Interim Results

Rolls-Royce PLC
24 August 2000

             ROLLS-ROYCE plc INTERIM RESULTS 2000


                                   2000           1999           
__________________________________________________________________
Sales                             £2801m         £2104m       +33%
                                                         
Underlying profit before tax       £195m          £155m       +26%
                                                         
Industrial Trent provision       £(120)m                       
                                                         
Profit before tax                   £38m          £159m       -76%
                                                         
Underlying earnings per share         9.79p          7.91p    +24%
                                                         
Dividend                              3.00p          2.70p    +11%
                                                         
Order book                          £11.8bn        £10.3bn    +15%
__________________________________________________________________            
                                       
Sir Ralph Robins, Chairman, said:-

'The momentum Rolls-Royce has achieved in recent years is
continuing and, for 2000, we are on target to deliver
underlying double digit earnings growth and reduce average net
debt.

'A combination of factors has affected the outlook for 2001,
when we now expect underlying earnings to be flat, but the
strength of our businesses and the actions taken in 2000 and
2001 will enable earnings growth to resume in 2002.

'The rapid expansion of our Aerospace business is also creating a 
growing fleet of engines.  As this fleet matures, the company will 
benefit from the long-term stream of spare part sales and related 
services. This is endorsed by our  increasing ability to attract risk 
and revenue sharing partners into our programmes.

'The success of the Trent family has placed Rolls-Royce in a 
strong position in the civil wide body aircraft sector, where 
we anticipate continuing growth in market share.

'In the energy sector, the industrial Trent addresses a
growing market and we have demonstrated an innovative solution
to emissions levels which fully satisfies regulatory
requirements.  The programme will generate significant value after 
allowing for the additional £120 million costs of introducing the new 
standard into service.

-- 2 --

'Our marine business is performing well and we are achieving
the market impact and synergy benefits anticipated at the time
of the Vickers acquisition.

'We are sustaining our drive for improved efficiency.  The
volume increases achieved by the company have opened up new
opportunities to enhance profitability through
rationalisation.

'Our core gas turbine technology in enabling Rolls-Royce to pursue new 
opportunities in a wide range of market sectors.  Order intake was 
at a record level in the first half of 2000 and we look forward to 
the future with confidence.'

Business overview
-----------------

For 2000, the company is on target to achieve underlying
double digit earnings growth and, before the impact of
acquisitions, reduce average net debt levels.

Sales grew by 33 per cent, as a result of acquisitions made in
1999, underlying profit before tax, including acquisitions, by
26 per cent and underlying earnings per share, by 24 per cent.

Looking beyond 2000, two key issues emerge from the interim
results: the financial outlook for 2001 and the major
opportunities which exist to create future value.

Based on current forecasts, the company expects underlying
earnings to be flat in 2001, as a result of a combination of
three factors:

. The current mix of business in civil aerospace, where recent
  market success has resulted in a higher proportion of original
  equipment sales relative to spares sales, compounded by the
  removal from service of a number of mature engines.

. The delay in sales of the industrial Trent, pending the
  implementation of new emissions technology.

. Ongoing operational restructuring charges.

The company has confidence that earnings growth will resume in 
2002.  This reflects the steps taken to translate Rolls-Royce's market
success into improved financial performance.  These include
the broadening of the business base, the cost savings already
secured - in particular those relating to procurement and improving 
the quality of the supply chain - and the success of its engine 
programmes, which have attracted increased interest from risk and 
revenue sharing partners.

The company has strengthened its long term prospects:

  The opportunity to build on the success of the Trent
  500,700 and 800, through the introduction of new members of
  the Trent engine family, will add to the company's
  position in the civil wide-body sector.  Rolls-Royce is the
  only company able to address, with a single engine family, the
  needs of the new generation of wide-body aircraft, which will
  account for half of the world aero-engine market over the next
  20 years.  The cost of developing these new engines will
  be contained within the company's long term target for
  research and development expenditure, of 4-5 per cent of
  sales.

-- 3 --

  Civil engine deliveries, having grown from some 400 in 1996 to 
  1,100 this year, are at a record level and will continue to grow, 
  though at a slower rate in the future.  This will result in an 
  improving business mix, as the installed base of engines matures and the
  higher margin aftermarket business grows.  Every engine which 
  enters service creates a future aftermarket opportunity equivalent to its 
  original price.  Adjusted for maturity, the current installed base of 
  engines represents a future aftermarket opportunity of approximately
  £14 billion over 25 years.  At current delivery rates a further £3 billion  
  is added to the aftermarket opportunity every year.  The company expects to 
  secure a high proportion of this opportunity as a result of the supply of   
  spare parts and the development of its aftermarket services, including its  
  international repair and overhaul network, total care packages and          
  predictive maintenance.

  The market opportunity of the industrial Trent is large,
  as a result of the development of distributed power.  In
  common with the rest of the industry,   Rolls-Royce
  experienced difficulties in meeting the stringent emissions
  legislation. The company has demonstrated an innovative
  solution capable of addressing the market need and satisfying
  the regulatory requirements.

  Rolls-Royce has grown rapidly, both organically and through 
  acquisitions and joint ventures.  Engine deliveries have more 
  than tripled over the last five years.  This volume increase provides
  significant new opportunities to rationalise the company's
  activities by creating centres of excellence, which will
  deliver substantial efficiency gains.  This programme will
  require investment of approximately £50 million per annum over
  the next three years. These rationalisation costs are
  exceptional in nature and will be excluded from underlying
  earnings per share.

  The company will also continue to pursue its ongoing
  restructuring programme, the cost of which will be  
  expensed within underlying earnings.

The company forecasts a continuing fall in the average level
of debt, after taking into account the cash impact of all
these activities.

Rolls-Royce has anticipated customer needs in civil aerospace,
defence, marine and energy markets and has successfully
invested in the products and services to respond to this
demand. As a result of the company's improved market coverage
the order book stood at £11.8 billion at the half year, with a
further £1.6 billion of business announced but not yet signed.
Order intake, at £3.5 billion, was a billion pounds higher
than for the same period last year.

Enquiries
---------

Peter Barnes-Wallis
Director of Financial Communications

Tel: [phone]
Rolls-Royce home page: www.rolls-royce.com

-- 4 --

Rolls-Royce plc interim results 2000

Underlying profit before tax was £195 million, up 26 per cent
over the first half of 1999.  Underlying earnings per share
grew by 24 per cent, to 9.79p.  Underlying earnings per
share before acquisitions grew by 10 per cent.

An exceptional provision of £120 million was made, to cover
the costs associated with the industrial Trent.

The firm order book was £11.8 billion (1999 £10.3 billion).
In addition a further £1.6 billion had been announced but not 
yet included in the order book (1999 £1.4bn).  Businesses acquired 
during 1999 accounted for £1.6 billion of orders.

Sales increased by 33 per cent to £2,801 million (1999 £2,104
million).  Civil spares sales grew by 15 per cent, of which 
ten percentage points related to sales of RB211 G/H-T upgrade kits.

Trading profit, before research and development expenditure
and before the industrial Trent provision, increased by 18 per
cent, to £314 million (1999 £265 million).  Trading margin reduced, 
largely as a result of higher restructuring charges, which increased 
from £11 million to £27 million and the amortisation of goodwill, which
amounted to £23 million.

Net research and development expenditure increased, as a
result of the impact of acquisitions, to £130 million (1999
£109 million).

In the first half, the net benefit of risk and revenue sharing
partnerships (RSPs) was £156 million (1999 £16 million).  This
comprised receipts of £216 million (1999 £77 million) and payments 
of £60 million (1999 £61 million).  The receipts and payments for the 
full year in 1999 were weighted towards the second half, at £232 million 
and £99 million respectively.   This pattern is not expected to be 
repeated in 2000, with net receipts substantially lower in the second
half.  Beyond 2000, payments to RSPs will grow in line with
deliveries of the relevant engine.  Receipts will depend upon existing
RSP arrangements, the launch of new programmes and the ability to attract 
new partners.

Capital expenditure during the first half was £104 million
(1999 £101 million).  Investment in finance companies was 
£31 million (1999 £88 million).

Average net debt, before the impact of acquisitions, was in
line with the company's plans and, at £248 million, showed an
improvement over the first half of 1999 (1999: £262 million).  Average net
debt, after acquisitions, was £1,247 million.  Net debt on 30 June was 
£1,235 million.

The interim dividend is 3.00 pence per share, an increase of
11.1 per cent over 1999.  The dividend is payable on 8 January
2001 to shareholders on the register on 20 October 2000.  
The ex-dividend date is 16 October 2000.

-- 5 --

REVIEW OF OPERATIONS

Civil aerospace:  Sales £1501m, underlying profit before
interest £166m

The civil aerospace market remains strong, with the number of
aircraft ordered in the first half exceeding those achieved in the 
same period in the previous two years.  Rolls-Royce sustained its 
30 per cent market share of new civil engine orders placed.

The company delivered 491 civil engines in the first half and
projects record deliveries, of more than 1100 engines for the
full year, almost three times the number five years ago.  This
success has a consequential impact on operating margins as a
higher proportion of sales is accounted for by lower margin,
original equipment.  The margin pressure will be exacerbated
in 2001 by the removal from service of a number of mature
engines.  This one-off effect will not impact future
spares sales which are expected to resume growth in 2002 as a
result of the growing size and maturity of the installed
engine base.

In the airline market sector, Rolls-Royce predicts a
requirement for 48,100 engines, worth $337 billion over the
next 20 years.   Approximately half of this market will be
addressed by the Trent engine family.

The Trent 700 and 800, in service on the Airbus Industrie A330
and Boeing 777 respectively, have achieved a combined total of
two million in-service hours.  In the first half of 2000, new
orders were received from British Midland, Dragonair and
El Al.  More recently, Singapore Airlines and American
Airlines increased their firm orders.

The Trent 500, under development for the A340-500 and -600
aircraft, completed its successful first flight in June and is
on target for engine certification at the end of 2000.  Ten
customers have placed firm and option engine orders with a
total value of $5.8 billion, for more than 500 engines.

Rolls-Royce signed a Memorandum of Understanding (MoU) with
Boeing to offer the Trent 600 to power the new 747X and 767X.
This complements the existing MoU with Airbus Industrie to
offer the Trent 900 to power the A3XX.  In each case final
investment decisions will depend upon satisfactory launch
conditions.

Rolls-Royce is the only company able to cover the market for
new-generation wide-body aircraft with a single engine family.
The new products will, therefore, benefit from the excellent
in-service record and market standing of the other members of
the Trent family.  The family also enables new products to be
developed more cost effectively and with lower risk, by
sharing innovation and experience.  Customers additionally
benefit from common maintenance programmes across the fleet of
engines.

Rolls-Royce has established a strong presence in the fast-
growing sectors for corporate and regional airlines, with a
range of engines covering the market from executive jets to
100-seat airliners.

-- 6 --

Demand in the regional airline sector is expected to remain
strong, particularly for aircraft of 50 seats and below.  The
AE3007 engine, powering the Embraer ERJ 135, 140 and 145
regional aircraft, won orders worth $1.5 billion from a number
of customers.  A further $1 billion of orders for these
engines and their through-life support was announced recently
at the Farnborough Air Show.  Orders for Rolls-Royce powered Embraer 
regional jets now exceed 1,400 aircraft.

The BR715 is the sole source engine on the Boeing 717 regional
aircraft, which has won a third of all firm orders placed for
aircraft in the 100-seat market over the last five years.  New
customers in the first half of 2000 took the total of firm and
option orders to almost 300 aircraft.

Growth in the corporate jet sector has been stimulated by the
introduction of fractional ownership arrangements.   Rolls-Royce has
sole-source engine positions on a range of corporate aircraft, 
including the Bombardier Global Express, the Cessna Citation X and the
Gulfstream V.  Embraer launched a corporate version of the Rolls-Royce
powered ERJ 145.

Executive Jet Aviation, the world's largest operator of corporate
aircraft, signed a $103 million contract for Rolls-Royce Power
by the Hour engine maintenance services.

The Tay 2000 engine was selected by Gulfstream to power the
next generation of its GIV aircraft.  This will deliver
business to Rolls-Royce with a potential value of
$1.4 billion over the next 10 years.

Rolls-Royce has continued to develop its services sector,
which includes 16 repair and overhaul facilities on four
continents.  This network was expanded by a new joint venture
maintenance and overhaul company, formed with a wholly-owned
subsidiary of Swissair.  The company also announced joint
venture operations with Chromalloy Gas Turbine Corporation, a
leading repair company, covering component repair and coatings
technology.

Data Systems & Solutions, the company's joint venture with
Science Applications International Corporation (SAIC),
introduced aeromanager.com, a new e-commerce portal which
gives airlines instant access to a range of engine aftermarket
services, from engine health monitoring to technical
publications.  Condor Flugdienst, Germany's largest inclusive
tour operator airline, became the launch customer for
enginedatacenter.com, one of the services available through
aeromanager.com.  Condition monitoring data from Condor's
Boeing 757 fleet will be available on-line wherever required
by their powerplant engineers.

-- 7 --

Defence: Sales £698m, underlying profit before interest £69m

In defence markets, Rolls-Royce forecasts a steadily growing
demand over the next ten years.  Large numbers of military
aircraft will reach the end of their operational lives,
creating a replacement demand.  The company has a strong
product range and participates in many of the world's new
programmes.  The Eurofighter, C-130J, V-22 and Joint Strike Fighter 
create an opportunity for Rolls-Royce of £15-£20 billion over the 
life of these programmes.

Customers are placing an increasing emphasis on complete
platforms and systems and through life support.  Rolls-Royce
is meeting this changing market requirement with a range of
services from long term support  to complete managed fleet
solutions.

An innovative example was the contract signed with the UK
Ministry of Defence, covering the total support of the Spey
engine fleet powering the Nimrod aircraft through to the end
of its operational life.

Profits, in the first half, fell as a result of the phasing of
long term contracts, particularly the EJ200 engine for
Eurofighter, which is making the transition from being a
development programme to a production programme.  The engine
is on schedule for certification and first production engine
deliveries during the second half of 2000.  Output is expected
to increase to around 100 engines a year by 2003.

Highlights in the Helicopter sector included a number of
important programme developments.  An order for 320 MTR390
engines for the Franco-German Tiger helicopter was signed.
Deliveries begin next year and run through to 2011.

Germany, France and the Netherlands selected Rolls-Royce
Turbomeca RTM322 engines for up to 399 twin-engined NH90
helicopters, with a potential engine value of $1 billion.

The first RTM322-powered Apache helicopter was delivered to
GKN Westland for the final stages of its flight development
programme.  The British Army has ordered 67 Apache helicopters
with entry into service scheduled for the end of this year.

The RTM322 engine has been ordered by all three UK armed
forces.  In January 2000 a £30 million contract was signed
with the Defence Helicopter Support Authority covering engine
and module repair services for all of these engines.

Vickers Defence Systems won two important competitions in the
first half.  A £70 million contract was announced, to supply spare 
parts and logistics services to the Ministry of Defence in support of
the British Army's Challenger 2 main battle tank.  Vickers Specialist 
Engines was recently selected as preferred bidder to the Field Electrical
Power Supply (FEPS) programme to provide mobile generators for the British
Army.  The programme is estimated to have a total value of more than £100
million over the next 15-20 years.

-- 8 --

Marine: Sales £340m, underlying profit before interest £27m

In the marine business, good progress was made with the
integration of Vickers, acquired in November last year.  A
customer focused organisation has been implemented, covering
the four main market sectors: offshore exploration and support
vessels; cruise and passenger ships; fast cargo ships; and
naval.  In each of these sectors, Rolls-Royce can offer a
broad range of products, supported by a fully integrated
systems capability.

Sales to the offshore sector slowed in the first half, as
expected, as a result of lower orders placed during the period
of oil price weakness at the end of 1998.  The subsequent
recovery in oil prices is stimulating demand in this area,
resulting in a growing order book for offshore
support vessels.  Orders for 11 new UT-Designs took the order
book to 18 vessels.

Around 1,500 new naval vessels are projected to be built over
the next 15 years.  Demand for larger, faster and more
flexible products will require high power, for which gas
turbines are well suited.  Water jets and podded propulsors
will provide high-speed propulsion and improved
manoeuvrability.  Rolls-Royce is well positioned to meet
these developing market needs.

The most powerful pod propulsion system in the world, Mermaid, 
successfully completed sea trials on board Celebrity Cruises' first
Millennium-class cruise-ship.

Rolls-Royce is applying its whole-ship power integration and
support capability in innovative ways.  In the UK, the company
is playing a leading role in defining the propulsion and power
engineering options for the Royal Navy's next generation of
naval marine vessels.  This includes offering products such as
the WR-21 advanced marine gas turbine and developing an
Integrated Full Electric Propulsion architecture. 

Energy: Sales £217m, underlying loss before interest £34m

Rolls-Royce plans to grow its energy business by 20 per cent
per annum compound through to 2005. The company is investing
to secure a growing proportion of the addressable market,
which it forecasts to be worth $165 billion over the next ten
years.  About a quarter of this opportunity lies in the oil
and gas sector and the balance in power generation.

In power generation, Rolls-Royce is focusing on the growing
market for distributed power.  The deregulation and
privatisation of the electricity supply industries,
environmental pressure, infrastructure constraints and the
growing availability of gas are all creating higher levels of
demand which Rolls-Royce is addressing through its range of
gas turbine and diesel equipment.

The company has successfully tested new emissions technology
for the industrial Trent, achieving the required emissions
levels at full output.  This major technical breakthrough will
result in a world-beating product in the growing sector for
distributed power, with annual sales expected to reach 30
units within five years.  The solution, which includes a new
Dry Low Emissions combustor, will also benefit the company's
other industrial gas turbines.

-- 9 --

The research and development costs associated with this
programme have impacted the results of the energy businesses.
Following the latest test results, the company has been able
to establish a clear strategy for the complete engine
solution, the rectification of existing plant and the cost of
meeting its contractual obligations and has, accordingly,
created a provision of £120 million.  Including this
provision, the gross investment in developing the industrial
Trent amounts to £300m.  The company expects to be producing a
return ahead of its cost of capital by 2004 on this programme.

In oil and gas, the company strengthened its position through
the acquisition of the rotating equipment business of Cooper
Cameron in 1999.  The acquisition has enabled Rolls-Royce to
respond to market changes by offering integrated solutions and
improved support to customers through aftermarket services.
Sales in the first half were affected by the slow down in the
oil and gas market.  Orders are now rising as a result of the
stronger oil price and the recovery of the Asian economies.

Financial Services: Sales £22m, underlying profit before
interest £24m

The financial services businesses comprise subsidiary and joint venture
companies.  The gross assets of these businesses amount to £1.5 billion.
Net assets amount to £132 million, reflecting the financial structure of
the joint ventures which are, generally, financed through non-recourse
debt.  Total sales amounted to £92 million in the first half.

Rolls-Royce Power Ventures was awarded new projects involving
a range of  Rolls-Royce power generation equipment, including
a contract worth more than $100 million for  the supply of
electricity to African goldmines, using Rolls-Royce diesel
generating sets.  The Bilenerji Cogen project in Turkey
achieved commercial operation, utilising the RB211 gas
turbine in combined cycle operation.

Pembroke Group, the company's aircraft leasing joint venture,
was successful in its placement of Boeing 717 aircraft.  The
company increased its firm orders from 15 to 25 aircraft and
has placed the majority of aircraft due to be delivered through to
the end of next year.  The company now owns 74 aircraft, including 
those on order and manages a further 46 aircraft on behalf of customers.

Rolls-Royce and Partners Finance, the world's largest
specialist aero gas turbine leasing business, expanded its
engine portfolio.  The company now manages 165 engines,
representing 11 engine types, on lease to 36 lessees in 19
countries.

Management information and control systems

The company has taken major steps forward in the
transformation of its business processes.  The introduction
of new enterprise resource planning (ERP) systems has
commenced with SAP software being implemented across the gas turbine
activities.  There are now 13,000 people using SAP across the
company, following a programme involving 30,000 people days of
training.  The company has invested £45 million in ERP to
date, in order to secure significant efficiency benefits.

-- 10 --



Group Profit and Loss Account
For the half year to 30 June 2000

                                         Half Year   Half Year      Year to
                                            to         to         31 December
                                       30 June 2000 30 June 1999     1999
                                            £m          £m            £m
Turnover: Group and share of joint 
  ventures                               2,967       2,197         4,807
Sales to joint ventures                    315         401           799
Less share of joint ventures' turnover    (481)       (494)         (862)
__________________________________________________________________________
Group turnover (note 1)                  2,801       2,104         4,744
Cost of sales and other operating    
  costs                                 (2,607)     (1,839)       (4,153)
Research and development (net)*           (130)       (109)         (215)
__________________________________________________________________________
Group operating profit                      64         156           376
Share of operating profit of joint   
  ventures                                  30          13            31
__________________________________________________________________________
Total operating profit                      94         169           407
--------------------------------------------------------------------------
Operating profit before exceptional 
  item                                     214         169           407
Exceptional item (note 2)                 (120)          -             -
--------------------------------------------------------------------------    
Loss on sale of businesses                  (3)         (4)          (14)
Profit on sale of fixed assets               2           8            20
__________________________________________________________________________
Profit on ordinary activities        
  before interest (note 1)                  93         173           413
Net interest payable - Group               (39)         (7)          (35)
                     - joint ventures      (16)         (7)          (18)
__________________________________________________________________________
Profit on ordinary activities       
  before taxation                           38         159           360
Taxation                                   (30)        (35)          (74)
__________________________________________________________________________
Profit on ordinary activities after  
  taxation                                   8         124           286
Equity minority interests in                    
  subsidiary undertakings                    -          (1)           (2)
__________________________________________________________________________
Profit attributable to ordinary      
  shareholders                               8         123           284
Dividends - interim 3.00p 
  (1999 interim 2.70p final 4.55p)         (47)        (41)         (112)
__________________________________________________________________________
Transferred to reserves                    (39)         82           172
__________________________________________________________________________
*  Research and development (gross)       (288)       (316)         (626)
                                                           
Earnings per ordinary share (note 4)                          
Underlying                                   9.79p       7.91p        19.52p
Basic                                        0.52p       8.17p        18.86p
Diluted basic                                0.51p       8.09p        18.62p
                                                           
There have been no material acquisitions in 2000.  The results of acquired
businesses in 1999 are set out in Note 3.                                     
     
Group Statement of Total Recognised Gains and Losses
__________________________________________________________________________
Profit attributable to ordinary      
  shareholders                               8         123           284
Exchange adjustments on foreign                            
  currency net investments                  32          17            17
__________________________________________________________________________
Total recognised gains for the period       40         140           301
__________________________________________________________________________

-- 11 --                                                          

Summary Group Balance Sheet

                                         Half Year   Half Year      Year to
                                            to         to         31 December
                                       30 June 2000 30 June 1999     1999
                                            £m          £m            £m

Fixed assets 
Intangible                                 860           8           873
Tangible                                 1,792       1,348         1,753
Investments  -  joint ventures             175         153           151
                                         -------------------------------
                share of gross assets    1,003       1,076           958
                share of gross 
                  liabilities             (828)       (923)         (807)
                                         -------------------------------
             -  other                       31          21            31
_____________________________________________________________________________
                                         2,858       1,530          2,808
Current assets
Stocks                                   1,335       1,174          1,274
Debtors                                  1,909       1,492          1,692
Short term deposits and investments        248         103            464
Cash at bank and in hand                   491         381            521
_____________________________________________________________________________
                                         3,983       3,150          3,951
Creditors
Amounts falling due within one year     (2,556)     (1,910)        (2,875)
Amounts falling due after one year      (1,684)       (643)        (1,380)

Provisions for liabilities and       
  charges                                 (593)       (302)          (503)
_____________________________________________________________________________
Net assets                               2,008       1,825          2,001
_____________________________________________________________________________
                                                          
Capital and Reserves                                       
Equity shareholders' funds               2,006       1,813          1,988
Equity minority interests in  
  subsidiary undertakings                    2          12             13
_____________________________________________________________________________
                                         2,008       1,825          2,001
_____________________________________________________________________________
                                                 
                                                
                                                       
                                                           
Reconciliation of Movements in Shareholders'               
Funds
                                                           
                                            £m          £m             £m
At 1 January                             1,988       1,705          1,705
Total recognised gains for the period       40         140            301
Ordinary dividends (net of scrip     
  dividend adjustments)                    (28)        (34)          (101)
New ordinary share capital issued  
  (net of expenses)                          5           2             75
Goodwill transferred to the profit                         
 and loss account in respect of       
  disposals of businesses                    1           -              8
____________________________________________________________________________
At period end                            2,006       1,813          1,988
____________________________________________________________________________

-- 12 --                                                           

Summary Group Cash Flow Statement


                                         Half Year   Half Year      Year to
                                            to         to         31 December
                                       30 June 2000 30 June 1999     1999
                                            £m          £m            £m

Net cash (outflow)/inflow from      
  operating activities                    (293)       (389)          359
Dividends received from joint        
  ventures                                   4           -             6
Returns on investments and           
  servicing of finance                     (32)         (6)          (32)
Taxation paid                              (15)         (7)          (38)
Capital expenditure and financial    
  investment                              (135)       (189)         (199)
Acquisitions and disposals                 (44)          -          (666)
Equity dividends paid                      (22)        (30)          (88)
_____________________________________________________________________________
Cash outflow before use of liquid                          
  resources and financing                 (537)       (621)         (658)
Management of liquid resources             217         619           261
Financing (share capital and         
  borrowings)                              346         108           622
_____________________________________________________________________________
Increase/(decrease) in cash                 26         106           225
_____________________________________________________________________________
                                                           
Reconciliation of net cash flow to                         
movement in net funds
Increase in cash                            26         106           225
Cash inflow from decrease in liquid  
  resources                               (217)       (619)         (261)
Cash inflow from increase in        
  borrowings                              (341)       (106)         (618)
_____________________________________________________________________________
Change in net funds resulting from   
  cash flows                              (532)       (619)         (654)
Borrowings of businesses acquired            -           -          (332)
Zero-coupon bonds 2005/2007 (9.0%    
  interest accretion)                       (1)         (1)           (3)
Exchange adjustments                        (8)         (7)           (7)
_____________________________________________________________________________
Movement in net funds                     (541)       (627)         (996)
Net funds at 1 January                    (694)        302           302
_____________________________________________________________________________
Net (debt)/funds at period end          (1,235)       (325)         (694)
_____________________________________________________________________________
                                                     
                                                           
Reconciliation of operating profit                         
  to operating cash flows
Operating profit                            64         156           376
Depreciation of tangible fixed assets       75          48           105
Amortisation of purchased goodwill          23           -             5
Loss/(profit) on disposals of tangible
  fixed assets                               -           3             4
Increase/(decrease) in provisions
  for liabilities and charges               90         (21)          (34)
(Increase) in working capital/
creditors due after more than one year    (545)       (575)          (97)
_____________________________________________________________________________
Net cash (outflow)/inflow from 
  operating activities                    (293)       (389)          359
_____________________________________________________________________________

-- 13 --                                                    

Notes

                                         Half Year   Half Year      Year to
                                            to         to         31 December
                                       30 June 2000 30 June 1999     1999
                                            £m          £m            £m
                                     
1. Analysis by business segment                            
   Group turnover                                          
        Civil Aerospace                  1,501       1,170         2,654
        Defence                            698         542         1,138
        Marine                             340         149           385
        Energy                             217         207           482
        Financial services                  22          13            37
   Businesses to be disposed                23          23            48
_____________________________________________________________________________
                                         2,801       2,104         4,744
_____________________________________________________________________________
                                    
   Underlying profit*               
        Civil Aerospace                    166          83           224
        Defence                             69          86           182
        Marine                              27          11            43
        Energy                             (34)        (13)          (30) 
        Financial services                  24           8            24
        Businesses to be disposed           (2)         (6)          (22)
_____________________________________________________________________________
                                           250         169           421
_____________________________________________________________________________

      *Underlying profit is profit before interest and exceptional
       items adjusted for amortisation of goodwill, restructuring of acquired
       businesses and non operating items as for underlying earnings per
       share (note 4)

   Profit before interest                                  
        Civil Aerospace                    159          91           232
        Defence                             68          86           181
        Marine                              11          11            37
        Energy                            (165)        (17)          (39)
        Financial services                  24           8            24
        Businesses to be disposed           (4)         (6)          (22)
___________________________________________________________________________
                                            93         173           413
___________________________________________________________________________
                                                           
   Net assets/liabilities - excluding net funds   
        Civil Aerospace                  1,522       1,049         1,074
        Defence                            411         360           312
        Marine                             629          53           595
        Energy                             383         304           468
        Financial services                 283         368           243
        Businesses to be disposed           15          16             3
____________________________________________________________________________
Net assets                               3,243       2,150         2,695
____________________________________________________________________________

-- 14 --                                                          

2.   Exceptional item

     A provision of £120m has been made in respect of the industrial
     Trent.  This covers both contractual obligations and write-down of
     assets.

3.   Acquisitions

     The 1999 profit and loss account comparative figures were
     as follows:-
     ________________________________________________________________________
     
      
                                         Half Year   Half Year      Year to
                                            to         to         31 December
                                       30 June 2000 30 June 1999     1999
                                            £m          £m            £m

     Group turnover                          -           -           161
     Cost of sales and other operating
       costs                                 -           -          (152)
     Research and Development (net)          -           -            (2)
     ________________________________________________________________________
     Profit (loss) before interest           -           -             7
     ________________________________________________________________________
                                                          
4.   Earnings per ordinary share
     
     Basic earnings per ordinary share are calculated by
     dividing the profit attributable to ordinary shareholders
     of £8 million (1999 half year £123m, full year £284m) by
     1,552 million (1999 half year,1,505 million, full year
     1,506 million) ordinary shares, being the average number
     of ordinary shares in issue during the period, excluding
     own shares held under trust which have been treated as if
     they had been cancelled.
     
     Underlying earnings per ordinary share have been
     calculated as follows.
     
                                      Half Year              Year
                                         to                   to
                                     30 June 2000       31 December 1999
                                         £m                   £m
                                     Pence  £m          Pence   £m
    Profit attributable to 
      ordinary shareholders           0.52     8        18.86    284
    Exclude:                                            
      Net loss on sale of           
       businesses                     0.19     3         0.93     14
      Profit on sale of fixed                            
       assets (excluding lease                                  
       engines and aircraft sold 
       by financial services 
       companies)                    (0.06)   (1)       (1.13)   (17) 
      Amortisation of goodwill        1.48    23         0.33      5
      Restructuring relating to 
       acquired businesses            0.77    12         0.40      6
      Industrial Trent provision      7.73   120         -         -
      Related tax effect             (0.84)  (13)        0.13      2
_____________________________________________________________________________
   Underlying earnings per        
     ordinary share                   9.79   152        19.52    294
_____________________________________________________________________________ 
                                                       
     Diluted earnings per ordinary share, are calculated by
     dividing the profit attributable to ordinary shareholders
     of £8m  (1999 half year £123m, full year £284m) by 1,562
     million (1998 half year 1,520 million, full year 1,525
     million) ordinary shares, being 1,552 million (1999 half
     year 1,505 million, full year 1,506 million) as above
     adjusted by the bonus element of existing share options
     of 10 million (1999 half year 15 million, full year 19
     million).

-- 15 --

 5.  Group Employees at the period end

                                      30 June    30 June      31 December
                                       2000       1999           1999
                                      Number     Number          Number
        Civil Aerospace               22000      19600           22700
        Defence                        8500       6900            8700
        Marine systems                 9400       5000            9700
        Energy                         5800       6500            7400
        Financial services              100        100             100
        Businesses to be disposed       700       1200            1000

_________________________________________________________________________
                                      46500      39300           49600

_________________________________________________________________________
                                                        
6.   Preparation of interim financial statements

     The results for each half-year are unaudited.  The
     comparative figures for the year to 31 December 1999 have
     been abridged from the Group's financial statements for
     that year, which have been delivered to the Registrar of
     Companies.  The auditors have reported on those financial
     statements; their report was unqualified and did not
     contain a statement under S237(2) or (3) of the Companies
     Act 1985.
     
     The interim financial statements for the six months ended
     30 June 2000 were approved by the Board on 23 August
     2000.