Welcome everyone to our 2020 full year results presentation. With me today are Warren East, CEO, and for his final results with us, Stephen Daintith, CFO. Also with us today is our Deputy CFO, Ben Fidler. We'll start the presentation shortly with an introduction from Warren, followed by a more detailed review of results by Stephen. Lastly, returning to Warren for an update on our outlook and strategy. In all, this should take about 40 minutes, leaving plenty time at the end for Q&A. Before I hand over to Warren, please take note of the safe harbor statement on slide two. This results presentation contains forward-looking statements that involve risk and uncertainty that may cause actual results or developments to differ materially. A full set of results materials can be downloaded from our website. Thank you, over to you, Warren. Good morning, everyone, and thank you for joining us. Now, before we look at our performance in detail, I'm going to reflect for a moment on the extraordinary and unprecedented year in 2020. You can see from the images on the top of the slide there, about just how devastating it was for our sector. It was also devastating for many people. It was a year where our colleagues made many personal sacrifices, and despite all the challenges, they still managed to dig deep to find the solutions to help keep our company strong for the future. I'm very mindful of the fact that around 7,000 of our colleagues, some of whom have worked with Rolls-Royce for many years, have left us as we took actions to restructure and protect our business. I thank all of those colleagues, both past and present, for their contributions, their diligence, and their hard work. Looking at the images on this slide, I'm particularly proud of the practical support that our people have given to the communities in which we work. Doing things such as making face shields and volunteering to help those in need. As a company, we also endeavored to give back to our community. We launched the Emergent Alliance, that's now grown to more than 140 members. We've worked together there as a community using data analytics to assist economic recovery. Here in the U.K., we also joined the ventilator program, we've been providing home learning and STEM materials to encourage online learning for young engineers and inventors of the future. Finally, of course, I must thank our investors and our lenders who helped us and gave us additional liquidity to weather this crisis. As we move forward, preparing for the recovery and investing for the future, we're very aware of the responsibility that we now have to honor the support we've received from all of our stakeholders by delivering on commitments that we've made and achieving those goals. Now moving on to group performance. I'm on slide five. When COVID arrived early in 2020, it had an immediate and very material impact on our business. If you remember, we came into 2020 with great positive momentum, and that momentum that we had at the start of the year was overtaken. In response, we took decisive and effective actions to protect our people and protect our business. We introduced new ways of working to protect our colleagues, and that has enabled us to maintain operations throughout with minimal disruption. We took mitigating actions that saved more than GBP 1 billion in cash. We secured more than GBP 7 billion of additional liquidity to secure the future. We embarked on a very large restructuring, the largest restructuring in our history, to fundamentally change the economics of our Civil Aerospace business. That's going to save more than GBP 1.3 billion of annual costs on an ongoing basis. We've also committed to rebuild our balance sheet, which is supported by a disposal program where we're targeting more than GBP 2 billion from disposals by 2022. Despite the enormous pressure on cash and the cost reductions, however, we managed to continue to invest in sustainable low-carbon solutions for the future. I'm going to come back and say much more about that later in this presentation. Looking at the business highlights for 2020. The impact of COVID on our business, you can see on the right-hand side of the chart, different businesses affected in different ways. The impact of COVID was most acutely felt in our Civil Aerospace business, with engine flying hours reducing sharply in April to less than 20% of 2019 levels. As the year progressed, those flying hours gradually recovered. While the rollout of vaccines and testing gives us good reason to look forward to the recovery, the impact on our industry is severe, and OE demand is expected to remain low for several years. Large engines, on wide-body aircraft, that's where we're most exposed to the downturn. International and business travel particularly was affected, and that's likely to recover slowly. Regional and narrow-body flights have been marginally less impacted, with fewer cross-border routes. Business aviation was relatively resilient, and that was helped initially by repatriation flights at the start of lockdowns. Of course, much less exposed customer base. We've made good progress on our fundamental restructuring program, in Civil. Around 5,500 of the roles removed so far from our business are from the Civil Aerospace. That will, of course, give us permanent cost efficiencies and help reshape the economics of our business for the longer term. I'll talk more about that later in this presentation. Despite the challenges, we've managed to continue to serve our customers. We've managed to design and manufacture solutions and invest in new technology. We've achieved our target of eliminating aircraft on ground due to the Trent 1000 durability fixes. We've now got enough parts and MRO capacity there on Trent 1000 to avoid a recurrence of any customer inconvenience, even if miraculously all travel restrictions were lifted today. In ITP Aero, we've seen, of course, similar market dynamics, because Civil Aviation accounts for about 70% of ITP revenues, and defence activities in ITP contributing the rest, that performed relatively resiliently. Power Systems was less affected than our Civil Aerospace, but still quite affected by what happened. It has a number of end markets, each with its own dynamics, and that has helped to balance the business performance in Power Systems. Government end markets, for instance, were the most resilient, whereas industrial and marine suffered from the impact of lower economic activity and lockdown restrictions. Our strategy in Power Systems to grow in China also helped the overall performance of that business, with structural growth and market share gains continuing. Our solutions to support and enable the transition to lower carbon power have had a good year, driven by investments in batteries, hydrogen fuel cells, and hybrid systems. Moving to the bottom of the slide, Defence. Defence had a good year because our government customers remained committed to the programs that we're delivering, and our order book remained strong. This year, or 2020, has been a real reminder of why the Defence business is an important one for our group, delivering profit growth even in what turned out to be the most challenging of years across the rest of our business. Now, I'll hand over to Stephen to talk more about our financial performance. Thanks, Warren, and good morning, everybody. Our full year 2020 results were severely impacted by COVID, as Warren has just outlined. In addition to the trading impact, there were a number of large one-time charges in our underlying and reported results. Now, they're shown here on this particular slide eight. These charges were mostly incurred in the first half of the year when the outlook suddenly deteriorated. Group revenues declined by more than 20%. This reflected the drop in activity in Civil Aerospace, ITP Aero, and Power Systems, but also the impact of a GBP 1.1 billion negative catch-up charge on our Civil Aerospace long-term service agreements. This related to changes in the outlook on our long-term contracts as a result of COVID, which led to the derecognition of some of the revenue that had been booked in prior years. We had a gross loss of GBP 512 million in 2020. This included GBP 1.3 billion of one-time charges, most notably the impact of the contract catch-ups that I've just talked about. Although the gross profit charge was slightly lower than the revenue impact after taking risk and revenue share partners into account. In addition, we took a GBP 230 million charge related to onerous or loss-making contracts. We don't have many of these, and they are mostly related to the Trent 900 engines on Airbus A380s. As the largest passenger plane in service, these have been particularly affected by the fall in passenger demand. It's been a very tough year for everyone in our industry. A number of our customers have had challenges with their liquidity and financial stability. We have responded commercially with relaxations of certain terms and conditions, and we're keeping a close watch on the customer credit risk. Prudence requires that in some cases we provide for specific customer credit risk, which is why we have taken an GBP 86 million charge in this respect. The final large charge on our underlying results is the GBP 1.7 billion financing cost charge related to our hedge book. Our U.S. dollar hedge book provides cover for transactional currency risk because our dollar receipts usually exceed our dollar costs. The impacts of COVID on our future forecasts left us significantly overhedged, and so in 2020 and early 2021, we reduced the hedge book at a cost of GBP 1.7 billion, spread over the next six years. Now, you can see on this slide the business unit performance in more detail. Warren has already talked about the market drivers of our performance, so I won't need to cover those again. What you can see here is the scale of the impact of the drop in performance in Civil Aerospace has had on the group, as well as the impact of the COVID-related one-time charges, which make up most of the loss. Power Systems, Defence, and ITP Aero all contributed positively to operating performance, albeit only Defence achieved year-on-year growth, up 8% on 2019. This next slide details the successful mitigating actions we took this year to help protect our financial and liquidity position. We've had a laser-like focus on cash costs, culminating in year savings of more than GBP 1 billion compared to our plan at the start of the year. The largest savings of around GBP 500 million came from a reduction in pay and benefits. This was a result of three key things. Number one, a pay cut for senior managers during the nine months between April and December. Secondly, support from government furlough schemes. Thirdly, savings starting to come through from the reduction in roles in the second half of the year. We reduced our capital expenditure by around GBP 300 million. We stopped all non-essential spend and rephased some of our projects. About 2/3 of our savings were in Civil Aerospace, where earlier plans to increase capacity were shelved, as we now expect to meet the forecast load within our existing facilities. We've reduced the pace of investment in spare engines, and we've also challenged capital plans across the group. Engineering spend was also reduced, as industry-wide delays have allowed us to slow down our R&D spend without jeopardizing our commercial objectives. We've also saved on third-party costs and travel, and absorbed the additional investment needed to make our workspaces COVID secure. Most of our mitigations were one-time or temporary. Some of the savings are expected to roll into our fundamental restructuring program, helping to deliver the GBP 1.3 billion of annualized savings by the end of 2022. Achieving more than GBP 1 billion of savings so swiftly is testament to the collaboration, dedication, and focus from everyone in the business. Not only have personal sacrifices been made, but we have pulled together to find savings, no matter how small, to contribute to the groupwide effort to protect our business. I'd like to thank everyone at Rolls-Royce for the part that they have played delivering this extraordinary response to the COVID crisis. On this next slide, we had a GBP 4.2 billion group free cash outflow in 2020, compared to a GBP 900 million inflow in 2019. This GBP 5.1 billion year-on-year movement can be divided into three broad categories. Firstly, compared to 2019, there was a GBP 3 billion impact from operational factors, and this is mostly due to the lower engine flying hour receipts from the long-term service agreements, but also includes lower time and materials receipts and the impact of under-recovery of fixed costs, particularly on Civil OE original equipment volumes. Although Power Systems and ITP Aero contributed positively to group cash, they were down year-on-year, which was only partly offset by growth in Defence. Secondly, we had a GBP 2.1 billion swing in working capital, moving from a GBP 0.4 billion inflow in 2019 to a GBP 1.7 billion outflow in 2020. This was mostly due to our decision to stop invoice factoring, which resulted in a GBP 1.1 billion adverse one-off timing impact to cash. The rest was a reflection of the underlying reduction in working capital as our activity levels diminished significantly in 2020. This compared to the previous trend of cash inflow from working capital as we grew the business. Finally, there were a range of other smaller factors moving in both directions, which largely net each other out. Included within these are the cost of closing out the hedges in 2020, as well as the positive swing of around GBP 400 million from the lower capital spending due to our cash mitigations. This next slide shows how these three movements show up in our summary funds flow in more detail. The Civil Aerospace net LTSA balance grew by GBP 479 million in 2020, which may feel a little counterintuitive given the significant fall in flying hours. This is the result, though, of the GBP 1.1 billion contract catch-up to revenues that I outlined a little while ago. Typically, we expect to see an increase in the LTSA balance as we grow the fleet. However, this year, if we adjusted out the catch-up effect, we had a reduction in the LTSA balance as revenues, which as you know, are driven by shop visits, were larger than the flying hour receipts. The GBP 138 million movement in provisions is the net result of new provisions for onerous contracts offset by the reduction in provisions related to the Trent 1000 in-service costs. You can also see here the GBP 202 million cash impacts of closing out unutilized hedges. Although the cash headwinds from the hedge book and Trent 1000 fixes are substantial and multi-year, they are not permanent elements of our cash flow. In 2020, the cash impact of these combined was around GBP 700 million. Moving on to 2021 and 2022, they are expected to be around GBP 800 million and GBP 500 million respectively. Beyond 2023, importantly, the headwind from Trent 1000 is expected to be de minimis. The last of the hedge costs will be in 2026. Further details of these are included in the appendix slides. Moving on to the next slide. We strengthened our liquidity in 2020 to cope with the uncertain outlook and near-term cash impact of the COVID crisis. At the start of 2020, we had GBP 6.9 billion of liquidity and a net funds position of GBP 1.4 billion. Our GBP 3.1 billion of debt included EUR 750 million of bonds maturing in 2020 and $500 million maturing in 2021. We had expected to cover these maturities with the cash generated by the business. With the arrival of COVID, we took the precaution of drawing down on our GBP 2.5 billion revolving credit facility, which had a duration out to 2024. As the extent of the pandemic became apparent, we took the necessary actions to ensure that we would have enough liquidity and a sufficiently long maturity profile to manage even in a severe but plausible downside scenario. We agreed new loan facilities, GBP 1 billion with a two-year term and GBP 2 billion with a five-year term, and we lengthened the GBP 2.5 billion revolving credit facility to 2025. We were supported by the U.K. Credit Export Finance with an 80% guarantee on the five-year term loan. In the fourth quarter, we added to this with a GBP 2 billion bond issue and a GBP 2 billion rights issue, which were both well supported by our investors. This leaves us all in a strong liquidity position with around GBP 9 billion at the start of 2021, and most of our debt does not mature until at least 2025. This gives us the strength to weather the near-term cash outflows, and we expect to return to generating cash from operations in 2022. Today, we have GBP 5.5 billion of undrawn facilities, and additionally, we have just agreed a GBP 1 billion extension to the five-year term loan with the U.K. Export Finance and our syndicate of banks. We do not expect to draw on this extension, even in a downside scenario, but it provides an important safety net. Moving on to the next slide. Our strong liquidity will therefore see us through this crisis, but afterwards, we will need to rebuild our balance sheet. We do not intend to remain in a net debt position. We are in a cyclical industry and need a strong balance sheet to be able to weather the storms without jeopardizing our commercial position or our through-cycle investments. The first step on the road to financial recovery came from the support of our shareholders, with the GBP 2 billion proceeds from the rights issue in 2020. We expect to at least match this with proceeds from disposals, which I'll say more about in a moment. The remainder of the bridge comes from cash generated organically from operations. The actions we are taking to restructure the business and the expected recovery in engine flying hours should enable us to get back to a healthy cash generation by 2022. This underpins our ambition to reach a net cash position in the medium term, consistent with an investment-grade credit rating. On this next slide, and before I hand back to Warren, I promised to say a bit more on our plans for asset sales. We've got off to a good start with two disposals already agreed and due to complete later this year. Firstly, we agreed the sale of our Civil Nuclear instrumentation and control business to Framatome. Secondly, we agreed to sell Bergen Engines to TMH International. This transaction has been temporarily paused at the request of the Norwegian government to be further reviewed by them. It is not for us to speculate on the outcome of the government's review. However, it should be noted that the sale of Bergen is only one part of our disposal program. Although both of these are good businesses, neither of them were central to our future strategy, and they did not generate any material profit or cash flows. Between them, they generated about GBP 300 million in annual revenues. The largest of our planned asset sales is ITP Aero. We've started the disposal process with the proposed transfer of our Hucknall facility and some of the work from Barnoldswick into ITP. We are holding talks with a number of interested buyers. No one has been ruled out, and we are working closely with all the key stakeholders to find the right path forward. We've got a number of other assets under consideration, too, not just in Civil Aerospace, but across the group. We're not in a position to name these yet as they are at a relatively still in their early stages, but we expect to see further progress by the end of 2021 on all processes. I'll now pass back to Warren to discuss our outlook and our strategy. Thank you, Stephen. Let's move on. As I said before, this has been an unprecedented time. We have faced up to the challenges with decisive and effective actions to take control of the things we can control and manage the things that we can't control. Within that framework, we have three clear priorities as we look forward. First of all, restoring our financial performance, then thinking about how we maximize value from our existing capabilities for the medium term, and looking further forward, how we deliver the science-led innovation in sustainable power that's going to take us forward into the longer term. I'm going to take each one of these in turn. Let's start with our financial performance and how that changes. We'll step back for a moment and look at the global economy. The impact of COVID on the global economy has been greater than any other event in recent history. You can see from the chart on the top right here. Nonetheless, there is cause to be optimistic about a V-shaped recovery, and that's underpinned by the efficacy of vaccines and the decline of infections in locations where vaccinations and testing have been rolled out. The initial data is very encouraging. The pace and timing for opening up borders, however, remains uncertain today, but it's clear from our airline customers that there is significant pent-up demand from consumers for flights just as soon as they're able to resume. This could be accelerated by vaccine passports, air bridges, or other risk-based approaches between countries with low levels of infection. Now, in Civil Aerospace, there is, as you know, a historic correlation between GDP and flying, with growth in passenger miles increasing at around 1.5 x the pace of economic growth. There's also a strong link between the development of a country's economy and the penetration of flights per person. As a result, fast-growing economies with low levels of air travel fuel the long-term expected growth trends for our industry in the coming decades. This makes it hugely important that we develop the right low-carbon solutions that will support these economies to develop cleanly and sustainably. I'm going to elaborate more on that in the future. Now, Power Systems is also a GDP plus business. Unlike aerospace, it doesn't have particular issues around opening up of travel corridors and government-to-government agreements, we expect the V-shaped recovery in GDP to result in a faster recovery of revenues and profits. Defence, as I said earlier, has been less impacted by the crisis. It's also less impacted on an ongoing basis by fluctuations in GDP, because government allocations are driven more by the need for investment based on geopolitical risk. Actually, we don't see that geopolitical risk changing anytime in the near future. Of course, there will be pressure, or likely to be pressure at any rate, on total government budgets in coming years as they seek to repair the economic and social damage that has been caused by COVID. Moving on to slide 19, talking about Defence and Power Systems. I'll start there with a little more detail. Power Systems and Defence have been the bedrock of support for us this year, and they contributed over half our revenues and generated both profit and cash for the group. Power Systems provide the power for industrial and agricultural growth, as well as travel and infrastructure. Reliable power is critical for continuity of services, and our microgrids and backup power solutions can provide that. As we see economies reopen and get back to business, so we expect our customers' capital expenditure cycle to accelerate, and that will drive a sharp recovery in demand for our OE and for aftermarket services. We see our Power Systems business returning to 2019 revenue levels by 2022, along with a margin recovery back to double-digit levels. That is helped by structural growth in China, as I've mentioned before, and increased pace of development of low carbon solutions, as well as the general recovery from COVID. In Defence, we have a stable outlook. We have a strong order book. We're working continuously in that business to offset inflation and pricing pressure with savings and operational efficiencies. We think that we're in a good position to benefit from future program opportunities as they emerge. Now let's look at Civil Aerospace on slide 20. Clearly, the pace and timing of recovery in engine flying hours remains uncertain, but the progress on vaccines and testing is encouraging. At the start of the year, in January, we updated our expectations for 2021 to reflect the challenges that the world is seeing from new virus variants and new national lockdowns. Our view of a recovery in 2021, we modified, and this is particularly about the Rolls-Royce fleet, by the way, but we modified to an average of around 55% of 2019 levels. That remains unchanged as we sit here today. Today, activity is actually below that level, but based on third-party projections and conversations with our airline customers, we expect the recovery to pick up in the second half of the year as flights fill up and airlines open more routes. This recovery is likely, of course, to be led by short-haul leisure demand, and that will be followed by business trips and long-haul journeys. Now, turning to our expectations for engine flying hours in 2022. We're now expecting around 80% average flying hours in 2022 compared to 2019. That's different from the 90% we talked about previously. The impact of this downward revision on our GBP 750 million cash target has been mitigated by additional management actions and our latest view on certain cash movements. We've also refreshed our plausible and severe downside scenario to make sure we're well prepared should the recovery take a little longer. Full details of our scenarios are included in the press release, in summary, we see a reasonable worst case of around 45% of 2019 levels in 2021. That's flat on 2020, but it's a bit higher than the levels we're seeing today. Approximately 70% of 2019 in 2022. We continue to see a disparity between the different engine programs, the chart on the top right-hand side of the slide. You can see that shows that the newer, more efficient aircraft and engines are the ones that are recovering faster than the more mature ones. That's, of course, driven by the economics for airlines as they look to minimize their operating costs. It's also driven as well by the geographic mix and customer concentrations of our fleet. You can see our Trent XWB engines have been the fastest to recover. They've already reached around 60% of prior year flying hours by the end of 2020, and that's followed closely by the fleet of Trent 1000. One of the bright spots for the whole industry last year was the winning combination of our Trent XWB engine on the Airbus A350. This is the most fuel-efficient wide-body aircraft in the world, and it has versatility to serve both long-haul and short-haul routes. We're already exclusive on the A350-1000 variant of the aircraft. We are extending our position, our exclusive position on the A350-900 variant. That accounts for the bulk of the A350 fleet. That extension is agreed with Airbus out to 2030. That's in line with the development timeline for our next generation UltraFan engine program. Just to remind you, by the way, that we're also the exclusive engine provider for the A330neo with the Trent 7000. Slide 21. I've talked so far about recovery factors that we can't control, engine flying hours, behavior of airlines and the like. I'm going to talk about things that we can control. We were quick to recognize the need for self-help actions to control our cost base and position our business for the future last year. In May, we announced a fundamental restructuring program, the largest we've ever undertaken. The impact on our people of a change program of this scale cannot be underestimated, and we certainly did not take this decision lightly. We're consulting with colleagues on the proposed actions. We're working with unions and employee representatives to try to limit the number of compulsory redundancies and protect as many livelihoods as we can. We've increased support for mental health and wellbeing, and we're helping those that are affected by redundancy to find alternative roles, sometimes elsewhere in Rolls-Royce, sometimes outside of the company. The outcome we're targeting is clear. We need to restructure our cost base and eliminate the under-recoveries and set up the framework that will enable us to recover strongly when activity levels return. We've set a target to achieve annualized pre-tax savings of more than GBP 1.3 billion by the end of 2022. Now, our plan for this includes the removal of more than 9,000 roles, and most of those are in our Civil Aerospace business. It includes consolidation of our operational footprint and cost discipline right across the business. We're also looking to keep our capital expenditure low, and we're aiming to be at the better end of our peer group range of 3%-4% of revenues in that respect. Now, we made a strong start in 2020. In 2020, around 7,000 roles were removed across the business, mostly through our voluntary severance programs, but also as a result of hiring freezes, fewer contractors, some compulsory redundancies. We also began consultations to consolidate the major Civil Aerospace operating sites, consolidating 11 sites down to five, with activities being moved to the most productive, cost-effective hubs, and a reduction in the duplication of work in multiple locations. We're engaging with all the stakeholders to make sure that our actions are both fair and effective. Now let's have a look at the economics. The changes are fundamentally altering the economics of our Civil Aerospace business, and that's shown here on slide 22. The majority of our cost savings are targeting fixed costs in our Civil Aerospace business. We're reducing headcount by approximately a third, and we're looking to lock in substantial savings from those site consolidations and efficiency improvements. On top of that, most of the planned group capital expenditure savings are also in Civil Aerospace, and there we have a reduction of more than 50% versus the 2019 levels. That's of course, helped by the growing maturity of our newest engine program. Some of that CapEx was going to reduce anyway. At the same time, we're seeing our variable costs reduce with load, but we're also pushing those variable costs even further. We're challenging ourselves to achieve better pricing and engineer greater efficiency to reduce per unit costs and waste. It really is a fundamental transformation of the Civil Aerospace cost base. It's a program of self-help, and that will enable us to create a stronger business with more sustainable cash generation and a permanently lower fixed cost base, regardless of whatever the pace of recovery happens to be. As the next slide shows, it sets up well to benefit from huge operating leverage as the market recovers. Let's look and see what that means for our future cash flows on slide 23. We can't control the pace and timing of recovery, which in turn is the main driver of recovery in both the aftermarket and the OE receipts part of our business. Those are the blocks above the axis. What we can control are the blocks below the axis, which I've just talked about on the previous slide. Here you can see spread out in time. We can influence the rate of cash burn during the downturn, and also consequently, the operational leverage that we enjoy as the flying hours improve. In 2020, large engine flying hours were 43% of 2019 levels, and we delivered around half as many of new large engines. Business jets and regional did show more resilience, but still, the fall in receipts was quite significant. You can see our response in the reduction of the turquoise bars below the line, representing the operating cost and capital spend. That begins in 2020, with the cash mitigation that I talked about, but it continues in 2021 and 2022 as the restructuring program makes those savings permanent and expands them even further. However, due to supplier lead times and working capital movements, in 2020, it simply wasn't possible to reduce our total costs at the same pace that we saw in the fall in receipts. That's what drove the Civil Aerospace trading cash outflow of GBP 4.6 billion. In 2021, this does begin to improve because the purchasing reduces with lower volumes, and as we're able to turn off those taps. We still have a working capital headwind to contend with. That is driven primarily by the OE concession payments that we talked about shortly before Christmas, as a backlog of 787 aircraft are delivered by Boeing, and that triggers payments from us to airlines. The timing of this is completely outside of our control. While we expect significant concession outflow in the first half of 2021, it may slip a little bit to the right. Nevertheless, you can see the cash flow as a whole begins to improve in 2021. Once the market recovers more fully, you can see Civil Aerospace returning to positive cash flow. Assuming flying hours reach approximately 80% of 2019 levels on average in 2022, we will see the Civil Aerospace business delivering cash flows that support our group ambition of at least GBP 750 million of free cash flow. Looking longer term, the actions that we've taken to change our cost base and position for the recovery mean we're confident we'll be able to keep those costs low as volumes increase, and that will deliver better cash margins in future than we have achieved in the past. That brings me back now to the group outlook for the near term on slide 24. We're expecting free cash outflow of around about GBP 2 billion in 2021. The first half will see the worst of the outflows, mostly due to the shape of expected flying hour recovery and the timing of those concession payments. In the second half, there should be benefit as vaccine and testing allows more routes to reopen and working capital pressures begins to ease from those concession payments. Both halves are expected to see cash outflow overall. At some point during the second half of the year, we expect net cash outflow to become net cash inflow, marking the inflection point in our recovery. As we move into 2022, we expect those improvements to continue and drive sustainable positive cash inflow. That could total as much as GBP 750 million in the year as a whole in 2022. That's not adjusted for any disposals that may have completed by then, but it does remain contingent on the recovery in flying hours to at least about 80% of 2019 levels. Despite the uncertainties of the exact timing of that, we're confident that over a 12-month period, starting at some point in 2022, we're going to achieve that target. Looking further ahead, our ambition to get back to at least GBP 750 million as early as 2022 includes up to GBP 500 million of temporary headwinds from the Trent 1000 fixes and the closure of our overhedged positions. Our projected future cash flows will benefit as these diminish in the years going forward. Slide 25. Now that's effectively covered how we are restoring our financial performance, I'm going to move on to how we're positioning ourselves for the recovery and creating a sustainable future. That's two things. First, by maximizing the value from our existing capabilities in Civil, in Power Systems and Defence. Secondly, through the science-led innovation in sustainable power that we talk about quite a bit. That includes exploring opportunities with things like sustainable aviation fuels, exploring opportunities around hydrogen, and I'll come on to talk about that in a moment. On slide 26, maximizing the value from our existing capabilities. It's all about what we can do in each of our business units, to really capitalize on our position. We've invested heavily in Civil Aerospace over recent years, but that major investment cycle is now largely complete. Our fleets are amongst the youngest in their respective markets. The focus now is on extracting aftermarket value from that installed base with more than 5,000 large engines and 7,000 business jet engines. We can do that by improving time on wing and continuing to reduce the costs of components. Similarly, in Power Systems, we've got an installed base of more than 150,000 large engines, which gives us a great foundation to build upon. We're also exploring how we can really grow our strategic position in China, which is a fast-growing market for Power Systems, as well as commercialize our electrical, hybrid, and hydrogen solutions. In Defence, there are two particularly notable engine programs. We're awaiting decisions on those in the next two years or so. These are the B-52 re-engining program and the Future Vertical Lift program. Together, they have an estimated lifetime value of more than GBP 7 billion. We're also continuing to work on through-life upgrades to engines in service. Slide 27 shows what this means for our capital allocation. On the left-hand side of the slide, you can see how we're pivoting our midterm investments away from Civil towards Power Systems and Defence. Because as mentioned, the major investment cycle in Civil is now largely complete. In 2019 and 2020, we spent more than 70% on Civil Aerospace and ITP Aero. Looking into the medium term, we're going to see that decline, and it'll be more like 50%. Now, if we look at the chart on the right, we can look at that capital allocation through a different lens. This is the lens where we are accelerating our focus on low carbon technologies and through self-funded and disciplined R&D. As we move toward the midterm, the proportion of our investments in low carbon and next generation engines will really be the lion's share. The current investment in current technology falls from around two-thirds in 2019 to around a quarter in several years' time. That rapid shift in investment spend reflects our net zero ambitions. If we're to become a carbon neutral business by 2050, and that means enabling the markets that we serve to be net zero by 2050, it's vitally important that we take the steps now that will enable us to create more sustainable power in the future. Slide 28. I'm going to take each of these in turn and start with low carbon. Firstly, UltraFan, our next generation aero engine. As many of you will know, this new engine architecture is forming an exciting part of our sustainability journey. For starters, it is 25% more fuel efficient than the first generation of Trent family engines. It's also 100% SAF compatible, sustainable aviation fuel compatible. That efficiency is very important as SAF will inevitably be more expensive than fossil fuel to begin with. I mentioned SAF a moment ago, and there's a lot of interest in this area recently. Just touching on that for a moment. For journeys over 1,000 nautical miles, alternatives like electric solutions and hydrogen solutions become very challenging, or even impossible. For Rolls-Royce, we see the use of SAF or sustainable aviation fuel, as being vital. They require little change to our existing engine architecture. What we're working on with partners in the industry, are SAFs that can be simply dropped into the engine. They also have higher energy density and fewer impurities. Additionally, they can be created synthetically using captured carbon, using a zero-carbon energy source, and that's what gives us our net zero. You may have read the announcements we've made recently about successful tests on our widebody business jet engines. We've also been testing SAFs in our defence engines, and all the results have been extremely promising. However, it's not just aviation that can benefit from more sustainable fuels. Our Power Systems business also has a separate unit called Power Lab, that's dedicated to our sustainable future. There, we're exploring the use of synthetic fuels in our Power Systems portfolio. Our hybrid electric solutions reduce further our CO2 impact, we're embracing hybrid solutions in many different areas across the group. You've seen pictures of hybrid trains before from Power Systems. In Power Systems here on the bottom of the slide, we have a picture of a hybrid electric engine based on the Series 2000 engine that's ideally suited for yachts and provides increased power and lower noise pollution. Let's turn to slide 29 and talk about enabling net zero. Remember, an UltraFan engine running 100% synthetic aviation fuel, generated from net zero electricity is indeed net zero. We're doing more. As with SAF, there's been a lot of interest and excitement in the aviation sector around the use of hydrogen. Just like others in the industry, of course, we're exploring the fundamentals of hydrogen in aviation. It's a very exciting area and one that really pushes the boundaries and uses our existing engine technology. Our existing engine technologies could be adapted relatively easily to utilize hydrogen. There are large challenges for the industry more broadly, however, to overcome. It's exciting to see the effort building around hydrogen. I'm confident that we have the technical capability to support our aviation customers if that is indeed the direction in which the industry moves. Aside from the use of hydrogen in aviation, there are also many opportunities for hydrogen in our Power Systems business. We're cooperating, for instance, with Daimler Truck on stationary hydrogen-powered fuel cell generators, and that would act as a CO2 neutral emergency power generator for critical facilities like data centers. We're also working on ways to make energy storage more carbon neutral. We recently made a majority stake in the acquisition of Qinous, which is central to our microgrid solutions, enabling renewable power and energy storage. I would also like to talk about SMRs or small modular reactors. You've heard us talk about that before. Rolls-Royce has unique expertise in high-density nuclear technology from decades of experience in defence. SMRs are small nuclear power stations, which are factory-built, which have the ability to deliver electricity in a net zero way. In turn, this electricity could further contribute towards our net zero ambition, as, of course, it could be used to power the synthetic production of SAF or indeed of hydrogen. We have U.K. government support for SMRs, and we're targeting the first power by 2030. They have much lower CapEx requirements and much smaller footprint per gigawatt. Turning to slide 30, I'm going to come back to aviation and the progress we're making in electric aviation. It's particularly important for small and medium distance journeys and is an area where we're seeing a huge amount of interest and growth. You may have noticed on Tuesday that we announced our first commercial deal in the urban air mobility market. It's a very significant step towards commercializing our technology. The deal with Vertical Aerospace uses a Rolls-Royce electrical power system, which will be integrated into the piloted eVTOL vehicle. It's also particularly exciting, as it has the potential to transform the way that people and freight move from city to city. In the commuter and regional space, we've got a partnership with Italian airframer Tecnam to jointly develop the P-Volt. That's an 11-seater aircraft in an all-electric battery and fuel cell configuration. Today, I'm announcing that we are expanding the successful research program between Rolls-Royce and Widerøe to cover all elements of developing and delivering the zero ambitions P-Volt commuter aircraft that could be used in the Norwegian market from 2026. In the small propeller space, you might have read our announcement earlier this month that the Spirit of Innovation aircraft, part of the ACCEL program, achieved another major milestone. It is on track to be the world's fastest electric airplane. It successfully did its taxiing trial, propelled by its 50 hp or 400 kW electric powertrain. We are hoping to see the first flight of that aircraft in the spring. Let me summarize before we end our presentation today, just a reminder of what we've been talking about. The decisive and effective actions we've taken to address the challenging market conditions we faced in 2020. We made in-year cash savings of more than GBP 1 billion from one-off mitigating actions with the support of our stakeholders. We've strengthened our liquidity position to increase the resilience and support our long-term strategy. We've also made strong progress on our fundamental restructuring program. We've commenced our disposals program to raise over GBP 2 billion in proceeds. If we look forward ahead to the recovery, we're confident that those restructuring actions that we've taken in 2020 will enable us to have permanent cost efficiencies. We remain committed to supporting the decarbonization of our end markets by pivoting our R&D and CapEx towards lower carbon solutions. I'm confident we'll be able to continue to offer growing low-carbon technology for a more sustainable future. Before I hand back to the operator now for Q&A, as I mentioned, or in fact, as Isabel mentioned at the start of this call, this is Stephen's final full year results with us. I'd obviously like to thank Stephen for all his hard work and support, particularly during the recapitalization efforts of the last year. I want to thank him for his friendship over the last four years as well, and help with putting this business back where it belongs. Thank you, Stephen. I think Ocado is very lucky to have you. As the rest of you know, Ben Fidler, who's here with us today, is stepping up to the role of interim CFO for a few months until our new CFO, Panos Kakoullis, joins us in May. I'd like to thank you all for listening and hand over to the moderator for Q&A. Thank you. As a reminder, ladies and gentlemen, if you do have a question or comment, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your question, please press the pound or the hash key. Once again, it is star one for any questions or comment. We have our first questions coming from the line of Andrew Humphrey from Morgan Stanley. Please ask your question. Hi. Thanks very much. I've got a couple, if I may. One is on flying hours. I think over January and February, Rolls-Royce flying hours, as far as we can tell, were around 36% of 2019 levels. Assuming they stay at a similar level over the rest of the first half, are we effectively saying we need to be at 75% of 2019 levels in the second half to meet the cash guidance for this year? My second question is a sort of bit longer term around XWB. You've obviously secured the exclusive position on the 900 until 2030. I was curious about the reason for specifying that variant. I assume that the 800 and the 1,000 would not be sufficiently large volume opportunities in themselves for a competitor to make significant inroads in there. I'd be interested in your view on that. Also, does the kind of specification of 2030 as an end date for that exclusivity mean effectively that could be dual sourced from 1st of January 2031? Thank you. Right. Thanks very much, Andrew. Well, let me take both of those. The engine flying hours, undoubtedly, we can see what's happened in the first couple of months. There is a huge amount of uncertainty still in the timing of the recovery. Yes, our base case does expect recovery to resume in the summer. Things like vaccine rollouts and the efficacy of vaccines are important to that. Also, airport testing or health passports or whatever the solution is going to be, will also require government-to-government interactions and lastly, public confidence. People have to actually get on the airplanes. Yes, there's a lot of uncertainty, and yes, the arithmetic that you suggest about overall percentage of engine flying hours is there. Of course, don't forget engine flying hours. There isn't a literal connection of engine flying hours to our cash performance this year. There's definitely a directional relationship. Our base case does depend on that recovery. We'll just have to wait and see, and we're going to concentrate and continue to concentrate on the things that we can control and manage the things that we can't control, like timing and pace of recovery. On XWB-900, you'll recall, 12 months or so ago, there was a huge amount of speculation about our competitive position on A350 and GE having conversations with Airbus and so on. A huge amount of speculation and uncertainty in the community. We're delighted to put that speculation to bed for the remainder of this decade. You're right, the 900 variant is the volume variant. It's a hugely successful airplane. Technically, yes, when a period of exclusivity finishes at the end of 2030, then it could be dual sourced at the end of 2031. As I pointed out in the presentation a moment ago, the 2030 date does coincide pretty much with the timing of likely UltraFan and next generation aircraft and those sorts of things. It's a useful round date as well, to say exclusivity to the middle of March 2031 or something like that doesn't seem like a very, it seems spuriously accurate date. We'll see. For now, we're delighted with confirming the exclusive position across all the variants of the A350. Great. Thank you. We have the next questions coming from the line of Céline Fornaro from UBS. Please ask your question. Yes. Good morning, gentlemen. Good morning, Isabel. If I may, I would have two questions, please. The first one is regarding your GBP 750 million free cash guidance for 2022. If we try and work it backwards a little bit in terms of the businesses, we know that roughly the non-aerospace part of the business would generate approximately GBP 700 million of cash, and then you would have GBP 600 million of headwinds coming from the tax interest and the hedge book. That would imply that aerospace basically needs to generate roughly GBP 600 million in 2022 with a scenario of 80% flying hours. This is way above the 2019 level, which was in the high GBP 400 million. Maybe you could just explain to us the path towards that and if this logic seems accurate based on the headwinds and aftermarket and the rebased volume, offset somewhat by restructuring. My second question would be, I've just seen this morning a new appointment with immediate effect on the board by Mr. Paul Adams, maybe you could share a few words on his background and what he would bring to the business, given his operational focus as you are midway through a restructuring and a potential portfolio sale of some assets. Thank you. Okay. Hi, Céline. It's Stephen here. Let me start with the bridge to the GBP 750 million free cash flow as early as 2022 that you referenced. You're absolutely right. The key driver here will be the recovery and turnaround in Civil Aerospace. If I just work, let's say, from the outflow of GBP 4.2 billion that we saw in 2020 and take you through to 2022, and what are the key drivers of that material improvement in free cash flow over those two years. First of all, the single biggest driver is, of course, the improvement in the engine flying hours that we see. Close to GBP 1.2 billion of cash flow improvement, that's essentially driven by engine flying hours rising from the 43% of 2019 levels that we saw in 2020, particularly in the final nine months of 2020, improving to the guidance that we're giving today of our expectation of around 80% of 2019 levels in 2021. Sorry, in 2022. Every 1%, as a rough rule of thumb, equals GBP 30 million. That's your first key item, really, in that bridge. We're also expecting to see about GBP 900 million of improvement in Civil Aerospace just in market impacts, this will be around the regional engines, the V2500, and just generally wide body time and material improvement. That's going to be a big driver of that. We're also going to see higher spare engine volumes in 2022 than we saw in 2020, which was a pretty subdued year for spare engine demand, as you might expect. Finally, a key thing that we shouldn't forget about in Civil Aerospace is we're going to see around GBP 300 million lower Trent 1000 costs that were about GBP 520 million this year that will reduce to around GBP 200 million or so in 2022. That's another key driver. When we look at Power Systems and ITP, put those two businesses together, we're probably going to see around GBP 200 million of improved cash flow out of those two businesses in 2022. Another key item that we're working through, and in fact, this is an item that we've made good progress on during 2020, is our group restructuring program. We're expecting a GBP 500 million contribution from that compared to our 2020 numbers. There's reductions in operating costs and capital expenditure. Just as a reminder on that, the cash mitigations of the GBP 1 billion of savings that we've delivered in 2020 were against our pre-COVID budget, whereas the GBP 1.3 billion of restructuring savings that we first indicated on the 20th of May, when we announced the 9,000 headcount reduction, they're measured against our 2019 cost base. In short, this difference means that despite the 2020 mitigations, there's still GBP 500 million of benefit to come across 2021 and 2022, and not just the headline, GBP 300 million. Another key point here is to bear in mind that we actually see a reduction in the 2020 temporary headwinds as well that we saw. These are two key areas, really. Number one is in the fixed cost underrecoveries, particularly in Civil Aerospace. The sharp drop in volumes that we saw in 2020 as COVID really kicked in, and that we've talked about the OE volumes just now. We've also got a one-off FX impact in 2020 as well, as our U.S. dollar costs exceeded our revenues. In that scenario, we translate rather the achieved rate at the prevailing spot rates at the time, closer to sort of 1.30 or so, rather than the 1.50 or so in the hedge book. Given that our costs exceeded our revenues in 2020, that is a material, around GBP 400 million FX headwind to 2020 that won't be repeated in 2022 as our revenues and costs get closer aligned in U.S. dollars. Finally, we had a GBP 200 million increase in pension interest and tax pension cost swings in 2020 due to a deferral of the 2020 cash costs into 2021. That's another item in that respect as well. That gets you to the GBP 750 million as early as 2022. I would put some qualification around that. Very much dependent on the 80% of engine flying hours that we've highlighted today, and also very much dependent on the pace of our restructuring program and the delivery of the savings as well. I think we've made very good progress during 2020. There's still much to do, particularly as we get into the discussions around the potential site implications in Civil Aerospace. We're pleased with the progress that we're making and feeling confident about delivering those full savings from our restructuring program. That's it, really, on the GBP 750 million. Warren? Great. Thanks, Stephen. On Paul Adams, well, we're very pleased to welcome Paul Adams to the board. I point out that we also highlight that three of our directors are leaving the board. They're timing out. This is part of the normal succession process. Now, Paul was head of engineering at Pratt & Whitney for some years, he clearly has very relevant industrial experience. That compensates for some of the industrial experience that we are losing with the timing out of those three directors. It's also very relevant industry experience. I think his technical background is going to be particularly useful as we go through the next decade with next generation engines to bring on and transition to new technologies. We have the next questions coming from the line of Chloé Lemarié from Exane BNP Paribas. Please ask your question. Yes. Good morning, everyone. Thank you for taking my question. I have two as well. The first one would actually be building on Céline's question on 2022 free cash flow. If we keep all things equal and at that, we're missing 20% flight hours to go back to 2019 levels, I would assume you could deliver about GBP 1 billion from Civil and even possibly GBP 1.5 billion once the hedge book and Trent 1000 headwind are gone. Could you say whether this is broadly your ambition for the division, or would there be elements that would cap that performance going forward? The second is on your R&D and technology roadmap. Would you see the need to return to past R&D peaks by, let's say, the middle of the decade to help fund that innovation to move toward the decarbonization goals? Are these technologies actually less R&D intensive than prior programs, having quite a lot of commonality with your existing portfolio? Thank you. Thank you. I'll do the first question, Warren. Yeah. I guess you'll do the second. Yep. That's fine. Yeah, it's a good prompt, actually. The GBP 750 million as early as 2022, that actually includes Trent 1000 costs. We're guiding those costs in that year. It's between GBP 100 million to GBP 200 million in Trent 1000 costs, and that's pretty much the final year of material Trent 1000 cash costs. We've also got within that number, the cash cost of closing out those FX forward contracts in respect to 2022 as well, and that's around GBP 300 million. You put those two numbers together, neither of which will be permanent. The Trent 1000 costs will stop earlier than the FX cash costs. You'll see in the appendix the timing for those total cash costs. Just as a reminder, on a profit basis, we took all of the profit impact, that GBP 1.7 billion, in underlying costs as part of our financing costs in 2020. The P&L impact of that has already rippled through, but the cash profile ripples through across from 2020 through to 2027. Your interpretation is correct, that one could see a route to free cash flows greater than GBP 1 billion in the absence of those two headwinds. Warren? Yeah. The question on R&D. Well, clearly we are talking about having an organization that is a science-led innovation. We could spend almost anything on R&D. Our challenge is to make sure that we can do this in a profitable and effective way. If you push COVID to one side for a moment, we've made lots of investments over recent years to enhance the productivity and efficiency of our engineering efforts. Yes, we remain absolutely confident that we can maintain R&D within the sort of envelope that we've now established, which is significantly less than it has been over the last several years. Don't forget two factors driving that, the improvement in efficiency and productivity, but also the fact that we're coming to the end of the big investment cycle in new engines in our Civil Aerospace business. That's why we're able to make a massive change, like I showed on the slide a moment ago, in terms of how much we're spending on Civil Aerospace, tilting the investments that we are making into the other divisions and also into the newer technologies. You'll see the absolute level of R&D remain roughly flat, but you'll see the shape change significantly. Thank you very much. We have the next questions coming from the line of Chris Hallam from Goldman Sachs. Please ask your question. Yeah, Morning, everybody. Three quick questions. First, on slide 14, are you able to put any timeframe around the GBP 2 billion of cumulative organic free cash flow that you've highlighted after 2022? Should we assume that that's net over 2.5 x dividend cover ratio, i.e., that you're paying out 40% of free cash flow and dividends over that period? Second, back in February 2019, you withdrew from the NMA due to the tight schedules associated with the program. If it comes, it seems like the EIS date for that program has been pushed out to 2027 or so. Obviously, you've continued to make progress on UltraFan in the past two years. Is there a chance that you're interested in that program once again? Finally, if the U.K. were to significantly reduce the number of F-35s it plans to operate, would that have a meaningful impact on your Defence business, or should we think about that being driven more by the global fleet number than by the U.K. fleet number? Do you want to do this one? We're really talking in the midterm, sort of three, four years is the timeframe that we're referencing there. Clearly, a lot of uncertainty ahead still. A lot of restructuring to do and a lot of engine flying hour recovery to happen. That's the sort of rough guide on the timing. Sorry, Chris, I missed the second part of the question there. I was writing down the first part of the question. What was the second part of the question again? I missed that one. Yeah, sorry. Pre-crisis, you used to operate on a 2.5x dividend cover ratio, right? You used to pay out 40% of your free cash flow in dividends. As you try and get to net cash, are you assuming within that net cash position that you will have paid out around 40% of free cash flow in dividends? No, that is not part of that modeling right now. It is something that we clearly will be considering as we get into 2023, I would imagine, will be the earliest that we'll start considering the dividend coming back. We clearly want to be in a world whereby we've come out of COVID the other side. We're confident in our cash flow profile. We are very keen to get back to that net cash position that you just described. We can see a route there, as I said, over the next sort of, three, four years or so. At that point, I think we'll be ready to have the debate about dividends. Right now, we're laser-focused on our disposals program, generating at least GBP 2 billion from that program, and very focused on the restructuring program and getting this business back to the sort of economics that makes sense for Rolls-Royce. That GBP 750 million as early as 2022, that's the first gauging point, and then taking it beyond there, particularly as the Trent 1000 and FX headwinds disappear as well. I think it's going to be around at the earliest 2023, 2024 debate around the dividend pick up again. Okay. Your second question, Chris, was around UltraFan and NMA, I suppose. Yes, you're right. We were very explicit about the reason why we withdrew from that proposed program a couple of years ago, and that was around the timing of our UltraFan program. Our UltraFan development has gone well since then, and we're sort of gearing up for a demonstration early next year. It will depend, whether we go ahead with it at that stage or whether we pause at that stage. It will depend on the timing of new aircraft programs. The product will be scalable. It will go across single aisle and dual aisle applications. It will be applicable for new aircraft, compatible with 100% SAF and so on. Yes, it's quite applicable. We'll have to see if programs actually materialize and when they do. On the F-35s and the U.K. government's cancellations. Actually, obviously, we're more geared to the whole sort of global F-35 program than just the U.K. program. I would also note that the U.K. is talking about channeling that investment into the Tempest program, where we're obviously playing a crucial role. Very clear. Thanks. We have the next questions coming from the line of Andrew Gollan from Berenberg. Please ask your question. Hi. Morning, everyone. Two questions for me, please. One on new engine volumes and one on shop visits. On the new engine volumes, you've lowered the outlook slightly to, I think, 200-250, which is understandable, I suppose. Firstly, can you give us an update on the engine unit losses, in 2020? With that kind of lower for longer volume outlook, what's the trajectory you're expecting now for reducing that number going forward? I guess I'm referring here to the pre-COVID target of GBP 0.4 billion per engine. Then second question on shop visits. Can you break out the volumes in 2020 as you have done before, so in terms of major refits and check and repair? What is assumed within the cash guidance over the next couple of years in particular, please? Righto. Let me start on the OE volumes. I mean, of course, on our OE volumes, we are completely dependent on the airframe build rates. I think in 2020 we demonstrated a certain amount of flexibility, being able to respond to that, and manage our supply chain accordingly. We will just respond to those build rates. As far as the losses are concerned, in 2020, whilst we can respond to build rate changes, in 2020, the change was rapid. Actually, OE losses, as we came into the year at full throttle, we had no chance whatsoever of being able to respond and scale down our operation quite as fast as the volume disappeared. Lots of under recovery in 2020. In a way, the 2020 number was pretty meaningless as far as our forward-looking ambitions are concerned. To those forward-looking ambitions, however, where that is precisely why we are resizing our business with this restructuring, that is to deal with the anticipated OE volumes and also the anticipated volumes of spare parts for the aftermarket. I think we'll be back with more news about OE loss ambitions. Hopefully we're resizing our operation accordingly to meet those lower volumes. Okay. Shop visit volumes. We actually have quite a bit of this detail already on page 12 in the front half of the release. I'll go through it in any event. In 2020, we had 278, sorry, 272 large engine major shop visits, as you describe them, those major refurbs. In 2021, that number is going to be closer to 240, so a slightly lower level. That's going to start to rise. It rises then quite sharply as we're talking around 2022 to around 400 in 2022. That's the broad trajectory of major shop visits over the course of the next couple of years compared to our 2020 levels. Okay, that's helpful. Thanks very much. All the best, Stephen, in your next challenge. Oh, thank you very much. We have the next questions from the line of Ben Heelan from Bank of America. Please ask your question. Yes, morning. Thanks for taking my question. One on retirement, because we haven't really touched on that in great detail. You do still have a relatively large exposure to four-engined aircraft, and retirement should be picking up as we go through 2021. How do you think about the impact of retirements of 380s, 340, 747s on that flight-hour recovery? Thank you. Yes, well, we're not guiding specifically on retirements today. When we look at our engine flying hour forecasts, which are what the guidance is, or what's really the driver for our aftermarket revenue, we're effectively taking into account that retirement risk. I mean, we know that airlines are preferring the newer aircraft. We showed that in the presentation. We do have exposure to some of these older aircraft, and undoubtedly, airlines are going to retire the less efficient aircraft more quickly, and in preference to the others. Yeah, we're taking that into account. In fact, in the data appendices to the presentation, we've got the data about those older aircraft and what happened in 2020, and that's probably an indicator of what airlines are doing. Okay, great. Thank you. We have the next questions coming from the line of Robert Stallard from Vertical Research. Please ask your question. Thanks so much. Good morning. Good morning. I have a similar question to Ben, actually. Looking in the back in the appendices, roughly a quarter of your civil revenues in 2020 came from time and materials and other. That actually held in pretty well, compared to long-term service agreements. I was wondering if you could explain what was going on there. Also looking forward into 2021 and beyond, how do you expect T&M to track from here? Yeah. Well, basically, we expect T&M to track with activity. The long-term service agreement actual numbers were hit by the catch-ups. If you want to look at sort of activity, then look at shop visits and how those are developing. Time and materials is more of a reflection of activity, whereas long-term service agreements are wrapped up in accounting as well as what's actually going on in the field. That's the difference. We would expect time and materials for those engines where we have time and material contracts, that will just reflect flying activity as we go forward, and therefore the recovery. Can I just follow up on that? Down 9% year-over-year would seem very good performance given the prevailing activity we saw in 2020. I was wondering if there was any offsets in that number. Well, I think 2020, we have to regard as an unusual year, and that's the way I'd sort of look at it. Don't forget, we came into the year with a bit of a backlog of airplanes needing shop visits. We did take the opportunity of 2020 to burn down those queues, and that also meant burning down some of the Time and Materials demand as well. Okay. That makes sense. Thank you very much. The next questions come from the line of Jeremy Bragg from Redburn. Please ask your question. Morning, guys. Hi, there. I wanted to ask, please, again on the GBP 750 million guide for 2022. You're achieving it despite low engine flight hours. I wondered if you could elaborate, please, on what the mitigating factors were and whether the cost-cutting is just happening a bit sooner, or whether there's the potential for it to actually wind up being bigger than the GBP 1.3 billion. That was the first question, please. The second question was on the IAE royalties, which, I wonder if you could quantify them for 2020 and give a kind of view of what's baked into the 2022 guidance, because that's, again, rather like the FX, something which doesn't last forever. Thank you. Okay. Thank you for that. I'll start off with the GBP 750 million. Yes, you're quite right. Back in October, with the rights issue, we highlighted a GBP 750 million number as early as 2022, but based on engine flying hours being at 90% of 2019 levels. We're now reconfirming that GBP 750 million, but obviously with a lower 80% of 2019 levels. I think the key driver of this is we actually made really good progress in 2020 in our restructuring program. We got further than we thought we would, and which means that we're delivering those savings earlier than we thought. In 2022, the GBP 1.3 billion of savings that we've quoted is the exit run rate at the end of 2022. Clearly, we're getting that earlier. We're gonna get it earlier in 2022 as well. That's one of the key drivers. I think another aspect here is that there have been some benefits from COVID. We now have a 13-week rolling cash flow forecast by business that's given us more granularity than we've ever had, I think, into the operations of our individual businesses. We've been working hard on our budget for 2021 and 2022 since October with the rights issue. That's identified, I think, some further opportunities for improvement, particularly around our capital allocation and operating costs to help us reconfirm that GBP 750 million. We've got a pretty robust plan, I think, for the next couple of years now. There are some timing items that have impacted 2021, that GBP 2 billion cash outflow in 2021 that may benefit 2022. There's an item there just to bear in mind as well. I think, as it stands, though, we are pretty comfortable with the GBP 750 million as early as 2022, but very much dependent on that 80% of engine flying hour level in 2022 compared to 2019 levels. Again, that in itself is very much dependent on the recovery in the second half of the year as Warren talked about once the vaccination programs globally kick in. It's become apparent talking to other countries and our customers in the aerospace sector generally, that the rollout of the vaccination program will be a really key gating item. I think most countries are looking for a majority of their population to have been vaccinated before global travel restrictions start to get lifted in a meaningful way. That is probably the one key indicator for us to watch out for. That's it. I'll pick up the second half of the question. Just as I start on that, I'd also point out that the U.K. government is hosting the G7 this year. This getting flying going again is a sort of multi-government thing that has to happen. Our government relations team are very much spending time and effort lobbying the U.K. government to play a leading role in getting this risk-based approach to opening up flying again. Now, IAE royalties. IAE royalties, simply pretty good reflection of the flying hours for that V2500 engine. In 2020, very roughly 50% down. We expect to be recovered quite a bit in 2022. Don't forget that this is effectively a single aisle. It's a short-haul aircraft. Short-haul recovers before long- haul, and so we would expect that to come back a bit more substantially than most of our activity, which is wide-body long haul, by 2022. Also, don't forget that this royalty stream is going to disappear in 2027 anyway. It's one to note, but it's not really the major driving factor of our business. Thank you. A follow on, please. What were the timing items that might benefit 2022 2021. Sorry. What were the timing items that might benefit 2022, please? You mentioned that, but I wasn't really- The item here, and we've talked about this before, is credit notes that we've issued in respect to the Trent 1000 customer disruption. I think in the main, that's one of the items that we, no surprise, are airlines using their credit notes earlier. We're working actually pretty well with our airlines to help them through their cash pressures to the extent that is appropriate for us to do so and not damage ourselves. I think it's the early use of credit notes is the one thing that I would point to, that they're in the 2021 numbers and therefore benefit 2022. Got you. Okay. Thank you. Good luck, Stephen. Thanks very much. Bye. We have the next questions coming from the line of John Stewart from JPMorgan. Please ask your question. Hi, good morning, thank you for taking my questions. I have four, please. Firstly, and similar to Ben's question, your base case is for engine flying hours to be 80% of 2019 levels in 2022. What is your assumption on the size of the fleet in 2022 versus 2019? Secondly, your guidance on free cash flows are greater than GBP 750 million as early as 2022, which essentially has a lot of flexibility as far as guidance goes. Are you able to provide us with the minimum guide on free cash flow actually in 2022 on the current perimeter? Thirdly, Warren, you provided some comments on your near-term margin expectations for your Power Systems business. Given EBITA in Civil Aero is somewhat tied to shop visit activity and engine deliveries, two things that you have guided on and which are perhaps not as volatile as the outlook for engine flying hours in the near term, please can you provide us with your margin expectations in the Civil Aero business in 2021 and 2022? Finally, you've injected some assets into ITP to make it perhaps more attractive to a potential buyer. Are you able to please quantify what the sales and EBITA have been injected into that business, please? Thanks a lot. Yeah. Right. There's quite a lot there, and I have to say, I didn't hear all of it completely accurately. Let's have a go at some of them. Size of the fleet in 2022. Look, we're guiding, or we're not guiding, we're making assumptions about the engine flying hours that we expect in 2022, and that's a reflection of activity. It's a reflection of airline schedules and their current plans, combined with top-down forecasts. In those current plans, it's about airline schedules and their expectations. Exactly how many airplanes they're going to have servicing those routes is not something that is of particular relevance to us. Yes, we're taking retirements into account, things like A340s retiring and four-engined aircraft generally retiring more than the ones that are current. We have the last questions coming from the line of Harry Breach. Please ask your question. Yes. Thank you very much. Can you hear me, Warren and Stephen? Okay, can you hear me? Please bear with us, one moment please. We're not giving the Sorry, I'm just getting told here the line's dropping. Shall I carry on? Okay, I'll carry on with my answer. We're not giving minimum 2022 free cash flow guidance. To help you, what I would say, all things being equal, engine flying hours is the key thing to watch out for here. 1% equals around GBP 30 million, and GBP 750 million, we've said 80%. Variation around that 80% number of 2019 levels, 1% equals GBP 30 million. That's probably as best as I can give you in terms of a minimum number for 2022. On your other questions, we're not guiding on civil profit. We haven't done previously, and nor do we intend to. It's a level of detail that we're not going to go into. I think even now is less likely more than ever, given the general uncertainty generally, as we're still in the thick of COVID, and we have all the recovery ahead of us to go through and the restructuring program to go through as well. I think that's probably going to be something to save up for this time next year. Thanks. Thank you. I think there may have been a small interruption on the line there. If anybody did miss part of Stephen's answer and wants to come back to investor relations later, we can run through that again. Apologies for that. I think some of you may have lost sound for a short period. Back to you, operator. Sorry, I think, were there any more questions on the line? If not, I've got just two on the webcast I'm going to turn to. Firstly, Nick Cunningham here from Agency Partners, wanting to know more about the longer-term pattern for the major overhauls and wanting to know the impact that has as those visits start to ramp up in the later years. If you've got any further commentary on the cash flow guideline of the overhaul scenarios, that would be welcomed by Nick. Yeah. Hi, Nick. The shop visit volumes will start to increase. You will have seen that from the big orders that came through over the last three, four, five years. Those first shop visits start to flow through, and that is built into our plans. They will grow, but so at the same time do engine flying hours. At the same time, we see the non-appearance of the FX costs that I talked about earlier, and we also will have seen the back of the Trent 1000 cost by then as well. Despite that growing shop visit volume, and therefore the cost headwind that goes with it, there are some very significant tailwinds as well ahead for us. That's how we compensate that. I'll just squeeze one last question in, and apologies for anybody who didn't get their question answered. Obviously, we will come back to you individually if you weren't able to get a response online. A question here about SMRs for Warren. Just saying, are we confident in sort of a 2030 target for SMRs, given the pressures on R&D spend and how we're making those priorities? If you have any comments you'd like to make on the SMR outlook, that'd be appreciated. The answer is, we're confident in the program at the moment. This is very early stages at the moment. Just had the government go ahead and we'll be fleshing out the detail on that, I think, over the next 18 months to two years. Suffice to say, we think it's a very exciting program. Rolls-Royce has absolutely unique expertise in this area, and we see it as an essential piece of net zero for the U.K., but also excitingly, as I pointed out in the presentation, for other applications like SAF and hydrogen. We'll flesh that out over the next couple of years. Okay. Thank you. I'm afraid that's all we've got time for on the webcast questions. We have run out of time. Just to say, for anyone who missed that period of answers, we will make sure there is content in there in the transcript, which will be out later today or if not, maybe tomorrow on our website. Sorry if anyone missed that. The answer will be published. Thanks, everyone. Great. Well, thank you very much, everybody. The messages that we need you to take away are that the worst is behind us as far as COVID is concerned. I'm very pleased with the progress we're making on the fundamental restructuring, particularly of our Civil business, to reset the economics of our Civil business and give us great operational leverage as the recovery happens. That's going to mean that we can tilt the balance of our capital allocation going forward. We're well positioned for this future recovery and a net zero world in the future. Thanks very much.