Further re ITP acquisition

RNS Number : 3314Q

Rolls-Royce Holdings plc

28 November 2016

ROLLS-ROYCE CONFIRMS VALUATION OF THE OUTSTANDING SHAREHOLDING IN ITP

Rolls-Royce Holdings plc ("Rolls-Royce") today confirmed the valuation of EUR 720m for the 53.1% shareholding in Industria de Turbo Propulsores SA ("ITP") currently owned by SENER Grupo de Ingeniería SA. This follows completion of due diligence, subsequent to the announcement in July 2016, that Rolls-Royce will purchase the outstanding stake.

Under the agreement, consideration will be settled over a two-year period following completion in eight evenly spaced instalments of equal value. The updated agreement allows flexibility to settle the consideration either in cash, in the form of Rolls-Royce shares or any mixture of the two, as preferred by Rolls-Royce. A decision as to whether each payment will be settled in cash, shares or cash and shares will be determined by Rolls-Royce during the payment period.

Completion remains subject to regulatory clearances and is expected in 2017.

The acquisition of ITP strengthens Rolls-Royce's position on its Civil Aerospace large engine growth programmes by capturing significant additional value from long-term aftermarket revenues, including on the high volume Trent 1000 and Trent XWB engine programmes where ITP has played a key role as a risk and revenue sharing partner. It also enhances the group's manufacturing and services capabilities and adds value to the Defence Aerospace business, particularly on the TP400 and EJ200 programmes. With their excellent facilities, services and products, ITP has been a trusted partner for Rolls-Royce and other engine manufacturers.

Warren East, Rolls-Royce, CEO, said: "We have enjoyed a successful partnership with SENER, building ITP to its current scale and capability. This agreement represents the best outcome for both of our companies and we look forward to welcoming ITP's employees into Rolls-Royce."

Ignacio Mataix, ITP, CEO added: "I am delighted that we can now start planning our integration into the Rolls-Royce family. We already know Royce-Royce well and are excited about the opportunities offered by joining a global leader in advanced engineering. We look forward to creating even better aerospace products and services together. At the same time, we will maintain our current portfolio and strengthen our global position."

About Rolls-Royce Holdings plc

1. Rolls-Royce's vision is to be the market-leader in high performance power systems where our engineering expertise, global reach and deep industry knowledge deliver outstanding customer relationships and solutions. We operate across five businesses: Civil Aerospace, Defence Aerospace, Marine, Nuclear and Power Systems.

2. Rolls-Royce has customers in more than 120 countries, comprising more than 400 airlines and leasing customers, 160 armed forces, 4,000 marine customers including 70 navies, and more than 5,000 power and nuclear customers.

3. We have three common themes across all our businesses:

· Investing in and developing engineering excellence

· Driving a manufacturing and supply chain transformation which will embed operational excellence in lean, lower-cost facilities and processes

· Leveraging our installed base, product knowledge and engineering capabilities to provide customers with outstanding service through which we can capture aftermarket value long into the future.

4. Annual underlying revenue was £13.4 billion in 2015, around half of which came from the provision of aftermarket services. The firm and announced order book stood at £79.5 billion at the end of June 2016.

5. In 2015, Rolls-Royce invested £1.2 billion on research and development. We also support a global network of 31 University Technology Centres, which position Rolls-Royce engineers at the forefront of scientific research.

6. Rolls-Royce employs over 50,000 people in more than 46 countries. More than 16,000 of these are engineers.

7. The Group has a strong commitment to apprentice and graduate recruitment and to further developing employee skills. In 2015 we employed 228 graduates and 277 apprentices through our worldwide training programmes.

About Industria de Turbo Propulsores SA

ITP is the ninth largest aircraft engine and components company in the world by revenue. The company has production centres in Spain, United Kingdom, Mexico, the United States, Malta and India with over 3,000 employees.

ITP includes among its activities the design, research and development, manufacturing and casting, assembly and testing of aeronautical engines. It also provides MRO services for a wide range of engines for regional airlines, business aviation, helicopters, industrial and defence applications.

For further information, please contact:

Investors:

John Dawson

Director of Investor Relations

Rolls-Royce plc

Tel: +44 (0)20 7227 9237

jcdawson@rolls-royce.com

Media:

Richard Wray

Director of External Communications

Rolls-Royce plc

Tel: +44 (0)20 7227 9163