UK ShareSave Maturity Sharing in our Success
Your ShareSave - time to make a decision Your ShareSave plan is coming to an end. Keeping things simple: two plans - one brochure Whether you re in the three or five year plan, most of the details are the same. So to keep things simple, we ve created one brochure to cover both. But, where there are differences, we ve explained them on page 5. So please read the information carefully. As long as you ve made all of your plan payments on time, we ll add your tax-free bonus (if applicable) to your savings on 1 February 2017. The headlines are: Your option price and bonus Keeping things simple Three year plan Five year plan Option price 9.616 Option price 5.25 No tax-free bonus. Tax-free bonus of 0.9 times your monthly savings amount. Important Information 3 year plan The share price on 30 November 2016 was 6.76, which is less than the offer price of 9.616. It will not usually be in your interest to exercise a ShareSave option where the share price is less than the ShareSave offer price. You have 6 months from 1 February to decide what to do but if you re uncertain, you should get independent professional advice. As always, please remember that share prices can go down as well as up. 02 Keeping things simple
What do you want to do? As your plan comes to an end, you have to decide what you want to do with your savings: A. Buy shares with your savings and bonus (if applicable), and keep them all. B. Buy shares with your savings and bonus (if applicable), and then sell all of them straight away. C. Buy shares with your savings and bonus (if applicable), and sell some of them straight away. D. Take your savings and bonus (if applicable), in cash. If you re in the five year plan you can also choose to: E. Leave your savings in your account for another two years and get an additional taxfree bonus of 2.6 times your monthly savings amount. If you take this option and receive your additional tax-free bonus, you will lose your option to purchase shares six months after the maturity date. Your choices and what happens next 03 CHOICE A Buy shares with your savings and bonus (if applicable), and keep them all By taking this option, all of your savings and bonus (if applicable), will be used to buy shares at the option price given for your plan. You will become a shareholder in Rolls-Royce Holdings plc, which means: You will receive any payments made to shareholders in future. You can vote at Rolls-Royce Holdings plc shareholder meetings. If the share price goes up you will benefit. Remember, however, that the share price can go down as well as up. Any shares you buy will automatically be transferred to your online Computershare account. This account is called a Vested Share Account ( VSA ) and you can use it to see the number of shares you have and what they re worth. With this option, you re in control. On the Computershare website you can see our live share price, subject to a 20 minute delay, so you can control your shares and trade online, in real time during market hours. There are no set up or ongoing account fees. If you want to move your shares into your own personal share dealing account or ask for a share certificate, you can do that too, at no cost. Please remember that if the share price is less than the offer price of 9.616 (3 year plan) or 5.25 (5 year plan) it will not usually be in your interest to exercise a ShareSave option. What do you want to do?
CHOICE B Buy shares with your savings and bonus and sell all of them straight away By taking this option, all of your savings and bonus (if applicable), will be used to buy shares at the option price for your plan. You can then decide to sell all of them, immediately. This is done by Computershare on your behalf you ll receive the share price shown on the Computershare website, subject to a 20 minute delay. If the amount you make from any increase in the share price is greater than your annual allowance, you may have to pay capital gains tax. Our taxation section covers this in more detail. Please remember that if the share price is less than the offer price of 9.616 (3 year plan) or 5.25 (5 year plan) it will not usually be in your interest to exercise a ShareSave option CHOICE C - Buy shares with your savings and bonus and sell some of them straight away Use your savings and bonus (if applicable) to buy Rolls-Royce Holdings plc shares at the option price. You can choose to sell just some of your shares, and your remaining shares will be transferred to a Vested Share Account (VSA) and will be viewable within your Computershare portfolio. CHOICE D Take your savings and bonus in cash By taking this option, you can withdraw all your savings and bonus (if applicable), and take the full amount in cash. If you do this, your account will be closed. You won t benefit from any increase in the share price, if the option price for your plan is higher than the current share price. You will get back all of your savings plus your bonus (if applicable). If you change your mind and decide that you want to buy shares at the option price, you still can within six months from the time your plan matures. In this case, you ll need to contact Computershare directly, as you ll have to pay back your savings and bonus out of your own funds. If you go over the six month deadline you will lose your option to buy shares. If you re in the five year plan you have another option open to you... CHOICE E Leave your savings in your account for another two years and get an additional tax-free bonus. If you d rather do this, you will receive an additional tax-free bonus of 2.6 times your monthly savings amount. This is on top of the five year plan bonus of 0.9 times that you ll already have received, giving a total tax-free bonus of 3.5 times your monthly savings amount. To take this option, you don t need to do anything it will happen automatically. Your option to buy shares will lapse 6 months after the maturity date. 04 What do you want to do? (cont.)
If you close your account before the full seven years, you won t get the additional bonus. You ll only get back what you ve paid in, plus the five year bonus of 0.9 times your monthly savings amount. If you take this option, you can still change your mind and decide to buy shares at any time up to six months after the maturity date. If you decide to do this, your savings and five year bonus will be used to buy shares. Your savings account will be closed and you ll no longer be able to save for the seven year savings bonus. You can buy the shares by going online and logging on to your account, and electing either choice A, B or C. What to consider when making your decision When deciding which option to take, remember that it is not usually in your interest to purchase shares if the option price is higher than the current share price. Remember to check the Rolls-Royce plc share price before you give your instruction to Computershare. If you have any doubts you should get independent professional advice. Will I receive any interest after the closing date of my plan? There is no interest applicable for this plan. You will receive an additional bonus of 2.6 times your monthly savings contribution, as long as you leave your savings for the full two years. How to make your choice. You can make your choice online - it s quick and easy to use the Computershare website. Log in and select Portfolio, then View Details next to UK ShareSave Plan, and then choose Maturity. You then just follow the onscreen instructions. You can ask for a paper form from Computershare, if you re unable to make your choice online. Important Information Five Year Plan If you choose option B or C, and instruct Computershare to sell your shares, they will do this as soon as is possible following your instruction. This is called real time trading. Three Year Plan If you are in the three year plan, you can still give your instruction online. All instructions will be completed by Computershare on a weekly basis. Please note the key dates for the weekly exercises, which are explained on page 8. 05 What do you want to do? (cont.)
Questions & Answers We ve included some of the more common questions about ShareSave here: Buying shares What is the option price? It s the price you pay for your shares. It is based on the market value of a share at the time you started the plan, including an additional 15% discount. So: If you buy a share at the five year plan option price of 5.25, and the share price at the moment you sell the share is 6.50, your gain would be 1.25 per share If you buy a share at the three year plan option price of 9.616, and the share price at the moment you sell the share is 6.50, you would lose 3.116 per share. You could of course just ask for your savings to be returned. What happens if our Company share price is below the option price? The share price on 30th November 2016 was 6.76 which is higher than the option price for the 5 year plan, but lower than the option price for the 3 year plan. If the share price remains lower than the option price then it would not usually be in your interest to buy the shares. Remember that for both plans you have the option of having your savings returned to you. How many shares can I buy and how much will they cost? The number of shares you can buy is shown on your online Computershare account. You can work it out by dividing your total savings - including any bonus - by the option price. What does exercising my option mean? Exercising an option means that you buy shares in the company at the discounted option price, using your savings and bonus (if applicable). When can I buy the shares? You can buy shares at any time within six months of the maturity date, known as the exercise period. Remember that if you ve missed a payment for any reason your maturity date will be delayed by the same number of missed payments. How do I buy shares? You can go online and buy shares at the option price at any time during the exercise period. 06 Questions & Answers
When will I get my shares? Once your shares are bought, they will be transferred into your Vested Share Account (VSA) within two working days. If you have chosen to sell some of your shares, the remaining shares not sold will be transferred into your VSA within four working days. What is a Vested Share Account ( VSA )? The VSA is an account that has been set up to hold your shares electronically on your behalf by Computershare. The VSA allows you to: Hold your shares safely and securely without the need for paper certificates or to set up your own brokerage account. Access a share dealing service that you can use to transfer or sell your shares subject to any compliance and share dealing rules that may apply to you. Please read the VSA Terms and Conditions, which can be found on the Computershare website. How do I ask for a share certificate? Once your shares are in your Vested Share Account (VSA), you can ask for a paper share certificate to be sent to you by Computershare. There s no cost for this service. Before you do, make sure that your address and personal details are right on your Computershare account, so that the certificate reaches you safely. Remember that your certificate is valuable. If you lose it, you will have to pay for a replacement. When can I sell my shares? If you are in the five year plan, you can sell your shares straight away, on the same day that you exercise, by choosing choice B. The real time trading facility on the Computershare website allows you to sell your shares whenever you like, giving you greater control and flexibility. You will receive your funds into your nominated bank account within five working days after the sale date. The price you sell your shares at is dependent on the price at the moment you sell subject to a 20 minute delay - this means that you won t always achieve the same price as a colleague who sold on the same day. If you are in the three year plan you can still give your instruction online, however, exercises and sale of shares will be completed on a weekly basis. Please note the key dates on page 8 for the weekly exercises. If you cannot go online, please contact Computershare on 0370 889 3122. 07 Questions & Answers (cont.)
If you ve chosen to keep your shares - choice A - you can sell them from your VSA at any time using the Computershare website. There will be a charge for selling your shares, please refer to the VSA Dealing Terms & Conditions hosted under Plan Documentation tab in your Computershare account. Please read our taxation section for details about capital gains tax and other tax implications. Is there a charge for selling my shares now? If you sell your shares on the day they are bought choice A- there is a fee of 15.00. If you sell your shares at a later date, directly from your Vested Share Account, there is a fee of 0.35% with a minimum of 12.50. I already have a share dealing account from a previous plan, where will my shares go? Whether you have a Computershare, a Halifax or another share dealing account, the rules are the same. To keep things simple we ve opened a new Vested Share Account where all the shares will go. If you have your own account from a previous plan, you can go online and move your shares into it at no cost. If you don t have a personal share dealing account, your shares will stay in our Vested Share Account until you decide to take them out; to move or sell them. Again, you can go online to tell Computershare what you would like to do. Key Dates - (three year plan only - weekly exercise) If you want to make a decision about what to do in advance of the maturity date, the online election window will be available from 9 January 2017 until 11am on 27 January 2017. This will allow you to elect to exercise your ShareSave option on 1 February 2017. Any elections received after this date will be processed in line with the timetable below. From 28th January, requests for exercise and sale will be carried out on a weekly basis and provided Computershare have received your valid instruction by 11am on a Thursday, they will aim to exercise your instruction and if you wish, sell your shares on the third Business Day following. The last date for you to exercise your option will be 31 July 2017. If you want to exercise your option and if you wish, sell your Shares by this cut off date then Computershare must receive your valid instruction by 11am on 26 July 2017. The only exception to this cut off date will be for anyone who has missed a contribution or contributions into their Savings Account. If this applies to you, provided Computershare receives your instruction to exercise/sell by 11am on a Thursday, they will aim to exercise your instruction and if you wish, sell your shares on the third Business Day following. 08 Questions & Answers (cont.)
Tax We re not allowed to give financial advice, so the information in this section is a guide to help you understand how your decision could affect what you have to pay. It s based on UK tax rules for anyone resident in the UK, throughout the ShareSave plan. If you have any questions, or are unsure which option to choose, you should contact an independent financial advisor. Will I have to pay tax when I buy shares? Under current tax rules, you don t have to pay tax on your savings or tax-free bonus, or when you decide to buy shares. Will I have to pay tax when I sell my shares? If you sell your shares, you may have to pay Capital Gains Tax (CGT) on the difference between the option price that you buy your shares for and the price that you sell them at. Capital gains tax is charged at 18% for basic rate tax payers and for higher rate and additional rate tax payers the rate is 28%. You are entitled to an annual tax exemption allowance of 11,100 for the 2016/17 tax year. This allowance is available for you to use against any capital gains made in that tax year. It covers all capital gains made in the tax year, not just gains made on the sale of Rolls-Royce Holdings plc shares. 09 Tax
Can I transfer my shares to my spouse or civil partner? I ve heard that this may reduce my capital gains tax liability? Yes. You can transfer shares to your husband, wife or civil partner as long as you have lived together for any part of the tax year in which you made the gift. This is called gifting and there is no tax payable on the gift. Please note, you will have to withdraw your shares from the VSA by logging into your account on the Computershare website. This withdrawal process will produce your share certificate which will be delivered to you. Then you will be able to transfer your shares by completing a Stock Transfer Form. You can download a Stock Transfer Form from www-uk.computershare.com/investor, which can be located under the Information tab or by calling Computershare on 0370 889 3122. If your capital gains exceed your 11,100 annual capital gains tax exemption allowance for the 2016/17 tax year, you could potentially reduce your capital gains tax liability by gifting shares to your husband, wife or civil partner. The annual tax allowance of 11,100 is available to each spouse or partner so gifting shares in this way could allow them to use their allowance too. Can I transfer my shares into an ISA? I ve heard that this may reduce my capital gains tax liability? Yes. You can move your shares to the stocks and shares part of your ISA within 90 days of the date when you exercised your option by registering your decision with Computershare. In 2016/17 you can move a maximum of 15,240 worth of shares into your stocks and shares ISA. The value of the shares at the date of transfer into the ISA counts towards the annual limit. You don t have to pay capital gains tax on any shares moved into your ISA or sold directly from your ISA. Please contact an independent financial advisor to discuss how moving shares into and out of your ISA may affect you. Donating to charity If you decide to buy shares with your savings and tax-free bonus, (if applicable), it may leave a small balance in your account. This happens when there isn t quite enough in your account to buy that next share. Unless you ask for this money to be returned to you, we will donate it to Children in Need. 10 Tax (cont.)
I ve made my decision. What do I need to do? We re working with Computershare who will act on your decision quickly and easily. You can go online at www.computershare.com/rollsroyceshareplans You will need your Shareholder Reference Number (SRN), which can be found on your maturity letter, and your Personal Identification Number (PIN). If you have forgotten your PIN, please select the Forgotten PIN link on the website and a new PIN will be sent to you or alternatively call Computershare on 0370 889 3122. If you have not previously been supplied with a PIN, then your PIN will be your date of birth in eight-digit format (i.e. DDMMYYYY). After login, you can access your ShareSave account by clicking on Portfolio, selecting View Details next to UK ShareSave Plan and then Maturity. You then need to follow the onscreen instructions. Before going online, make sure you ve read this brochure. Help and advice? We re not allowed to give you any financial advice. So, if you want to know how your decision might affect you, please speak to an independent financial advisor before deciding which option to take. It is your responsibility to make sure that your decision has been registered. If you don t get confirmation of your choice by email or letter, you should get in touch with Computershare to check that they have received it. All Rolls-Royce employees must adhere to the Rolls-Royce Dealing Policy which can be found on Group Policies section of the Rolls-Royce intranet. If you have a question about the plan itself, please contact Computershare on: 0370 889 3122. Useful telephone numbers General ShareSave queries Computershare > > Plan Managers 0370 889 3122 rollsroyceshareplans@ computershare.co.uk 11 I have made my decision...
R R Rolls-Royce plc 2014 Rolls-Royce Holdings plc Registered office: 62 Buckingham Gate, London SW1E 6AT. Company number; 7524813. Registered in England. 12BILE D04