1

Preliminary Results 2007

Sir John RoseAndrew ShilstonMike Terrett

2

Financial highlightsOrder book− Firm and announced order book up 76% to £45.9bn in 2007

Revenue −Sales £7.8bn - 6% underlying growth −Services revenues £4.3bn - 9% underlying growth

Profit−Underlying PBT £800m - 13% growth−Underlying EPS 34.06p - 14% growth

Average net cash £350m (2006: £150m)−Cash inflow £62m, after £500m pensions (2006: £491m inflow)−Net cash balance £888m (2006: £826m)

Shareholder payments−Rebased shareholder payments up by 35% to 13p for 2007

3

Financial performance

Andrew Shilston

Underlying profit is a non-IFRS measure. Definitions and reconciliations of underlying profits and additional disclosures and provided in the Group’s press release dated 7 February 2008

4

Components of profit growth – 2007

2006UPBT

OperatingMargin

2007UPBT

705

800

600

£m

187

R&DInvestment

800

700

11

FinanceCosts

(11)

FXUSD

(92)

900

5

Civil aerospace

Strong order activity across all programmesExpanding the portfolio and capabilities Flying hours – up 5%, with services revenues up 11%Services revenues represent 63% of salesManaging significant headwinds on currency and material costs

2006 £m

2007£m

564 519

2006 £m

2007£m

4,038 3,907

Sales * Profit *

*Underlying sales and profit before financing costs

2006 £bn

2007£bn

Order Book

35.9 20.0

6

Defence aerospace

Extending access to international programmes−AE2100, ADVENT & HEETE

Strong order book providing revenue visibilityGood balance of development, production and services programmesServices revenues represent 52% of sales

2006 £m

2007£m

199 193

2006 £m

2007£m

1,673 1,601

Sales * Profit *

* Underlying sales and profit before financing costs

Order Book2006 £bn

2007£bn

4.4 3.2

7

Marine

Commercial and offshore order intake remains robust Strong revenue growth across products and servicesNaval business stable – accessing global programmesMargins lower in H2 as a result of programme provisions Services revenues represent 35% of sales

2006 £m

2007£m

113 101

2006 £m

2007£m

1,548 1,299

Sales * Profit *

* Underlying sales and profit before financing costs

2006 £bn

2007£bn

4.7 2.4

Order Book

8

Energy

Oil & gas markets remain strongIndustrial Trent gaining position in Power GenerationFee income - £18m benefit Fuel Cells - £25m spend, key milestone in 2008Services revenues represent 52% of sales

2006 £m

2007£m

5 (18)

2006 £m

2007£m

558 546

Sales * Profit *

* Underlying sales and profit before financing costs

2006 £bn

2007£bn

0.9 0.5

Order Book

9

Underlying financing costs

Interest

Financial RRSPs

Other

Underlying financing costs

(18)

(27)

2

(43)

2006£m

2007£m

(6)

(26)

-

(32)

10

Cash flow

Trading cash generationCapital/intangible expenditureWorking CapitalCustomer DepositsTax PaymentsPayments to shareholdersCash flow (Before Pensions)Additional pensions contributionCash inflowNet Cash at 1 JanNet Cash at 31 DecAverage Net Cash

2007£m

870(517)(40)296 (25)(93)491

-491335 826150

2006£m

1,037(598)(41)332(71)(97)562

(500) 62

826 888350

11

Strategic Financial ReviewPension scheme restructuring completed

- increased annual funding in 2008

Business model continues to be cash generative

Resilient balance sheet is crucial

Flexibility to respond to investment opportunities

Shareholder payments for 2007 35% higher that 2006

12

Operational performance

Mike Terrett

13

Operations – 2007 reviewContinued strong load growth across all businesses− Driven by changing mix and increasing services− Ramp-up on Trent 900 and Trent 1000

Product costs increased by almost 7%− Increasing commodity costs− Escalation of cost in the external supply chain− Facility disruption

Improving productivity and focus on support costs

14

Global operationsDomestic operations− UK facility modernisation complete− Modern Working Practices established at all UK facilities− USA and Singapore – enabling future growth and “dollarisation”− Continuing to focus on make-buy strategy

Supply chain simplification− Providing greatly simplified supplier interfaces− Now fully aligned to commodity− Significant new IT implementation− Moving to global purchasing

15

Sales per employee

£000

106.5113.3

125.8

146.1 147.7

160.4

172.7

190.1

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

1998 1999 2000 2001 2002 2003 2004 2005

Sales at constant currency

Compound growth of 7.4% pa over past 10 years196.9

2006

201.8

2007

220.0

16

Operations summary

Further impact from increased material costs and disruption from facility

restructuring incurred in 2007.

Continued progress with SAP implementation in the year creates

opportunities for improving productivity.

Evolution of our supply chain to deliver improved productivity will

continue.

Optimisation of global support functions in 2008.

Challenges within supply chain reducing - not eliminated.

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Summary

Sir John Rose

18

Resilience in a challenging environment

Strong market positions and improving market share

Extending our product and service portfolio

Developing our global footprint

Focus on improved productivity and reducing costs

Continued profitable growth despite challenges

Outcome of financial review reflects our confidence

19

Addressing four global markets

A global 20 year market opportunity for products and services worth around US$2 trillion

Defence Aerospace(US$480 billion)

Energy(US$120 billion)

Marine(US$350 billion)

Civil Aerospace(US$1,250 billion)

20

Investing in technology and capability and infrastructure£11 billion over 10 years

Capex and IT

Intangibles

£0.91bn

£1.07bn £1.07bn

£0.90bn

£1.02bn

£0.88bn £0.93bn

£1.05bn

£1.30bn

£1.45bnTraining

Gross R&D

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

21

Rolls-Royce is privatised

Bergen Diesels

F136 for JSF

AE 2100

LiftFan for JJF

Trent 500

AE 3007

TP400

Trent 900

MT30

Tay 611C Trent 1000

AE 1107C

Trent XWB

RB282

RR300

1987

2007

Broadening our portfolio

Trent 700

Trent 800

BR710

Industrial Trent

BR715

22

1998 2007 1998 2007 1998 2007

£5.0bn

£12.7bn

£4.7bn

£12.9bn

£2.9bn

£20.3bn

Americas Asia and Middle EastEurope

Growing our market share and installed base globally

11% Compound

growth

Europe

12%Compound

growth

Americas

24%Compound

growth

Asia and Middle East

Compound growth of order book 15% and increased global reach

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CHENGDU●

●●●

●XIAMEN

GUANGZHOUKUNMING

ACI: 13 x Boeing 757

CYH: 3 x Boeing 767

CSN: 20 x Boeing 757

CXA: 5 x Boeing 757

Improved Market Access: Rolls-Royce Powered Aircraft in China - 1997

Total: 41 Aircraft

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● URUMQI

CHENGDU●

BEIJING●

●●

●●●

●SHANGHAI

NANJING

XIAMEN

GUANGZHOU

KUNMING

WUHAN

CXJ: 13 x Boeing 757

CAA: 13 x Boeing 757

CYH: 3 x Boeing 767 –

CSN: 16 x Boeing 757CSN: 24 x A330 CSN: 6 x Emb 145

CXA: 9 x Boeing 757

CKK: 2 x Tu204

CES: 10 x Emb 145

CKK: 3 x Tu204CAA: 14 x A330

CES: 5 X A340-600

CSN: 5 x A380

CSC: 5 x Emb 145

CHH: 7 x A330

CES: 20 x A330

●XIAN

TIANJIN ●CHH: 50 x Emb 145

CAA: 15 x Boeing 787

Total: 504 Aircraft

CAA: 6 x A330

CAA: 13 x A320

CSN: 127 x A320

CSC: 40 x A320

CSN: 13 x MD90

CES: 9 x MD90

Rolls-Royce Powered Aircraft in China - 2010

CHH(HK): 20 x A330

CHH: 3 X A340-600

●CHONGQING

CGQ: 3 x A320

CES: 30 x A320

CHH: 20 x A319

25

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Adding value for customers through product related services

£1.8bn £1.9bn£2.2bn

£2.4bn £2.5bn£2.8bn

£3.3bn£3.5bn

£3.9bn

£4.3bn

• Changed business model (TCA, MRMS, LTSA)

• Intelligent services – engine health monitoring, predictive maintenance

• Adding value to customers and Rolls-Royce

10% Compound growth of services revenues

26

• Our consistent investment in technology and capability has created value, global market access and options for the Group

• Our confidence in the future reflected in the 35% increase in payments to shareholders

• For 2008, we expect underlying profit growth and positive cash flow generation

Future

4.3

27

Summary

Sir John Rose

28

Rolls-Royce Group plc (the “Group”) is providing the following cautionary statement. This document contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of the Group. These statements are sometimes, but not always, identified by the words ‘may’, ‘anticipates’, ‘believes’, ‘expects’ or ‘estimates’. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to (i) changes to the current outlook for global power systems markets, (ii) changes in tax laws and regulations, (iii) the risks associated with the introduction of new products and services, (iv) significant global disturbances such as terrorism or prolonged healthcare concerns, (v) the termination or delay of key contracts and (vi) long-term fluctuations in exchange rates, (vii) regulatory and shareholder approvals, (viii) unanticipated liabilities and (ix) actions of competitors.

Subject to the Listing Rules of the UK Listing Authority, Rolls-Royce Group plc assumes no responsibility to update any of the forward looking statements herein.

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Supplementary data

30

Consistent strategy

Addressing four global markets

Investing in technology, capability and infrastructure

Developing a competitive product portfolio

Growing market share / installed base

Adding value for our customers through the provision of product-related services

31

Balanced business portfolio

Civil: 19%Marine: 13%

Defence: 10%

Energy: 3%

Aftermarket services: 55%(£4.3 bn)

Original equipment: 45%(£3.5bn)

Total sales: £7.8bn

32

Rolls-Royce

4.32.5 1.00.3Aftermarket sales £bn

888(501)18(300)Net cash £m

55403020% Aftermarket

40435756Employees 000

7.86.3 3.51.4Sales £bn

461773Order book £bn

2007200119911981

33

Research & Development

Gross spendFunded externally

Net R&D spend*

* Net R&D spend % Sales

CapitalisedAmortised

R&D Charged to Income Statement

2007£m

(824)370

(454)

5.8%

91(18)

(381)

2006£m

(747)352

(395)

5.4%

41(16)

(370)

34

Cash flow

Cashflow from operating activitiesSpecial Pension injectionForeign ExchangeWorking Capital Net Investment in businessesOther

Trading Cash Generation

2007£m

1,072-

(49)(256)

4855

870

2006£m

705500 41

(291) 26 56

1,037

35

Foreign exchange management

Forward cover of $9.4bn with an average rate £~$1.83

Opening spot rate £~$1.96

Average spot rate £~$2.00

Closing spot rate £~$1.99

Hedging policy offers visibility of £~$ rate allowing planned transition

Managing exposure through

−Utilisation of hedge book

−Dollarisation of supply chain

−Cost reduction

Coverage – 2008 and 2009 ~ 100%, 2010 ~ 60%

36

2007 Shareholder Payments2007 payments increased to 13p/share, increased by

35.5% over 2006

2007 Interim payment of 4.04p/share

2007 Final payment of 8.96p/share – increased by 51%

Elimination of scrip option following 2007 final payment

New C class shares issued – redeemable for cash

37

The broadest civil product range

38

Civil engine deliveriesUnits

0

200

400

600

800

1000

1200

1400

1600

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Corporate & Regional engines Airlines engines

39

Civil engine (Millions/lbs of delivered thrust)

-

5

10

15

20

25

30

35

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Corporate & Regional engines Airlines engines

40

Installed engine fleet 1986-2007

0

2000

4000

6000

8000

10000

12000

14000

16000

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

AE 3007

Tay

Spey

BR700

V2500 (@100%)

Trent

RB211

Other

31/12/04:12054 installed engines31/12/05:12680 installed engines31/12/06:13268 installed engines31/12/07:13857 installed engines

V2500 @ 100%

41

Installed engine fleet 1986-2007

0

2000

4000

6000

8000

10000

12000

14000

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

AE 3007

Tay

Spey

BR700

V2500 (@50%)

Trent

RB211

Other

31/12/04:10974 installed engines31/12/05:11463 installed engines31/12/06:11907 installed engines31/12/07:12361 installed engines

V2500 @ 50%

42

Engine Flying Hours and Service Revenues

80

100

120

140

160

180

Rolls-Royce engine flying hours

* 6-month moving average – ATA+AEA+AAPA airlines

World capacity *

2001 2002 2003 2004 2005 2006 2007

Index (Jan 2001=100)

43

A competitive portfolio – Defence aerospace

12

44

Defence engine deliveries

0

100

200

300

400

500

600

700

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Helicopters Fixed wing aircraft

Units

45

The widest range of marine products and services from a single supplier

46

Energy Portfolio

Oil & Gas production(onshore and offshore)− Oil production− Gas production− Oil transmission− Gas gathering− Secondary oil/gas

recoveryGas transmission− Gas pipelines− Gas storage

Power Generation

− Industrial− Commercial− Municipal

501s and RB211s provide 4 -32 MW of power

Trent 60 provides up to 58 MW of power

Developing a 1MW Fuel Cell