Rolls-Royce Regulatory News (RR.)

16 January 2017

ROLLS-ROYCE ANNOUNCES AGREEMENTS IN PRINCIPLE

WITH INVESTIGATING AUTHORITIES

Rolls-Royce announces that it has in principle reached a Deferred Prosecution Agreement (DPA) with the UK Serious Fraud Office (SFO), which was the subject of a preliminary court ruling today. The proposed DPA is subject to final judicial approval and the SFO and Rolls-Royce will appear at court on 17 January 2017 to seek this approval.

In addition to the agreement with the SFO, Rolls-Royce has also reached a DPA with the US Department of Justice (DoJ) and a Leniency Agreement with Brazil's Ministério Público Federal (MPF).

Rolls-Royce has co-operated fully with the authorities and will continue to do so.

These agreements relate to bribery and corruption involving intermediaries in a number of overseas markets, concerns about which the company passed to the SFO from 2012 onwards. These are voluntary agreements which result in the suspension of a prosecution provided that the company fulfils certain requirements, including the payment of a financial penalty.

In total, these agreements, if finalised, would result in the payment of approximately £671m*. Under the terms of the agreements with the DoJ and MPF, Rolls-Royce has agreed to make payments to the DoJ totalling $169,917,710 and to the MPF totalling $25,579,179. Under the terms of the DPA with the SFO, Rolls-Royce will pay £497,252,645 plus interest under a schedule lasting up to five years, plus a payment in respect of the SFO's costs.

As a result, total payments by Rolls-Royce in the first year of all three agreements would be £293m*.

Rolls-Royce will report full year 2016 results on 14 February 2017 and an appropriate update on the implications of these agreements will be provided at that time. Early indications are that the Group has had a good finish to the year with both profit and, in particular, cash expected to be ahead of expectations.

Further details of any finalised agreements will be given at the appropriate time.

Today's announcement has been determined to contain inside information.

* at current exchange rates

About Rolls-Royce Holdings plc

1. Rolls-Royce's vision is to be the market-leader in high performance power systems where our engineering expertise, global reach and deep industry knowledge deliver outstanding customer relationships and solutions. We operate across five businesses: Civil Aerospace, Defence Aerospace, Marine, Nuclear and Power Systems.

2. Rolls-Royce has customers in more than 150 countries, comprising more than 400 airlines and leasing customers, 160 armed forces, 4,000 marine customers including 70 navies, and more than 5,000 power and nuclear customers.

3. We have three common themes across all our businesses:

· Investing in and developing engineering excellence

· Driving a manufacturing and supply chain transformation which will embed operational excellence in lean, lower-cost facilities and processes

· Leveraging our installed base, product knowledge and engineering capabilities to provide customers with outstanding service through which we can capture aftermarket value long into the future.

4. Annual underlying revenue was £13.4 billion in 2015, around half of which came from the provision of aftermarket services. The firm and announced order book stood at £79.5 billion at the end of June 2016.

5. In 2015, Rolls-Royce invested £1.2 billion on research and development. We also support a global network of 31 University Technology Centres, which position Rolls-Royce engineers at the forefront of scientific research.

6. Rolls-Royce employs over 50,000 people in more than 46 countries. More than 16,000 of these are engineers.

7. The Group has a strong commitment to apprentice and graduate recruitment and to further developing employee skills. In 2015 we employed 228 graduates and 277 apprentices through our worldwide training programmes.

www.Rolls-Royce.com

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Investors

John Dawson

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Rolls-Royce plc

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investor.relations@rolls-royce.com

Helen Harman

Assistant Director, Investor Relations

Rolls-Royce plc

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investor.relations@rolls-royce.com

Ross Hawley

Assistant Director, Investor Relations

Rolls-Royce plc

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investor.relations@rolls-royce.com

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Rolls-Royce plc

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Sarah Roberts

Corporate Communications

Rolls-Royce plc

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Sarah.Roberts2@Rolls-Royce.com

Craig Taylor

Corporate Communications

Rolls-Royce plc

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Craig.Taylor2@Rolls-Royce.com