Quarterly News Update

10 October 2007

                    QUARTERLY NEWS UPDATE FROM ROLLS-ROYCE:                    
                          THIRD QUARTER REVIEW, 2007                           

Rolls-Royce has continued to demonstrate the strength of its technology, its
broad product and service portfolio and its global reach. During the third
quarter of 2007, its civil aerospace, defence, marine and energy businesses
announced major orders or developments in 17 different countries.

Three major US announcements were among the highlights for the defence
business:

  * The AE1107C-Liberty engine that powers the V-22 tilt rotor aircraft for the
    US Navy and US Marine Corps received a $700 million production contract,
    which runs until 2013.
   
  * The United States Air Force Research Lab awarded two contracts valued at
    $315 million to LibertyWorks, the Rolls-Royce research unit, for work on
    advanced propulsion concepts:
   
    Work on the ADVENT (Adaptive Versatile Engine Technology) programme will
    focus on the development of variable cycle features for future US military
    aerospace platforms.
   
    The HEETE (Highly Efficient Embedded Turbine Engine) programme will focus
    on the development of high temperature, high pressure ratio compressor
    technologies and their related thermal management features.
   
In the energy sector, the company has signed contracts valued at more than
$100 million to supply Trent, RB211 and 501 gas turbines for onshore power
generation and oil and gas projects in Australia and the UK, and for offshore
projects in Australia, Malaysia and Brazil.

The Group's service capabilities expanded significantly. A new Trent repair and
overhaul facility - a joint venture with Lufthansa Technik - opened in Germany
and an innovative 10-year contract was signed with the UK Ministry of Defence
to provide support for the nuclear powerplant systems on Royal Navy submarines.

The Trent engine experienced a strong quarter. In addition to the roll-out of
the Boeing 787 Dreamliner, for which the Trent 1000 is the launch engine, the
engine also achieved on-time certification and is the first to receive joint
European and FAA certification.

British Airways' announcement of its new long-haul fleet of Airbus A380s,
powered by the Trent 900, and Boeing 787s, powered by the Trent 1000, brought
the quarter to a strong end for the Trent family. The low noise and emission
levels of both engines played a key role in the British Airways selection as
the airline builds a new more environmentally-friendly fleet. Including option
aircraft and TotalCare agreements, the business is worth more than $5 billion
to Rolls-Royce at list prices. The order includes 12 firm and seven option
Airbus A380 aircraft and 24 firm and 18 option Boeing 787s, scheduled for
delivery from 2010.

Other highlights:

Corporate

  * The Interim Results, announced on 26 July, demonstrated a well-balanced
    business with a broad portfolio of products and proven access to global
    markets. The Group announced a record order book of £35.1 billion - an
    increase of 34 per cent over the 2006 year-end figure of £26.1 billion.
    Services revenues accounted for £2,001 million, or 53 per cent, of total
    Group sales, which, at £3,591 million, rose by 10 per cent on an underlying
    basis.
    In the Interim Results, Rolls-Royce said it was well placed to deliver
    growth in underlying profit and, before pension scheme injections, a
    positive cash flow for 2007, despite the challenges of increasing raw
    material costs and the effects of the weakening US dollar.
   
Civil Aerospace

  * ILFC selected the Trent 1000 to power 40 of the 74 Boeing 787s it has on
    firm order. The contract is worth $1.3 billion and covers aircraft
    deliveries between 2010 and 2017. Nakash Group ordered the Trent 1000 for
    the two firm and two option 787s it has on order to be operated by Arkia
    Israeli Airlines. Hong Kong real estate tycoon, Joseph Lau, also purchased
    Trent power for his VIP version of the Dreamliner, while Royal Brunei
    Airlines announced it will be leasing four aircraft fitted with the Trent
    1000, covered by a lifetime TotalCare services agreement.
   
  * Orders have now been placed for over 600 Trent 1000 engines by 18 operators
    and five leasing companies - approximately half the Boeing 787 customers
    who have made an engine decision.
   
  * The V2500, produced by International Aero Engines, in which
    Rolls-Royce is a senior partner, received orders from two Singapore
    customers for up to 140 engines, with a value to Rolls-Royce of more than
    $500 million. Engines for 50 aircraft for Tiger Airways will be worth
    $400 million. BOC Aviation, previously known as SALE (Singapore Aircraft
    Leasing Enterprise), selected the V2500 for 10 firm and 10 option aircraft,
    engine business worth just over $100 million to Rolls-Royce.
   
  * Rolls-Royce and Cessna Aircraft celebrated the delivery of the 5000th
    Citation business jet - an AE 3007 powered Citation X, the fastest business
    jet in operation - at the National Business Aviation Association Annual
    Meeting and Convention in Atlanta, Georgia.
   
Defence

  * The GE Rolls-Royce Fighter Engine Team has successfully fired the
    augmentor, or afterburner, on the F136 test engine for the first time,
    reaching full power thrusts, during tests conducted at GE test facilities
    in Cincinnati. Turbomachinery testing will continue in Cincinnati prior to
    the engine being shipped to Arnold Engineering Development Center in
    Tennessee for simulated altitude testing.
   
  * Positive budget marks from both the US Senate Armed Services and
    Appropriations Committees mean that all four Congressional Committees have
    now approved full F136 funding for 2008 at a level of $480 million.
   
  * The most powerful version to date of the Rolls-Royce Turbomeca RTM322
    turboshaft engine has received its Civil Type Certificate from the European
    Aviation Safety Agency. It has been tailored specifically to operate in the
    NH90 helicopter in arduous `hot and high' conditions.
   
Marine

  * An innovative 10-year contract, worth £1 billion, was signed with the UK
    Ministry of Defence to cover support of nuclear powerplant systems on the
    current fleet of 13 Royal Navy submarines and the new Astute-class when it
    enters service. Rolls-Royce and the MoD will form a joint team to set
    agreed service levels, and the company will be paid for meeting those
    targets rather than through individual contracts.
   
  * The 100th UT 755 ship, designed by Rolls-Royce, has been delivered in
    Norway. The first ship was delivered in 1996, and the UT 755 has gone on to
    become one of the world's most popular offshore ship designs.
   
  * A £24 million contract with the Singapore-based SE Shipping, a subsidiary
    of India-based Suzlon Energy, for complete marine power systems for four
    heavy lift vessels is the largest ever power systems contract for the
    merchant business. Options for eight more vessels would triple the order
    value.
    Rolls-Royce is supplying equipment which powers and propels the ship
    including diesel engines, propellers, tunnel thrusters and steering gear.
    These are then allied to automation and control equipment that fully
    integrates the system.
   
Energy

  * Alinta Limited of Australia has ordered a Trent 60 WLE dual-fuel electrical
    generating set for its new Tamar Valley Power Station site on the Tamar
    River in Tasmania. It will operate in a simple-cycle plant providing 58MW
    of electrical power.
   
  * Also in Australia the company will supply three industrial RB211 packages
    for Woodside Energy's North Rankin platform, part of its North West Shelf
    venture, Australia's largest resource project. In addition, two RB211s have
    been selected by Shell for the Sarawak offshore platforms B11 and F23, and
    three 501 engines have been ordered via Centrax for the Mexilhão platform
    to be operated by Petrobras, offshore Brazil.
   
  * BP has ordered two RB211 gas turbine mechanical drive packages for use at
    its Dimlington, UK, onshore compression facility as an integral part of a
    £125 million investment it is making in its southern North Sea business to
    increase recoverable gas reserves and create opportunities for further
    offshore development.
   
Services

  * N3 Engine Overhaul Services, a joint venture set up by Lufthansa Technik AG
    and Rolls-Royce plc in 2003 to repair and overhaul aircraft engines,
    officially opened its new plant in the Thuringian town of Arnstadt in
    central Germany on 14 September. N3 will specialise in overhauling
    Rolls-Royce Trent 500, 700 and 900 engines, which power Airbus A340, A330
    and A380 aircraft respectively.
   
  * TotalCare agreements have been signed with:
   
  * Thai Airways International covering the Trent 500 engines powering its
    fleet of ten new-generation Airbus A340s.
   
  * South African Airways which has extended its Trent 500 agreement to cover
    all nine of its A340-600s.
   
  * Monarch Airlines with a new contract for RB211-535 engines for
    its seven Boeing 757s.
   
  * Icelandair has signed a new engine overhaul agreement with Rolls-Royce Aero
    Repair and Overhaul to cover its RB211-535s that power a fleet of 21 Boeing
    757s. The $100 million agreement builds on a relationship that has spanned
    50 years.
   
  * American Airlines and Rolls-Royce celebrated the 1,500th engine to come
    through the joint venture maintenance and repair facility, Texas Aero
    Engine Service Ltd (TAESL) in Fort Worth, Texas, which was formed in April
    1998. It repairs and overhauls the RB211 engine, which American Airlines
    has on its Boeing 757 fleet, and the Trent 800 engine, which is on its
    Boeing 777 aircraft.
   
  * CorporateCare®, the Rolls-Royce business jet engine service programme, is
    poised to beat last year's record of 165 signed contracts, with 115
    contracts signed this year to date. More than 625 aircraft are under
    CorporateCare or other agreements, with contracts valued at more than $1.2
    billion.
   
Operations and technology

  * The Group's `focused factory' modernisation programme creating a
    world-class manufacturing capability in the UK has been completed with the
    opening of a new 'Rotatives' manufacturing facility for core-technology
    components in Derby on 17 September and a new Bristol manufacturing
    facility for turbine components and a range of legacy parts on September
    21. Good progress is also being made in identifying a site for a new assembly
    and test facility, with proposals being considered from Singapore and a
    number of US states.

  * The new 58 Bed engine test facility in Derby was also opened on 17
    September and, together with the adjacent 57 Bed, is the most advanced test
    complex of its type in the world.
   
  * A new University Technology Centre was established at Karlsruhe University
    in southern Germany to research cooling in gas turbine combustors and
    turbines and related technologies. The goal is to improve fuel efficiency
    and environmental performance of future aero engines.
   
  * UK Secretary of State for Innovation, Universities and Skills, John Denham
    marked the start of manufacturing activity in Derby on the Environmentally
    Friendly Engine (EFE) in July. This is a collaborative, five-year
    government-backed research and technology acquisition programme, led by
    Rolls-Royce, to advance key environmental technologies.
   
  * Rolls-Royce is to team with Air New Zealand and Boeing to evaluate a
    renewable fuel source, as part of a wider research programme to understand
    renewable fuels and their potential future applications. A bio fuel blended
    with kerosene will be used in one of the four Rolls-Royce RB211-524s
    powering an ANZ Boeing 747-400 in the second half of 2008.
   
Community Relations

  * A new school opened in tsunami-devastated Tamilnadu in India, rebuilt as a
    joint project by Rolls-Royce and the Confederation of Indian Industry.
    Pallayar Government Middle School is close to Rolls-Royce energy
    installations at Saheli, Vaigai, Kaveri and M M Steel.
   
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For further information please contact:

Mark Alflatt
Director - Financial Communications
Tel: [phone]