Rolls-Royce Second Quarter Review

June 30 2004

                    QUARTERLY NEWS UPDATE FROM ROLLS-ROYCE                     

                             SECOND QUARTER REVIEW                             

Rolls-Royce plc released today its first quarterly overview of key news items
covering April to June 2004. This will be a routine publication issued at the
end of each quarter.

On May 4 Rolls-Royce celebrated the centenary of the first meeting between
Charles Rolls and Henry Royce. Within two years they had formed Rolls-Royce
Ltd, describing its business in the original memorandum of association as `to
manufacture, sell, or let on hire motor vehicles for use on land or water or in
the air'.

Today Rolls-Royce has established leading positions in energy, marine and
aerospace markets and it addresses these markets with common technology. This
has enabled it to reinforce its market position:-

  * On April 6, the Trent 1000 (the fifth generation of Trent aero-engine) was
    selected to power the Boeing 7E7.
   
  * The company delivered the first fan module (using Trent fan blade
    technology) for the F136 Joint Strike Fighter engine on 15 June.
   
  * The MT30, 80% common with the Trent 800 aero-engine, was selected by
    Lockheed Martin for the US Littoral Combat Ship programme.
   
  * The industrial Trent, also derived from the Trent 800, recently won its
    first application in the oil and gas sector.
   
On April 30, Rolls-Royce confirmed the latest phase in its transformation
programme to modernise factories and drive down costs, demonstrating its
confidence in the UK as a centre for high value-added manufacturing operations.
The company will invest more than £100 million in UK manufacturing facilities
specialising in compression systems, combustion systems, component services and
turbine systems.

The Rolls-Royce Annual General Meeting was held for the first time in Glasgow
in May. At nearby Inchinnan, shareholders were invited to visit the new
compressors facility, a further example of the company's commitment to
operational excellence.

The company extended its international network of University Technology Centres
(UTCs) inaugurating a new UTC in partnership with the University of Genoa in
Italy. It will conduct research into fuel cell systems, which are expected to
become an increasingly important and environmentally acceptable power source in
the future.

Rolls-Royce published its first community investment report and a new
environmental report during the quarter.

http://www.rolls-royce.com/community/downloads/community04

http://www.rollsroyce.com/community/downloads/environment04

BUSINESS HIGHLIGHTS

Civil

  * The Rolls-Royce Trent 1000 engine was selected as one of the engines to
    power the Boeing 7E7. Air New Zealand, the first airline to choose engines
    for the 7E7, selected the Trent 1000 and also ordered Trent 800s for eight
    Boeing 777s.The Trent 900, which will be the first engine into commercial
    service on the Airbus A380, successfully completed its first flight.
   
  * Rolls-Royce delivered its 1,000th Trent engine.
   
  * AirTran Airways ordered six BR715 powered Boeing 717 airliners.
   
  * IAE, Rolls-Royce's joint venture with Pratt & Whitney, MTU and JAEC,
    received orders for V2500 engines to power 30 A320s for Jet Blue Airlines.
   
  * Rolls-Royce and American Airlines announced a five-year contract that could
    be worth over $1.6billion in repair and overhaul work for their joint
    venture, Texas Aero Engine Services Ltd.
   
Defence

  * Testing of the first short take off and vertical landing propulsion system
    for the Joint Strike Fighter (JSF) was completed successfully. The
    Rolls-Royce LiftSystem ® operated flawlessly.
   
  * The first fan module was delivered for the F136 engine for the JSF
    programme. This is the most powerful combat engine programme in which the
    company has participated.
   
  * Orders were received for 10 Pegasus engines for the Spanish and Italian
    navies for their Harrier aircraft.
   
  * The first production NH90 helicopter, powered by Rolls-Royce Turbomeca
    RTM322 engines, made its maiden flight.
   
Marine

  * Lockheed Martin selected MT30 gas turbines and Kamewa high-speed water-jets
    for two Littoral Combat Ship coastal defence vessels. The US Navy's current
    shipbuilding plan calls for a total of 57 ships.
   
  * The UK Ministry of Defence, acting on behalf of partner nations UK, France
    and Norway, selected Rolls-Royce to provide the NATO Submarine Rescue
    System. Under the £47 million contract, Rolls-Royce will create and lead a
    team which will design, build and support the system over the next ten
    years.
   
Energy

  * Rolls-Royce received an order for pipeline compressors which will be used
    to move gas along the sub-sea Interconnector Pipeline from mainland Europe
    to the UK. This, along with a similar order placed last year, will ensure
    that the flow of gas into the UK will increase to 23.5bn cubic metres each
    year, or enough to supply eight million homes.
   
  * Rolls-Royce signed a Long Term Service Agreement with Dolphin Energy, the
    oil and gas exploration company, supporting six Trent-powered compressor
    sets for the export pipeline from Qatar to United Arab Emirates. The
    initial agreement is worth more than $40m over 6 years. If further renewal
    options are added at a later date, then the agreement could last 30 years
    and be worth US$300m.
   
Further information on the above can be found at:

http://www.rolls-royce.com/media/showPR.jsp?PR_ID=40090

Or please contact:

Peter Barnes - Wallis

Director, Financial Communications

Rolls-Royce plc

020 7227 9141

or

Maria Darby-Walker

Head of Corporate Media Relations

Rolls-Royce plc

020 7227 9102