Rolls-Royce has made progress in understanding the cause of the engine failure on the Trent 900 powered A380 Qantas flight QF32 on 4 November 2010. It is now clear this incident is specific to the Trent 900 engine.

As a result, a series of checks and inspections has been agreed with Airbus, with operators of the Trent 900 powered A380 and with the airworthiness authorities. These are being progressively completed which is allowing a resumption of operation of aircraft in full compliance with all safety standards. We are working in close cooperation with Airbus, our customers and the authorities, and as always safety remains our highest priority.

We can be certain that the separate Trent 1000 event which occurred in August 2010 on a test bed in Derby is unconnected. This incident happened during a development programme with an engine operating outside normal parameters. We understand the cause and a solution has been implemented.

The Trent 900 incident is the first of its kind to occur on a large civil Rolls-Royce engine since 1994. Since then Rolls-Royce has accumulated 142 million hours of flight on Trent and RB211 engines.

We will provide a further update with our interim management statement on 12 November 2010.

Interim management statement

Rolls-Royce Group plc, the global power systems company, is today issuing its Interim Management Statement for the period 1 July to 11 November 2010.

Trading across the Group’s businesses has progressed in line with the guidance for modest growth provided in July 2010, at which time the Board expected underlying profits to grow by between four and five per cent compared to 2009. As a result of the recent Trent 900 incident on 4 November, partially mitigated by better performance in the Marine and Defence businesses, the Board now expects underlying profit growth for the full year to be slightly lower than previously guided. The Board also expects a small cash inflow in 2010 with the average net cash balance remaining similar to that in the first half of the year which was £915m, both substantially the same as guided in July.

Sir John Rose, Chief Executive, said:

“Safety is the highest priority of Rolls-Royce. This has been demonstrated by the rapid and prudent action we have taken following the Trent 900 incident. We have instigated a programme of measures in collaboration with Airbus, our Trent 900 customers and the regulators. This will enable our customers progressively to bring the whole fleet back into service. We regret the disruption we have caused.

“This event and the consequent actions will have an impact on the Group’s financial performance this year. However the scale of our order book, the breadth and mix of our portfolio, the global nature of our business and our strong balance sheet makes Rolls-Royce a resilient business, and we expect continued underlying profit growth in 2010”.

The Group has made further good progress in the period with the non-civil aerospace businesses now expected to perform slightly better than guided in July.

There are signs of improving demand in our Marine business as we build our portfolio across the offshore, specialist vessel and naval markets.

The Energy business is expected to make good progress in 2010. We continue to explore options to grow our Energy and nuclear activities.

The global reach of our Defence business affords us access to the markets where demand for our products and services is increasing. The broad range of applications, customers and sectors that we support and the entry into service of new programmes will further underpin long-term growth. This will more than compensate for the modest, and anticipated, reduction in revenues from the UK Government which are a consequence of the recently announced Strategic Defence and Security Review.

The Civil aerospace business has proved resilient through a challenging economic period. Our market leading positions will progressively be extended as new applications, such as the B787, Gulfstream G650 and A350XWB enter service over the next few years. In 2010 the civil business has continued to make progress in line with our expectations. The bulk of the costs of the Trent 900 incident and the necessary mitigation will be expensed this year. Civil business profitability will therefore be lower than guided in July.

The Group will report its preliminary results for the 12 month period ending 31 December 2010 on 10 February 2011.