Disposal

Rolls-Royce PLC
02 August 2002

                                                                   2 August 2002





                   ALVIS PLC ACQUIRES VICKERS DEFENCE SYSTEMS

                              FROM ROLLS-ROYCE PLC


Rolls-Royce plc and Alvis plc announced today (2 August 2002) that they have
reached agreement on the sale of Vickers Defence Systems (VDS), a leading
integrated high technology land defence systems business, and associated
businesses, to Alvis for a gross consideration of £16.2 million.



The disposal is conditional upon Alvis shareholder approval and gaining
clearance from the relevant UK and South African regulatory and competition
authorities.



Under the terms of the agreement, Alvis, a UK-based company with interests in
armoured vehicles and other specialist vehicles for military application, will
acquire the main VDS facilities in Newcastle upon Tyne, Vickers Bridging in
Wolverhampton and the Vickers OMC armoured vehicle facilities in South Africa.
Between them, the companies employ some 1300 people.



VDS customers comprise mainly the UK Ministry of Defence and overseas
Governments. The main product in recent years has been the Challenger II Main
Battle Tank for the UK MoD and Oman government.  Both contracts have been
material to the financial performance of VDS and are now effectively complete,
with only minor deliveries outstanding. In 2001, VDS recorded sales of £160
million, profit before tax of

 £37 million and net assets of £47 million.



The company has been part of Rolls-Royce plc since 1999 following the
acquisition of Vickers plc.



John Rose, Chief Executive of Rolls-Royce, said: 'This agreement offers the best
future for the VDS business.  Rolls-Royce bought Vickers in 1999 to create a
world-leading marine business.  The successful integration of the marine
activities and the disposal of the non-core businesses acquired have created
significant shareholder value.'





Note to editors



1.        Vickers Defence Systems (VDS) designs, integrates and supplies a wide
range of land systems solutions for the UK and overseas defence markets.  It
operates in both the heavy and light armour markets. The company employs 600
people at plants at Newcastle upon Tyne and Leeds.




2.        Vickers Bridging products include the BR90 tactical bridging system,
comprising close support, tank launched bridges and general support bridges,
capable of spanning gaps from 9 to 60 metres. There are more BR90 bridges in
service than any other competing system in the world. The company is based in
Wolverhampton, UK and employs 75 people.



3.        Vickers OMC, based in Benoni, South Africa, provides a wide range of
armoured vehicles including main battle tanks and police and security vehicles,
such as the Scout, which is in service with the United Nations. It employs
approximately 650 people.



4.        Alvis plc is a UK-based company with interests in armoured fighting
vehicles and other specialist vehicles for military application. It is quoted
onthe London Stock Exchange and has its headquarters in London. TheAlvis Group
has a global reach, having major manufacturing facilities in Scandinavia as well
as the UK, and having exported military vehicles to more than 60 countries.



5.        Rolls-Royce is a global company providing power for land, sea and air.
It employs some 40,000 people in more than 30 countries, including over 25,000
in the UK, 5,000 in the rest of the Europe and over 8,000 in North America.  The
company has a balanced business portfolio with leading positions in civil
aerospace, defence aerospace, marine and energy markets. With annual sales of
around £6 billion and a forward order book of nearly £17 billion, its technology
is applied over a wide range of products that generate high-value services
throughout their operational lives.





For further information please contact:


Peter Barnes-Wallis

Director of Financial Communication

Rolls-Royce plc

Tel: [phone]

Email:  [e-mail]







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