Scheme of Arrangement

Announcement on 18 June 2003

Rolls- Royce plc: Scheme of Arrangement

At a hearing today, the High Court sanctioned the proposed scheme of
arrangement under section 425 of the Companies Act 1985 (the 'Scheme') between
Rolls-Royce plc and its shareholders to introduce a new listed holding company,
Rolls-Royce Group plc.

Under the terms of the Scheme, shareholders will receive one Rolls-Royce Group
plc ordinary share for every Rolls-Royce plc ordinary share held and cancelled
pursuant to the Scheme.

The Scheme is expected to become effective on 23 June 2003 and the Rolls-Royce
Group plc ordinary shares are expected to be admitted to the Official List and
to trading on the London Stock Exchange's market for listed securities at 8.00
am on 23 June 2003. The listing of Rolls-Royce plc is expected to be cancelled
by 8.00 am on 23 June 2003.

The High Court is expected to approve the reduction of capital of Rolls-Royce
Group plc at a hearing on 24 June 2003. The reduction of capital is expected to
become effective on 25 June 2003 whereupon the nominal value of a Rolls-Royce
Group plc ordinary share will be reduced from 70 pence to 20 pence.