Director Shareholding

STOCK EXCHANGE ANNOUNCEMENT

The Company announces the purchase on 7th January 2005 of 46,518 ordinary
shares in the Company by Computershare Trustees Limited (the Trustee) at a
price of 253.5 pence per share for the purpose of satisfying the purchase of
ordinary shares by eligible employees (including executive directors) under the
Rolls-Royce SharePurchase Plan (the Plan) for the current month. The Plan has
been approved by the Inland Revenue as a share incentive plan under Schedule 8
to the Finance Act 2000.

Following the transaction the Trustee will hold 5,083,538 ordinary shares, all
of which are held on behalf of eligible employees pursuant to the terms of the
Plan.

The number of ordinary shares purchased on this date on behalf of the executive
directors were as follows:

Sir John Rose    50

C H Green        50

A B Shilston     50

The UKLA has confirmed that, although not referred to specifically in the Model
Code, the purchase of SharePurchase shares under the Rolls-Royce SharePurchase
Plan during a Close Period does not constitute a breach of the Close Period
restrictions. The value of these purchases have not changed from the previous
month.

Company notified 12 January 2005

Dated 12 January 2005

For further information please contact John Warren, Deputy Company Secretary,
Rolls-Royce Group plc, tel. no. 01332 245878