Scheme Circular - Rolls-Royce

Following the Scheme Effective Time, any future issues of C Shares shall be by Rolls-Royce Holdings as determined by its board of directors.
Accordingly, the issue of C Shares scheduled for July 2011 will be made by Rolls-Royce Holdings and is expected to be made to the holders of Rolls-
Royce Group Ordinary Shares on the register on 26 April 2011.
4. LONDON LISTING
It is expected that, at 8.00 a.m. on 23 May 2011, the Rolls-Royce Holdings Ordinary Shares will be listed and dealings in Rolls-Royce Holdings Ordinary
Shares on the London Stock Exchange’s main market for listed securities will commence.
5. ROLLS-ROYCE HOLDINGS REDUCTION OF CAPITAL
Shortly after the Scheme becomes effective, it is expected that the share capital of Rolls-Royce Holdings will be reduced to create distributable
reserves in Rolls-Royce Holdings. This is a legal and accounting adjustment and should not have any impact on the market value of the Rolls-Royce
Holdings Ordinary Shares.
Further details in relation to the Rolls-Royce Holdings Reduction of Capital are contained in the explanatory letter from the Financial Adviser contained
in Part II of this document.
6. SPECIAL SHAREHOLDER
In order to protect the UK Gove rnment’s strategic interests, Rolls-Royce Group has a Special Share which is held by a nominee of the Secretary of State
for Business, Innovation and Skills. The Special Share will not be subject to the Scheme. The Special Shareholder has agreed that, immediately after
the Scheme becomes effective, the Special Share will be redeemed and the Special Shareholder will subscribe for the New Special Share in Rolls-
Royce Holdings. The New Special Share will have the same rights as are attached to the Special Share.
7. ACTION TO BE TAKEN
The Scheme is conditional upon a number of matters which are set out in full in the explanatory letter from the Financial Adviser contained in Part II
of this document, including approval by the Rolls-Royce Group Shareholders of the Resolutions at the Annual General Meeting and of the Scheme
at the Court Meeting. Further details of the Annual General Meeting and the Court Meeting are contained in Part II of this document, including the
action to be taken by Rolls-Royce Group Shareholders.
Notices convening the Annual General Meeting and the Court Meeting are set out in Part VI of this document. In order that the Court can be
satisfied that the votes cast fairly represent the views of Rolls-Royce Group Shareholders, it is important that as many votes as possible are cast
at the Court Meeting. Rolls-Royce Group Shareholders are therefore urged to attend the Court Meeting in person or by proxy. Separate Forms
of Proxy or, if you hold Rolls-Royce ADRs, voting instruction cards, for use at the Annual General Meeting and the Court Meeting are enclosed.
If you have any questions about this document, the Annual General Meeting, the Court Meeting or the Proposals or are in any doubt as to how
to complete the Forms of Proxy or the voting instruction cards or appoint a proxy electronically, please call the Rolls-Royce shareholder helpline
between 8.30 a.m. and 5.30 p.m. Monday to Friday (except UK public holidays) on 0870 703 0162 (from within the UK) or +44 870 703 0162 (from
outside the UK). Calls will be charged at 7 pence per minute from a BT landline. Calls to the Rolls-Royce shareholder helpline from outside the UK will
be charged at international rates. Other telephone provider costs may vary. Please note that calls may be monitored or recorded and the helpline
cannot provide financial, legal or tax advice or advice on the merits of the Proposals.
8. RECOMMENDATION
The Board, which has been advised by Rothschild, has considered the Proposals and unanimously believes the Proposals and their terms to be in the
best interests of Rolls-Royce Group and its shareholders as a whole. In providing its advice, Rothschild has placed reliance on the Board’s commercial
assessments of the Proposals.
Accordingly, the Board unanimously recommends Rolls-Royce Group Shareholders to vote, and that holders of Rolls-Royce ADRs instruct the
US Depositary to vote, in favour of the Proposals at the Annual General Meeting and the Court Meeting, as the Directors intend to do in respect
of their own shareholdings totalling 3,091,264 Rolls-Royce Group Ordinary Shares (representing approximately 0.165 per cent. of the issued
ordinary share capital of Rolls-Royce Group) as at 10 March 2011 (being the latest practicable date prior to publication of this document).
Yours sincerely
Sir Simon Robertson
Chairman
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