Fourth Quarter Review - 2007

8 January, 2008

                    QUARTERLY NEWS REVIEW FROM ROLLS-ROYCE:                    

                             FOURTH QUARTER, 2007                              

In the final quarter of 2007, Rolls-Royce continued to expand its global
capability, announcing its investment in new aero engine facilities in
Singapore and Virginia, US. The Group also demonstrated the strength of its
broad product and services portfolio, announcing major orders in 13 countries.

The investment in new capability in Singapore and the US results from the
Group's increasing global expansion and its growing worldwide customer base.
The facilities will be closer to customers in two of the largest and
fastest-growing aerospace markets.

Rolls-Royce also reached agreement with pension fund members and trustees on
its strategy to reduce overall deficits in its three main UK defined benefit
pension schemes. Special contributions totalling £500 million were paid and the
implementation of the revised lower risk investment strategies is largely
complete.

The Group's strong position in key global markets was also illustrated in the
Middle East with $10 billion worth of business announced by Emirates Airline,
Dubai Aerospace Enterprise and Yemenia at the Dubai Airshow in November.

During the quarter, the civil aerospace business won orders for the Trent XWB
engine to power up to 200 Airbus A350 XWB aircraft, and the Trent 700
maintained its position as the engine of choice on the Airbus A330, with three
further airline orders.

The defence aerospace business benefited from the agreement of the Salam
government-to-government contract covering the sale and support of 72
Eurofighter Typhoon aircraft for the Royal Saudi Air Force. Rolls-Royce is the
prime contractor for the EJ200 engines on behalf of the EUROJET consortium. The
value of the EJ200 engines and their support is expected to be up to
£1 billion.

The offshore marine business increased the value of its largest contract from
Nordcapital to £155 million with a further four UT Design deep water anchor
handling vessels, incorporating a range of Rolls-Royce marine equipment, worth
a total of £72 million. This followed a June 2007 contract worth £83 million for six UT
Designs and equipment.

The energy business also recorded its largest ever contract, with a 
£120 million TotalCare services agreement with BP for the maintenance of 28 RB211
gas turbines operating onshore and offshore in Azerbaijan. The agreement
extends an existing contract until 2016.

Services continued to perform well during the quarter, with TotalCare
agreements signed with Singapore Airlines, for the Trent 900 powering its
Airbus A380s, Yemenia for Trent 700s powering its A330s, and Emirates Airline,
worth $340 million for the Trent 500s powering its A340-500s.

In addition, the US Navy has renewed its F405 (Adour) engine services contract
with Rolls-Royce for the fifth year to provide support for the T-45 training
aircraft. The contract is worth $66 million.

Business highlights:

Civil Aerospace

  * Airbus A380 launch customer, Singapore Airlines, took delivery of the first
    of its new Trent 900-powered double-deck aircraft on 15 October. Ten days
    later, the aircraft began commercial operations on the high-density
    Singapore-Sydney route. The airline also signed a TotalCare services
    agreement, extending to 2021, for support of its Trent 900s.
   
  * New customers for the Trent XWB include Emirates Airline, Hawaiian
    Airlines, China Airlines, Yemenia Yemen Airways, ILFC and the aircraft
    leasing arm of Dubai Aerospace Enterprise (DAE). The value of these engines
    at list prices is in excess of $8 billion. Emirates and Yemenia also signed
    TotalCare long-term services agreements.
   
  * The Trent 700 maintained its position as the engine of choice on the Airbus
    A330 with new customers Hawaiian Airlines and leasing company, Aircastle,
    both of which ordered engines to power six aircraft. Cathay Pacific
    selected the Trent 700 for its fleet of eight additional A330s due for
    delivery from 2010.
   
  * LAN Airlines S.A. became another new customer for the Trent, when it
    selected the Trent 1000 to power a fleet of up to 41 Boeing 787s, with
    deliveries due to begin in 2012. The order, worth over $2.4 billion, also
    includes TotalCare.
   
  * The first Rolls-Royce test facility of its kind outside the UK - a new
    outdoor jet engine testing facility at the National Aeronautics and Space
    Administration's John C. Stennis Space Center in Mississippi - has been
    opened formally. It will be used to test development Trent 1000 and Trent
    900 engines, being developed for the Boeing 787 Dreamliner and Airbus A380
    respectively.
   
  * The V2500, produced by International Aero Engines, in which Rolls-Royce is
    a senior partner, received an order from US Airways for engines to power a
    new fleet of up to 153 A320-family aircraft. The value of the business to
    Rolls-Royce was $400 million at list prices.
   
Defence

  * The US Defense Department's Fiscal 2008 Budget includes full funding at a
    level of $480 million for the GE Rolls-Royce Fighter Engine Team F136
    engine for the F35 Lightning II Joint Strike Fighter. An engine is
    undergoing successful tests at the US Air Force Arnold Engineering
    Development Center and a second test engine has been installed at a new GE
    testing facility near Cincinnati, US. Earlier in 2007, the F136 reached 500
    hours of full-engine testing.
   
  * The first System Development and Demonstration flight test LiftFan was
    successfully installed and mounted into the first F-35 Lighting II Joint
    Strike Fighter STOVL aircraft, dubbed the BF-1, during December. The BF-1
    is scheduled to make its first flight in 2008. Rolls-Royce is under
    contract to Pratt & Whitney for the development of the LiftSystem
    components of the F135 STOVL Propulsion System and ensure
    interchangeability with the F136 engine.
   
  * The Hercules Integrated Operational Support (HIOS) contract has reached an
    important milestone with the changeover to the incentivised "availability"
    phase for the RAF Hercules fleet. This will enhance the number of
    mission-capable aircraft at the front-line. Rolls-Royce is a partner in
    HIOS, alongside the UK Ministry of Defence, Marshall Aerospace and Lockheed
    Martin.
   
  * Rolls-Royce has signed an agreement with Starflex LLC to upgrade the
    Eurocopter AS355 helicopter with the new Rolls-Royce Model 250-C20R engine.
   
  * An order from the Romanian Ministry of Defence for seven C-27J Spartan
    aircraft confirms the position of the AE 2100-powered Spartan as the
    world's best-selling twin-turboprop military airlifter.
   
Marine

  * US naval architecture and engineering firm Seaworthy Systems Inc., based in
    Connecticut, with offices in New Jersey, Virginia and California, has been
    acquired to improve further marine support services.
   
  * Rolls-Royce won its largest contract with Chinese shipbuilder Sinopacific,
    worth $42 million, to provide steering gear and deck machinery for bulk
    carriers and liquid petroleum gas carriers.
   
Energy

  * Orders totalling over $260 million have been received by the energy
    business during the quarter, including the BP TotalCare® contract in
    Azerbaijan.
   
  * The industrial RB211 was selected to power a generating set to be located
    at Milan airport alongside a similar unit installed in 2003. Also in Italy,
    the company is to supply gas engines to power electrical generating sets at
    Rome airport. In both cases, the installations will help the airports to
    become energy self-sufficient.
   
  * In the oil and gas market, Rolls-Royce natural gas pipeline centrigufal
    compressors are to be installed on a major new gas pipeline in Brazil.
   
Corporate responsibility

  * Rolls-Royce was one of 18 of the UK's largest companies working on a CBI
    Climate Change Task Force, which issued its report 'Climate Change -
    Everyone's Business' in November.
   
  * Rolls-Royce has created a $100,000 endowment for Science Bound, a programme
    supporting Indiana high school students studying science and engineering.
   
  * The Rolls-Royce Science Prize has entered its fourth year with the launch
    of two new interactive resource packs. Based on the projects of the 2007
    winner and runner-up teams, they include online games that teachers and
    pupils can work on together in the classroom, plus a wealth of supporting
    material.
   
  * Rolls-Royce has retained its position in the Aerospace and Defence group
    within the Dow Jones Sustainability World and European Indices for the
    sixth successive year.
   
Note to news editors

The Group's Preliminary Results for 2007 will be published on 7 February, 2008.

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