4 November 2014

Rolls-Royce today announces additional headcount reductions as part of an intensified programme to improve operational efficiency and reduce cost across the Group. We now propose a restructuring plan that will reduce headcount by 2,600 over the next 18 months, principally in our Aerospace division. The majority of this reduction will be achieved in 2015.

This is consistent with our announcement of October 17, when we committed to accelerate progress on the 4Cs: Customer, Concentration, Cost and Cash – particularly Cost. We will continue to pursue further cost improvements in all areas, including in our Land & Sea division

The investment we have made in technology and new capacity, alongside the organisational changes we have made to simplify the Group, have enabled us to increase output and improve efficiency.

For example:

1)   A large engineering team was required for the development phase of the Trent 1000 and Trent XWB engines. Both these major programmes have now entered their production phase, reducing our engineering requirement.

2)   We have opened a number of world class new facilities, such as Crosspointe in the USA and in the UK at Rotherham and Washington, Tyne & Wear. These set new standards in productivity and efficiency and allow us to improve the competitiveness of our footprint.

3)   The organisation of our Group into two divisions, Aerospace and Land & Sea, will enable us to reduce management layers and structural cost including indirect labour.

We anticipate these actions will result in incremental restructuring costs of around £120m over the next two years. We intend to accrue around half of these costs this year, subject to employee consultation. We expect annualised cost benefits of around £80m when fully implemented. Approximately half of this amount is in our 2015 guidance and the full benefit in our medium term outlook.

John Rishton, Chief Executive Officer, said:

“We are taking determined management action and accelerating our progress on cost. The measures announced today will not be the last, however they will contribute towards Rolls-Royce becoming a stronger and more profitable company.

We will work closely with employees and their representatives to achieve the necessary reductions on a voluntary basis where possible, while making sure we retain the skills needed for the future.”

Our business remains well positioned in growth markets.

For further information, please contact:

Investors:                                                                                  Media:

Jilinda Crowley                                                                        Richard Wray

Acting Director – Investor Relations                                   Director of External Communications

Rolls-Royce plc                                                                         Rolls-Royce plc

Tel: +44 (0)20 7227 9282                                                      Tel: +44 (0)20 7227 9163

jilinda.crowley@rolls-royce.com                                          richard.wray@rolls-royce.com