Adoption of FRS 19

Rolls-Royce PLC
21 August 2001


21 Aug 01

                     ROLLS ROYCE PLC - ADOPTION OF FRS 19

Rolls-Royce plc announced today that, in accordance with best practice, it
would adopt FRS 19, deferred taxation, in 2001. The new standard was issued in
December 2000 and is mandatory for the period ending 31 December 2002 for
Rolls-Royce.

The Group's effective tax rate has generally been less than the nominal UK
rate as a result of the write back of advance corporation tax and timing
differences where full deferred tax was not provided. The new standard is much
closer to a full provision basis. The joint effect of adjusting the treatment
of advance corporation tax and timing differences tends to increase the
Group's effective tax rate and produce a more stable tax rate going forward.
There is no impact on cash flows.

As a result, the taxation charge and earnings per share will be restated for
prior years, as follows:-

                             1997  1998  1999    2000        2000
                                                             half year
Taxation charge £m
Old basis                    51    65    74       83         30
New basis                    75    76    123      87         20


                             1997  1998  1999     2000       2000
                                                             half year
Earnings per share pence
Old basis (basic)            15.16 17.25 18.86    5.33       0.52
New basis (basic)            13.53 16.51 15.60    5.07       1.16

Old basis (underlying)       15.16 16.91 19.52    21.63      9.79
New basis (underlying)       13.53 16.18 16.47    19.38      8.70



As previously announced, the Group's interim results for 2001 will be released
on Thursday 23 August.