Rolls-Royce Third Quarter Review

September 30 2004

         QUARTERLY NEWS UPDATE FROM ROLLS-ROYCE: THIRD QUARTER REVIEW          

Rolls-Royce continued to make good progress in the third quarter. Order intake
remained strong and further investment in new factories in the UK was
announced, supporting the company's drive to improve efficiency.

During the quarter, the company reported interim results for 2004. Underlying
profit increased by 18 per cent to £136 million and average net debt reduced by
39 per cent to £550 million. These results were underpinned by aftermarket
services revenues, which grew by 16 per cent in the first half. The company
reiterated its guidance for the full year, based on its strong order book,
continuing progress with cost reduction activities and its first half
performance.

The company announced a £45 million investment in a new repair and overhaul
facility in East Kilbride, Lanarkshire, further demonstrating its commitment to
the UK and to Scotland and taking its planned investment in new factories in
Scotland to £130 million. This investment is underpinned by agreements to
implement further improvements in working practices. The company also began
work on new facilities in Derby, for repair and overhaul and manufacturing.

On July 14, Rolls-Royce launched its key flagship education programme, the
Rolls-Royce Science Prize, at a reception at No 11 Downing Street, attended by
representatives from industry, government and education. Science Prize
information packs have recently been sent to 35,000 schools and colleges in the
UK and Republic of Ireland. Rolls-Royce has launched this initiative to inspire
young people to become passionate about science at school and lead them to
consider a career in science-based industry.

Business Highlights during this quarter:

Civil

  * Rolls-Royce announced that Japan's Mitsubishi Heavy Industries (MHI) is to
    be a risk and revenue sharing partner (RRSP) on the Trent 1000 engine being
    developed for the Boeing 7E7 Dreamliner. This is the first time that MHI
    has been involved as an RRSP on a Rolls-Royce large engine programme. It
    will supply the Trent 1000's combustor and low pressure turbine blades,
    giving it a 7 per cent programme share. MHI will play a leading role in the
    design of its components, with teams based in Derby, UK, and Japan.
   
  * Virgin Atlantic and Etihad Airways announced orders worth a potential $1.7
    billion for the Trent 500, the exclusive engine for the A340-500 and -600.
   
  * The Trent 900 successfully completed its blade-off test for the Airbus A380
    and passed its 150 hour endurance test for certification
   
  * Air New Zealand signed a $500m services agreement for the Trent engines
    which will power its Boeing 777 and Boeing 7E7 airliners
   
  * Rolls-Royce and Jetsgo signed a Tay TotalCare agreement. The Montreal-based
    carrier agreed a $90 million contract covering 18 Fokker 100s
   
Defence

  * Rolls-Royce is to provide a derivative of its AE 3007 engine to power the
    five Embraer ERJ 145 regional jets recently selected for the U.S. Army's
    next-generation Aerial Common Sensor (ACS) reconnaissance aircraft.
   
  * Europrop International GmbH (EPI), the joint company formed by the four
    leading European aero engine companies to offer the TP400-D6 turboprop for
    the A400M transport aircraft, has successfully concluded the preliminary
    design review of the engine.
   
  * The new Nimrod MRA4, the next maritime reconnaissance and attack aircraft
    for the RAF, made its first flight from Woodford to Warton. The MRA4 is
    powered by four Rolls-Royce BR710 turbofans.
   
  * The first GE Rolls-Royce F136 development engine for the Joint Strike
    Fighter (JSF) programme began ground testing on schedule.
   
  * The Ministry of Defence (MOD) and Rolls-Royce have extended an innovative
    service support contract for the Rolls-Royce RB199 engine, which powers the
    MOD's fleet of Tornado aircraft in service with the Royal Air Force.
   
Marine

  * The MT30 gas turbine, the marine version of the Trent 800 aero engine,
    completed its endurance test running for the American Bureau of Shipping
    certification - a requirement for operation by the US Navy. The MT30 has
    been selected for a prototype of the Lockheed Martin Littoral Combat Ship
    and the DD(X) multi-mission destroyer Engineering Demonstrator Model in the
    US. The MT30 has 80 per cent commonality with the Trent 800 aeroengine.
   
Energy

  * During the past quarter, the energy business has received orders for nine
    industrial RB211 gas turbine packages to be installed offshore on three
    continents. For installation offshore Brazil, Petrobras has ordered four
    RB211 generating sets for its P51 Floating Production Unit (FPU), and three
    units to power its PRA-1 re-pumping platform. These orders amount to
    US$80m. These units bring the total to 19 RB211-powered gas turbine
    generating sets ordered by Petrobras in the last 2.5 years.
   
  * Two contracts were received for offshore gas compression service. The first
    for an RB211 compression package for the Enfield development project by
    Woodside Energy Limited offshore the North West Cape, West Australia. The
    second, for an RB211 Dry Low Emission gas compression package, is for a
    fixed platform for Exxon Mobil Canada Production, offshore Nova Scotia.
   
Further information on the above can be found at www.Rolls-Royce.com

Or contact

Peter Barnes-Wallis

Director, Financial Communications

Rolls-Royce plc

020 7227 9141

Maria Darby-Walker

Head of Corporate Media Relations

Rolls-Royce plc

020 7227 9102