Re Agreement

14 June, 2004

   ROLLS-ROYCE WELL POSITIONED TO POWER NEXT GENERATION OF US NAVY WARSHIPS    

Rolls-Royce has been selected by Lockheed Martin to provide MT30 gas turbine
engines and waterjets for up to two ships of the Littoral Combat Ship programme
(LCS), the next generation of US Navy warship.

LCS is being designed and built to improve the US Navy's operational capability
in the littorals, or coastal waters. Rolls-Royce's selection as the engine and
waterjet provider for the Lockheed Martin ships leaves it well positioned for
the programme.

The Lockheed Martin ship design incorporates two Rolls-Royce MT30 marine gas
turbines driving four Rolls-Royce high-speed waterjets. The first vessel is due
to be launched in December 2006 by Lockheed Martin. General Dynamics will also
construct up to two ships for the same class. Both designs will then be subject
to further evaluation by the US Navy before production orders are placed. The
overall number of ships currently projected for the Class is a total of 57.

"LCS is the next generation warship and we're delighted to help power the
future for the US Navy in its defence of the homeland," said Patrick J.
Marolda, President of the Rolls-Royce naval marine business in North America.
"In addition to the MT30 gas turbine, this win introduces large water jets and
other advanced technology products in support of US Navy objectives."

Dr Saul Lanyado, President of the Rolls-Royce marine business, said, "The
selection of MT30 represents another important milestone for our business in
North America. We are already providing the MT30 for the US Navy's DD (X)
destroyer programme demonstrator.

"We are also looking forward to displaying our capabilities as a propulsion
system integrator in addition to our ability to manufacture world-class
propulsion products."

The 36MW MT30 is the most powerful, cost-effective and efficient marine gas
turbine on the market today. The engine has 80 per cent commonality with the
Trent 800 aero engine, and is an example of the Rolls-Royce strategy of
investing once in new technologies and using these many times. The Trent 800
has won a market-leading 44 per cent of the Boeing 777 programme and has
achieved more than five million flying hours since entering service in 1996.

In addition to its gas turbine capabilities, Rolls-Royce is a world-leader in
the research, development and manufacture of high-power waterjets. Currently,
several hundred Rolls-Royce waterjets are used in North America by commercial
and naval vessels including the X-Craft, the US Navy's experimental high-speed
catamaran and the 11 metre Ridged Inflatable Boat used extensively by Special
Operations Command.

ends

Corporate note to editors

Rolls-Royce operates in four global markets - civil aerospace, defence
aerospace, marine and energy. It is investing in technology and capability that
can be exploited in each of these sectors to create a competitive range of
products.

The success of these products is demonstrated by the company's rapid and
substantial gains in market share over recent years. The company now has a
total of 54,000 gas turbines in service worldwide. The investments in product,
capability and infrastructure to gain this market position create high barriers
to entry.

Rolls-Royce has a broad customer base comprising more than 500 airlines, 4,000
corporate and utility aircraft and helicopter operators, 160 armed forces and
more than 2,000 marine customers, including 50 navies. The company has energy
customers in nearly 120 countries. Rolls-Royce employs around 35,000 people, of
which 21,000 are in the UK. Forty percent of its employees are based outside
the UK - including 5,000 in the rest of Europe and 8,000 in North America.

The large installed base of engines generates demand for the provision of
services. A key element of the company's strategy is to maximise services
revenues, which have increased by 60 percent over the past five years, by the
provision of a comprehensive portfolio of services.

Annual sales total nearly £6 billion, of which 50 percent are services
revenues. The order book is over £18 billion, which, together with demand for
services, provides visibility as to future activity levels.

For further information please contact:

Mia Walton

Vice President Corporate Communications

North America

Rolls-Royce plc

Tel [phone]

Fax [phone]

[e-mail]

Bill O'Sullivan

Communications Manager

Rolls-Royce plc

Tel [phone]

Fax [phone]

[e-mail]

Web www.rolls-royce.com