Rolls-Royce Holdings’ (RYCEF) Q2 2017 Earnings Call

Warren East – CEO

They are ramping up engine production

“Clearly we’re in the midst of, and we’ve been talking about for some time, a period when we are ramping our volumes of large engines that we deliver. And clearly this has been a question mark: Are we going to be able to ramp up sufficiently, or not? Last year, we grew volumes year-on-year from the previous year. This year, we have a big step-up to do. We’re halfway through the year. We are achieving a step-up, volume production’s up, volumes produced up 37%, deliveries up 27%, so I think we’re addressing that question.”

Stephen Daintith – CFO

Accounting changes coming up

“Accounting changes, a couple of items that are on the horizon. As you know, with effect from the 1st of January 2018, we move to IFRS 15….We welcome IFRS 15. I think it will allow for a purer and clearer view of the business….And indeed, we are hoping that for the March results next year we can show you the ’17 results on a current basis but also the full results on an IFRS 15 basis as well so you can see that fair comparison, probably spend quite a lot of time on that. And that will then allow you to think about how you want to think about 2018 on an IFRS 15 basis….IFRS 16 comes into play on the 1st of January 2019, and we’ll be taking operating losses onto the balance sheet. Again, no impacts on cash.”