - - 4,416 4,416 (8) 4,408
Foreign exchange translation differences on foreign operations - - - - (296) - (296) - (296)
NCI disposed of on disposal of business 20 - - - - - - - (23) (23)
Actuarial movements on post-retirement schemes 17 - - - - - (20) (20) - (20)
Fair value movement on cash flow hedging reserve - - - (58) - - (58) - (58)
Reclassified to income statement from cash flow hedging reserve - - - 51 - - 51 - 51
Revaluation to fair value of other investments - - - - - 1 1 - 1
OCI of joint ventures and associates - - - 5 - (1) 4 - 4
Related tax movements - - - 2 - 9 11 - 11
Total comprehensive (expense)/income for the period - - - - (296) 4,405 4,109 (31) 4,078
Bonus issue (2) 6,962 - - - - (6,962) - - -
Capital reduction (2) (6,962) (1,012) (177) - - 8,151 - - -
Share buyback programme (3) (10) - 10 - - (397) (397) - (397)
Redemption of C shares 15 - - 1 - - (1) - - -
Share-based payments - direct to equity (4) - - - - - 96 96 - 96
Dividends paid - - - - - (507) (507) - (507)
Transactions with NCI (5) - - - - - 9 9 26 35
Related tax movements - - - - - 10 10 - 10
Other changes in equity in the period (10) (1,012) (166) - - 399 (789) 26 (763)
At 30 June 2025 1,691 - 2 13 307 395 2,408 26 2,434
At 1 January 2024 1,684 1,012 167 12 634 (7,190) (3,681) 52 (3,629)
Profit for the period - - - - - 1,149 1,149 (13) 1,136
Foreign exchange translation differences on foreign operations - - - - (24) - (24) - (24)
Actuarial movements on post-retirement schemes - - - - - 124 124 - 124
Fair value movement on cash flow hedging reserve - - - (16) - - (16) - (16)
Reclassified to income statement from cash flow hedging reserve - - - 15 - - 15 - 15
Revaluation to fair value of other investments - - - - - (3) (3) - (3)
OCI of joint ventures and associates - - - (2) - (6) (8) - (8)
Related tax movements - - - - - 35 35 - 35
Total comprehensive (expense)/income for the period - - - (3) (24) 1,299 1,272 (13) 1,259
Issue of ordinary shares 17 - - - - - 17 - 17
Shares issued to employee share trust - - - - - (17) (17) - (17)
Share-based payments - direct to equity (4) - - - - - 39 39 - 39
Transactions with NCI (5) - - - - - 26 26 16 42
Related tax movements - - - - - 52 52 - 52
Other changes in equity in the period 17 - - - - 100 117 16 133
At 30 June 2024 1,701 1,012 167 9 610 (5,791) (2,292) 55 (2,237)
(1) At 30 June 2025, 31,666,521 ordinary shares with an aggregate value of
£8m were held for the purpose of share-based payment plans and included in
retained earnings/(accumulated losses) (30 June 2024: 110,852,000 ordinary
shares with an aggregate value of £27m). During the period:
- 74,400,310 ordinary shares with an aggregate value of £18m vested in
share-based payment plans (30 June 2024: 30,331,000 ordinary shares with an
aggregate value of £13m);
- the Company issued nil new ordinary shares to the Group's share trust for
its employee share-based payment plans with an aggregate value of £nil (30
June 2024: 88,200,000 ordinary shares with an aggregate value of £17m); and
- the Company, through the Employee Benefit Trust, acquired none (30 June
2024: none) of its ordinary shares via reinvestment of dividends received on
its own shares and purchased none (30 June 2024: 71,490) of its ordinary
shares through purchases on the London Stock Exchange
(2 ) On 1 May 2025 Rolls-Royce Holdings plc performed a bonus issue of one
share from its merger reserve for £6,962m. This merger reserve was presented
within retained earnings / (accumulated losses) within the consolidated
statement of changes in equity. The company subsequently performed a capital
reduction against share capital, share premium, and capital redemption reserve
(3 ) Following the announcement of the £1bn share buyback on 27 February
2025, during the period the Company purchased with cash 48,623,940 (30 June
2024: none) of its ordinary shares at a cost of £378m. The Company also
separately paid costs of £2m in relation to the programme.
The Company recognised a creditor of £5m, relating to a further 513,407
shares that had been purchased at 30th June 2025 but not yet paid.
Of these ordinary shares purchased by the Company 48,623,940 shares at a cost
of £378m were cancelled during the period. As at 30 June 2025 the Company
held 513,407 ordinary shares with a net book value of £5m within Treasury
shares. The Company intends to cancel these shares during 2025. The Company
has also accrued for a further liability of £14m, representing an estimate of
the amount it was committed to purchase under the terms of its Share Purchase
Agreement but as yet unpurchased at 30 June 2025
(4 ) Share-based payments - direct to equity is the share-based payment
charge for the period less the actual cost of vesting excluding those vesting
from own shares and cash received on share-based schemes
(5 ) Relates to NCI investment received in the period in respect of
Rolls-Royce SMR Limited
Notes to the Condensed Consolidated Interim Financial Statements
1 Basis of preparation and accounting policies
Reporting entity
Rolls-Royce Holdings plc (the 'Company') is a public company limited by shares
incorporated under the Companies Act 2006 and domiciled in the UK. These
condensed consolidated interim financial statements of the Company as at and
for the six months to 30 June 2025 consist of the consolidation of the
financial statements of the Company and its subsidiaries (together referred to
as the 'Group') and include the Group's interest in jointly controlled and
associated entities.
The Consolidated Financial Statements of the Group as at and for the year
ended 31 December 2024 (2024 Annual Report) are available upon request from
the Company Secretary, Rolls-Royce Holdings plc, Kings Place, 90 York Way,
London, N1 9FX.
The Board of Directors approved the condensed consolidated interim financial
statements on 31 July 2025.
Statement of compliance
These condensed consolidated interim financial statements have been prepared
on the basis of the policies set out in the 2024 Annual Report, and in
accordance with UK adopted IAS 34 Interim Financial Reporting and the
Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial
Conduct Authority. They do not include all of the information required for
full annual statements and should be read in conjunction with the 2024 Annual
Report.
The interim figures up to 30 June 2025 and 2024 are unaudited. The 2024
Financial Statements, which were prepared in accordance with UK adopted
International Accounting Standards (IAS) and interpretations issued by the
IFRS interpretations Committee applicable to companies reporting under UK
adopted IAS, have been reported on by the Group's auditors and delivered to
the registrar of companies. The report of the auditors was (i) unqualified,
(ii) did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report, and (iii) did
not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Revisions to IFRS applicable in 2025
There are no new standards or interpretations issued by the IASB that had a
significant impact on these condensed consolidated interim financial
statements.
Revisions to IFRS not applicable to 2025
Standards and interpretations issued by the International Accounting Standards
Board (IASB) are only applicable if endorsed by the UK. Other than IFRS 18
Presentation and Disclosure in Financial Statements described below, the Group
does not consider that any other standards, amendments or interpretations
issued by the IASB, but not yet applicable will have a significant impact on
the condensed consolidated interim financial statements
IFRS 18 Presentation and Disclosure in Financial Statements
The IASB issued a new Standard, IFRS 18 Presentation and Disclosure in
Financial Statements, on 9 April 2024 that will replace IAS 1 Presentation of
Financial Statements. The purpose of the new standard is to provide more
consistent presentation of financial information across preparers as it is
acknowledged that existing standards have given flexibility to present
information in different ways. IFRS 18 Presentation and Disclosure in
Financial Statements will not impact the recognition or measurement of items
in the financial statements. Many of the existing presentation principles in
IAS 1 Presentation of Financial Statements are retained, but there are some
more specific requirements that will lead the Group to make some changes in
its future Annual Report and Interim Financial Statements.
The new Standard is not yet endorsed by the UK Endorsement Board (UKEB) but is
expected to be applicable for reporting periods beginning on or after 1
January 2027. Comparative information for 2026 will need to be restated when
the 2027 Interim Financial Statements and Annual Report and Accounts are
published. The Group has started an initial review of the Standard and expects
changes to the presentation of the income statement and the Group's reported
operating profit (driven by required changes such as moving 'Share of results
of joint ventures and associates' into a new investing category which will no
longer form part of operating profit in the Statutory Consolidated Income
Statement). The process of assessing the financial impact on the Consolidated
Financial Statements will continue during the remainder of 2025. The Group
does not anticipate its early adoption of the new Standard.
Post balance sheet events
The Group has taken the latest legal position in relation to any ongoing legal
proceedings and reflected these in the 30 June 2025 results as appropriate.
On 1 July 2025 the Group completed the disposal of its naval propulsors
business to Fairbanks Morse Defense as set out in note 20. Disposal proceeds
were in excess of the carrying value of the assets and liabilities. The sale
of the naval handling business also to Fairbanks Morse Defense is expected to
complete at a later date.
Climate change
In preparing the condensed consolidated interim financial statements, the
Directors have continued to consider the potential impact of climate change,
particularly in the context of the disclosures made in the Strategic Report
within the 2024 Annual Report that set out climate-related commitments,
targets and the four pillars of the Rolls-Royce energy strategy that are:
- decarbonising operations, facilities, product testing and business
activities. This will be met through a combination of procuring clean energy,
reducing overall energy demand, and clean power generation. An estimate of the
investment required to meet scope 1 + 2 emission improvements is included in
the forecasts that support these condensed consolidated interim financial
statements;
- enabling customers to operate their products in a way that is
compatible with low or net zero carbon emissions. The Group has demonstrated
that all the commercial aero engines it produces, and 80% of the Power Systems
portfolio, is compatible with alternative and sustainable fuels;
- delivering new products and solutions that can accelerate the global
energy transition. This includes the development and deployment of small
modular reactors (SMRs) and, in Power Systems, battery energy storage
solutions is a growth area; and
- supporting the necessary enabling environment, with public and
policy support, to achieve collective climate goals.
1 Basis of preparation and accounting policies continued
In this context the Directors have assessed the impact of climate change on a
number of estimates, including those identified as being key sources of
estimation uncertainty within the financial statements such as:
- Civil Aerospace LTSA revenues;
- estimates of future cash flows considered for trigger assessments
and used in impairment assessments for non-financial asset impairments; and
- estimates of suitable taxable profits that will arise in the UK to
utilise the deferred tax assets recognised.
When making these assessments the Directors include consideration of the risks
associated with changing customer demand, changes in costs due to carbon
pricing and commodity price changes and change in investment requirements. As
details of what specific future intervention measures will be taken by
governments are not yet available, carbon pricing has been used to quantify
the potential impact of future policy changes on the Group. The approach is
consistent with that disclosed in note 1 in the 2024 Annual Report.
There have been no significant changes to assumptions, including the potential
impact of carbon prices on the Group's cost base, since the year ended 31
December 2024. Hence, these considerations did not have a material impact on
financial reporting key judgements and estimates in the period and the Group's
assessment remains that climate change is not expected to have a significant
impact on the Group's current going concern assessment nor on the viability of
the Group over the next five years.
Going concern
Overview
In adopting the going concern basis for preparing these condensed consolidated
interim financial statements, the Directors have undertaken a review of the
Group's cash flow forecasts and available liquidity, along with consideration
of the principal risks and uncertainties through to December 2026 (the 'going
concern period'). The processes for identifying and managing risk are
described in the Group's 2024 Annual Report on pages 52 to 60. As described on
those pages, the risk management process and the going concern statement are
designed to provide reasonable but not absolute assurance.
Forecasts
Recognising the challenges of reliably estimating and forecasting the impact
of external factors on the Group, the Directors have reviewed the Group's
financial forecasts and liquidity forecasts with consideration given to the
potential impact of severe but plausible risks. Two forecasts have been
modelled in the assessment of going concern, along with a likelihood
assessment of these forecasts. The base case forecast reflects the Directors
current expectations of future trading over the going concern period. A
downside forecast has also been modelled which envisages severe but plausible
downside risks.
The Group's base case forecast reflects the Directors best estimation of how
the business plans to perform over the going concern period. Macro-economic
assumptions have been modelled using externally available data based on the
most likely forecasts with general inflation at around 2%-3%, wage inflation
at an average of 3%-4%, interest rates at around 2%-4% and GDP growth at
around 2%-4%.
The downside forecast assumes Civil Aerospace large engine flying hours remain
at average second quarter 2025 levels throughout the going concern period,
reflecting slower GDP growth in this forecast when compared with the base
case. It also assumes a more pessimistic view of general inflation at around
2%-3% higher than the base case covering a broad range of costs including
product costs, energy, commodities and jet fuel. Wage inflation in the
downside forecast is 1%-2% higher than the base case and interest rates are
1%-2% higher. These macro-economic pressures have been modelled across the
whole going concern period. The downside forecast also considers lower demand
as a result of slower market growth, potential output risks associated with
increasing volumes and possible ongoing supply chain challenges.
In reviewing the Group's cash flow forecasts and available liquidity, the
Directors have considered the current volatility in macroeconomic variables,
including recently announced global tariff increases which have created a
degree of uncertainty for the industry. The Directors expect to fully offset
the impact of announced tariffs on the Group through the mitigating actions
that are being taken. The Directors continue to closely monitor the potential
indirect impact on economic growth, foreign exchange and inflation and will
continue to take necessary actions.
In modelling both the base case and downside forecast, the repayment of a $1bn
bond that is due to mature in October 2025 has been assumed to be repaid from
cash as stated externally. The subsequent 2026 maturities, being a €750m
bond in February 2026 and a £375m bond in June 2026 have also been assumed to
be repaid from cash in both the base case and downside forecast.
In preparing the condensed consolidated interim financial statements, the
Directors have continued to consider the impact of climate change,
particularly in the context of disclosures made in the Strategic Report in the
2024 Annual Report. Consistent with our assessment in the 2024 Annual Report,
climate change in not expected to have a significant impact on the Group over
the going concern period. More detail can be found on page 38 of the 2024
Annual Report.
Liquidity and borrowings
At 30 June 2025, the Group had liquidity of £8.5bn including cash and cash
equivalents of £6.0bn and undrawn facilities of £2.5bn.
The Group's committed borrowing facilities at 30 June 2025 and 31 December
2026 are set out below. None of the facilities are subject to any financial
covenants or rating triggers which could accelerate repayment.
£m 30 June 2025 31 December 2026
Issued Bond Notes (1) 3,511 1,801
Revolving Credit Facility (undrawn) (2) 2,500 2,500
Total committed borrowing facilities 6,011 4,301
(1) The value of Issued Bond Notes reflects the impact of derivatives on
repayments of the principal amount of debt. The bonds mature by May 2028
(2) The £2.5bn Revolving Credit Facility matures in November 2027 (currently
undrawn) with one subsequent one year extension option
Taking into account the maturity of these borrowing facilities, the Group has
committed facilities of at least £4.3bn available throughout the going
concern period.
Conclusion
After reviewing the current liquidity position and the cash flow forecasts
modelled under both the base case and downside forecast, the Directors
consider that the Group has sufficient liquidity to continue in operational
existence over the going concern period to 31 December 2026 and are therefore
satisfied that it is appropriate to adopt the going concern basis of
accounting in preparing the interim financial statements.
1 Basis of preparation and accounting policies continued
Key areas of judgement and sources of estimation uncertainty
The determination of the Group's accounting policies requires judgement. The
subsequent application of these policies requires estimates and the actual
outcome may differ from that calculated. The key areas of judgement and
sources of estimation uncertainty as at 31 December 2024, that were assessed
as having a significant risk of causing material adjustments to the carrying
amount of assets and liabilities, are set out in
note 1 to the Consolidated Financial Statements in the 2024 Annual Report and
are summarised below. During the period, the Group has
re-assessed these and where necessary updated the key judgements and
estimation uncertainties. Sensitivities for key sources of estimation
uncertainty are disclosed where this is appropriate and practical.
Area Key judgements Key sources of estimation uncertainty Sensitivities performed
Revenue recognition and contract assets and liabilities Whether Civil Aerospace OE and aftermarket contracts should be combined. Estimates of future revenue, including customer pricing, and costs of Based upon the stage of completion of all large engine LTSA contracts within
long-term contractual arrangements, including the impact of climate change. Civil Aerospace as at 30 June 2025, the following changes in estimate would
How performance on long-term aftermarket contracts should be measured. result in catch-up adjustments being recognised in the period in which the
estimates change (at underlying FX rates):
Whether long-term aftermarket contracts contain a significant financing
component. A change in forecast EFH of 1% over the remaining term of the contracts would
impact LTSA income and to a lesser extent costs, resulting in an impact of
Whether any costs should be treated as wastage. around £20m. This would be expected to be seen as a catch-up change in
revenue or, to the extent it impacts onerous contracts, within cost of sales.
Whether the Civil Aerospace LTSA contracts are warranty style contracts
entered into in connection with OE sales and therefore can be accounted for A 2% increase or decrease in our pricing to customers over the life of the
under IFRS 15 Revenue from Contracts with Customers. contracts would lead to a revenue catch-up adjustment in the next 12 months of
around £360m.
Whether sales of spare engines to joint ventures are at fair value.
A 2% increase or decrease in shop visit costs over the life of the contracts
When revenue should be recognised in relation to spare engine sales. would lead to a revenue catch-up adjustment in the next 12 months of around
£90m.
Risk and revenue sharing arrangements (RRSAs) Determination of the nature of entry fees received.
Taxation Estimates necessary to assess whether it is probable that sufficient suitable The following sensitivities have been modelled using 100% probability of a
taxable profits will arise in the UK to utilise the deferred tax assets base case forecast (31 December 2024: 75% base case / 25% downside forecast)
recognised. to reflect the possibility of plausible downside risks:
A 5% reduction in margin or a 5% reduction in the number of shop visits (which
could be driven by fewer EFH, the impact of climate change, and/or
macro-economic factors) would result in a decrease in the deferred tax asset
in respect of UK losses of around £165m and £135m respectively.
If only 90% of assumed future cost increases from climate change are passed on
to customers, this would result in a decrease in the deferred tax asset of
around £20m, and if carbon prices were to double, this would be £90m.
Research and development Determination of the point in time where costs incurred on an internal
programme development meet the criteria for capitalisation.
Determination of the basis for amortising capitalised development costs.
Leases Determination of the lease term.
1 Basis of preparation and accounting policies continued
Key areas of judgement and sources of estimation uncertainty continued
Area Key judgements Key sources of estimation uncertainty Sensitivities performed
Impairment of non-current assets Determination of cash-generating units for assessing impairment of goodwill.
Whether there are indicators of potential reversal of previous impairments of
programme-related assets.
Provisions Whether any costs should be treated as wastage. Estimates of the time and cost to incorporate required modified parts into the The Group considers that at 30 June 2025 the Trent 1000 onerous contract
fleet to resolve technical issues on certain programmes (which could be provisions are most sensitive to changes in estimates. Our forecast increases
Whether the criteria to recognise a transformation and restructuring provision exacerbated by prolonged supply chain challenges) and the implications of this in shop visit capacity could be impacted by several factors, including
have been met. on forecast future costs when assessing onerous contracts. prolonged supply chain challenges. If forecast increases in shop visit
capacity are not achieved, this could have the impact of reducing planned
output of engine overhauls. A 15% reduction in Trent 1000 planned output
during the second half of 2025 (and thus delayed incorporation of modified
parts into the fleet) could lead to around a £30m to £50m charge.
Estimates of the future revenues and costs to fulfil onerous contracts. An increase in Civil Aerospace large engines estimates of LTSA costs of 1%
over the remaining term of the contracts could lead to a £50m to £70m
increase in the provision for contract losses across all programmes.
Assumptions implicit within the calculation of discount rates. A 1% change in the discount rates used could lead to around a £20m-£30m
change in the onerous contract provision.
Post-retirement benefits Estimates of the assumptions for valuing the net defined benefit obligation. A reduction in the discount rate of 0.25% from 5.65% could lead to an increase
in the defined benefit obligations of the RR UK Pension Fund (RRUKPF) of
approximately £135m. This would be expected to be broadly offset by changes
in the value of scheme assets, as the scheme's investment policies are
designed to mitigate this risk.
An increase in the assumed rate of inflation of 0.25% (RPI of 3.10% and CPI of
2.70%) could lead to an increase in the defined benefit obligations of the
RRUKPF of approximately £50m.
A one-year increase in life expectancy from 20.8 years (male aged 65) and from
21.5 years (male aged 45) would increase the defined benefit obligations of
the RRUKPF by approximately £125m.
2 Segmental analysis
The analysis by segment is presented in accordance with IFRS 8 Operating
Segments, on the basis of those segments whose operating results are regularly
reviewed by the Board (who acts as the Chief Operating Decision Maker as
defined by IFRS 8 Operating Segments). The Group's three divisions are set out
below.
Civil Aerospace - development, manufacture, marketing and sales of commercial aero engines
and aftermarket services
Defence - development, manufacture, marketing and sales of military aero engines,
naval engines, submarine nuclear power plants and aftermarket services
Power Systems - development, manufacture, marketing and sales of integrated solutions
for onsite power and propulsion
On 4 March 2025, an investment was received by Rolls-Royce SMR Limited from
ČEZ Group (ČEZ), as a result the Group relinquished control of Rolls-Royce
SMR Limited and the subsidiary was deconsolidated (see note 20 for further
details).
Following the decision in 2024 to exit the Group's advanced air mobility
activities and the deconsolidation of Rolls-Royce SMR Limited on 4 March 2025
(see note 20) the New Markets operating segment that was reported at 31
December 2024 is no longer regularly reviewed by the Board as a basis for
making decisions about the allocation of resources to the business or to
assess its performance. In line with IFRS 8 Operating Segments, New Markets is
no longer considered to meet the definition of an operating segment.
New electrical power solutions and the Group's share of the financial results
of Small modular reactors (SMRs) have been included in 'All Other Businesses',
which also includes the trading results of the UK Civil Nuclear business. The
segmental analysis for 2024 has been restated to reflect the 2025 assessment
of operating segments.
Underlying results
The Group presents the financial performance of the divisions in accordance
with IFRS 8 Operating Segments and consistently with the basis on which
performance is communicated to the Board each month.
Underlying results are presented by recording all relevant revenue and cost of
sales transactions at the average exchange rate achieved on effective settled
derivative contracts for Rolls-Royce Group companies and subsidiaries in the
period that the cash flow occurs. The impact of the revaluation of monetary
assets and liabilities (other than lease liabilities) using the exchange rate
that is expected to be achieved by the use of the effective hedge book is
recorded within underlying cost of sales. Underlying financing excludes the
impact of revaluing monetary assets and liabilities to period end exchange
rates. Lease liabilities are not revalued to reflect the expected exchange
rates due to their multi-year remaining term, the Directors believe that doing
so would not be the most appropriate basis to measure the in-year performance.
Transactions between segments are presented on the same basis as underlying
results and eliminated on consolidation. Unrealised fair value gains/(losses)
on foreign exchange contracts, which are recognised as they arise in the
statutory results, are excluded from underlying results. To the extent that
the previously forecast transactions are no longer expected to occur, an
appropriate portion of the unrealised fair value gain/(loss) on foreign
exchange contracts is recorded immediately in the underlying results.
Amounts receivable/(payable) on interest rate swaps which are not designated
as hedge relationships for accounting purposes are reclassified from fair
value movement on a statutory basis to interest receivable/(payable) on an
underlying basis, as if they were in an effective hedge relationship.
In the period to 30 June 2025, the Group was a net seller of USD at an
achieved exchange rate GBP:USD of 1.44
(30 June 2024: 1.48) based on the USD hedge book.
In 2020, the Group experienced a significant decline in its medium-term
outlook and consequently a significant deterioration to its forecast net USD
cash inflows. The Group took action to reduce the size of the USD hedge book
by $11.8bn across 2020-2026 to reflect the fact that, at that time, future
operating cash flows were no longer forecast to materialise. An underlying
charge of £1.7bn was recognised within the underlying finance costs in 2020
and the associated cash settlement costs occur over the period
2020-2026. The derivatives relating to this underlying charge have been
subsequently excluded from the hedge book, and therefore are also excluded
from the calculation of the average exchange rate achieved in the current and
future periods.
Underlying performance also excludes the following:
- the effect of acquisition accounting and business disposals;
- impairment of goodwill and other non-current and current assets
where the reasons for the impairment are outside of normal operating
activities;
- exceptional items; and
- certain other items which are market driven and outside of the
control of management.
Subsequent changes in items excluded from underlying performance recognised in
a prior period will also be excluded from underlying performance. All other
changes will be recognised within underlying performance.
Acquisition accounting, business disposals and impairment
The Group excludes these from underlying results so that the current period
and comparative results are directly comparable.
Exceptional items
Items are classified as exceptional where the Directors believe that
presentation of the results in this way is useful in providing an
understanding of the Group's financial performance. Exceptional items are
identified by virtue of their size, nature or incidence.
In determining whether an event or transaction is exceptional, the Directors
consider quantitative as well as qualitative factors such as the frequency or
predictability of occurrence. Examples of exceptional items include one-time
costs and charges in respect of aerospace programmes, costs of exceptional
transformation and restructuring programmes and one-time past service charges
and credits on post-retirement schemes.
Exceptional items are not allocated to segments and may not be comparable to
similarly titled measures used by other companies.
2 Segmental analysis continued
Other items
The financing component of the defined benefit pension scheme cost is
determined by market conditions and has therefore been excluded from
underlying performance.
The tax effects of adjustments above and changes in tax rates are excluded
from the underlying tax charge. In addition, changes in the amount of
recoverable deferred tax recognised are excluded from the underlying results
to the extent that their recognition or derecognition was not originally
recorded within the underlying results.
The following analysis sets out the results of the Group's divisions on the
basis described above and also includes a reconciliation of the underlying
results to those reported in the condensed consolidated income statement.
- Civil Aerospace Defence Power Systems All Other Businesses (1) Corporate and Inter-segment (2) Total underlying
£m £m £m £m £m £m
For the half-year ended 30 June 2025
Underlying revenue from sale of original equipment 1,478 1,000 1,381 6 - 3,865
Underlying revenue from aftermarket services 3,308 1,223 661 - - 5,192
Total underlying revenue 4,786 2,223 2,042 6 - 9,057
Gross profit/(loss) 1,477 462 635 - (2) 2,572
Commercial and administrative costs (213) (103) (251) (7) (35) (609)
Research and development (138) (18) (79) (21) - (256)
Share of results of joint ventures and associates 67 1 8 (50) - 26
Underlying operating profit/(loss) 1,193 342 313 (78) (37) 1,733
For the half-year ended 30 June 2024
Underlying revenue from sale of original equipment 1,329 872 1,257 6 - 3,464
Underlying revenue from aftermarket services 2,790 1,347 580 1 - 4,718
Total underlying revenue 4,119 2,219 1,837 7 - 8,182
Gross profit 992 476 507 2 - 1,977
Commercial and administrative costs (193) (108) (238) (20) (34) (593)
Research and development (135) (24) (83) (73) - (315)
Share of results of joint ventures and associates 76 1 3 - - 80
Underlying operating profit/(loss) 740 345 189 (91) (34) 1,149
(1) Following the decision to exit the Group's advanced air mobility
activities in 2024 and the deconsolidation of Rolls-Royce SMR Limited on 4
March 2025 (see note 20) the results of those activities in both 2024 and 2025
have been reported within All Other Businesses. The Group's income statement
for the period to 30 June 2025 includes two months of the results of
Rolls-Royce SMR Limited as a subsidiary and four months of the Group's share
of the results of the equity-accounted investment
(2) Corporate and Inter-segment consists of costs that are not attributable
to a specific segment and consolidation adjustments
2 Segmental analysis continued
Reconciliation to statutory results
Total underlying Underlying adjustments and adjustments to Group statutory results
foreign exchange
£m £m £m
For the half-year ended 30 June 2025
Revenue from sale of original equipment 3,865 114 3,979
Revenue from aftermarket services 5,192 319 5,511
Total revenue 9,057 433 9,490
Gross profit 2,572 355 2,927
Commercial and administrative costs (609) (22) (631)
Research and development (256) 10 (246)
Share of results of joint ventures and associates 26 (2) 24
Operating profit 1,733 341 2,074
Gain arising on the disposal of business - 679 679
Profit before financing and taxation 1,733 1,020 2,753
Net financing (44) 2,132 2,088
Profit before taxation 1,689 3,152 4,841
Taxation (93) (340) (433)
Profit for the period 1,596 2,812 4,408
Attributable to:
Ordinary shareholders 1,604 2,812 4,416
NCI (8) - (8)
For the half-year ended 30 June 2024
Revenue from sale of original equipment 3,464 162 3,626
Revenue from aftermarket services 4,718 517 5,235
Total revenue 8,182 679 8,861
Gross profit 1,977 131 2,108
Commercial and administrative costs (593) (48) (641)
Research and development (315) 416 101
Share of results of joint ventures and associates 80 (2) 78
Operating profit 1,149 497 1,646
Profit before financing and taxation 1,149 497 1,646
Net financing (114) (116) (230)
Profit before taxation 1,035 381 1,416
Taxation (298) 18 (280)
Profit for the period 737 399 1,136
Attributable to:
Ordinary shareholders 750 399 1,149
NCI (13) - (13)
2 Segmental analysis continued
Disaggregation of revenue from contracts with customers
Civil Aerospace Defence Power Systems All Other Businesses Corporate and Inter-segment Total underlying
Analysis by type and basis of recognition £m £m £m £m £m £m
For the half-year ended 30 June 2025
Original equipment recognised at a point in time 1,478 295 1,351 - - 3,124
Original equipment recognised over time - 705 30 6 - 741
Aftermarket services recognised at a point in time 766 493 518 - - 1,777
Aftermarket services recognised over time 2,505 730 143 - - 3,378
Total underlying customer contract revenue 4,749 2,223 2,042 6 - 9,020
Other underlying revenue (1) 37 - - - - 37
Total underlying revenue 4,786 2,223 2,042 6 - 9,057
For the half-year ended 30 June 2024
Original equipment recognised at a point in time 1,329 204 1,235 1 - 2,769
Original equipment recognised over time - 668 22 5 - 695
Aftermarket services recognised at a point in time 559 478 535 1 - 1,573
Aftermarket services recognised over time 2,180 869 45 - - 3,094
Total underlying customer contract revenue 4,068 2,219 1,837 7 - 8,131
Other underlying revenue (1) 51 - - - - 51
Total underlying revenue 4,119 2,219 1,837 7 - 8,182
(1 ) Includes leasing revenue
Total underlying Underlying adjustments and adjustments to foreign exchange Group statutory results
£m £m £m
For the half-year ended 30 June 2025
Original equipment recognised at a point in time 3,124 113 3,237
Original equipment recognised over time 741 1 742
Aftermarket services recognised at a point in time 1,777 73 1,850
Aftermarket services recognised over time 3,378 242 3,620
Total customer contract revenue 9,020 429 9,449
Other revenue 37 4 41
Total revenue 9,057 433 9,490
For the half-year ended 30 June 2024
Original equipment recognised at a point in time 2,769 162 2,931
Original equipment recognised over time 695 - 695
Aftermarket services recognised at a point in time 1,573 76 1,649
Aftermarket services recognised over time 3,094 432 3,526
Total customer contract revenue 8,131 670 8,801
Other revenue 51 9 60
Total revenue 8,182 679 8,861
2 Segmental analysis continued
Underlying adjustments Half-year to 30 June 2024
Half-year to 30 June 2025
Revenue Profit before financing Net financing Revenue Profit before financing Net financing
£m £m £m £m £m £m
Taxation Taxation
£m £m
Underlying performance 9,057 1,733 (44) (93) 8,182 1,149 (114) (298)
Impact of foreign exchange differences as a result of hedging activities on A 433 102 529 (159) 679 85 120 (50)
trading transactions (1)
Unrealised fair value changes on derivative contracts held for trading (2) A - - 1,640 (414) - (3) (213) 53
Unrealised fair value change to derivative contracts held for financing (3) A - - (6) 1 - - 39 (10)
Exceptional programme credits/(charges) (4) B - 83 - (21) - - - -
Exceptional transformation and restructuring charges (5) B - (21) - 5 - (107) (11) 32
Impairment reversals (6) C - 185 - (46) - 545 - (159)
Effect of acquisition accounting (7) C - (8) - 2 - (23) - 6
Other (8) D - - (31) 6 - - (51) 13
Gains arising on the disposals of business (9) C - 679 - - - - - -
Impact of tax rate change (10) D - - - - - - - 10
Recognition of deferred tax assets (11) D - - - 286 - - - 123
Total underlying adjustments 433 1,020 2,132 (340) 679 497 (116) 18
Statutory performance per condensed consolidated income statement 9,490 2,753 2,088 (433) 8,861 1,646 (230) (280)
A - FX and derivatives, B - Exceptional, C - M&A and impairment, D - Other
(1)( ) The impact of measuring revenues and costs at the average exchange
rate during the period and the impact of valuation of assets and liabilities
using the period end exchange rate rather than the achieved rate or the
exchange rate that is expected to be achieved by the use of the hedge book
increased statutory revenues by £433m (30 June 2024: £679m) and increased
profit before financing and taxation by £102m (30 June 2024: £85m).
Underlying financing excludes the impact of revaluing monetary assets and
liabilities at the period end exchange rate
(2) The underlying results exclude the fair value changes on derivative
contracts held for trading. These fair value changes are subsequently
recognised in the underlying results when the contracts are settled
(3) Includes net fair value loss of £6m (30 June 2024: gain of £34m) on any
interest rate swaps not designated into hedging relationships for accounting
purposes
(4) During the period to 30 June 2025, contract loss provisions have reduced
by £83m (30 June 2024: £nil) as a result of amounts released following
contractual renegotiations where the original charge was treated as
non-underlying
(5) In 2023, the Group announced a major multi-year transformation programme
which consisted of seven workstreams (set out in the 2022 Annual Report).
During the period to 30 June 2025, the Group incurred charges of £21m related
to this programme (30 June 2024: £107m). The charges comprise of £22m for
advisory fees and transformation office costs (30 June 2024: £20m), £nil
related to impairments, write offs and closure costs (30 June 2024: £32m
including those related to the closure of advanced air mobility activities)
and a credit of £1m related to severance (30 June 2024: £55m charge)
(6)( ) The Group has assessed the carrying value of its assets and reviewed
for potential impairment and impairment reversal triggers. In the period to 30
June 2025, there was an impairment reversal of intangible assets of £12m (30
June 2024: £413m), property plant and equipment of £52m (30 June 2024:
£nil), right-of-use assets of £121m (30 June 2024: £nil) and contract
assets of £nil (30 June 2024: £132m). See notes 8, 9 and 10 for further
details. Of the £185m reversed, £176m (30 June 2024: £132m) was included
within cost of sales, and £9m (30 June 2024: £413m) within research and
development costs, see note 3 for further details
(7) The effect of acquisition accounting includes the amortisation of
intangible assets arising on previous acquisitions
(8) Includes interest received of £30m (30 June 2024: £44m) on interest
rate swaps which are not designated into hedge relationships for statutory
purposes from interest payable on an underlying basis to fair value movement
(9) An exceptional gain on disposal was recognised as a result of the
deconsolidation of Rolls-Royce SMR Limited during the period. Further details
can be found in note 20
(10 ) Represents the impact to the income statement of the reduction in the
tax rate on authorised surplus pension charges from 35% to 25% in 2024
(11) During the period to 30 June 2025, the Group recognised deferred tax
assets of £563m (30 June 2024: £157m) relating to UK tax losses of which
£277m (30 June 2024: £34m) is included in underlying performance and £286m
(30 June 2024: £123m) in non-underlying
2 Segmental analysis continued
Balance sheet analysis
At 30 June 2025 ( ) Civil Defence Power Total reportable segments
Aerospace £m Systems £m
£m £m
Segment assets 20,426 3,492 4,090 28,008
Interests in joint ventures and associates 525 9 28 562
Segment liabilities (25,473) (3,352) (2,139) (30,964)
Net (liabilities)/assets (4,522) 149 1,979 (2,394)
At 31 December 2024
Segment assets 19,303 3,495 3,998 26,796
Interests in joint ventures and associates 550 9 33 592
Segment liabilities (26,621) (3,322) (1,969) (31,912)
Net (liabilities)/assets (6,768) 182 2,062 (4,524)
Reconciliation to the balance sheet
30 June 31 December
2025 2024
£m £m
Segment assets (excluding held for sale) 28,008 26,796
Interests in joint ventures and associates 562 592
All Other Businesses 700 122
Corporate and inter-segment (1,874) (2,227)
Assets held for sale 157 153
Cash and cash equivalents and short-term investments 6,044 5,575
Fair value of swaps hedging fixed rate borrowings 67 154
Deferred and income tax assets 3,526 3,731
Post-retirement scheme surpluses 750 790
Total assets 37,940 35,686
Segment liabilities (excluding held for sale) (30,964) (31,912)
All Other Businesses (83) (200)
Corporate and inter-segment 1,874 2,227
Liabilities associated with assets held for sale (88) (100)
Borrowings and lease liabilities (4,909) (5,132)
Fair value of swaps hedging fixed rate borrowings (117) (121)
Deferred and income tax liabilities (277) (348)
Post-retirement scheme deficits (942) (981)
Total liabilities (35,506) (36,567)
Net assets/(liabilities) 2,434 (881)
3 Research and development
Half-year to 30 June 2025 Half-year to
30 June 2024
£m £m
Gross research and development expenditure (687) (723)
Contributions and fees 387 333
Net expenditure in the period (300) (390)
Capitalised as intangible assets 104 126
Amortisation and impairment of capitalised costs (1, 2) (50) 365
Net amount recognised in the income statement (246) 101
Underlying adjustments (2) (10) (416)
Net underlying cost recognised in the income statement (256) (315)
(1) See note 8 for analysis of amortisation and impairment
(2 ) Underlying adjustments include impact of acquisition accounting,
foreign exchange and an impairment reversal of £9m (30 June 2024: £413m).
Further details can be found in notes 2 and 8
4 Net financing
Half-year to Half-year to
30 June 2025 30 June 2024
Statutory Underlying (1) Statutory Underlying (1)
£m £m £m £m
Interest receivable and similar income (2) 150 147 128 128
Net fair value gains on foreign currency contracts 1,652 - - -
Net fair value gains on non-hedge accounted interest rate swaps (3) - - 34 -
Net fair value gains on commodity contracts - - 12 -
Financing on post-retirement scheme surpluses 11 - 12 -
Net foreign exchange gains 529 - 120 -
Financing income 2,342 147 306 128
Interest payable (161) (125) (188) (137)
Net fair value losses on foreign currency contracts - - (225) -
Net fair value losses on non-hedge accounted interest rate swaps (3) (6) - - -
Net fair value losses on revaluation of other investments accounted for at - - (24) (24)
FVTPL (4)
Net fair value losses on commodity contracts (12) - - -
Financing on post-retirement scheme deficits (9) - (14) -
Cost of undrawn facilities (4) (4) (12) (12)
Other financing charges (62) (62) (73) (69)
Financing costs (254) (191) (536) (242)
Net financing income/(costs) 2,088 (44) (230) (114)
Analysed as:
Net interest (payable)/receivable (11) 22 (60) (9)
Net fair value gains/(losses) on derivative contracts 1,634 - (179) -
Net post-retirement scheme financing 2 - (2) -
Net foreign exchange gains 529 - 120 -
Net other financing (66) (66) (109) (105)
Net financing income/(costs) 2,088 (44) (230) (114)
(1) See note 2 for definition of underlying results
(2 ) Includes interest income on cash balances and short-term deposits of
£90m (30 June 2024: £88m) and similar income of £59m (30 June 2024: £40m)
on money market funds
(3)( ) The condensed consolidated income statement shows the net fair value
loss on any interest rate swaps not designated into hedging relationships for
accounting purposes. Underlying financing reclassifies the realised fair value
movements on these interest rate swaps to net interest payable
(4 ) Included in the financing costs is a £nil (30 June 2024: £24m) charge
in relation to the fair value write-down of an unlisted investment recorded at
fair value through profit or loss (FVTPL)
5 Taxation
The income tax expense has been calculated by applying the annual effective
tax rate for each jurisdiction to the half-year profits of each jurisdiction.
The tax charge for the period is £433m on a statutory profit before taxation
of £4,841m (30 June 2024: tax charge of £280m on a statutory profit before
taxation of £1,416m), giving a statutory tax rate of 8.9% (30 June 2024:
19.8%). The key drivers of the tax charge in the period are the profits in key
jurisdictions taxed at local rates together with a tax credit on the
recognition of a deferred tax asset relating to UK tax losses and on the
deconsolidation of Rolls-Royce SMR Limited from the Group.
Tax reconciliation:
Half-year to Half-year to
30 June 2025 30 June 2024
£m Tax rate £m Tax rate
Profit before taxation 4,841 1,416
Nominal tax charge at UK corporation tax rate 1,210 25.0% 354 25.0%
Movement in UK deferred tax assets not recognised (1) (563) (11.7%) (157) (11.1%)
Utilisation of previously unrecognised tax losses (2) (31) (0.6)% - -
Tax de-grouping charge (3) - - 100 7.1%
Decrease in deferred tax liabilities from change in UK tax rate (4) - - (10) (0.7%)
Effect of de-consolidation of Rolls-Royce SMR Limited (5) (170) (3.5%) - -
Other (6) (13) (0.3%) (7) (0.5%)
Statutory tax charge and rate 433 8.9% 280 19.8%
Analysis of statutory tax charge/(credit):
Underlying items 93 298
Non-underlying items (see note 2) 340 (18)
433 280
(1 ) Movement in the period to 30 June 2025 and 30 June 2024 relates to the
recognition of UK tax losses previously not recognised
(2) Movement in the period to 30 June 2025 relates to the utilisation of
previously unrecognised brought forward losses against UK taxable profits
(3) The charge in the period to 30 June 2024 arose due to the dilution of the
Group's shareholding in Rolls-Royce SMR Limited to below 75%
(4) The period to 30 June 2024 includes the impact of the reduction in the
tax rate on authorised surplus pension charges from 35% to 25%
(5 ) The deconsolidation of Rolls-Royce SMR Limited from the Group in the
period to 30 June 2025 is treated as non-taxable, following the tax
de-grouping charge in footnote 3
(6 ) Includes Pillar Two income taxes of less than £1m (30 June 2024: less
than £1m)
Deferred tax assets are recognised to the extent it is probable that future
taxable profits will be available against which to recover the asset. Where
necessary, this is based on management's assumptions and probability
assessments relating to the amounts and timing of future taxable profits. The
Directors continually reassess the appropriateness of recovering deferred tax
assets, which includes a consideration of the level of future profits and the
time period over which they are recovered.
The assessment performed at 30 June 2025, which has been calculated at 100%
probability of a base case forecast (30 June 2024: 75% base case and 25%
downside forecast) reflects sustained profitability and continued growing
financial resilience of the Group. It also reflects the fact that the Group's
multi-year transformation continues to deliver despite an uncertain external
environment, including continued supply chain challenges and tariffs. Delivery
against the Group's strategic initiatives continues to expand the earnings
potential of the business.
Sensitivities have been modelled on the base case forecast to reflect the
possibility of plausible downside risks which could be driven by a number of
factors, including a change in forecast EFH, the impact of climate change
and/or macroeconomic factors:
- A 5% reduction in margin in the main Civil Aerospace large engine
programmes would result in a decrease in the deferred tax asset of around
£165m.
- A 5% change in the number of shop visits would result in a decrease
in the deferred tax asset of around £135m.
- Assumed future cost increases from climate change are expected to
pass through to customers at 100%. If only 90% of assumed future cost
increases from climate change are passed on to customers, this would result in
a decrease in the deferred tax asset of around £20m, and if carbon prices
were to double, this would be £90m. The assumptions around carbon pricing are
consistent with those at 31 December 2024.
Based on the assessment, the Group has recognised a total deferred tax asset
relating to UK losses of £3,035m, which includes the recognition of a further
£563m of previously unrecognised deferred tax asset relating to UK tax losses
(of which £286m is non-underlying and £277m is underlying) and £31m
utilisation of previously unrecognised deferred tax asset relating to UK tax
losses against profits in the period to 30 June 2025 (all of which is
underlying).
The Group is within the scope of the OECD Pillar Two (Global Minimum Tax)
model rules, which came into effect from 1 January 2024. For the period to 30
June 2025, the Group has continued to apply the mandatory exception to
recognising and disclosing information about deferred tax assets and
liabilities related to Pillar Two income taxes.
5 Taxation continued
Impact of recognition of UK deferred tax assets on underlying profit after tax
As outlined above, in the period to 30 June 2025 the Group recognised a
further £563m of previously unrecognised deferred tax asset relating to UK
tax losses (of which £286m is non-underlying and £277m is underlying). The
£277m credit to underlying profit after tax has been adjusted in the
calculation of the interim dividend per share, earnings per share and return
on capital. This one-off non-cash adjustment has been made as it would
otherwise cause a disproportionate impact on these metrics.
6 Earnings per ordinary share
Basic earnings per share (EPS) is calculated by dividing the profit
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the period, excluding ordinary shares held
under trust, which have been treated as if they had been cancelled.
Half-year to 30 June 2025 Half-year to 30 June 2024
Basic Potentially dilutive share options Diluted Basic Potentially dilutive share options Diluted
Profit attributable to ordinary shareholders (£m) 4,416 4,416 1,149 1,149
Weighted average number of ordinary shares (millions) 8,430 38 8,468 8,380 52 8,432
EPS (pence) 52.38 (0.23) 52.15 13.71 (0.08) 13.63
The reconciliation between underlying EPS and basic EPS is as follows:
Half-year to 30 June 2025 Half-year to 30 June 2024
Pence £m Pence £m
EPS / Profit attributable to ordinary shareholders 52.38 4,416 13.71 1,149
Total underlying adjustments to profit before tax (note 2) (37.39) (3,152) (4.55) (381)
Related tax effects 4.03 340 (0.21) (18)
Adjustment for recognition of deferred tax assets (1) (3.28) (277) - -
Underlying EPS / Underlying profit attributable to ordinary shareholders 15.74 1,327 8.95 750
Diluted underlying EPS attributable to ordinary shareholders 15.67 8.89
(1 ) Underlying profit attributable to ordinary shareholders has been
adjusted for the one-off non-cash impact of £277m related to the recognition
of deferred tax assets on UK tax losses, see note 5 for further details
7 Dividends
Half-year to 30 June 2025 Half-year to
30 June 2024
£m £m
Dividends paid during the period 507 -
Ordinary dividends declared and paid in the period ended 30 June 2025
comprised of a final dividend for 2024 of 6p per ordinary share.
The Employee Benefit Trust has currently waived the right to receive dividends
on Rolls-Royce Holdings plc shares. This waiver has been applied to dividends
paid in 2025.
On 31 July 2025, the Board announced an interim cash dividend in respect of
the first half of 2025 of 4.5 pence per ordinary share. The expected total
cost of servicing this dividend is £379m, for which no liability has been
recognised at the balance sheet date. The interim dividend will be paid on 18
September 2025 to shareholders on the register on 8 August 2025. The election
deadline for ordinary shareholders wishing to participate in the Dividend
Reinvestment Programme (DRIP) is 29 August 2025, further details can be
obtained from the Company's Registrar, Equiniti Limited.
8 Intangible assets
Goodwill Certification costs Development expenditure Customer relationships Software (1) Other (2) Total
£m £m £m £m £m £m £m
Cost:
At 1 January 2025 1,045 929 3,956 469 1,018 688 8,105
Additions - 17 104 - 39 7 167
Disposal of business (2) - - - - (3) (5)
Disposals (10) - - - (11) (24) (45)
Exchange differences - 1 37 (5) (3) 9 39
At 30 June 2025 1,033 947 4,097 464 1,043 677 8,261
Accumulated amortisation and impairment:
At 1 January 2025 36 493 1,626 441 723 384 3,703
Charge for the period (3) - 15 56 2 37 11 121
Impairment (4) - (3) (6) - - (1) (10)
Disposal of business (2) - - - - (3) (5)
Disposals (10) - - - (10) (24) (44)
Exchange differences - - 12 (5) (2) 3 8
At 30 June 2025 24 505 1,688 438 748 370 3,773
Net book value at:
30 June 2025 1,009 442 2,409 26 295 307 4,488
1 January 2025 1,009 436 2,330 28 295 304 4,402
(1)( ) Includes £120m (31 December 2024: £100m) of software in course of
construction which is not amortised
(2 ) Other intangibles includes trademarks, brands and the costs incurred
testing and analysing engines with the longest time in service (fleet leader
engines) to gather technical knowledge on engine endurance which will improve
reliability and enable us to reduce the costs of meeting our LTSA obligations
(3 ) Charged to cost of sales and commercial and administrative costs except
development costs, which are charged to research and development costs
(4) Includes the reversal of a Civil Aerospace - Trent programme asset which
was fully impaired by 30 June 2020. A partial impairment reversal of £12m has
been credited to cost of sales (£3m) and research and development (£9m)
within the non-underlying income statement. See further details below
Intangible assets (including programme intangible assets) have been reviewed
for impairment in accordance with IAS 36 Impairment of Assets. Assessments
have considered potential triggers of impairment such as external factors
including significant programme changes, climate change, and by analysing
latest management forecasts against those prepared in 2024 to identify any
change in performance.
An impairment reversal trigger was identified for a Civil Aerospace - Trent
programme asset which became fully impaired as a result of the impacts of
COVID-19 in 2020. The trigger for recalculating the recoverable amount was an
increase in the estimated period of operation of engines under TotalCare
arrangements.
An impairment reversal assessment has been carried out on the following basis:
- The recoverable amount of programme assets has been estimated using a
value in use calculation. This has been estimated using cash flows from the
most recent forecasts prepared by the Directors, which are consistent with
past-experience and external sources of information on market conditions over
the life of the respective programme; and
- The key assumptions underpinning cash flow projections are based on
estimates of product performance and aftermarket volumes. Climate-related
risks are considered when making these estimates.
An intangible asset impairment reversal of £12m was recognised together with
a property, plant and equipment impairment reversal of £52m (see note 9) and
a lease right-of-use asset impairment reversal of £121m (see note 10) being
recognised in cost of sales (£176m) and research and development (£9m) in
the period as follows:
Impairment reversal Pre-tax nominal discount rate at 30 June 2025 (1)
Intangible Assets Property, plant and equipment Total
£m
£m
£m
Right-of-use Assets
£m
Civil Aerospace - Trent programme assets 12 52 121 185 12.0%
(1 ) The equivalent pre-tax nominal discount rate in 2020 when the
impairment was recognised was 11.0%
The recoverable amount calculated includes passage of time benefits in
addition to those from the impairment reversal trigger drivers described above
and has resulted in a partial impairment reversal. In making this assessment,
the Directors have considered a range of sensitivities in relation to the
aftermarket returns, cost increases and discount rates.
There have been no other individually material impairment charges or reversals
recognised during the period (30 June 2024: none).
9 Property, plant and equipment
Land and buildings Plant and equipment Aircraft and engines In course of construction Total
£m £m £m £m £m
Cost:
At 1 January 2025 1,882 4,910 1,099 535 8,426
Additions 7 61 68 70 206
Disposal of business - (5) - - (5)
Disposals/write-offs (2) (68) (4) (1) (75)
Reclassifications within property, plant and equipment (1) 1 36 - (37) -
Exchange differences (18) (41) (13) (23) (95)
At 30 June 2025 1,870 4,893 1,150 544 8,457
Accumulated depreciation and impairment:
At 1 January 2025 768 3,454 472 8 4,702
Charge for the period (2) 34 118 31 - 183
Impairment (3) - 1 (52) - (51)
Disposal of business - (2) - - (2)
Disposals/write-offs (1) (61) (3) - (65)
Exchange differences (9) (28) (5) - (42)
At 30 June 2025 792 3,482 443 8 4,725
Net book value:
At 30 June 2025 1,078 1,411 707 536 3,732
At 1 January 2025 1,114 1,456 627 527 3,724
(1 ) Includes reclassifications of assets in course of construction into the
other categories of property, plant and equipment when the assets become
available for use
(2 ) Depreciation is charged to cost of sales and commercial and
administrative costs or included in the cost of inventory as appropriate
(3 ) The carrying values of property, plant and equipment have been assessed
during the period in line with IAS 36 Impairment of Assets. Material items of
plant and equipment and aircraft and engines are assessed for impairment
together with other assets used in individual programmes - see potential
triggers considered in note 8. Land and buildings are generally used across
multiple programmes and are considered based on future expectations of the use
of the site, which includes any implications from climate-related risks.
During the period to 30 June 2025, a partial impairment reversal of £52m has
been recognised within cost of sales (31 December 2024: £nil), as outlined
within notes 2 and 8
10 Right-of-use assets
Land and buildings Plant and equipment Aircraft and engines Total
£m £m £m £m
Cost:
At 1 January 2025 517 246 1,897 2,660
Additions/modification of leases 19 29 13 61
Disposal of business (2) - - (2)
Disposals (6) (26) (49) (81)
Exchange differences (19) (1) 2 (18)
At 30 June 2025 509 248 1,863 2,620
Accumulated depreciation and impairment:
At 1 January 2025 294 135 1,470 1,899
Charge for the period (1) 25 24 85 134
Impairment (2) - - (121) (121)
Disposal of business (1) - - (1)
Disposals (6) (13) (49) (68)
Exchange differences (11) 1 2 (8)
At 30 June 2025 301 147 1,387 1,835
Net book value:
At 30 June 2025 208 101 476 785
At 1 January 2025 223 111 427 761
(1 ) Depreciation is charged to cost of sales and commercial and
administrative costs as appropriate
(2 ) The carrying values of right-of-use assets have been assessed during
the period in line with IAS 36 Impairment of Assets. Material items of plant
and equipment and aircraft and engines are assessed for impairment together
with other assets used in individual programmes - see potential triggers
considered in note 8. Land and buildings are generally used across multiple
programmes and are considered based on future expectations of the use of the
site (which includes any implications from climate-related risks). During the
period to 30 June 2025, a partial impairment reversal of £121m has been
recognised within cost of sales (31 December 2024: charge of £2m), as
outlined within notes 2 and 8
11 Trade receivables and other assets
Current Non-current (1) Total
30 June 31 December 2024 30 June 31 December 2024 30 June 31 December 2024
2025 £m 2025 £m 2025 £m
£m £m £m
Trade receivables 2,879 2,917 108 138 2,987 3,055
Prepayments 853 829 87 89 940 918
RRSA prepayment for parts (2) 724 486 1,112 1,182 1,836 1,668
Receivables due on RRSAs 899 1,118 80 119 979 1,237
Amounts owed by joint ventures and associates 871 894 5 2 876 896
Other taxation and social security receivable 166 215 25 2 191 217
Costs to obtain contracts with customers 9 11 174 124 183 135
Other receivables and similar assets (3) 651 529 74 58 725 587
7,052 6,999 1,665 1,714 8,717 8,713
(1) Trade receivables and other assets have been presented on the face of
the balance sheet in line with the operating cycle of the business. Further
disclosure is included in the table above and relates to amounts not expected
to be received in the next 12 months, in line with specific customer payment
arrangements, including customers on payment plans
(2 ) These amounts reflect the contractual share of EFH flows and original
equipment deposits from customers paid to RRSA partners in return for the
supply of parts in future periods under long-term supply contracts. During the
period £279m (31 December 2024: £262m) has been charged in cost of sales in
relation to parts supplied and used in the period
(3) Other receivables includes unbilled recoveries relating to completed
overhaul activity where the right to consideration is unconditional
The Group has adopted the simplified approach to provide for expected credit
losses (ECL), measuring the loss allowance at a probability weighted amount
incorporated by using credit ratings which are publicly available, or through
internal risk assessments derived using the customer's latest available
financial information.
The ECL for trade receivables and other assets has decreased by £35m to
£204m (31 December 2024: decreased by £3m to £239m).
The movements of the Group's ECL provision are as follows:
30 June 31 December
2025 2024
£m £m
At 1 January (239) (242)
Increases in loss allowance recognised in the income statement during the (50) (130)
period
Loss allowance utilised 19 11
Releases of loss allowance previously provided 63 116
Transferred to assets held for sale 1 1
Exchange differences 2 5
At 30 June/31 December (204) (239)
12 Contract assets and liabilities
Current Non-current (1) Total
30 June 31 December 2024 30 June 31 December 2024 30 June 31 December 2024
2025 £m 2025 £m 2025 £m
£m £m £m
Contract assets
Contract assets with customers 546 886 834 598 1,380 1,484
Participation fee contract assets 30 38 293 291 323 329
576 924 1,127 889 1,703 1,813
(1) Contract assets and contract liabilities have been presented on the face
of the balance sheet in line with the operating cycle of the business.
Contract liabilities are further split according to when the related
performance obligation is expected to be satisfied and therefore when revenue
is estimated to be recognised in the income statement. Further disclosure of
contract assets is provided in the table above, which shows within current the
element of consideration that will become unconditional in the next year
The balance includes £882m (31 December 2024: £955m) Civil Aerospace LTSA
assets and £336m (31 December 2024: £381m) Defence LTSA assets.
The decrease in the Civil Aerospace balance is driven by revenue recognised
(when performance obligations have been completed during the period) being
lower than the amount invoiced on those contracts that have a contract asset
balance. Revenue recognised relating to performance obligations satisfied in
previous years was £56m which reduced the contract asset (31 December 2024:
reduction of £42m) in Civil Aerospace.
No impairment losses in relation to these contract assets (31 December 2024:
none) have arisen during the period.
Participation fee contract assets have decreased by £6m (31 December 2024:
increased by £102m) primarily due to amortisation of £(11)m (31 December
2024: £(23)m) and the Civil Aerospace programme asset impairment reversal of
£nil (31 December 2024: £132m), offset by foreign exchange on consolidation
of £5m (31 December 2024: £(7)m).
12 Contract assets and liabilities continued
Current Non-current Total
30 June 31 December 2024 30 June 31 December 2024 30 June 31 December 2024
2025 £m 2025 £m 2025 £m
£m £m £m
Contract liabilities 7,048 6,309 9,602 9,447 16,650 15,756
Contract liabilities have increased by £894m. The movement in the Group
balance is primarily as a result of an increase in Civil Aerospace of £632m.
This is mainly a result of growth in LTSA liabilities of £436m (30 June 2025:
£11,575m, 31 December 2024: £11,139m) driven almost wholly by large engines,
with customer invoicing in 2025 (based on EFH) being in advance of revenue
recognised (based on costs incurred completing performance obligations). The
contract liability movement includes a decrease of £(182)m (31 December 2024:
decrease of £(354)m) as a result of revenue being recognised in relation to
performance obligations satisfied in previous years. Contract liability
increases in Defence of £146m and Power Systems of £124m are from the
receipt of deposits in advance of performance obligations being completed.
13 Borrowings and lease liabilities
Current Non-current Total
30 June 31 December 2024 30 June 31 December 2024 30 June 31 December 2024
2025 £m 2025 £m 2025 £m
£m £m £m
Unsecured
Overdrafts 2 2 - - 2 2
Bank loans 3 4 4 3 7 7
Loan notes 1,743 795 1,732 2,764 3,475 3,559
Other loans - - 9 9 9 9
Total unsecured 1,748 801 1,745 2,776 3,493 3,577
Lease liabilities 323 296 1,093 1,259 1,416 1,555
Total borrowings and lease liabilities 2,071 1,097 2,838 4,035 4,909 5,132
All outstanding items described as loan notes above are listed on the London
Stock Exchange
The Group has access to the following undrawn committed borrowing facilities
at the end of the period:
30 June 31 December 2024
2025 £m
£m
Expiring after one year 2,500 2,500
Total undrawn facilities 2,500 2,500
Further details can be found in the going concern statement on page 19
During the period to 30 June 2025, the Group did not repay any loan notes.
14 Trade payables and other liabilities
Current Non-current Total
30 June 31 December 2024 30 June 31 December 2024 30 June 31 December 2024
2025 £m 2025 £m 2025 £m
£m £m £m
Trade payables 1,841 1,526 - - 1,841 1,526
Accrued liabilities 2,369 2,552 110 109 2,479 2,661
Customer discounts (1) 1,169 1,035 682 866 1,851 1,901
Payables due on RRSAs 1,460 1,529 5 11 1,465 1,540
Deferred receipts from RRSA workshare partners 57 55 737 757 794 812
Amounts owed to joint ventures and associates 492 492 - - 492 492
Government grants (2) 30 26 28 24 58 50
Other taxation and social security 124 54 - - 124 54
Other payables (3) 563 740 204 198 767 938
8,105 8,009 1,766 1,965 9,871 9,974
(1)( ) Customer discounts include customer concession credits. Revenue
recognised comprises sales to the Group's customers after such items. Customer
concession credits are discounts given to a customer upon the sale of goods or
services. A liability is recognised to correspond with the recognition of
revenue when the performance obligation is met, as set out on page 126 of the
2024 Annual Report. The largest element of the balance, approximately £1.3bn
(31 December 2024: £1.4bn) arises when the Civil business delivers its
engines to an airframer. A concession is often payable to the end customer
(e.g. an airline) on delivery of the aircraft from the airframer. The
concession amounts are known and the payment date is reasonably certain, hence
there is no significant judgement or uncertainty associated with the timing of
these amounts
(2 ) During the period, £4m (30 June 2024: £47m), of government grants
were released to the income statement
(3 ) Other payables includes payroll liabilities and HM Government UK levies
The Group's payment terms with suppliers vary based on the products and
services being sourced, the competitive global markets the Group operates in
and other commercial aspects of suppliers' relationships. Industry average
payment terms vary between 90 to 120 days. The Group offers reduced payment
terms to its smaller suppliers, who are typically on 75-day payment terms, so
that they are paid in 30 days.
In line with civil aviation industry practice, the Group offers a supply chain
financing (SCF) programme in partnership with banks to enable suppliers
(including joint ventures who are on 90-day standard payment terms) to receive
their payments sooner. This SCF programme is available to suppliers at their
discretion and does not change the Group's rights and obligations with the
suppliers or the timing of payment by the Group to settle its liabilities
arising from transactions with these suppliers.
At 30 June 2025, £458m (31 December 2024: £594m) of trade payables and other
liabilities were within the scope of the SCF arrangements of which suppliers
had drawn £352m (31 December 2024: £506m), with £132m (31 December 2024:
£243m) drawn by joint ventures. In some cases the Group settles the costs
incurred by joint ventures as a result of them utilising SCF arrangements and,
during the period to 30 June 2025, the Group incurred costs of £5m (30 June
2024: £1m). These were included within the cost of sales.
15 Financial assets and liabilities
Carrying value of other financial assets and liabilities
Derivatives
Foreign exchange contracts Commodity contracts Interest rate contracts (1) Total Financial RRSAs Other C Shares Total
£m £m £m derivatives £m £m £m £m
£m
At 30 June 2025
Non-current assets 713 3 39 755 - 22 - 777
Current assets 300 1 86 387 - 13 - 400
Assets 1,013 4 125 1,142 - 35 - 1,177
Current liabilities (286) (20) (37) (343) - (51) (22) (416)
Non-current liabilities (467) (23) (69) (559) (5) (172) - (736)
Liabilities (753) (43) (106) (902) (5) (223) (22) (1,152)
260 (39) 19 240 (5) (188) (22) 25
At 31 December 2024
Non-current assets 10 1 110 121 - 5 - 126
Current assets 25 4 148 177 - 32 - 209
Assets 35 5 258 298 - 37 - 335
Current liabilities (539) (18) - (557) - (62) (23) (642)
Non-current liabilities (1,364) (22) (111) (1,497) (7) (136) - (1,640)
Liabilities (1,903) (40) (111) (2,054) (7) (198) (23) (2,282)
(1,868) (35) 147 (1,756) (7) (161) (23) (1,947)
(1)( ) Includes the foreign exchange impact of cross-currency interest rate
swaps
15 Financial assets and liabilities continued
Derivative financial instruments
Movements in the fair value of derivative financial assets and liabilities
were as follows:
Half-year to 30 June 2025 Year-ended
£m 31 December 2024
£m
Foreign exchange instruments Commodity instruments Interest rate instruments - hedge accounted (1) Interest rate instruments - non-hedge accounted Total Total
£m £m £m £m
At 1 January (1,868) (35) 54 93 (1,756) (1,878)
Movements in fair value hedges - - (56) - (56) (32)
Movements in cash flow hedges - - (58) - (58) (23)
Movements in other derivative contracts (2) 1,652 (12) - (6) 1,634 (609)
Contracts settled 476 8 22 (30) 476 786
At 30 June/31 December 260 (39) (38) 57 240 (1,756)
(1) Includes the foreign exchange impact of cross-currency interest rate
swaps
(2) Included in net financing
Financial risk and revenue sharing arrangements (RRSAs) and other financial
assets and liabilities
Movements in the carrying values were as follows:
Financial RRSAs Other level 3 assets Other level 3 liabilities
Half-year to 30 June 2025 Year-ended 31 December 2024 Half-year to 30 June 2025 Year-ended 31 December 2024 Half-year to 30 June 2025 Year-ended
£m £m £m £m £m 31 December 2024
£m
At 1 January (7) (17) 14 25 (198) (163)
Exchange adjustments included in OCI (3) 1 (2) - 7 (5)
Additions - - - - (37) (34)
Financing charge (1) - - - (11) (11) (9)
Excluded from underlying profit:
Changes in forecast payments (1) - - - - - -
Cash paid 5 9 - - 14 12
Other - - - - 2 1
At 30 June/31 December (5) (7) 12 14 (223) (198)
(1 ) Included in net financing
15 Financial assets and liabilities continued
Fair values of financial instruments equate to book values with the following
exceptions:
Half-year to 30 June 2025 Year-ended 31 December 2024
Book value Fair value Book value Fair value
£m £m £m £m
Other assets - Level 2 16 16 16 16
Borrowings - Level 1 (3,475) (3,477) (3,559) (3,540)
Borrowings - Level 2 (19) (21) (18) (21)
Financial RRSAs - Level 3 (5) (5) (7) (7)
The fair value of a financial instrument is the price at which an asset could
be exchanged, or a liability settled, between knowledgeable, willing parties
in an arms-length transaction. There have been no transfers during the period
from or to Level 3 valuation. Fair values have been determined with reference
to available market information at the balance sheet date, using the
methodologies described below.
- Non-current investments primarily comprise unconsolidated
companies where fair value approximates to the book value. Listed investments
are valued using Level 1 methodology.
- Money market funds, included within cash and cash equivalents,
are valued using Level 1 methodology. Fair values are assumed to approximately
equal cost either due to the short-term maturity of the instruments or because
the interest rate of the investments is reset after periods not exceeding six
months.
- The fair values of held to collect trade receivables and similar
items, trade payables and other similar items, other
non-derivative financial assets and liabilities, short-term investments and
cash and cash equivalents are assumed to approximate to cost either due to the
short-term maturity of the instruments or because the interest rate of the
investments is reset after periods not exceeding six months.
- Fair values of derivative financial assets and liabilities and
trade receivables held to collect or sell are estimated by discounting
expected future contractual cash flows using prevailing interest rate curves
or cost of borrowing, as appropriate. Amounts denominated in foreign
currencies are valued at the exchange rate prevailing at the balance sheet
date. These financial instruments are included on the balance sheet at fair
value, derived from observable market prices (Level 2 as defined by IFRS 13
Fair Value Measurement).
- Borrowings are carried at amortised cost. Amounts denominated in
foreign currencies are valued at the exchange rate prevailing at the balance
sheet date. The fair value of borrowings is estimated using quoted prices
(Level 1 as defined by IFRS 13) or by discounting contractual future cash
flows (Level 2 as defined by IFRS 13).
- The fair values of RRSAs and other liabilities, which primarily
includes royalties to be paid to airframers, are estimated by discounting
expected future cash flows. The contractual cash flows are based on future
trading activity, which is estimated based on latest forecasts (Level 3 as
defined by IFRS 13).
- Other assets and borrowings are carried at amortised cost.
Amounts denominated in foreign currencies are valued at the exchange rate
prevailing at the balance sheet date. The fair value of borrowings is
estimated by discounting contractual future cash flows.
- Other assets are included on the balance sheet at fair value,
derived from observable market prices or latest forecast (Level 2/3 as defined
by IFRS 13). At 30 June 2025, Level 3 assets totalled £12m (31 December 2024:
£14m).
- The fair value of lease liabilities are estimated by discounting
future contractual cash flows using either the interest rate implicit in the
lease or the Group's incremental cost of borrowing (Level 2 as defined by IFRS
13).
16 Provisions for liabilities and charges
At Charged to income statement (1) Reversed Utilised Exchange differences At
1 January 2025 30 June
2025
£m £m £m £m £m £m
Onerous contracts 1,433 320 (544) (101) (1) 1,107
Warranty and guarantees 354 77 (7) (43) (3) 378
Trent 1000 wastage costs 36 - - (36) - -
Employer liability claims 25 - (3) - - 22
Transformation and restructuring 62 - (5) (26) 1 32
Tax related interest and penalties 16 - - - - 16
Claims and litigation 25 - - (3) - 22
Other 43 8 (1) (9) (1) 40
1,994 405 (560) (218) (4) 1,617
Current liabilities 589 525
Non-current liabilities 1,405 1,092
(1)( ) The charge to the income statement within net financing includes
£14m (30 June 2024: £25m) as a result of the unwinding of the discounting of
provisions previously recognised
Onerous contracts
Onerous contract provisions are recorded when the direct costs to fulfil a
contract are assessed as being greater than the expected recoverable amount.
Onerous contract provisions are measured on a fully costed basis. During the
period additional contract losses for the Group of £320m (30 June 2024:
£333m) have been recognised. These are mainly a result of increases in the
estimate of future LTSA costs due to prolonged supply chain challenges and
inflationary cost increases. Contract losses of £544m (30 June 2024: £195m)
previously recognised have been reversed following improvements to the
forecast revenue, cost estimates and time on wing across various engine
programmes as a result of operational improvements, contractual renegotiations
and extensions. During the period £101m (30 June 2024: £107m) of the
provisions have been utilised. The Group continues to monitor onerous contract
provisions for changes in the market and revises the provision as required.
The value of the remaining onerous contract provisions reflect, in each case,
the single most likely outcome. The provisions are expected to be utilised
over the term of the customer contracts, typically within eight to 16 years.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets requires a
company to recognise any impairment loss that has occurred on assets used in
fulfilling the contract before recognising a separate provision for an onerous
contract. No impairments were required for any of the assets solely used in
the fulfilment of onerous contracts.
Warranty and guarantees
Provisions for warranty and guarantees relate to products sold and are
calculated based on an assessment of the remediation costs related to future
claims based on past experience. The provision generally covers a period of up
to three years.
Trent 1000 wastage costs
During the period, the Group has utilised the remaining £36m (30 June 2024:
£42m) of the Trent 1000 wastage costs provision. This represents customer
disruption costs and remediation shop visit costs.
Employer liability claims
The provision relating to employer healthcare liability claims is as a result
of an historical insolvency of the previous provider and is expected to be
utilised over the next 30 years.
Transformation and restructuring
In 2023, the Group announced a major multi-year transformation programme as
set out in the 2022 Annual Report. During the period £26m (30 June 2024:
£28m) was utilised and £5m reversed (30 June 2024: £nil). As part of these
plans a further £3m (30 June 2024: £2m) has been charged directly to the
income statement that had not been provided for. The remaining provision is
expected to be utilised by 31 December 2025.
16 Provisions for liabilities and charges continued
Tax related interest and penalties
Provisions for tax related interest and penalties relate to uncertain tax
positions in some of the jurisdictions in which the Group operates.
Utilisation of the provisions will depend on the timing of resolution of the
issues with the relevant tax authorities.
Claims and litigation
Provisions for claims and litigation represent ongoing matters where the
outcome for the Group may be unfavourable.
The balance also includes the best estimate of any retained exposure by the
Group's captive insurance company for any claims that have been incurred but
not yet reported to the Group, as that entity retains a portion of the
exposures it insures on behalf of the remainder of the Group. Such exposures
include policies for aviation claims, employer liabilities and healthcare
claims. Significant delays can occur in the notification and settlement of
claims, and judgement is involved in assessing outstanding liabilities, the
ultimate cost and timing of which cannot be known with certainty at the
balance sheet date. The insurance provisions are based on information
currently available, however, it is inherent in the nature of the business
that ultimate liabilities may vary if the frequency or severity of claims
differs from estimated.
Other
Other items are individually immaterial. The value of any remaining provisions
reflects the single most likely outcome in each case.
There were no provisions held for customer financing at 30 June 2025 (31
December 2024: £nil). Provisions are held to cover potential calls on
guarantees provided over asset values and/or financing when it is considered
probable by management that the exposure will crystallise. The Group discloses
contingent liabilities for customer financing arrangements where the payment
is not probable. See note 18.
17 Post-retirement benefits
The net post-retirement scheme surplus/(deficit) as at 30 June 2025 is
calculated on a year to date basis, using the latest valuation as at 31 March
2023, updated to 30 June 2025 for the principal schemes.
Amounts recognised in the balance sheet in respect of defined benefit schemes
UK schemes Overseas schemes Total
£m £m £m
At 1 January 2025 779 (970) (191)
Exchange adjustments - 11 11
Current service cost and administrative expenses (3) (19) (22)
Past-service cost - (11) (11)
Financing recognised in the income statement 21 (19) 2
Contributions by employer - 39 39
Actuarial gains recognised in OCI (1) 87 27 114
Returns on plan assets excluding financing recognised in OCI (1) (135) 1 (134)
At 30 June 2025 749 (941) (192)
Post-retirement scheme surpluses - included in non-current assets (2) 749 1 750
Post-retirement scheme deficits - included in non-current liabilities - (942) (942)
(1 ) Actuarial gains recognised in OCI on the UK scheme (Rolls-Royce UK
Pension Fund - RRUKPF) are primarily driven by movements in the discount rate
and inflation
(2 ) The surplus in the UK Scheme is recognised as, on ultimate wind-up when
there are no longer any remaining members, any surplus would be returned to
the Group which has the power to prevent the surplus being used for other
purposes in advance of this event
Virgin Media
A UK High Court legal ruling that took place in June 2023 between Virgin Media
Limited and NTL Pension Trustees II Limited, found that certain historic rule
amendments were invalid if they were not accompanied by actuarial
certifications. The ruling was subject to an appeal with a judgment delivered
on 25 July 2024. The Court of Appeal unanimously upheld the decision of the
High Court and concluded that the pre-April 2013 conditions applied to
amendments to both future and past service. Whilst this ruling was in respect
of another scheme, its relevance and hence the potential impact of this to the
RRUKPF scheme, and other UK schemes was unclear.
On 5 June 2025 the UK Government announced that in light of this uncertainty,
it would introduce legislation to give potentially affected pension schemes
the ability to retrospectively obtain written actuarial confirmation that
historic rule amendments met the necessary standards. As a result of this
Government intervention the Group does not anticipate any scheme amendments or
additional liabilities.
18 Contingent liabilities and commitments
In January 2017, after full cooperation, the Company concluded deferred
prosecution agreements (DPA) with the Serious Fraud Office and the US
Department of Justice and a leniency agreement with the Ministério Público
Federal, the Brazilian federal prosecutor. The terms of both DPAs have now
expired. The Company has also met all its obligations under a two-year
leniency agreement with Brazil's Comptroller General (CGU), signed in October
2021, relating to the same historical matters. In April 2024, the CGU
confirmed that the Company would no longer be subject to compliance
monitorship. Certain authorities are investigating members of the Group for
matters relating to misconduct in relation to historical matters. The Group is
responding appropriately. Action may be taken by further authorities against
the Group or individuals. In addition, the Group could still be affected by
actions from other parties, including customers, customers' financiers and the
Company's current and former investors, including certain potential claims in
respect of the Group's historical ethics and compliance disclosures which have
been notified to the Group. The Directors are not currently aware of any
matters that are likely to lead to a material financial loss over and above
the penalties imposed to date, but cannot anticipate all the possible actions
that may be taken or their potential consequences.
The Group has, in the normal course of business, entered into arrangements in
respect of export finance, performance bonds, grant funding, countertrade
obligations and minor miscellaneous items, which could result in potential
outflows if the requirements related to those arrangements are not met.
Various Group undertakings are party to legal actions and claims (including
with tax authorities) which arise in the ordinary course of business, some of
which are for substantial amounts.
In connection with the sale of its products the Group will, on some occasions,
provide financing support for its customers, generally in respect of civil
aircraft. The Group's commitments relating to these financing arrangements are
spread over many years, they relate to a number of customers, a broad product
portfolio and are generally secured on the asset subject to the financing.
These include commitments of $339m (31 December 2024: $405m) (on a discounted
basis) to provide facilities to enable customers to purchase aircraft (of
which approximately $nil could be called during 2025). These facilities may
only be used if the customer is unable to obtain financing elsewhere and are
priced at a premium to the market rate. Significant events impacting the
international aircraft financing market, the failure by customers to meet
their obligations under such financing agreements, or inadequate provisions
for customer financing liabilities may adversely affect the Group's financial
position.
Customer financing provisions would be made to cover guarantees provided for
asset value and/or financing were it probable that a payment would be made.
These would be measured on a discounted basis at the Group's borrowing rate to
reflect the time span over which these exposures could arise. The values of
aircraft providing security are based on advice from a specialist aircraft
appraiser. There were no provisions for customer financing provisions at 30
June 2025 or 31 December 2024.
The Group has responded appropriately to the Russia-Ukraine conflict to comply
with international sanctions and export control regime, and to continue to
implement the business decision to exit from Russia. The Group could be
subject to action by impacted customers, suppliers and other contract parties.
While the outcome of the above matters cannot precisely be foreseen, the
Directors do not expect any of these arrangements, legal actions or claims,
after allowing for provisions already made, to result in significant loss to
the Group.
19 Related party transactions
Half-year Half-year
to 30 June 2024
to 30 June 2025
£m
£m
Sale of goods and services (1) 5,055 3,583
Purchases of goods and services (1) (5,195) (4,420)
(1) Sales of goods and services to related parties and purchases of goods and
services from related parties, including joint ventures and associates, are
included at the average exchange rate, consistent with the statutory income
statement
Included in sales of goods and services to related parties are sales of spare
engines amounting to £92m
(30 June 2024: £24m). Profit recognised in the period on such sales amounted
to £37m (30 June 2024: £29m), including profit on current year sales and
recognition of profit deferred on similar sales in previous years. Cash
receipts relating to the sale of spare engines amounted to £92m (30 June
2024: £24m).
Included in cost of sales in the income statement are interest costs of £5m
(30 June 2024: £4m) incurred during the period which have been settled by the
Group on behalf of joint ventures.
20 Business disposals and businesses held for sale
Disposals
On 29 October 2024 Rolls-Royce SMR Limited announced that ČEZ Group (ČEZ)
would make an equity investment into the Rolls-Royce SMR Limited business and
establish a strategic partnership to deploy up to 3GW of electricity in the
Czech Republic. This investment from ČEZ was received by Rolls-Royce SMR on 4
March 2025. Rolls-Royce Holdings plc's indirect shareholding in Rolls-Royce
SMR Limited was diluted from 70.5% at 31 December 2024 to 61.7%.
When the new investment was received the Group relinquished control of
Rolls-Royce SMR Limited, as a result of changes in shareholder matters, and
the subsidiary was deconsolidated. This followed detailed consideration of the
criteria within IFRS 10 Consolidated Financial Statements in relation to the
Group's ability to take decisions that affect the returns of the business
without the support of other shareholders. The Group's investment in
Rolls-Royce SMR Limited was recognised at its fair value of £732m on 4 March
2025 and a profit on disposal of £679m was recognised in the Group's income
statement.
Half- year
to 30 June
2025
£m
Proceeds -
Cash and cash equivalents disposed (81)
Net cash consideration (81)
Disposal costs paid (4)
Net cash outflow on disposal per cash flow statement (85)
( )
Half-year
to 30 June
2025
£m
Proceeds -
Property, plant and equipment 3
Right-of-use assets 1
Trade receivables and other assets 47
Cash and cash equivalents 81
Trade payables and other liabilities (56)
Net assets disposed 76
Loss on disposal before disposal costs and accounting adjustments (76)
Derecognition of NCI 23
Accounting adjustment - recognition of Rolls-Royce SMR Limited at fair value 732
Profit on disposal of business before taxation 679
Tax on disposal (1) -
Profit on disposal of business after taxation 679
(1) The deconsolidation of Rolls-Royce SMR Limited from the Group in the
period to 30 June 2025 is treated as non-taxable, following the tax
de-grouping charge recognised in 2024 when the Group's shareholding fell below
75%, see note 5 for further details
Businesses held for sale
At 31 December 2024, the Group had classified the assets and liabilities
related to its naval propulsors & handling business as held for sale as,
in line with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations, the business was available for sale in its current condition and
the sale was considered highly probable.
At 30 June 2025 the assets and liabilities continued to be disclosed as held
for sale. They were measured at the lower of their carrying value or fair
value less costs to sell as summarised below. Completion of the sale of the
naval propulsors business to Fairbanks Morse Defense took place on 1 July
2025. The completion of the naval handling business disposal to Fairbanks
Morse Defense is expected at a later date.
The table below summarises the categories of assets and liabilities of the
naval propulsors & handling business classified as held for sale.
30 June 31 December
2025
2024
£m
£m
Intangible assets 12 13
Property, plant and equipment 47 51
Right-of-use assets 1 1
Inventory 20 24
Trade receivables and other assets 77 64
Assets held for sale 157 153
Trade payables and other liabilities (83) (96)
Provisions for liabilities and charges (4) (3)
Borrowings and lease liabilities (1) (1)
Liabilities associated with assets held for sale (88) (100)
Net assets held for sale 69 53
21 Derivation of summary funds flow statement
Half-year to 30 June 2025 Half-year to
30 June 2024
Cash flow Impact of hedge book Impact of acquisition accounting Impact of other non-underlying items Funds flow Funds flow
£m £m £m £m £m £m
Operating profit/(loss) 2,074 (102) 8 (247) 1,733 1,149
Loss on disposal of property, plant and equipment (1) 4 - - - 4 1
Joint venture trading (1) 6 - - - 6 (63)
Depreciation, amortisation and impairment 256 - (8) 185 433 427
Movement in provisions (395) (8) - 109 (294) (106)
Increase in inventories (2) (608) - - - (608) (641)
Movement in prepayments to RRSAs for LTSA parts 46 (15) - - 31 (171)
Movement in cost to obtain contracts (48) - - - (48) 7
Movement in trade receivables/payables and other assets/liabilities (2) (297) (240) - (1) (538) 86
Revaluation of trading assets (2) 241 2 - - 243 (3)
Realised derivatives in financing 358 - - - 358 405
Movement in Civil LTSA balance 440 1 - - 441 715
Movement in contract assets/liabilities (excluding Civil LTSA) (2) 532 (9) - - 523 (75)
Settlement of excess derivatives (116) - - - (116) (75)
Interest received 150 - - - 150 124
Contributions to defined benefit schemes in excess of underlying operating (6) - - - (6) (18)
profit charge (1)
Cash flows on other financial assets and liabilities held for operating (389) 358 - - (31) (5)
purposes
Share-based payments (1) 60 - - - 60 59
Other (1) - - - - - 11
Income tax (290) - - 31 (259) (113)
Cash from operating activities 2,018 (13) - 77 2,082 1,714
Capital element of lease payments (91) 13 - - (78) (112)
Capital expenditure (349) - - - (349) (291)
Cash received on maturity of share-based payment schemes 38 - - - 38 -
Investment 31 - - - 31 17
Interest paid (136) - - - (136) (157)
Other (M&A, exceptional transformation and restructuring costs) 71 - - (77) (6) (13)
Free cash flow 1,582 1,582 1,158
(1) Included in other operating cash flows in the summarised free cash flow
on page 9
(2 ) Included in working capital (excluding Civil LTSA balance) in the
summarised free cash flow on page 9
Free cash flow is a measure of the financial performance of the businesses'
cash flows which is consistent with the way in which performance is
communicated to the Board. Free cash flow is defined as cash flows from
operating activities including capital expenditure and movements in
investments, capital elements of lease payments, interest paid, cash received
on maturity of share-based payment schemes, amounts paid relating to the
settlement of excess derivatives and excluding amounts spent or received on
activity related to business acquisitions or disposals and other material
exceptional or one-off cash flows. The Board considers that free cash flow
reflects cash generated from the Group's underlying trading.
Cash flow from operating activities is determined to be the nearest statutory
measure to free cash flow. The reconciliation between free cash flow and cash
flow from operating activities can be found on page 45.
Reconciliation of Alternative Performance Measures to their statutory
equivalent
Alternative Performance Measures (APMs)
Business performance is reviewed and managed on an underlying basis. These
alternative performance measures reflect the economic substance of trading in
the period. In addition, a number of other APMs are utilised to measure and
monitor the Group's performance.
Definitions and reconciliations to the relevant statutory measure are included
below. All comparative periods relate to 30 June 2024.
Underlying results
Underlying results are presented by recording all relevant revenue and cost of
sales transactions at the average exchange rate achieved on effective settled
derivative contracts in the period that the cash flow occurs. Underlying
results also exclude: the effect of acquisition accounting and business
disposals, impairment of goodwill and other non-current assets where the
reasons for the impairment are outside of normal operating activities,
exceptional items and certain other items which are market driven and outside
of management's control. Further detail can be found in note 2.
Half-year to 30 June 2025 Half-year to 30 June 2024
£m £m
Revenue
Statutory revenue 9,490 8,861
Derivative and FX adjustments (433) (679)
Underlying revenue 9,057 8,182
Gross profit
Statutory gross profit 2,927 2,108
Derivative and FX adjustments (102) (73)
Programme exceptional credits (83) -
Exceptional transformation and restructuring charges (1) 52
Acquisition accounting 7 22
Civil Aerospace programme asset impairment reversal (176) (132)
Underlying gross profit 2,572 1,977
Commercial and administrative costs
Statutory commercial and administrative (C&A) costs (631) (641)
Derivative and FX adjustments - 1
Exceptional transformation and restructuring charges 22 47
Underlying C&A Costs (609) (593)
Research and development
Statutory research and development (R&D) (246) 101
Derivative and FX adjustments (2) (12)
Exceptional transformation and restructuring charges - 8
Acquisition accounting 1 1
Civil Aerospace programme asset impairment reversal (9) (413)
Underlying R&D costs (256) (315)
Operating profit
Statutory operating profit 2,074 1,646
Derivative and FX adjustments (102) (82)
Programme exceptional credits (83) -
Exceptional transformation and restructuring charges 21 107
Acquisition accounting 8 23
Civil Aerospace programme asset impairment reversal (185) (545)
Underlying operating profit 1,733 1,149
Underlying operating profit margin 19.1% 14.0%
Half-year to 30 June 2025 Half-year to 30 June 2024
pence pence
Basic EPS
Statutory basic EPS 52.38 13.71
Effect of underlying adjustments to profit before tax (37.39) (4.55)
Related tax effects 4.03 (0.21)
Adjustment for recognition of deferred tax assets (1) (3.28) -
Basic underlying EPS 15.74 8.95
(1 ) Underlying profit attributable to ordinary shareholders has been
adjusted for the one-off non-cash impact of £277m related to the recognition
of deferred tax assets on UK tax losses, see note 5 for further details
Reconciliation of Alternative Performance Measures to their statutory
equivalent continued
Organic change
Organic change is the measure of change at constant translational currency
applying full year 2024 average rates to 2024 and 2025 and excludes M&A
changes and business disposals. The movement in underlying change to organic
change is reconciled below.
All amounts below are shown on an underlying basis and reconciled to the
nearest statutory measure above. All comparative periods relate to half-year
to 30 June 2024.
Total Group income statement Half-year to 30 June 2025 Half- year to 30 June 2024 Change FX Organic Change Organic Change
£m £m £m £m £m %
Underlying revenue 9,057 8,182 875 (78) 953 13%
Underlying gross profit 2,572 1,977 595 (24) 619 33%
Underlying operating profit 1,733 1,149 584 (17) 601 50%
Net financing costs (44) (114) 70 (1) 71 (62)%
Underlying profit before taxation 1,689 1,035 654 (18) 672 62%
Taxation (93) (298) 205 1 204 (68)%
Underlying profit for the period 1,596 737 859 (17) 876 111%
Civil Aerospace Half-year to 30 June 2025 Half-year to 30 June 2024 Change FX Organic Change Organic Change
£m £m £m £m £m %
Underlying revenue 4,786 4,119 667 (22) 689 17%
Underlying OE revenue 1,478 1,329 149 (8) 157 12%
Underlying services revenue 3,308 2,790 518 (14) 532 19%
Underlying gross profit 1,477 992 485 (9) 494 50%
Commercial and administrative costs (213) (193) (20) 2 (22) 11%
Research and development (138) (135) (3) 1 (4) 3%
Joint ventures and associates 67 76 (9) (2) (7) (9)%
Underlying operating profit 1,193 740 453 (8) 461 63%
Defence Half-year to 30 June 2025 Half-year to 30 June 2024 Change FX Organic Change Organic Change
£m £m £m £m £m %
Underlying revenue 2,223 2,219 4 (28) 32 1%
Underlying OE revenue 1,000 872 128 (10) 138 16%
Underlying services revenue 1,223 1,347 (124) (18) (106) (8)%
Underlying gross profit 462 476 (14) (5) (9) (2)%
Commercial and administrative costs (103) (108) 5 1 4 (4)%
Research and development (18) (24) 6 - 6 (25)%
Joint ventures and associates 1 1 - - - -
Underlying operating profit 342 345 (3) (4) 1 -
Power Systems Half-year to 30 June 2025 Half-year to 30 June 2024 Change FX Organic Change Organic Change
£m £m £m £m £m %
Underlying revenue 2,042 1,837 205 (28) 233 20%
Underlying OE revenue 1,381 1,257 124 (19) 143 21%
Underlying services revenue 661 580 81 (9) 90 17%
Underlying gross profit 635 507 128 (9) 137 34%
Commercial and administrative costs (251) (238) (13) 3 (16) 8%
Research and development (79) (83) 4 2 2 (2)%
Joint ventures and associates 8 3 5 1 4 133%
Underlying operating profit 313 189 124 (3) 127 89%
Reconciliation of Alternative Performance Measures to their statutory
equivalent continued
Trading cash flow
Trading cash flow is defined as free cash flow (as defined below) before the
deduction of recurring tax and post-employment benefit expenses. Trading cash
flow per segment is used as a measure of business performance for the relevant
segments.
Half-year to 30 June 2025 Half-year to 30 June 2024
£m £m
Civil Aerospace 1,111 1,038
Defence 327 234
Power Systems 425 121
Total reportable segments trading cash flow 1,863 1,393
All Other Businesses (1) 17 (71)
Central and Inter-segment (33) (33)
Trading cash flow 1,847 1,289
Underlying operating profit charge exceeded by contributions to defined (6) (18)
benefit schemes
Tax (2) (259) (113)
Free cash flow 1,582 1,158
(1) All Other Businesses include the financial results of small modular
reactors, electrical power solutions and the UK Civil Nuclear business (see
note 2 for further details)
(2 ) See page 15 for tax paid in the statutory cash flow statement
Free cash flow
Free cash flow is a measure of the financial performance of the businesses'
cash flows which is consistent with the way in which performance is
communicated with the Board. Free cash flow is defined as cash flows from
operating activities including capital expenditure and movements in
investments, capital elements of lease payments, interest paid, cash received
on maturity of share-based payment schemes, and excluding amounts spent or
received on activity related to business acquisitions or disposals and other
material exceptional or one-off cash flows.
Half-year to 30 June Half-year to 30 June 2024
2025 £m
£m
Statutory cash flows from operating activities 2,018 1,669
Capital expenditure (349) (291)
Cash received on maturity of share-based payment schemes 38 -
Investment (including investment from NCI and movement in joint ventures, 31 17
associates and other investments)
Capital element of lease payments (91) (122)
Interest paid (136) (157)
Exceptional transformation and restructuring costs 68 55
M&A costs 5 -
Other (2) (13)
Free cash flow 1,582 1,158
Gross R&D expenditure
In period gross cash expenditure on R&D excludes contributions and fees,
amortisation and impairment of capitalised costs and amounts capitalised
during the period. For further detail, see note 3.
Gross capital expenditure
Gross capital expenditure during the period. All proposed investments are
subject to rigorous review to ensure that they are consistent with forecast
activity and provide value for money. The Group measures annual capital
expenditure as the cash purchases of PPE acquired during the period.
Half-year to 30 June Half-year to 30 June 2024
2025 £m
£m
Purchases of PPE (cash flow statement) 202 133
Reconciliation of Alternative Performance Measures to their statutory
equivalent continued
Key performance indicators
The following measures are key performance indicators and are calculated using
alternative performance measures or statutory results. See below for
calculation of these amounts.
Order backlog
Total value of firm orders placed by customers for delivery of products and
services where there is no right to cancel.
Adjusted return on capital (abbreviated to return on capital)
Return on capital is defined as net operating profit after tax (NOPAT) as a
percentage of average invested capital. NOPAT is defined as underlying net
profit excluding net finance costs and the tax shield on net finance costs.
Invested capital is defined as current and non-current assets less current
liabilities. It excludes pension assets, cash and cash equivalents, and
borrowings and lease liabilities. Return on capital assesses the efficiency in
allocating capital to profitable investments.
Year-ended 30 June 2025 Year-ended 30 June 2024
£m £m
Underlying operating profit 1,315 917
Less: taxation (1) (329) -
Underlying operating profit (post-taxation) (six-month period ended 31 986 917
December)
Underlying operating profit 1,733 1,149
Less: taxation (1) (372) (331)
Underlying operating profit (post-taxation) (six-month period ended 30 June) 1,361 818
Total underlying operating profit (post-taxation) 2,347 1,735
Total assets 37,940 33,011
Less: post-retirement scheme surpluses (750) (868)
Less: cash and cash equivalents (6,044) (4,319)
Current liabilities (18,218) (15,264)
Liabilities held for sale (88) (13)
Less: borrowings and lease liabilities 2,071 305
Invested capital (closing) 14,911 12,852
Invested capital (average) 13,882 12,575
% %
Return on capital 16.9 13.8
(1 ) Excluding underlying taxation on underlying finance (costs)/income of
£(2)m (30 June 2024: £(33)m) and adjusted for the one-off non-cash impact of
£277m in the six-month period ended 30 June 2025 and £346m in the six-month
period ended 31 December 2024 related to the recognition of deferred tax
assets on UK tax losses, see note 5, page 29 for further details
Total underlying cash costs as a proportion of underlying gross margin
(abbreviated to TCC/GM)
Total underlying cash costs during the period (represented by underlying
research and development (R&D) expenditure and underlying commercial and
administrative (C&A) costs) as a proportion of underlying gross profit.
This measure provides an indicator of total cash costs relative to gross
profit. A reduction in total cash costs relative to gross profit indicates how
effective the business is at managing and/or reducing its costs.
Half-year to 30 June Half-year to 30 June 2024
2025 £m
£m
Underlying R&D expenditure (1) 299 380
Underlying C&A 609 593
Total cash costs 908 973
Underlying gross profit 2,572 1,977
Total cash costs as a proportion of underlying gross profit 0.35 0.49
(1 ) Excludes £1m (30 June 2024: £10m) impact of acquisition accounting,
exceptional transformation costs, derivatives and FX
Principal risks and uncertainties
Our approach to risk management is described on pages 52 to 54 of our 2024
Annual Report. It sets out requirements for managing risk across the
organisation, in a continuous process where risk owners define, quantify,
control, assure and respond to risks, including ongoing monitoring and
oversight. We continue to review our principal risks, their dynamic nature and
how well they are managed.
Our risks are categorised as either a 'pillar' or a 'driver', with drivers
being those risks that could cause one or more risk pillars to happen and/or
make them worse if they do. All principal risks facing the Group are
summarised below and are unchanged from those included and reported in detail
on pages 55 to 60 of our 2024 Annual Report.
Principal risk pillars
Safety
Failure to: i) create a place to work which minimises the risk of harm to our
people, those who work with us, and the environment, would adversely affect
our reputation and long-term sustainability or ii) provide safe products.
Compliance
Non-compliance by the Group with legislation or other regulatory requirements
in the heavily regulated environment in which we operate (for example, export
controls; data privacy; use of controlled chemicals and substances;
anti-bribery and corruption; human rights; and tax and customs legislation).
This could affect our ability to conduct business in certain jurisdictions and
would potentially expose us to: reputational damage; financial penalties;
debarment from government contracts for a period of time; and suspension of
export privileges (including export credit financing), each of which could
have a material adverse effect.
Strategy
Failure to develop an optimal strategy and continuously evolve it, investing
in key areas for performance improvement and growth (taking into account risk
reward), making difficult decisions for competitive advantage and the right
portfolio and partnership choices, could result in us underperforming against
our competitors and significantly reduce our ability to build a
high-performing, competitive, resilient and growing business.
Execution
Failure to deliver as One Rolls-Royce on short-to medium-term financial plans,
including efficient and effective delivery of quality products, services and
programmes, or falling significantly short of customer expectations, would
reduce our resilience and have potentially significant adverse financial and
reputational consequences, including the risk of impairment of the carrying
value of the Group's intangible assets and the impact of potential litigation.
Business interruption
A major disruption of our operations and ability to deliver our products,
services and programmes could have an adverse impact on our people, internal
facilities or external supply chain which could result in failure to meet
agreed customer commitments and damage our prospects of winning future orders.
Disruption could be caused by a range of events, including extreme weather or
natural hazards (for example, earthquakes or floods), which could increase in
severity or frequency given the impact of climate change; political events;
financial insolvency of a critical supplier; scarcity of materials; loss of
data; fire; pandemic or other infectious disease.
Principal risk drivers
Energy transition
Failure to become a net zero company by 2050, leveraging technology to
transition from carbon intensive products and services at pace could impact
our ability to win future business; achieve operating results; attract and
retain talent; secure access to funding; realise future growth opportunities;
or force government intervention to limit emissions.
Information & data (including cyber)
Failure to protect the integrity, confidentiality and availability of data,
both physical and digital, from attempts to cause us and our customers harm,
such as through a cyber-attack. Potential impacts include hindering data
driven decision making, disrupting internal business operations and services
for customers, or a data breach, all of which could damage our reputation,
reduce resilience, and cause financial loss.
Causes include ransomware threats, unauthorised access to property or systems
for the extraction, corruption, destruction of data, or availability of access
to critical data and intellectual property.
Market & financial shock
The Group is exposed to market and financial risks, some of which are of a
macro-economic nature (for example, economic growth rates, foreign currency,
oil price, interest rates) and some of which are more specific to us such as
cyclical aviation industry, reduction in air travel or defence spending,
disruption to other customer operations, liquidity and credit risks. This
could affect demand for our products and services.
Significant extraneous market events could also materially damage our
competitiveness and/or creditworthiness and our ability to access funding.
This would affect operational results or the outcomes of financial
transactions.
Political
Geopolitical factors, such as changes in key political relationships, explicit
trade protectionism, differing tax or regulatory regimes, potential for
conflict or broader political issues and heightened political tensions, could
lead to an unfavourable business climate and significant tensions between
major trading parties or blocs, which could impact our strategy, execution,
resilience, safety and compliance.
Talent & capability
Inability to identify, attract and grow the critical talent, skills and
capabilities required to deliver our strategic priorities could threaten our
ability to be a high-performing, competitive, resilient and growing business.
Technology
Failure to ensure products and services are based on competitive technology,
leveraging substantial engineering and scientific challenges, adopting digital
tools (such as AI) and new ways of working, could hinder our ability to
accelerate product design and deliver a competitive offer that ensures
superior performance; enhances the customer experience; drives the transition
to lower carbon; improves productivity and reduces costs. This will ultimately
negatively impact our competitiveness and market share.
Dividend
An interim cash dividend in respect of the first half of 2025 of 4.5 pence per
ordinary share, to be paid on 18 September 2025 to shareholders on the
register on 8 August 2025. The election deadline for ordinary shareholders
wishing to participate in the Dividend Reinvestment Programme (DRIP) is 29
August 2025, further details can be obtained from the Company's Registrar,
Equiniti Limited.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge:
• the condensed consolidated interim financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by the UK;
• the interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed consolidated interim
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last Annual Report that could do so.
By order of the Board
Tufan Erginbilgic Helen McCabe
Chief Executive Chief Financial Officer
31 July 2025 31 July 2025
Independent review report to Rolls-Royce Holdings plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Rolls-Royce Holdings plc's condensed consolidated interim
financial statements (the "interim financial statements") in the 2025 Half
Year Results of Rolls-Royce Holdings plc for the 6 month period ended
30 June 2025 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed consolidated balance sheet as at 30 June 2025;
· the Condensed consolidated income statement and Condensed consolidated
statement of comprehensive income for the period then ended;
· the Condensed consolidated cash flow statement for the period then
ended;
· the Condensed consolidated statement of changes in equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the 2025 Half Year Results of
Rolls-Royce Holdings plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the 2025 Half Year Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The 2025 Half Year Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the 2025 Half Year Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the 2025 Half Year Results,
including the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the 2025 Half Year Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
31 July 2025
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