Quarterly News Update

December 22 2004

                    QUARTERLY NEWS UPDATE FROM ROLLS-ROYCE                     

                             FOURTH QUARTER REVIEW                             

Rolls-Royce continued to make good progress in the fourth quarter, maintaining
a strong order intake and achieving strategic milestones. Notable amongst these
were:

  * The $1bn order from All Nippon Airways (ANA) for the Trent 1000 to power
    its new fleet of 50 Boeing 7E7s;
   
  * The selection by China Eastern of the Trent 700 for 20 Airbus A330-300
    twinjets, an order worth $450m;
   
  * The decision by Malaysia Airlines that the Trent 900 engine will power its
    fleet of six Airbus A380 airliners;
   
  * The confirmation, by the four partner nations, of the second tranche for
    Euro-fighter Typhoon, a contract worth over £750 million to Rolls-Royce
   
  * The strengthening of the commercial offshore marine sector in the second
    half of the year, leading to £166 million in firm orders for design and
    propulsion equipment packages in the support and service vessel sector.
   
A key feature of Rolls-Royce's strategy is focused investment in technology,
capability and infrastructure:

  * The company opened a new research centre this month in Singapore. It is the
    first to be established in Asia, and will be the first to undertake
    research across a wide range of technologies such as aero-dynamic design,
    materials science and modelling for fuel cells. In addition, Rolls-Royce
    opened a new University Technology Centre in conjunction with Manchester
    University, which will conduct research into advanced electrical systems.
   
  * The company also opened a new £85m state-of-the-art compressor blade
    manufacturing facility in Inchinnan, Glasgow.
   
  * To further develop its services infrastructure, Rolls-Royce, with partner
    Lufthansa Technik, announced that a site near Erfurt in Germany was to be
    the location for N3 Engine Overhaul Services, a joint venture for the
    maintenance of Trent 500, 700 and 900 engines.
   
In November, Rolls-Royce appointed Simon Robertson, Managing Director of
Goldman Sachs International and President of Goldman Sachs Europe, as its new
Chairman. He will take up his new position on January 1, 2005.

Business highlights during this quarter:

Civil

  * Rolls-Royce announced that ANA of Japan had selected the Trent 1000 to
    power its new, flagship fleet of 50 Boeing 7E7s. The $1 billion deal with
    the 7E7's launch customer establishes the Trent as the lead engine for the
    aircraft's development programme.
   
  * Kawasaki Heavy Industries, Goodrich Corporation and Hamilton Sundstrand
    joined Mitsubishi Heavy Industries as risk and revenue sharing partners on
    the Trent 1000 programme.
   
  * China Eastern Airlines, the first Trent operator in mainland China, added
    to its Trent fleet when it ordered Trent 700s for 20 Airbus A330 twinjets.
    The airline also operates Trent 500-powered A340-600s.
   
  * Having achieved airworthiness certification on schedule less than 20 months
    after its first run, the Trent 900 was chosen by Malaysia Airlines for its
    new fleet of six A380s, entering service in 2007. The deal took the Trent
    900's market share to 50 per cent based on announced engine decisions for
    A380 firm and option orders. Malaysia Airlines already flies the Trent 800
    on its Boeing 777s.
   
  * In the business jet sector, Rolls-Royce announced in October that it had
    enrolled an additional 100 aircraft in CorporateCare service agreements
    during the previous 12 months. The company now has 400 aircraft under
    CorporateCare or other flight hour contracts.
   
Defence

  * In October, Rolls-Royce was awarded a $60 million follow-on services
    contract by the US Department of Defense (DoD) for the Adour engines that
    power the Navy's T-45 training aircraft.
   
  * In November, Rolls-Royce received contracts worth almost $100m from the
    United States. These included a $23 million contract from the US DoD for
    T56 engines and equipment for the E2C Hawkeye airborne early warning
    aircraft; a $22 million contract from the Army for 60 spare Model 250
    engines for its OH-58 Kiowa Warrior helicopter fleet; and a 40 per cent
    share of the $122 million transition contract which will fund the F136
    engine for the Joint Strike Fighter through to Q3 2005. Rolls-Royce is a 40
    per cent participant in this engine programme.
   
  * Rolls-Royce announced in December that its share of the Tranche 2
    Eurofighter Typhoon order was worth more than £750 million. The total
    contract covers 519 EJ200 engines, and will sustain 4,000 high value jobs
    in Rolls-Royce and its supply chain. Rolls-Royce will produce the
    combustion system, high pressure turbine, intermediate casing and other
    components, as well as the assembly and test of 195 engines for the Royal
    Air Force.
   
  * The Rolls-Royce Turbomeca RTM322 engine was selected by the Royal Air Force
    of Oman to power its new fleet of 20 twin-engined NH90 multi-role
    helicopters.
   
Marine

  * Marine offshore sector orders in the last six months totalled £166 million,
    including design and propulsion equipment packages for 26 new support and
    service vessels. The support ships are based on the Rolls-Royce UT-Design
    and nearly 500 of these vessels are in service or on order since they were
    introduced in the mid-1970s.
   
  * Rolls-Royce has signed orders with the Chilean Navy to service gas turbines
    on five new ships for the next 20 years. The company will provide repair
    services and technical support for its gas turbines on a former Royal Navy
    frigate and four former Dutch Navy ships.
   
  * The Ministry of Defence placed a £56 million contract for updated reactor
    instrumentation systems for Vanguard class and the first three Astute class
    submarines. The contract is part of a long-term power-plant support package
    that will run to 2011.
   
  * Samsung Techwin signed an order worth more than $40 million for nine
    Rolls-Royce AG9140RF gas turbine generator sets that will operate in three
    Republic of Korea KDXIII destroyers.
   
  * Rolls-Royce was selected by ABG Shipyard to design and provide equipment
    for three Indian Coast Guard pollution control ships in a contract worth £
    14 million.
   
Energy

  * Rolls-Royce continued to strengthen its leadership position in the oil and
    gas fields being developed in the Caspian Sea with a significant order for
    four RB211 gas turbine electrical generating sets ordered by Agip, part of
    a contract won in association with ABB. The units will be installed on a
    power generation barge being constructed by ABB to provide electrical power
    requirements for continuing offshore field development.
   
Further information on the above can be found at www.Rolls-Royce.com

Or contact

Peter Barnes-Wallis or Maria Darby-Walker

Director, Financial Communications Head of Corporate Media Relations

Rolls-Royce plc Rolls-Royce plc

[phone] [phone]