Cobham plc Annual Report & Accounts 2002 Leading the Way
The group intends to strengthen its leading
position in aerospace niche markets by
building on the skills and systems capabilities
that have been developed in recent years. © The Boeing Company Investing in People
Developing potential for the future –
Cobham companies encourage and provide
the highest levels of vocational training 
for employees.  4
Cobham designs and manufactures
equipment, specialised systems 
and components supplied to the
aerospace, defence, industrial and
communications markets 
–
and
operates, maintains and modifies
aircraft, particularly in relation to
special mission flight operations.
Contents
Group Financial Highlights  . . . . . . . . . . . . . . . . . . . . . . . . . 5
Chairman’s Statement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Chief Executive’s Review  . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cobham at a Glance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1
Business Review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Financial Review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Board of Directors  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Directors, Officers and Advisers  . . . . . . . . . . . . . . . . . . . . 36
Directors’ Report  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Directors’ Remuneration Report  . . . . . . . . . . . . . . . . . . . . 42
Statement of Directors’ Responsibilities  . . . . . . . . . . . . . . 50
Independent Auditors’ Report  . . . . . . . . . . . . . . . . . . . . . . 5 1
Accounting Policies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Consolidated Profit and Loss Account  . . . . . . . . . . . . . . . 55
Consolidated Balance Sheet  . . . . . . . . . . . . . . . . . . . . . . . 56
Parent Company Balance Sheet  . . . . . . . . . . . . . . . . . . . . 57
Consolidated Cash Flow Statement  . . . . . . . . . . . . . . . . . . 58
Reconciliation of Net Cash Flow to Movement in Net Debt 58
Statement of Total Recognised Gains and Losses  . . . . . . 59
Reconciliation of Movements in Shareholders’ Funds  . . . 59
Notes to the Financial Statements  . . . . . . . . . . . . . . . . . . 60
Group Financial Record  . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Shareholder Information  . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Group Financial Highlights
COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 5
Turnover
£734.6m +1.8% (2001 – £721.8m)
Profit on ordinary activities before taxation
£99.4m +13.6% (2001 – £87.5m)
Profit on ordinary activities before taxation, 
amortisation of goodwill and integration costs
(“underlying profits”)
£115.3m +11.4% (2001 – £103.5m)
Profit retained for the year 
£45.3m +25.8% (2001 – £36.0m)
Earnings per Ordinary Share – basic
70.4p +18.5% (2001 – 59.4p)
Earnings per Ordinary Share – fully diluted
69.9p +18.9% (2001 – 58.8p)
Earnings per Ordinary Share – underlying
Earnings per Ordinary Share – underlying
86.1p +14.2% (2001 – 75.4p)
Interim Dividend – paid 13 December 2002
7.60p +10.1% (2001 – 6.90p)
Final Dividend – payable 4 July 2003
18.00p +10.2% (2001 – 16.33p)
Dividend per Ordinary Share
25.60p +10.2% (2001 – 23.23p)
Analysis of Turnover Non Military      Military
2002
2001
2000
£734.6m
50.6% £371.8m 49.4% £362.8m
56.2% £405.6m 43.8% £316.2m 
53.2% 46.8% £265.8m
£721.8m
£568.4m
86.1p
75.4p
64.2p
Dividend
25.60p
23.23p
20.20p
2002
2001
2000
2002
2001
2000
£302.6m 6
Chairman’s Statement
Results
Another strong performance in 2002 further extends the
group’s consistent record of growth. Turnover for the year
increased by 1.8% to £734.6m (2001 – £721.8m) and profit
before tax, integration costs and goodwill amortisation rose
by 11.4% to £115.3m (2001 – £103.5m). Profit on ordinary
activities before taxation increased by 13.6% to £99.4m
(2001 – £87 .5m). Underlying earnings per share of 86.1p
(2001 – 75.4p) were 14.2% higher than for the comparable
period last year . Your directors have recommended a final
dividend of 18.00p (2001 – 16.33p) per share. Together with
the interim dividend of 7 .60p per share (2001 – 6.90p) which
was paid in December , this represents an increase of 10.2%
compared to 2001. Subject to shareholders’ approval, the
final dividend will be paid on 4 July 2003 to all shareholders
on the register as at 6 June 2003.
The group generated cash from operations of £135.9m (2001
– £90.2m). Net debt at the year end of £188.8m (2001 –
£207 .7m) includes the cash cost of acquisitions completed 
in 2002, and represents a gearing level of 52.6% 
(2001 – 66.3%).
The group invested £31.6m (2001 – £28.2m) in research and
development and £31.4m (2001 – £32.2m) in capital
expenditure on new equipment and facilities. As a percentage
of turnover this level of continued reinvestment in the group
is reflected favourably in the Department of Trade and
Industry’s most recent scoreboard for UK companies.
New orders worth £0.7bn were won during the year and total
orders-in-hand at the end of the year amounted to £1.2bn.
Trading performance was much stronger in the second six
months of the year . Good results were produced within the
manufacturing segment by Flight Refuelling and Carleton,
whilst the Avionics segment continued its impressive growth.
Across the group, the benefit of continued investment and
restructuring programmes will enable a competitive cost
structure to be maintained.
“These results represent an excellent
performance in 2002 which further
extend the group’s consistent record
of growth. The high level of
reinvestment in research and
development and capital expenditure
will enable the group to continue to
exploit its position in key aerospace
niche markets. Undoubtedly 2003 
will provide further challenges but 
the underlying strength of the 
group and its position on a wide 
range of aerospace programmes
ensure that it is best placed to 
face the tasks ahead.”
Gordon Page COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 7
Corporate Development
The group intends to strengthen its leading position in
aerospace niche markets building on the skills and systems
capability that have been developed in recent years. A
combination of organic growth and acquisition will continue
to underpin this strategy which has produced consistent
growth and an increasing return for our shareholders over
many years.
People
In June 2002, the group was pleased to appoint Peter Hooley,
Group Finance Director of Smith & Nephew, as an
independent non-executive director . At the same time, Mike
Smith was nominated as senior non-executive director .
Also in June, Geoff Roe retired as a director of the group and
Managing Director of FR Aviation. He will continue to work
with the group on a part-time basis for the next two years
assisting in the development of specific projects. Alex
Hannam, who was previously Managing Director of Radar
Systems Division with Alenia Marconi Systems, was
appointed an executive director of the group and Managing
Director of FR Aviation with effect from July 2002.
Outlook
The outbreak of war in Iraq has increased uncertainties and
tensions worldwide. After previous conflicts the commercial
aerospace sector demonstrated its capability to return to
normal operation within a relatively short period of time and
I hope that this will happen again. On the military side, any
conflict highlights the need for a number of essential
capabilities and these certainly include air to air refuelling,
aircraft and ship defensive aids, secure and mobile
communications – many of which are being supplied and
supported by group companies.
The group’s performance is a source of pride to us all and is
built on the hard work of all employees. I thank them for their
contribution in the year and am confident, as is the board,
that our record of growth will be continued.
Gordon Page Chairman
20 March 2003
Cobham companies have been
chosen to supply state-of-the-art
systems and equipment for the
Gripen fighter aircraft. Introduction
2002 has been another successful year for Cobham,
driven by excellent performances across almost every
business unit. The breadth of product portfolio and the
wide service offering has again stood the group in good
stead. The group operates predominantly in aerospace
and defence, where recent strength on the defence side
has mitigated the widely publicised difficult civil market
conditions.
Cobham has increased its systems capabilities to key
customers and strategic partnerships are being pursued
relentlessly to improve productivity, reduce costs and
ultimately grow the business. We have built leading niche
positions organically, through the development of state-
of-the-art technology and by acquisition especially in the
areas of fuel systems, oxygen systems, avionics and
marine safety and survival systems. Additionally, the
group is a leader in avionics across a number of product
areas and in our flight operations we offer some of the
most sophisticated training and special mission flight
operations available anywhere in the world.
Strategy
Cobham’s strategy has evolved into a clearly focused plan
that has been tested and proven. It is this focus that has
delivered close to 20% per annum compound underlying
pre-tax earnings growth over the past 20 years. This
strategy is challenged and reviewed on a regular basis,
but the key tenets have remained. They are:
•
to strengthen our focus and retain a balanced portfolio
of companies which are leaders in their particular field;
•
to seize opportunities as they arise as the aerospace
and defence industry consolidates;
•
to continue to generate cash flow from our existing
businesses to support our plans for further organic
and acquisitive growth;
•
to create an environment which encourages, rewards
and motivates staff at all levels within the organisation.
8
Chief Executive’s Review
“Cobham has increased its
systems capabilities to key
customers and strategic
partnerships are being pursued
relentlessly to improve
productivity, reduce costs and
ultimately grow the business.”
Allan Cook COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 9
Chelton acquired the Blackburn, UK based land platforms
communications business (LPC) from BAE SYSTEMS. LPC
is a world leader in the supply of digital intra-vehicle
communications systems and has, since 1995, been a
prime supplier of such systems to the US Army with the
brand name ROVIS
®
. Under a teaming arrangement with
Northrop-Grumman, over 50% of LPC’s business is in the
USA, with a further 15% of revenue coming from US
Foreign Military Sales (FMS). These systems are an
integral part of the command, control, communication,
computers, intelligence, surveillance and reconnaissance
(“C4ISR”) capability of armed forces around the world. To
date, approximately 17 ,000 systems have been fielded on
more than 26 different types of platform to customers in
13 countries. LPC is a natural extension of Chelton’s
current airborne intercommunications systems business
(Northern Airborne Technology and TEAM) into the
military land vehicle market, in which Chelton’s radio and
antenna companies are also increasingly active.
Chelton Radomes acquired Saab’s Applied Composites
Division based in Linköping and Ljungby, Sweden. The
division supplies the main nose radome for the Gripen
fighter and its acquisition firmly establishes Chelton as
Europe’s leading radome supplier for military aircraft
such as Eurofighter Typhoon, Tornado, Hawk, EH101 and
Nimrod. The new business is a key centre of knowledge for
Flight Refuelling’s aerial refuelling
equipment plays a key role in extending
the Eurofighter Typhoon’s mission
capability.
Cobham has a highly devolved management structure
which ensures quick and decisive decision making. This
allows the management to focus on the strategic
direction of the group which has delivered excellent
results and created significant shareholder value.
Cobham will continue to pursue both organic and
acquisition related growth.
Markets
In the markets in which we operate there has been and
continues to be an element of uncertainty. The defence
market has shown signs of continued growth, particularly
in the USA, but the commercial aerospace business is still
fragile with only the low cost airlines showing any sign of
growth. Cobham is, however , in a strong position with a
large, long term order book. We have a highly trained,
motivated work force, excellent niche products and
services, and are leaders in many of the markets in which
we operate. 
Acquisitions
During the year , the group made a number of acquisitions
for a cash cost of £32.8m, with deferred and contingent
consideration estimated at a further £3.2m. In December
2002, agreement was reached to acquire Dräger
Aerospace GmbH for m28.4m in cash, of which m3m is
deferred for three years. 10
radar cross section reduction and stealth techniques,
including frequency selective surfaces design and semi-
conducting stealth coating technology. 
In December, the group reached agreement with
Drägerwerk AG to acquire its subsidiary company, Dräger
Aerospace, subject to regulatory and other approvals.
Dräger Aerospace is located in Lübeck, Germany and
produces a range of oxygen components and systems for
civil and military aircraft. Its technology covers gaseous,
liquid and mechanical oxygen systems and includes an 
on board generated oxygen capability. In recent years
Dräger Aerospace has been working with Carleton
Technologies, and the business alliance between the two
companies has been successful in winning contracts to
supply complete oxygen systems for the Airbus A340-
500/600, the Boeing Business Jet fleet at Lufthansa
Technik and, latterly, for the Airbus A380. The
combination of these two businesses gives the group a
complete systems capability in aircraft oxygen which it
intends to exploit further in the commercial and military
aircraft markets. 
In the early part of 2003, there were a further two
acquisitions within the Avionics segment. Orion
Electronics was acquired for a cash consideration of
C$14m and the assets of Xybion Sensor Positioning
Systems for US$1.4m in cash. Orion is a leader in the
design and manufacture of GPS tracking equipment sold
primarily to US Federal Government agencies. The
company employs 62 people and is located in Windsor ,
Nova Scotia. Orion is located close to Chelton’s existing
subsidiary Seimac and has product synergies with both
Seimac and Chelton’s UK security products company,
Micromill. The group sees considerable potential for
further growth by these three companies working
together in the Defence and Homeland Security market
places. Xybion designs and manufactures positioning
systems for use with optical and radio frequency antenna
sensors and is located in Clearwater , Florida. It will be
integrated into Chelton’s Atlantic Microwave business.
Future Prospects
Despite the uncertainties in the civil aerospace market,
the group, with its focus on the future, has exciting
prospects. We are a global company, our products and
people have put us on the world stage and we intend to
remain there.
With our broad portfolio of businesses, our position on
many long term programmes and the ability of our people
to keep Cobham at the cutting edge of technology,
Cobham is well set for the future. 
Allan Cook Chief Executive
20 March 2003
Chief Executive’s Review continued
Chelton Radomes perform computer controlled microwave
correction to aircraft nose radomes to ensure extremely
high levels of performance. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 11
Cobham at a Glance
Cobham has consistently pursued an aggressive approach to building and managing a
diverse portfolio of aerospace and defence businesses. This strategy has generated
excellent shareholder returns over the past 20 years. The group is in a strong
financial and strategic position to grow and create further shareholder value.
Manufacturing
Flight Refuelling has a reputation for innovation and high quality engineering for the aerospace and
defence industries. Its principal capabilities include air to air refuelling systems, weapons carriage and
release systems, aircraft fuel systems, fuel, air and hydraulic components and expendable infrared
countermeasures. Carleton T echnologies, USA, designs, develops and manufactures pneumatic systems,
life support equipment and aerospace oxygen systems. Conax Florida, USA, designs and manufactures
pneumatic and life supporting systems. Westwind Air Bearings is a world market leader in air bearing
spindles for the electronics market.
Avionics
Chelton companies have an extensive global presence with facilities extending into Europe, North America
and South Africa. The group is one of the world’s leading designers and suppliers of airborne antennas,
aircraft communication and navigation equipment, and microwave sub-systems, components and radomes.
Flight Operations and Services
FR Aviation has developed its aviation services business to become a world leader in the provision of complete
turnkey solutions to military users, government departments and large corporations worldwide. The group
operates long term contracts in military training, surveillance/survey, outsourced flight operations and
special aircraft engineering/modification activities. 12
Business Review
Manufacturing
Turnover – third party
Operating profit
*
*Excluding goodwill amortisation of £4.7m (2001 – £4.7m)
and integration costs of £3.2m (2001 – £4.1m) 
£308.3m
£309.9m
£54.3m
£50.3m
2002
2001
2002
2001
Another successful year for the Flight Refuelling group of
companies and some important programme wins which will
consolidate its leading position in the major markets it serves.
Carleton Technologies achieved record revenues and
operating margins in 2002 and also advanced key strategic
initiatives.  
Conax Florida had a good year in 2002 meeting profit
expectations and exceeding budgeted order intake.
Westwind Air Bearings experienced difficult trading conditions
resulting in a loss for the year . A repair facility was opened 
in China to address the emerging market demand. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 13
Flight Refuelling
Following a satisfactory first half of the year , the Flight
Refuelling group of companies achieved an excellent result
for the year with record sales and record profits.
FR-HiTEMP, which designs and produces high quality
components and systems, achieved a satisfactory result,
despite the downturn in the commercial aerospace market.
Overall demand for commercial and military spares remained
stronger than expected although demand from its largest
commercial aircraft customer , Airbus, slowed. It has recently
been awarded a contract worth in excess of £11m for work on
the Main Battle Tank (MBT ) Light Anti-armour Weapon (LAW)
missile programme and has gained further work from Airbus
on the A380 airliner .
Building on its successful programme with Boeing, supplying
low pressure fuel pumps for the B777 , FR-HiTEMP will also
adapt the B777 fuel pump for use on the B7 47 aircraft. It is
hoped that the new pump design will find application on
other Boeing aircraft including the best selling B737 . Overall,
this presents a significant opportunity for FR-HiTEMP to gain
additional business from Boeing and establish itself as the
leading supplier of low pressure fuel pumps for aircraft.
© The Boeing Company
Above: FR-HiTEMP supplies the fin actuation system 
for the MBT LAW programme.
Below: Flight Refuelling’s latest generation AAR pod
dispensing fuel from a KC-130J tanker, on test with a
CH-53 receiver, both of the US Marine Corps.
Photograph courtesy of Saab Bofors Dynamics. 14
Business Review continued
Manufacturing continued
Flight Refuelling’s military systems division, the leader in
aerial refuelling technology and weapons carriage and
release systems, performed well. It has several important air
to air refuelling (AAR) programmes in progress for the US
Marine Corps and the US Air Force Special Operations
Command (AFSOC). The division is currently engaged in the
Engineering Manufacturing and Development phase (EMD) of
the AFSOC programme with flight testing due to commence
in the summer of 2003. Work also commenced on a contract
to equip a major overseas air force with its first operational
AAR capability. This contract is part of a long term
programme to give up to 100 Sukoi 30 multi-role fighters an
AAR capability. In addition to this programme, the division
has received contracts to supply Mk32B AAR pods to the
German Air Force and the Royal Canadian Defense Force in
support of their Airbus A310 multi-role tanker transport
programmes. Deliveries commenced on the Gripen
retractable refuelling probe programme and work continued
on the engineering, manufacturing and development phase
of a programme with Boeing to design and qualify a
retractable refuelling probe for the United States Marine
Corps MV-22 aircraft. In addition to the division’s AAR
products, deliveries continued to be made in support of 
the division’s Eurofighter Typhoon weapons carriage and
release programmes. At the end of the year deliveries
commenced on a multi-million pound contract for the 
Indian Air Force for practice bomb carriers for its MIG21 fleet
of aircraft.
The performance in 2002 of Wallop Defence Systems, the
defence pyrotechnic business, was adversely affected by a
slower than expected rate of order intake for both its
SuperBarricade and infrared (IR) flare product lines. However ,
orders for the company’s IR flares have picked up since the
turn of the year including increased demand for its new Hot
Spot™ spectral flare. During the year FR Countermeasures
signed an agreement under the US government ARMS
programme to set up a pyrotechnic and IR flare
manufacturing facility at the US Department of Defense
Army Ammunition Plant in Milan, Tennessee. In addition to a
significant investment made by the US government, a capital
investment of US$15m will be required to establish the
“During the year FR Countermeasures
signed an agreement under the US
government ARMS programme to set up a
pyrotechnic and IR flare manufacturing
facility at the US Department of
Defense Army Ammunition Plant in
Milan, Tennessee.”
Left: Stanley Aviation will benefit from the
purchase by the US Air Force of a further 
60 Boeing C-17 aircraft.
Far right: Airbus remains an important customer
for FR-HiTEMP as well as for the Carleton/Dräger
Aerospace alliance.
Below right: Carleton manufactures the successful
pneumatic actuation manifold system used in the
Paveway laser guided bomb. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 15
qualification of the system in early 2002. The technology was
also selected for application to the Small Diameter Bomb
development program, both for wing deployment and for
weapon release on the bomb carrier . The latter opens up
significant new market opportunities. Other weapon system
revenues resulted from continuing production of cryostats
for ASRAAM and Javelin, as well as pneumatic actuation
systems for the Longbow/ Hellfire and VT-1 missiles.
Despite the continuing downturn in the commercial aviation
market, 2002 was marked by major successes for Carleton.
The new gaseous oxygen system for the Airbus A340-
500/600 was successfully qualified, and the first production
sets shipped. The Dräger Aerospace/Carleton alliance was
selected to supply the entire emergency oxygen system for
company which will share in the US market for expendable
countermeasures – worth US$180m per year and growing.
Cobham sees the establishment of FR Countermeasures as
an excellent opportunity tied, as it is, to a secure position in a
strong and growing market. Through the development of
spectral flares, the establishment of world class facilities in
the UK and the USA and the admission to the US IR flare
restricted supply base, Cobham intends to become the
leading supplier of expendable IR countermeasures.
Both Sargent Fletcher and Stanley Aviation in the USA
performed well. Although Stanley suffered a downturn in
demand for its coupling and tubing products from Embraer
and Gulfstream, it received a boost during the year as a result
of the announcement that the US Air Force would purchase a
further 60 Boeing C-17 Airlifters, a major programme for
Stanley. In addition to this, Stanley was awarded a contract
during the year for the design and supply of the wing fuel
delivery system for the Lockheed Martin F-35 Joint Strike
Fighter (JSF) programme. This programme will play a key role
in the future of Stanley. Demand for Sargent Fletcher
products remained strong throughout the year – particularly
in respect of AAR product support reflecting increased
operational requirements in the USA. In addition to a very
satisfactory trading performance, the company ended the
year with a record order book.
Carleton Technologies
Carleton Technologies, the designer and manufacturer of
high pressure pneumatic components based in the USA,
again achieved record new orders and product shipments
during 2002. This strong performance was underpinned by
orders for over 10,000 of the company’s pneumatic systems
for Paveway laser guided bomb kits. The conflict in
Afghanistan, combined with continued political tension in the
Middle East, has generated increased demand for this
weapon system. The precision weapons market also opened
up new growth opportunities for Carleton’s pneumatic
actuation technology. The company received a five year
production order for wing and fin deployment actuators for
the Joint Air to Surface Standoff Missile following successful 16
Business Review continued
Manufacturing continued
passengers and crew of the new Airbus A380 aircraft. This is
the first occasion that a single source has been awarded the
complete oxygen system for a major commercial aircraft, and
underscores the success that the team has had in
establishing itself at the forefront of this market. Military
aviation oxygen products continued to provide strong
revenues from projects such as the US Navy CRU-103 chest-
mounted regulator , and from spares and overhaul kits for
fielded systems for various military aircraft. In addition,
Carleton was selected by the US Navy to develop a prototype
on board oxygen generating system (OBOGS) for possible
application to a range of aircraft, including the F/A-18.
Military aviation continued to provide opportunities for
Carleton. Supplementing legacy production such as the
Nighthawk pod cooling system, the company will supply three
pneumatic systems for the Comanche helicopter to
accomplish weapons bay door release and for the vehicle
landing system. The V-22 continues to provide production
potential for emergency landing gear release and for
emergency crew oxygen. In addition, the company’s
microclimate cooling system for helicopter crew personal
environmental control was qualified for the US Army air
warrior programme. A proposal was submitted late in the
year and a production contract is expected in 2003. This
robust miniature refrigeration technology represents a new
market for Carleton, with significant future potential for
human cooling. 
Carleton’s products for life support in space, on land and
underwater continue to provide future potential. Spares and
support for the International Space Station and Shuttle
continue to provide revenue opportunities, while Carleton
Life Support in Canada has won new orders for its
underwater rebreather products worldwide. The Pressure
Technology division in Baltimore had another year of growth,
and won orders from new customers for cylinders for fire-
fighters’ breathing equipment. The division also won a major
order for helium storage tanks for the Boeing Delta IV
programme which will generate production revenues 
through 2007 .
“The company’s microclimate cooling
system for helicopter crew personal
environmental control was qualified for
the US Army air warrior programme. 
This robust miniature refrigeration
technology represents a new market 
for Carleton, with significant future
potential for human cooling. ”
Left: Flight Refuelling, Carleton and Chelton 
are involved with the V-22 aircraft.
Far right: Schmoll drilling machine fitted with
Westwind 180,000 rpm spindles. 
Below right: The next generation water-activated
parachute release system (AMWARS) developed
by Conax. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 17
Conax
Conax Florida, the designer and manufacturer of electro-
explosive devices and gas storage systems, had a good year
in 2002. New orders in the core water-activated life support
product line, water-activated parachute release systems
(UWARS, SEAWARS), and water-activated life vest inflation
systems (FLU-8, FLU-9, and Deck Crew) have had continued
strong demand from the US military. A Passive Anti-
Suffocation Device (PASD) has been submitted to the US
Navy for integration approval and is funded for its first
procurement in early 2003. The next generation water-
activated parachute release system (AMWARS) was
introduced to the US government for evaluation and a new
automatic inflator design was completed for an anticipated
2003 market introduction. 
The order intake for IR seeker components continued
strongly in 2002 with full rate production of the Javelin anti-
armour missile. Opportunities in the international market for
Javelin remain very promising. Several countries have placed
small orders for Javelin, and in 2003 Conax was a member of
the successful bid team for the UK procurement of Javelin.
The success of Javelin in the international market will extend
production requirements for several years. Activity on other
programmes utilising this technology remain at a high level
with missile defence programmes such as the theatre high
altitude air defence (THAAD), exoatmospheric kill vehicle
(EKV) and the lightweight exoatmospheric projectile (LEAP). 
Conax continues to maintain the major share of the global
satellite and launch vehicle marketplace for pyrovalves.
Although this market has been flat with the troubles faced in
the telecommunications sector , industry projections suggest
that this market will begin to recover in 2004. 
Westwind
Westwind, the world’s leading supplier of air bearing spindles,
started 2002 with sales at depressed levels continuing the
trend from the second half of 2001. This meant that despite
the cost reduction measures taken in 2001 it reported a
loss in 2002. The sales of spindles for the semi-conductor ,
industrial, disk and scanning markets were hit badly by the
recession in the electronics sector . However , during the year ,
there was an increase in spares orders and as the year
progressed turnover improved. Current demand remains
fragile but is being driven from the Far East, most notably
Korea and China. Facilities were opened in Shanghai to
manufacture collets and provide sales support in China.
Photograph courtesy of Schmoll Maschinen GmbH. 18
Avionics
Turnover – third party
Operating profit
*
*Excluding goodwill amortisation of £6.3m (2001 – £5.6m)
2002
2001
£251.5m
£224.3m
£51.9m
£47 .7m
2002
2001
Business Review continued
Another record year for the Chelton group of companies,
which saw several exciting new product initiatives launched.  
The group continued to perform very well and generated a
high level of new business ending the year with a record
order book. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 19
Above: Chelton Electrostatics’ 19-429 Satcom antenna 
is installed on several different types of ground and 
air vehicles. 
Below: A typical Micromill tracking system display.
The Chelton group, with businesses specialising in
aeronautical communication and navigational equipment,
had another record year .
The core Chelton Electrostatics business continued to
perform very well with traffic collision avoidance systems
(TCAS), global positioning systems (GPS), Satcom and tactical
airborne communications antennas representing the bulk of
sales. The company achieved important new business for
antennas and direction finders on Danish and Portuguese
versions of the EH101 and for South African and Swedish
A109 helicopters as helicopter manufacturers including Bell,
Boeing, Eurocopter , Sikorsky and Agusta-Westland continued
to generate a high level of sustaining business for Chelton.
Chelton’s airline and business aircraft antenna and static
discharger business for Airbus, Embraer , Dassault, Cessna
and others performed very satisfactorily as the installed 
base continued to expand generating an increasing 
product support after-market which offset slightly lower 
OEM business.
Omnipless shipped initial quantities of its Satcom-On- The-
Move antenna to the US Army and its superior performance
already indicates substantial new business in 2003. 20
Avionics continued
Omnipless is also now close to the production launch of its
revolutionary new Aero H+ satellite communications antenna
which completed all major design milestones during the year .
This antenna will enable high speed data access such as
internet connectivity and packet-data to be provided on
virtually every airborne platform as a consequence of its low
size and drag. 
Chelton’s experience in multi-band antenna systems for the
military combined with Comant’s expertise in high volume,
low cost manufacturing have led to the development of the
ComDat line of general aviation antennas. This series of
seventeen antennas gives the aircraft manufacturer and
avionics installer the ability to reduce the number of
antennas per aircraft thereby enabling more systems to be
fitted without increasing the risk of performance degradation
due to mutual interference.
The telecoms and wireless infrastructure market remained
relatively slow during the year which adversely affected
European Antennas, although increasing activities in the
non-commercial market showed promise. Culham
Electromagnetics and Lightning had a satisfactory year
which included completion of the first stage of a major radio
frequency modelling programme using unique internally
developed software.
Micromill Electronics had an excellent year with record levels
of business in its homeland defence market culminating in
the launch at the year end of its new generation surveillance
equipment for UK and overseas customers.
Chelton’s composites companies enjoyed continued growth
maintaining excellent revenues for aerospace and rail
transportation composite engineering, and made good
progress on important programmes such as the SAMPSON
and airborne stand-off radar (ASTOR) systems. Radome
production for programmes such as Eurofighter Typhoon,
Apache Longbow and Nimrod continues to grow and first
delivery took place of a new fincap antenna housing for the
Aermacchi M-346 jet trainer aircraft.
“Chelton achieved important new business
for antennas and direction finders on
Danish and Portuguese versions of the
EH101 and for South African and 
Swedish A109 helicopters as helicopter
manufacturers including Bell, Boeing,
Eurocopter, Sikorsky and Agusta-
Westland continued to generate a high
level of sustaining business.”
Left: Northern Airborne Technology is the 
sole provider of audio systems to Robinson
Helicopters, one of the most prolific helicopter
manufacturers in the world.
Far right: Chelton Flight Systems’ ground
breaking synthetic vision Electronic Flight
Information System (EFIS).
Below right: Safety equipment such as Siemac’s
PRO-find 406 Emergency Position Indicating
Radio Beacon (EPIRB) is vital in achieving
success in search and rescue operations.
Business Review continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 21
Wulfsberg Electronics, the FM/AM radio communications
business, had a record year with continuing deliveries of its
Series III™ radios to the US Air Force T -38C upgrade, T -6A
joint primary aircraft training systems (JPATS) and other civil
and military programmes including production for a wide
range of Eurocopter helicopters. The RT5000 Flexcomm™
radio system, now with added digital technology (APCO25),
continues to be a best seller in the airborne law enforcement,
paramilitary and homeland defence market.
In its first full year as a Chelton company, Chelton Flight
Systems (CFS) has achieved important breakthroughs in both
technology and market expansion. The Federal
Aviation Administration’s (FAA) Technical
Standards Order certification of the company’s
revolutionary synthetic vision Electronic Flight
Information System (EFIS) was confirmed in
January 2003. During the course of
development the capabilities of the system have
grown to include terrain awareness warning
system (TAWS), recently mandated by the FAA
for all turbine-powered aircraft in the US, as
well as the world’s first wide area augmentation
system (WAAS) global positioning system. In
another industry first, the FAA has granted the
company blanket approval for installation of
the system on any general aviation aircraft.
2002 brought CFS its first OEM
contract – a small business
turboprop – and several more
are pending. A select network
of 30 dealers throughout
the US has been
established to support the
increased level of activity
in the retrofit market. 
The company continues 
to penetrate new
markets, both domestic
and foreign, in military and
special mission applications,
including most recently a
fleet of US Air Force 
OV-10 Broncos deployed 
in anti-drug activities in
Central America. 
Slingsby Aviation completed a very satisfactory year with
delivery of sixteen Firefly aircraft for the Royal Jordanian Air
Force and receipt of an initial US Air Force contract to
investigate the return of some or all of its Firefly aircraft to
active service in a training role.
Chelton’s North American avionics companies showed
excellent growth with Northern Airborne Technology
successfully completing on-time delivery of the large German
Air Force C-160 intercom upgrade programme. They also
successfully introduced an airborne satellite telephone for
use with low earth orbit (LEO) constellations and embarked
upon a major new state-of-the-art tactical radio controller
development programme.
Chelton’s two major search and rescue companies had an
excellent year with Artex achieving record sales and profit for
its satellite linked emergency locator transmitters (ELT’s) and
ACR completing the development of a patented 406MHz
oscillator which will be produced in very large quantities in its
Florida factory for use in all Chelton group COSPAS-SARSAT
and Rescue Satellite-Aided Tracking emergency transmitters.
Chelton considers the entire search and rescue market,
including covert combat search and rescue for the military as
well as civilian maritime and aircraft safety initiatives, to be a
major growth business area for the group. 22
Avionics continued
2003 looks likely to be an excellent year as new products,
including a small multi-function display and an advanced
autopilot, are added to the CFS portfolio and existing
products benefit from government mandates.
Seimac continued to focus on its core radio business and
received its first significant contract related to “homeland
security” with a programme to develop a shipping container
intrusion and tracking system. The company expects to see
more applications in this area in 2003.
Chelton’s US based microwave companies (Nurad, Atlantic
Microwave, Continental Microwave and Kevlin), now trading
as Chelton Microwave (CMC), had an outstanding 2002.
Assisted by the addition of the Airtron product line during
2001, bookings were up 35% and sales and earnings were
significantly higher than last year . CMC’s critical technologies
are supplied to virtually all US and European prime aerospace
and defence companies. CMC’s radar, data link,
communication and electronic warfare (EW) products are
used in airborne, space, ground and sea applications. CMC is
a key participant in the effort to improve the US military’s
readiness as well as many homeland defence initiatives. 
Nurad had an exceptional year, virtually doubling sales,
earnings and bookings and winning numerous new electronic
warfare and communication, navigation and identification
antenna contracts. The company was awarded a contract by
Lockheed Martin (with whom it won a Star Supplier Award) to
provide antennas and radomes for the Peace Marble-V 
F-16 Programme. In addition, the company is developing a
radar cross section/compact antenna range and a high
power/altitude test facility, which will provide the facilities
necessary to support the most advanced military platforms 
in the USA. 
Atlantic Microwave, which designs and manufactures high
power microwave products and ground and shipboard
antennas, had a very good year which included establishing 
a microwave products repair facility to support military
customers. The company won a number of exciting new
programmes including ground antennas for the tactical
unmanned aerial vehicle (TUAV), US Army mobile radar
(ATNAVICS) and the next generation receiver transmitter
(NGRT) for the Global Broadcasting System (GBS). The latter
is a key tactical data antenna for all US ground forces. The
company also won a contract to supply the combiners for the
SPY 1 F phased array radar for the Norwegian frigate
programme. 
Continental Microwave’s sales increased by over 80% as it
absorbed the largest portion of the Airtron Microwave
acquisition, which was completed in 2001. Continental now
supplies the US Navy with virtually all of the Aegis Radar’s
waveguide products, and has become the world’s leading
supplier of flat plate antennas for tracking, surveillance and
weather radars. The Chelton Control System (CCS) division
won a number of key contracts including products for the
Left: Atlantic Microwave is supplying Raytheon
with major sub-systems for the ATNAVICS
programme.
Far right: Air Précision continues to supply
aircraft clocks to the complete Airbus family 
of aircraft.
Below right: The new Audio Management Unit
(AMU) manufactured by TEAM.
Business Review continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 23
Air Précision’s maintenance and overhaul operation,
expanded and achieved record sales despite the general
downturn in civil aerospace.
In its first full year of Chelton ownership, TEAM completed
certification of the new Audio Management Unit (AMU) for
the A330/A340 aircraft and was selected to supply similar
equipment to the A380 programme. In addition, the Pilatus
PC21 trainer aircraft made its first flight in 2002 equipped
with TEAM’s AMU, which is similar to the design also selected
for PC9 and PC7 MK II aircraft.
The European Microwave and Telecoms equipment market,
comprising the Hyper group and Salies in France and
Credowan in the UK, had an excellent year as regards space
waveguide equipment sales, more than offsetting difficulties
in terrestrial telecoms. New travelling wave tube products
were introduced to a customer base that includes Astrium,
Alcatel and Alenia.
As mentioned earlier , Chelton acquired BAE SYSTEMS LPC
business and SAAB’s Applied Composites business.
The Chelton group enters 2003 with its largest portfolio of
new avionic product developments and a record order book
that indicates continuing growth in its broad range of
business activities.
THAAD programme. CCS will provide critical components to
many of the new electronically scanned phased array radars
that are under development. 
Kevlin also had a successful year and relocated into a new
80,000 sq foot facility which is required to meet increased
demand. The company was awarded an upgrade and redesign
contract for the US Air Force AWACS rotary coupler/slipring
and won a contract for the supply of a TPS-78 tactical ground
radar multi-channel rotary joint/slipring that will replace the
TPS-43 and TPS 70/75. 
In France, Air Précision had a record year during which the
company’s share of the slipring market significantly
increased on the back of major new business for air traffic
control radars (a success shared with Sivers in Sweden which
won many new microwave rotary joint contracts), wind
turbines and a wide range of industrial applications. Air
Précision’s aircraft clocks continue to be fitted on all current
Airbus models, Bombardier CRJ 200/700/900, Global
Express and all models of Embraer’s ERJ family. Satori,  24
Business Review continued
With its new focus on specialist flight operation services, 
the FR Aviation group produced satisfactory results across 
all three of its business segments – military training,
surveillance/survey and outsourced flight operations.
The group achieved a record 120,000 flying hours in the year
from its fleet of fixed and rotary wing aircraft.
Flight Operations and Services
Turnover – third party
Operating profit
*
*Excluding goodwill amortisation of £1.7m (2001 – £1.6m)
£174.8m
£187.6m
£19.3m
£19.2m
2002
2001
2002
2001 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 25
Above: Surveillance Australia’s Dash 8 aircraft will soon
be able to transmit live video while on offshore patrol
utilising an Inmarsat installation.
Below: FR Aviation has completed major modification
programmes on Boeing 727 aircraft, including a VIP
upgrade to a national presidential aircraft.
FR Aviation
The FR Aviation group, the turnkey aviation service provider ,
had a satisfactory year. Bournemouth Aviation Services
Company Limited (BASCO), the new venture with Singapore
Technologies Aerospace, has been established in 2002 in its
marketplace of aircraft maintenance and overhaul work. By
the end of the year it had expanded its capability and
approvals to cover Boeing 727/ 737 and Airbus A300/A320.
During 2003 Boeing 7 47 and 757 are expected to be added.
Following the transfer of business to BASCO, FR Aviation is
now focused on its core service provision of specialist flight
operations which are dominated by a number of long term
contracts.
During 2002 all UK flight operations continued to perform
well, achieving and, in many cases, exceeding the customer’s
contractual requirements. The £24m Falcon 20 fleet upgrade
programme funded by the Ministry of Defence is now well
underway, with the first aircraft, containing the full
equipment fit, scheduled to commence pre-flight testing in
the first quarter of 2003.
The year produced a strong trading performance from the
businesses in Australia. Flight Operations and Services continued
26 26 26
National Air Support (NAS) which focuses on government
and special mission aviation opportunities in Australia and
the region, continued to strengthen during 2002 with record
levels of flying hours achieved. During the year NAS signed a
three year contract extension with the Australian Customs
Service for a continuation of this higher level of flying
through to 2005. NAS ended the year with a further contract
to install an Inmarsat system into the fleet of five Dash 8
aircraft. These will be the first civil maritime surveillance and
border protection aircraft to field such a system and will allow
the transmission of real time video, still images, radar , voice
and data from the patrolling Coastwatch aircraft via satellite
direct to the Customs National Surveillance Centre.
National Jet Systems (NJS) continues to expand the
provision of its services to the buoyant resources sector .
During the year NJS entered into a new five year support
contract with Santos, Australia’s largest natural gas producer ,
building on an existing twelve year contractual relationship.
NJS also secured two new contracts, with Newcrest and 
Rio Tinto. The company is providing aviation services 
during the two year construction phase of the giant Newcrest
Telfer Gold Mine in Western Australia, thus placing it in a
strong position to secure the long term contract in support of
the production phase of what is expected to become
Australia’s largest gold mine. A two year contract has been
secured to support the newly opened Rio Tinto West Angelas
iron ore mine.
NJS continues to maintain an excellent relationship with
Australian Air Express in cargo operations on the back of an
acknowledged exemplary operational performance,
providing a sound basis for current discussions regarding a
possible extension to 2010 of the existing five year contract
for the provision of three BAe 146 freighters.
New hangar facilities were opened at both Adelaide and
Brisbane during 2002 and the year was concluded with the
winning of South Australia’s Employer of the Year Award.
Left: FBS secures an expansion of the DHFS
contract, whilst FBH develops its helicopter
services overseas.
F ar right: FR A viation Services’ “Tank Devils”
continues to expand, providing specialist fuel
tank services to military and civil customers.
Below right: National Jet Systems and 
National Air Support operate a combined 
fleet of 43 aircraft for the Australian Customs
Service and other civil organisations. 
Business Review continued
“The FR Aviation group had a satisfactory
year as it transitioned out of aircraft
maintenance and overhaul, and focused
on its core service provision of specialist
flight operations.” COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 27
AVdef, our French based joint venture, had a very successful
year . Its order book has grown significantly with extensions 
to existing contracts through to 2006 and the addition of a
new three year contract for the supply, operation and
maintenance of drone targets for the French test ranges
worth m5.4m. Further growth is anticipated in 2003 as 
a result of the current trend towards contractorisation 
in France.
FR Aviation’s joint venture with Bristow Helicopters, FBS, has
successfully completed its fifth year of a fifteen year support
contract to the UK Defence Helicopter Flying School (DHFS)
at RAF Shawbury, RAF Valley, and the School of Army
Aviation at Middle Wallop. It continues to provide exceptional
levels of aircraft availability with its fleet of thirty-eight 
AS 350 Squirrel and nine Bell 412 Griffin aircraft. An
expansion of this contract will see a further two Bell 412
Griffin helicopters enter service in 2003.
2003 will also see an expansion of another joint venture with
Bristow Helicopters, FBH, following the award of two
contracts during the year for the provision of helicopter
support to the British Army in Belize utilising three Bell 212
helicopters and British Forces in Cyprus, utilising four Bell 412
helicopters. Both of these contracts commence on 1 April
2003 and run for three and five years respectively.
Flight Precision had another successful year which included
the introduction of a third new Beech King Air 200 flight
inspection aircraft into service in the UK in support of its ten
year Ministry of Defence contract. They also renewed many
existing contracts, including a five year contract with
National Air Traffic Services to inspect the UK’s en route
navigation aids and landing systems at BAA airports.
During the year , FR Aviation Services (FRAS) concluded a 
six year contract with BAE SYSTEMS for the maintenance of
the existing Nimrod aircraft at RAF Kinloss. FRAS has been
involved with supporting the Nimrod fleet since 1995 and
currently employs in excess of 100 engineers in the various
forms of maintenance work undertaken on the Nimrod.
The company’s fuel tank repair capability, which operates
mainly in the UK and mainland Europe, providing specialist
fuel tank services to both military and civil customers,
continues to expand, and ended the year positively by
securing a major contract with FedEx on their A310 fleet.  28
Research and development expenditure
£31.6m
£28.2m
£21.6m
£20.1m
£16.5m
T echnology and Product Development
28
Throughout the history of the group, there has been a strong commitment to 
technology and product development which annually amounts to approximately 6% of
Manufacturing/Avionics sales. This level of investment has resulted in a comprehensive
range of innovative products and services which have significantly advanced knowledge in
the Aerospace and Defence industry.
In Avionics, the research and development activities can be divided into two specific areas.
The first is the continued development of new products to enable entry into new market
areas and the second being the further development of existing products. New product
development includes digital radios for law enforcement applications, integrated homing
and direction finding systems for Search and Rescue applications, multiband antennas for
Communications, Navigation and Identification (CNI) applications and the Chelton Flight
Systems synthetic vision EFIS.
Flight Refuelling group is actively involved with the UK Department of Trade & Industry in a
number of research programmes. These include the work on More Electric Aircraft (MEA)
which aims to optimise hydraulic and electrical power systems on a wide range of
commercial and military aircraft, Distributed Electrically Actuated Wing System (DEAWS)
which involves a number of other aerospace companies and research into power by light of
fuel system components for use in intelligent fuel management systems.
A small group working with the Shell Exploration Company has developed technology which
enables the retrieval of data, and control of pipeline equipment by using the pipeline itself
as the medium for data transmission.
In the USA, Carleton Technologies is developing advanced technology in the further
application of pneumatics to actuation systems, typically serviced by either electrical or
pyrotechnic technologies, and the application of gas generation and storage technology to
inert aircraft fuel tanks.
28
Business Review continued
2002
2001
2000
1999
1998 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 29
Our People
COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 29
2002 has been a successful, exciting, yet challenging year for Cobham and its group
companies. It is against this background that our people development strategy during this
year has been centred throughout the group. 
There are many examples of development programmes aimed at young people. This is a
deliberate policy, its purpose is simple – to develop potential and talent for the future. This
policy has been implemented in many guises, including a growing Advanced Modern
Apprenticeship programme at Flight Refuelling which has a strong link with the Royal Naval
Engineering Training Centre (Flagship) at Portsmouth. Westwind Air Bearings has
continued to develop its apprentice programme, which now includes a fully accredited
training centre which has led to recognition of a National Training Award. In Chelton,
Johanna Norcott was awarded an Engineering Award for Women by the Institution of
Incorporated Engineers. 
Links with schools, colleges and universities continues to grow within the Cobham group
across the world, from Conax and Carleton in the USA, NJS in Australia, Omnipless in South
Africa and to all the UK based companies. The Young Enterprise initiative figures highly in
our priorities, Cobham being the main sponsor in Dorset for this exciting programme
designed to bring business focus to the classroom.
At Cobham, we recognise that strong leadership, integrity and openness is an integral part
of the organisation’s well being. Leadership is the ability to motivate, to do the right thing,
to create the right environment for people to want to follow and promote business
improvement. It is this vision and these values that has led to the implementation of the
Cobham, Managing for Excellence Programme which reinforces our commitment to our
employees through development and training.
Cobham’s people contribute to the organisation’s success and growth through continual
improvement activities, such as Investors In People, the EFQM business model which
supports the Cobham Five Year Planning Process and workplace representative groups
which support employee relations.  30 30
Financial Review
Financial Record
•
In each of the three year periods since 1997 total
shareholder returns have been in the top quartile of
Cobham’s comparator group. In the last three year period
to the end of 2002 Cobham was ranked first in total
shareholder return. The comparator group comprised the
companies in the FTSE engineering sector index prior to
2000, and the FTSE All Share aerospace and defence
sector and the engineering and machinery sector after
1999.
•
Operating Cash Flow £135.9m (2001 – £90.2m), which is a
conversion rate of 129.7% (2001 – 93.8%) to operating
profit (excluding joint ventures and associates)
•
Free cash flow (as defined later) £7 4.7m (2001 – £27 .0m)
•
Underlying profit before tax up 11.4% to £115.3m 
(2001 – £103.5m) and profit before tax up 13.6% to
£99.4m (2001 – £87 .5m)
•
Underlying earnings per share up 14.2% to 86.1p 
(2001 – 75.4p) and basic earnings per share up 18.5% to
70.4p (2001 – 59.4p)
•
Return to shareholders by way of dividends has increased
by 10.2%.
Turnover Analysis
The table below analyses turnover into the various end
market categories of which military remains the largest.
2002 2001
% %
Military 49 44
Commercial Aerospace 17 17
General Aviation 5 5
Outsourcing – non military 12 11
Government – non military 8 6
Industrial, including Westwind 5 12
Marine/Space 4 5
Acquisitions
During the year the group made a number of acquisitions for
a cash consideration of £32.8m with deferred and contingent
consideration estimated at £3.2m. 
The largest of the acquired businesses was the purchase of
LPC from BAE SYSTEMS for £30.0m in cash subject to a net
asset adjustment which was agreed at an additional £1.8m in
February 2003. This transaction completed on 31 December
2002 and has therefore been incorporated into the 2002
balance sheet. There was no impact on the 2002 profit and
loss account.
“ In my last review prior to retirement as
Group Financial Director , it is pleasing
to report that in 2002 further success
was achieved in the most important
business metrics, despite the well
documented slow down in the
commercial aircraft market. ”
Giles Irwin COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 31
Acquisitions continued
Turnover from those businesses acquired during 2002
amounted to £3.8m on which an operating profit of £0.3m
was recorded. 
It was also announced that contracts had been exchanged to
acquire Dräger Aerospace for m28.4m, of which m3m will be
payable three years from the completion date. Completion is
expected, subject to regulatory and other approvals, in the
first half of 2003.
Results
Group turnover increased by 1.8% to £734.6m (2001 –
£721.8m). Excluding amortisation of goodwill of £12.6m (2001
– £11.8m) and integration costs of £3.2m (2001 – £4.1m),
group operating profit increased by 7 .6% to £120.6m (2001 –
£112.1m). The share of operating profit from joint ventures
and associates before goodwill amortisation of £0.1m (2001 –
£0.1m) reduced from £5.1m in 2001 to £4.9m in 2002 due to
the losses incurred in the repair and overhaul business
transferred at the end of 2001 to our associate, BASCO.
Selling and distribution costs remained steady in the year , but
still represented about 5% of turnover , whilst administration
expenses (excluding goodwill amortisation) reduced from
7 .8% to 7 .4% of turnover .
Profit on ordinary activities before tax amounted to £99.4m
(2001 – £87.5m). An 11.4% increase was achieved in
underlying profit of £115.3m (2001 – £103.5m) which excludes
the amortisation of goodwill of £12.7m (2001 – £11.9m) and
integration costs of £3.2m (2001 – £4.1m).
Net interest costs, including those of joint ventures, reduced
from £13.7m to £10.2m as a result of lower borrowings and
interest rates. 
Taxation
The tax charge of £27 .9m (2001 – £27 .7m) on the profit before
tax of £99.4m (2001 – £87 .5m) represents a rate of 28.1%
(2001 – 31.7%). Excluding goodwill amortisation of £12.7m
(2001 – £11.9m), and the prior year tax credit of £4.5m (2001
– £0.6m), the effective rate for the year would be 28.9%
(2001 – 28.5%). This adjusted tax charge is lower than the
prevailing tax rates primarily because part of the goodwill
charge is an allowable expense for taxation, a benefit has
arisen from the newly introduced tax credit for research and
development and also because of the tax deduction on the
contribution to the Qualifying Employee Share Trust
(“QUEST”). In addition, in 2002 agreement was received from
the Inland Revenue concerning a previously outstanding
matter for which the group had not taken benefit through 
the profit and loss account. Further details on the tax 
charge can be found in note 5 to the financial statements.
Full provision has been made for deferred taxation as
required by FRS 19 and the opening balance sheet has been
restated for this accounting policy change to increase the
deferred tax provision by £2.9m.
Dividends
The directors are recommending a final ordinary dividend of
18.0p per share (2001 – 16.33p) which represents an increase
of 10.2% on last year . If approved by shareholders, this will
result in a total dividend of 25.6p per share (2001 – 23.23p),
also an increase of 10.2%.
The total ordinary dividend for the year will absorb £25.9m
(2001 – £23.6m) leaving profit retained of £45.3m (2001 –
£36.0m). The total dividend is covered 2.75 times by profit
attributable to shareholders.
Earnings per Share
The basic earnings per share increased by 18.5% to 70.4p
(2001 – 59.4p) whilst the fully diluted earnings per share
amounted to 69.9p (2001 – 58.8p). However , after adjusting for
the amortisation of goodwill of £12.7m (2001 – £11.9m) and the
integration costs of £3.2m (2001 – £4.1m), underlying earnings
per share increased by 14.2% to 86.1p (2001 – 75.4p).
Financing
During 2002, the group financed its operations and
acquisitions from internally generated funds and borrowings.
At the year end, the net debt of the group as defined by 
FRS 1 was £188.8m (2001 – £207 .7m). Included in this figure
are all amounts owing under bank loans, debenture loans,
finance leases and other borrowings. This level of debt
represents a gearing level of 52.6% (2001 – 66.3%). Net
interest cover is at a prudent level of 10.7 times (2001 – 7 .4)
based on profit before tax after goodwill amortisation.
The Australian subsidiaries have a number of operating
leases for the provision of aircraft which are used to provide
services to third parties under back-to-back contracts. The
major customers are Qantas Airlink, Australian Air Express
and the Australian Government Customs Service. Of the
£24.9m aircraft lease cost in 2002 (2001 – £27 .3m) these
customers accounted for £18.8m (2001 – £20.6m) of the
total. The remainder of the costs emanated from back-to-
back contracts with other customers and the leasing of spare
parts and engines.
The group had four main borrowings outstanding at the year
end. These were:
(a) a private placement of Cobham guaranteed senior notes.
This placement raised US$50m in March 1996. The
facility comprises two series of notes for US$25m, one
with an average life of seven years and the other with an  32
Financial Review continued
Financing continued
average life of ten years. These notes carry a fixed
interest rate of 6.28% for the seven year notes and
6.42% for the ten year notes. Principal repayments to
date amount to US$10m with a further US$5m
repayment due in March 2003.
(b) a private placement of Cobham guaranteed senior notes.
This placement raised US$225m in October 2002. The
facility comprises two series of notes. The first is for
US$55m which has a bullet repayment in seven years and
the second is for US$170m which has a bullet repayment
in ten years. The notes carry a fixed interest rate of 5.14%
in respect of the seven year notes and a rate of 5.58% in
respect of the ten year notes. These fixed rates were
swapped into rates that vary with LIBOR and for the first
six months the rates are 2.7 4% and 2.73% respectively.
(c) a £200m club multi currency credit agreement was
entered into in December 2002. The borrowings carry a
variable rate of interest. At the end of 2002 £30.3m had
been drawn under this agreement. The facility is
repayable in full in January 2008.
(d) an Australian dollar borrowing of A$49m outstanding at
31 December 2002. The interest rate is fixed at 6.63%
and the loan in being repaid in monthly instalments to 
30 June 2005, with a final payment of A$30.7m at that
date. The loan, converted from a US$38m facility during
the year, was used to finance the acquisition and
modification of two aircraft for the Australian Coastwatch
contract.
Cash Flow
I have stated previously that high priority is given to cash
management throughout the group. It is therefore
particularly noteworthy to highlight the operating and free
cash flow generated in 2002 shown in the following
summary. The operating cash flow amounted to £135.9m
(2001 – £90.2m), which is 129.7% (2001 – 93.8%) of operating
profit, and £7 4.7m (2001 – £27 .0m) of free cash flow was
generated.
Control over working capital continues to be a major focus
within the operating companies and some success was
achieved in 2002. The need to deliver on time and to hold
emergency stocks required under customer contracts has to
be balanced against the financial goal to reduce inventories.
Excluding the impact of acquisitions, there was an increase in
stocks of £10.8m. As was the case in 2001, a substantial
amount of business was invoiced in the latter part of 2002.
However year on year there was a decrease of £1.4m in
debtors. In addition the movement in creditors amounted to
an increase of £6.7m.
The net cash outflow in respect of tangible and intangible
fixed assets was £29.0m (2001 – £27 .8m). This continues the
trend of investing in our operating companies at a level
higher than the annual depreciation charge. 
Further details on the cash flows and movement in net debt
of the group is given in notes 24, 25 and 26 of the financial
statements. A summary of the change in net debt is set 
out below:
2002 2001
£m £m
Operating Profit
*
104.8 96.2
Depreciation 26.4 26.1
Amortisation of goodwill and intangibles 13.1 12.3
Profit on sale of fixed assets (2.0) (0.8)
Net provisions for liabilities and charges (4.4) (3.5)
Long term incentive plan 0.7 1.0
Increase in working capital (2.7) (41.1)
Cash inflow from Operating Activities
*
135.9 90.2
Net capital expenditure and financial investment (29.0) (27.8)
Net interest paid (8.6) (12.4)
T ax paid (23.6) (23.0)
Free Cash Flow 74.7 27.0
Dividends paid (24.2) (21.2)
Net cash outflow for acquisitions (38.8) (62.8)
Shares issued – net of expenses 4.8 3.3
Loans of subsidiary undertakings acquired – (1.1)
Exchange movements 2.4 (1.1)
Decrease/ (increase) in Net Debt 18.9 (55.9)
*
After integration costs of £3.2m (2001 – £4.1m).
Pensions
The group has continued to comply with the requirements of
SSAP 24 “ Accounting for Pension Costs”. Included within the
balance sheet at 31 December 2002 is an amount of £15.2m
which represents the pension asset, net of deferred tax, on
the SSAP 24 basis.
FRS 17 “Retirement Benefits” was issued in November 2000
but transitional arrangements permit the disclosure only of
certain pension valuation information. On the basis required
to be adopted under FRS 17 , the funding position of the
group’s pension schemes shows that, net of deferred tax,
liabilities exceed assets by £46.6m.  COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 33
Pensions continued
The group’s pension position under the accounting 
standards SSAP 24 and FRS 17 are significantly different as a
result of the application of the different assumptions and
methodologies required under each. The board has decided
(as have many others) that full adoption of FRS 17 should be
deferred, as allowed by the Accounting Standards Board,
pending the completion of the review of the corresponding
international standard.
The long term funding basis adopted under the main UK
pension scheme showed the scheme to be in surplus at 1 April
2001. With effect from 1 January 2002 an increase in the
employer contribution rate of approximately 0.5% of
pensionable salaries was implemented, and a further review
of the contribution rate will take place in June this year . The
defined benefit section of the scheme was closed to new
members from 1 January 2003.
The latest actuarial valuation of another UK pension plan at 
1 April 2002 showed a funding deficit and accordingly the
group will be making additional funding payments of
approximately £200,000 per month in 2003 through to mid
2006 to reduce the funding shortfall.
Foreign Exchange 
The group’s policy is to reduce, or eliminate where
practicable, foreign exchange risk. The pound sterling/US
dollar exchange rate is the most important as far as the
group is concerned. This is due to the level of US dollars
which the UK and European subsidiaries expect to receive
from their business activities and to the level of investment in
operating companies based in the USA. Dollar denominated
borrowings help to mitigate the foreign exchange risks faced
by the group. All significant foreign exchange transactions
are approved by the parent company and in addition to the
borrowing structure a number of financial instruments are
used to manage the foreign exchange position, such as
forward rate contracts and options.
A number of outstanding transactions were in place at the
end of 2002, the most significant of which were the forward
sale of: 
(a) US$50m at rates between 1.4330 and 1.4399 during the
years 2003 and 2004.
(b) US$1m each month from 2003 to 2005 at the rate of
1.3925.
(c) US$1m each month from 2003 to 2007 at a rate of
1.4885.
Prior to its acquisition in 2001, TEAM SA entered into a five
year agreement to account for exchange differences arising
from the following contractual terms. At 31 December 2002,
the outstanding commitment is expected not to exceed
US$72m over the next three years in accordance with the
following rate structure:
•
if m1 is over $1.112, then each $1 would generate m0.899
•
if m1 is under $1.112 but over $1, then each $1 would be sold
at the prevailing spot rate
•
if m1 is under $1 but over $0.868, then each $1 would
generate m1
•
if m1 is under $0.868, then each $1 would generate m1 plus
the amount by which $1 was under m0.868.
In addition, in 1997 Cobham agreed to swap US dollars for
sterling at the rate of 1.6263 over the period to 2012 with
US$95m of the commitment outstanding at 31 December
2002. Approximately US$13m of the commitment exists in
2003, US$53m from 2004 to 2007 with the balance of
US$29m over the remaining five years. It is the group’s
current belief that the net dollar receipts from its subsidiaries
will exceed the level of the outstanding commitment.
Going Concern
The group’s finances are sound and the balance sheet
remains strong. Accordingly, after making enquiries, the
directors have formed a judgement at the time of approving
the financial statements that there is a reasonable
expectation that the company and the group as a whole have
adequate resources to continue in operational existence for
the foreseeable future. For this reason they continue to adopt
the going concern basis in preparing the financial
statements. 
Giles Irwin Group Financial Director
20 March 2003 34
G F Page CBE, MA, FRAeS Chairman
Appointed to the board in 1990, Gordon Page, aged 59, joined the group as managing director of Flight Refuelling Limited having
previously been commercial director – military engines of Rolls-Royce plc. He was appointed deputy chief executive in 1991, chief
executive in 1992 and chairman in November 2001. He is a non-executive director of Amey plc, president of The Society of Britis h
Aerospace Companies Ltd (previously president 1997 /98), a member of the Department of Trade and Industry’s Industrial Development
Advisory Board, president-elect of the Chartered Management Institute and chairman of the Wessex branch of the Institute of Directors.
A E Cook BSc, CEng, FRAeS Chief Executive 
Appointed to the board in 2001, Allan Cook, aged 53, joined the group from BAE SYSTEMS where he was group managing director of
programmes and managing director Eurofighter . He was formerly group managing director of GEC-Marconi Avionics and chief executive
of Hughes Aircraft (Europe). He is also a director of The Society of British Aerospace Companies Ltd.
A G Irwin FCA Group Financial Director 
Appointed to the board in 1983, Giles Irwin, aged 59, joined as group financial director – a position he continues to hold. Prior to joining
Cobham, he acted as both a financial director and chief financial officer of a number of listed multinational companies.
R H L Clark Managing Director , Flight Refuelling Limited
Appointed to the board in 1995, Robin Clark, aged 57 , joined the group as commercial director of Flight Refuelling Limited in 1981. He is
managing director of that company, having been appointed in 1991, and is responsible to the board for the performance of the Flight
Refuelling group. He is also a director of The Society of British Aerospace Companies Ltd and a member of the Department of Tra de and
Industry’s Aerospace Committee.
Board of Directors COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 35
G C Cooper OBE, CPhys, FRAeS, MInstP  Managing Director , Chelton Limited
Appointed to the board in 1995, Geoffrey Cooper , aged 57 , joined the group as managing director of Chelton Limited – a position he
continues to hold – on the acquisition of that company in 1989. He is responsible to the board for the performance of the Chelton group.
A J Hannam Managing Director , FR Aviation Group Limited
Appointed to the board in 2002, Alex Hannam, aged 56, joined the group as managing director of FR Aviation Group Limited in that year .
Prior to joining, he was managing director of Alenia Marconi’s radar systems division, a position he had held since 1995. He is responsible
to the board for the performance of the FR Aviation group.
J D M Smith BSc  Senior non-executive Director
Appointed to the board as a non-executive director in 1996, Mike Smith, aged 63, is a non-executive director of Bullough plc and 
P Z Cussons plc, and a former director of BTR plc.
J W Edington PhD, DSc, FIM, FREng  Non-executive Director
Appointed to the board as a non-executive director in 1996, Jeff Edington, aged 63, was, until his retirement, executive director ,
technology with Corus Group plc (formerly British Steel plc) where he had responsibility for product and process technology, th e
environment and information technology. Prior to joining British Steel in 1992, Mr Edington was vice-president, research and te chnology
at Alcan Aluminium Limited based in Montreal. He is also a non-executive director of AstroPower Inc.
P Hooley FCA, MSc  Non-executive Director
Appointed to the board as a non-executive director in 2002, Peter Hooley, aged 56, is group finance director of Smith & Nephew plc, 
a position he has held since 1991. He was a non-executive director of Powell Duffryn plc from 1997 to 2000.
Left to right
R H L Clark
J D M Smith
J W Edington
A G Irwin
G F Page
A E Cook
A J Hannam
P Hooley
G C Cooper
Below
J M Pope 
Company Secretary 36
Directors, Officers and Advisers
Directors of Cobham plc
G F Page CBE, MA, FRAeS °
Chairman
A E Cook BSc, CEng, FRAeS °
❑ Chief Executive
A G Irwin FCA
❑ Group Financial Director
R H L Clark 
❑ Managing Director , Flight Refuelling Limited
G C Cooper OBE, CPhys, FRAeS, MInstP 
❑ Managing Director , Chelton Limited
A J Hannam 
❑ Managing Director , FR Aviation Group Limited
J D M Smith BSc 
†
*°
J W Edington PhD, DSc, FIM, FREng 
†
*°
P Hooley FCA, MSc 
†
*°
†
Member of the remuneration committee
*
Member of the audit committee
°
Member of the nomination committee
❑ Member of the executive committee
Officers and Advisers
President
Sir Michael Cobham CBE, MA, Barrister , FRAeS
Secretary
J M Pope LLB, FCIS, Solicitor
Auditors
PricewaterhouseCoopers LLP
Principal Group Bankers
Barclays Bank PLC
Financial Advisers and Stockbrokers
Dresdner Kleinwort Wasserstein
Solicitors
CMS Cameron McKenna COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 37
Directors’ Report
The directors have pleasure in submitting their report together with the audited financial statements of the group for the year ended 
31 December 2002.
Dividends
An interim dividend of 7 .60p per ordinary share (2001 – 6.90p) was paid in December 2002. The directors are recommending a final
dividend of 18.0p per ordinary share (2001 – 16.33p) payable on 4 July 2003 to ordinary shareholders on the register as at 6 June 2003,
making a total ordinary dividend for the year of 25.60p (2001 – 23.23p). It is proposed that the retained profit of £45.3m be transferred
to the profit and loss reserve.
Principal Activities and Business Review
The principal business of the group is the design and manufacture of equipment, specialised systems and components supplied primarily
to the aerospace, defence, industrial and communications markets – and the operation, maintenance and modification of aircraft,
particularly in relation to special mission flight operations.
A review of the business, together with an indication of likely future developments, is included in the chairman’s statement on pages 6
and 7 , the chief executive’s review on pages 8 to 10, the business review on pages 12 to 29 and the financial review on pages 30 to 33.
Board of Directors 
The current directors are named on page 36. They held office throughout the year with the exceptions of Peter Hooley and Alex Hannam
who were appointed on 12 June 2002 and 15 July 2002 respectively. In addition, the Lord Rockley and Geoff Roe were directors until 
12 and 30 June 2002 respectively. 
The directors retiring by rotation at the annual general meeting are Giles Irwin and Jeff Edington who, being eligible, will offer
themselves for re-appointment. Mr Irwin’s service contract with the company will expire on his 60th birthday in July 2003. Mr Edington
does not have a service contract with the company.
Peter Hooley and Alex Hannam will retire at the annual general meeting in accordance with article 111 and will offer themselves for 
re-appointment. Mr Hooley does not have a service contract with the company. Mr Hannam has a service contract with FR Aviation
Group Limited which is terminable by either party giving 24 months’ notice if given on or before 15 July 2003 and thereafter by either
party giving 12 months’ notice at any time.
Directors’ Interests 
None of the directors is or was materially interested in any significant contract during or at the end of the financial year particulars of
which are required to be disclosed by the Companies Act 1985 or the Financial Services Authority’s Listing Rules.
Details of directors’ share interests and of their rights to subscribe for shares are shown in the directors’ remuneration report on pages
47 to 49.
Corporate Governance
This statement describes how the company has applied the principles of good governance set out in section 1 of the combined code on
corporate governance annexed to the Listing Rules of the Financial Services Authority (“the Code”); it also contains a statement
regarding compliance with the provisions set out in section 1 of the Code.
Directors: The Cobham board currently comprises the chairman, the chief executive, four other executive directors and three 
non-executive directors of whom Mike Smith is recognised as the senior member . Short biographical notes in respect of each director
are contained on pages 34 and 35 and these demonstrate a wide range of relevant experience.
Board members have access to the advice and services of the company secretary and, if required, independent external advice at the
company’s expense in connection with the furtherance of their duties as directors. No external advice was sought during the year.
The board as a whole meets regularly during the year to make and review major business decisions and to monitor and test the
operational performance of the group in accordance with the schedule of matters reserved by the board for its decision. There is regular
contact between meetings to progress the group’s business.
To assist in the discharge of its duties and responsibilities, the board has established a number of committees, the most significant of
which are the audit, remuneration, nomination and executive committees. Each committee has its own terms of reference and meetings
take place on a regular basis throughout the year save in the case of the nomination committee, the meetings of which take place as
required.  38
Corporate Governance continued
The respective roles and responsibilities of the chairman and chief executive are clearly understood and the board’s policy is that these
two positions should normally be held by different people. In addition to his other duties, the chairman is responsible for carrying out a
formal review of the board’s effectiveness on an annual basis.
The board and its committees receive relevant and appropriate information relating to the business to be transacted in sufficient time
to enable it to be fully considered. Additional information is made available to all directors if requested and reports in respect of the
group’s activities and performance for those months during which a meeting of the board is not scheduled to take place are routinely
circulated to all directors.
The nomination committee is responsible for recommending new directors, both executive and non-executive, to the board. In
appropriate cases recruitment consultants are used to assist in the process and normally no offer of a directorship is made before all
board members have had a reasonable opportunity to meet the prospective director concerned. The membership of the committee
consists of Gordon Page (chairman), Allan Cook, Mike Smith, Jeff Edington and Peter Hooley.
The executive committee develops the group’s strategy for board approval, makes recommendations as to acquisitions and divestments
and reviews operational activities. Membership of the committee comprises all the executive directors, with the exception of Gordon
Page, and the chief executive is the committee’s chairman.
Non-executive directors are initially appointed for three years and, under the articles of association, all directors are required to retire
at least every three years. Directors who have reached the age of 70 are required to retire, and not to seek re-appointment, at the annual
general meeting following their seventieth birthday. 
Directors’ Remuneration: Information on the company’s policy with regard to executive directors’ remuneration, the role and function
of the remuneration committee, and details of the remuneration of each executive director are contained in the directors’ remuneration
report on pages 42 to 49. A committee of the board comprising executive directors is responsible for determining the fees of the 
non-executive directors within the limits contained in the articles of association.
Relations with Shareholders: The company welcomes discussions with shareholders where practicable. During the year the company
made presentations to fund managers both in the UK and overseas and received a number of visits. Presentations to analysts and others
were also made following the announcements of the full and half year’s results and at other times during the year .
Shareholders have the opportunity to question the chairmen of the board and of the principal board committees at the company’s
annual general meeting and also to receive at that meeting the chairman’s statement as to any significant developments during the year
to date. Information relating to the level of proxies lodged at the 2002 annual general meeting was formally announced to shareholders
after each resolution had been dealt with on a show of hands and was subsequently reported on the company’s website.
Accountability and Audit: The chairman’s statement, the chief executive’s review, the business review and the financial review on pages
6 to 33 contain information relevant to an assessment of the company’s position and prospects. Statements regarding the directo rs’
responsibilities for preparing the company’s financial statements and the auditors’ responsibilities for reporting on them are set out on
pages 50 to 52. The directors’ going concern statement is set out on page 33.
The board is responsible for the group’s system of internal control the aim of which is to manage risks that are significant to the
fulfilment of the group’s business objectives and to contribute to the safeguarding of shareholders’ investment and the company’s
assets. It is also responsible for reviewing the effectiveness of the system. However , such a system is designed to manage rather than
eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material
misstatement or loss.
The board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the group.
This process has been in place for the year under review and up to the date of approval of the annual report and financial statements
and accords with the guidance for directors on internal control issued by the Turnbull Committee. It comprises, among other things, an
assurance programme based around significant risks and key procedures/control processes. Integral to the process are the Group
Finance Manual and the Corporate Framework which contain comprehensive policies of a financial and non financial nature. The board
has appointed a senior executive, the director of special projects, with particular responsibility for the operation of the system. During
the year the group executive undertook a top-level review of significant risks and risk management has been embedded into the group’s
management process through the adoption of a requirement for subsidiaries to carry out formal risk management assessments as part
of the annual five year planning exercise. The board regularly reviews the effectiveness of the internal control process by means of
reports either to it or to the audit committee. In addition, the audit committee receives and considers an annual report from the director 
Directors’ Report continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 39
Corporate Governance continued
of special projects and reports thereon to the board. The audit committee has, accordingly, conducted a review on behalf of the board
of the effectiveness of the group’s system of internal control in respect of 2002. 
The audit committee comprises Peter Hooley (chairman), Mike Smith and Jeff Edington, all of whom are considered to be independent
non-executive directors. The committee normally meets on three occasions during the year and the auditors attend meetings twice
yearly at which they present reports on internal control and other matters. The group financial director attends all meetings but is not
present throughout. Relationships are such that, if there are any particular concerns, the auditors are able to approach the chairman of
the committee directly to air them.
The audit committee selects the auditors, approves their fees, and reviews their performance, independence and objectivity. The
auditors may carry out non-audit work such as in relation to borrowings and shareholder circulars, taxation and, on occasion, due
diligence in connection with acquisitions. 
Compliance Statement: Throughout the year ended 31 December 2002 the company has complied with the provisions set out in 
section 1 of the Code except as follows: 
Code Provision A.2.1: The Lord Rockley was recognised as the senior non-executive director until his retirement on 12 June 2002.
However , he was not considered to be independent in view of his length of service as a director . Mike Smith has been the senior 
non-executive since that date and he is considered to be independent.
Code Provision B.1.7: For the reason given in the directors’ remuneration report on page 45, the board does not have as an objective the
reduction of Robin Clark’s notice period to one year or less.
Code Provisions B.2.1/2: As a result of the membership of Lord Rockley until his retirement on 12 June 2002, the remuneration
committee did not consist exclusively of independent non-executive directors throughout the year for the reason given above. The
remuneration committee has consisted exclusively of independent non-executive directors since that date.
The auditors have, as mentioned in their report on page 51, reviewed whether or not this statement reflects the company’s compliance
with the seven provisions of the Code specified for their review by the Financial Services Authority.
Share Capital
Details of movements in the share capital of the company during the year are given in note 21 to the financial statements.
The company is not a close company within the meaning of the Income and Corporation Taxes Act 1988.
Research and Development
The group continues to invest in the important area of research and development. During the year the group expended £31.6m 
(2001 – £28.2m) on non customer funded research and development. The management of each of the group’s businesses is responsible
for identifying and carrying out research and development programmes which are suitable having regard to particular market and
product needs.
Further information on research and development appears on page 28.
Major Interests in Shares
Major interests in the issued ordinary share capital of the company appearing in the register maintained in accordance with Sec tion 211
of the Companies Act 1985 as at 20 March 2003 were as follows:
Percentage
Number of at date of
Shares Notification
FMR Corp and Fidelity International Limited 9,719,333 9.57%
Sir Michael Cobham 5,020,062 4.94%
Scottish Widows Investment Partnership Limited 3,967,748 3.91%
Legal and General Investment Management Limited 3,508,087 3.46%
AVIVA plc (formerly CGNU plc) 3,299,692 3.25%
Standard Life Investments Limited 3,278,294 3.23%
Aegon Investment Management 3,178,499 3.13%
Other than the above interests the directors are not aware of any notifiable interest in the issued ordinary share capital of the company
of 3% or more. 40
Employment
The group’s employment policies include a commitment to equal opportunities regardless of sex, race, colour , national or ethnic origin,
disability, and other forms of discrimination. With regard to employees who become disabled, the policy is to take all reasonable steps,
including retraining, to ensure that they can remain in employment, wherever practicable.
The importance of employee development and training is recognised and group businesses are required to encourage employees to take
advantage of available and relevant training programmes and opportunities for advancement. Further information on employee
development programmes appears on page 29.
The process of employee involvement is different in each operating company and has been developed over the years by local
management working with employees in ways which suit their own needs in their particular environment. This may involve the
publishing of in-house newspapers, notice board announcements, management briefings, meetings with locally elected committees of
employees, the holding of social functions and the running of sports and social clubs.
UK employees are given the opportunity to become shareholders in the company through the Cobham Savings Related Share Option
Scheme. Selected UK and overseas employees may become shareholders through participation in the Cobham Executive Share Option
Scheme.
Environment 
The group has adopted an environmental policy under which it is committed to meeting legislative requirements, to the prevention of
pollution and to the continuous improvement of its environmental performance.
The chief executive has been appointed as the main board member with overall environmental responsibility whilst, at the operating
company level, the responsibility for ensuring compliance with the environmental policy lies with the appropriate subsidiary board. The
Cobham environmental steering group is chaired by the chief executive, supported by the director of special projects and environmental
representatives from each of the sub-groups. Its role is to ensure the implementation of policy, major initiatives and the regular
reporting of environmental measures.
In order to meet its commitments the group will continue to implement environmental management systems in those companies across
the group where such controls are desirable. In 2002 the South Molton site of FR-HiTEMP was added to those sites already accred ited
as having met the requirements of the internationally recognised standard for environmental management systems – ISO 14001. During
2002 the group also decided upon a selection of criteria to identify which other group companies would benefit from the
implementation of an environmental management system. These criteria include whether the site carries out prescribed processes 
(i.e. processes that require monitoring and reporting to a regulator), whether the site stores hazardous liquids with the potential to 
cause environmental harm, and whether the site is in a particularly sensitive area. 
To address the difficulties of collating data from business units spread across the globe, the group has developed standard
methodologies to report on the key environmental impacts regarding energy use, water consumption, and the generation of waste.
These methodologies have now been disseminated across the group in order to commence the collection of data for the whole group 
in 2003.
To improve emergency preparedness, key staff from several sites in the UK received training in environmental legislation, correct spill
response methods and appropriate disposal methods. This training will be reinforced in 2003 by carrying out controlled emergency
exercises.
Several initiatives to improve environmental protection equipment took place across the group in 2002. Business activities require the
storage of bulk hazardous liquids, and improving storage arrangements was seen as a priority in several group companies. Flight
Refuelling (Wimborne) and FR-HiTEMP (South Molton) have improved the storage of oils through investing in high capacity fully b unded
stores, which accommodate drums in racked bays. The stores have ample forklift access and steel sliding doors to provide security. 
Cobham Fluid Systems in Blandford has carried out a major initiative to improve its fuel tank farm by increasing capacity and p roviding
an automatic warning system. Safety has also been improved through the upgrading of electrical circuits in the fuel house.
Improvements have also been made in the storage of metal swarf, a waste product from manufacturing business units. Two Cobham
manufacturing sites have provided covered storage areas which meet best practice for the storage of this oil laden and potentially
hazardous waste.
Directors’ Report continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 41
Environment continued
Smaller scale environmental initiatives were implemented by various group businesses during 2002. There has been an increase in the
number of companies involved in recycling initiatives. Group companies now recycle metals, office paper , cardboard, fluorescent tubes
and batteries. Water consumption has been reduced at some sites through the installation of self-closing taps, whilst energy efficiency
has been improved through the installation of variable frequency drives on compressors and ensuring that non essential equipment is
shut down when not in use.
At a local level, group companies support the local business community through involvement in environmental groups focused on waste
minimisation and environmental and energy management. One site, which is certified to ISO 14001, gave a well-received presentation to
local businesses and local authorities regarding its experience in implementing an environmental management system. A site in the UK
is assisting a local university in the development of vocationally oriented environmental courses.
The group remains actively involved in the Environmental Special Interest Group of The Society of British Aerospace Companies Ltd,
which has organised seminars and workshops for other aerospace companies on the impact of environmental legislation and other
environmental issues. Membership of the steering group of the Greener-by-Design programme continues. This programme aims to
increase the understanding of the effects of aviation on the environment through consultation with appropriate industrial and
governmental bodies.
The environmental steering group has set objectives for 2003. These include conducting an impact analysis at all sites which meet the
criteria, described above, for implementing an environmental management system and raising environmental awareness among
employees.
Creditor Payment Policy
Payment is generally made by group companies to their creditors in accordance with agreed terms of business provided that those
terms have been met. It is the policy of the parent company that all invoices are paid within 30 days following the end of the month in
which the invoices are approved. The total amount of the parent company’s trade creditors falling due within one year at 31 December
2002 represents 36 days’ (2001 – 23 days) worth as a proportion of the total amount invoiced by suppliers during the year ended on 
that date.
Political and Charitable Gifts
2002 2001
Charitable £36,396 £42,401
No contributions were made to political organisations.
Auditors
Following their conversion to a limited liability partnership, PricewaterhouseCoopers resigned as auditors on 17 February 2003. There
were no circumstances relating to the resignation which were required to be brought to the attention of the company’s members or
shareholders in accordance with the Companies Act 1985. PricewaterhouseCoopers LLP were appointed as auditors on 17 February
2003 and a resolution to re-appoint them as auditors will be proposed at the forthcoming annual general meeting.
Annual General Meeting
The company’s annual general meeting will be held at 12 noon on Wednesday, 11 June 2003 at Painters’ Hall, 9 Little Trinity Lane, London
EC4V 2AD. The notice convening this meeting, together with an explanation of the business to be conducted, is sent to shareholders
separately with this report.
By order of the board
John Pope Secretary
20 March 2003 42
Directors’ Remuneration Report
In accordance with The Directors’ Remuneration Report Regulations 2002 (“the Regulations”), shareholder approval of this
remuneration report will be sought at the forthcoming annual general meeting. The report has been approved by the board.
The remuneration committee, which met on four occasions during the year , determines the remuneration, benefits and terms and
conditions of service of the executive directors and makes recommendations to the board with regard to the company’s policy on
executive directors’ remuneration. The membership of the committee consists of Mike Smith (chairman), Jeff Edington and Peter
Hooley, each of whom is an independent non-executive director . Mr Hooley replaced the Lord Rockley as a member of the committee on
the latter’s retirement at the 2002 annual general meeting.
The committee also considers the remuneration (salary, bonus and share option grants) for senior managers reporting to executive
directors as recommended to it by the chief executive. 
The relationship between the board and the committee is governed by formal terms of reference which have been reviewed and updated
during 2002. Under these terms, the committee is entitled, among other things, to avail itself of external legal or other professional
advice at the company’s expense.
Remuneration Policy
The company’s policy is to recruit, motivate and retain executive directors of high calibre by rewarding them with competitive salary and
benefit packages, increasingly linked to measured performance. More specifically, the current strategy is to position base salaries at the
median of the market and to provide an opportunity to earn a total cash payment (i.e. base salary and annual incentive) at the upper
quartile for high performance. Remuneration is also linked to performance through participation in a long term share incentive plan
which ensures that directors’ interests are closely aligned with shareholders’ interests. In considering remuneration matters, the
committee has received advice from Hewitt Bacon & Woodrow and reports from Executive Remuneration Review (a joint venture owned
by New Bridge Street Consultants and Hewitt Bacon & Woodrow), Inbucon Meis and Inbucon Administration. Hewitt Bacon & Woodrow
were appointed by the committee. None of the foregoing provided other services to the company during the year . However BWCI Trust
Company Limited, formerly Bacon & Woodrow Trust Company (C.I.) Limited, acted as trustee and administrator of the Cobham Employee
Share Trust which was established in 1997 in connection with the Cobham Long Term Incentive Plan. After the year end the committee
appointed New Bridge Street Consultants to provide consultancy on remuneration matters. The committee also consulted with Gordo n
Page and Allan Cook and they attended one or more of the committee’s meetings on matters which did not directly affect them. No
director is involved in deciding his own remuneration. The board, through the committee, will continue to consult with principal
shareholders when it is considering structural changes to its policy on executive directors’ remuneration.
The main elements of directors’ remuneration are described in the paragraphs that follow. Remuneration information and details of
directors’ interests in Cobham ordinary shares are set out in tables 1 to 6 on pages 46 to 49.
Basic Salary
Basic salaries are reviewed annually, usually in November . The committee takes into account internal and external advice and data from
a range of companies as well as personal performance and business responsibilities. The company participates in the annual survey of
directors’ remuneration carried out by Executive Remuneration Review and receives the full survey results together with a pay review
pack in respect of the remuneration of each executive director .
Annual Performance-related Bonus
The company operates an annual cash bonus scheme for its executive directors. Bonuses are awarded by the committee having regard
to the performance of the group, the individual and, in the case of executive directors with specific subsidiary company responsibilities,
the performance of the relevant subsidiaries. Bonuses in respect of the year under review were capped at 60% of basic salary save for
Gordon Page and Giles Irwin whose bonuses were capped at 100% of basic salary in view of their ineligibility, as a result of proximity to
retirement, to receive an award during the year under the Cobham Long Term Incentive Plan. The policy in respect of the payment of
bonuses for 2003 is the same as for 2002 with pro-rata awards being considered for Gordon Page and Giles Irwin.
In the cases of Gordon Page, Allan Cook and Giles Irwin the constituent elements of their bonus plans are earnings per share in excess
of inflation, cash generation against budget and proven achievement of personal objectives for each individual. Up to 75% of the
maximum achievable bonus is determined by the company’s financial performance with the balance being attributable to the
achievement of personal objectives. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 43
Annual Performance-related Bonus continued
In the cases of Robin Clark, Geoffrey Cooper and Alex Hannam the constituent elements of their bonus plans are earnings per share in
excess of inflation (as for other directors), net profit against budget for the group of subsidiary companies for which they are
operationally responsible, cash generation against budget and proven achievement of personal objectives for each individual. Up to 75%
of the maximum achievable bonus is determined by the financial performances of the company or the relevant subsidiary groups, as
appropriate, with the balance being attributable to the achievement of personal objectives.
Personal objectives for the other executive directors are set by Gordon Page and Allan Cook and agreed with the committee. Those for
Allan Cook are set by Gordon Page and agreed with the committee, and those for Gordon Page are set by the committee, after
consultation with Allan Cook.
Performance Graph
The graph set out below is required by the Regulations and illustrates the performance of the company and a “broad equity market
index” over the five year period commencing on 31 December 1997 . The FTSE 350 Index, of which the company has been a constituent
throughout the period in question, is considered the most appropriate form of “broad equity market index” against which the company’s
performance should be graphed having regard to the size of companies it contains and the fact that it includes most of the companies
which form the comparator group for the purposes of the Cobham Long Term Incentive Plan. Performance is measured by Total
Shareholder Return (share price growth plus dividends paid).
Total Shareholder Return
Source: Datastream.
This graph looks at the value, by the end of 2002, of £100 invested in Cobham plc on 31 December 1997 compared with that of £100
invested in the FTSE 350 Index. The other points plotted are the values at the intervening financial year ends.
Pensions
Executive directors may join the Cobham Executives Pension Plan (“the Plan”) at the invitation of the company. The Plan is established
under trust, contracted out of the State Earnings Related Pension Scheme and approved by the Inland Revenue under the Income an d
Corporation Taxes Act 1988. All the executive directors, with the exception of Geoffrey Cooper , who has a personal money-purchase
pension scheme, are members of the Plan.
The Plan provides benefits for executive directors on final pay principles against a normal pension age of 60 with retirement before that
age being subject to actuarial reduction. Pensionable earnings are taken as the member’s basic annual salary at each April, restricted 
150
140
133.44
89.04
137.71
114.93
131.53
132.36
141.53
95.63
115.16
83.19
130
120
110
100
90
80
70
60
31/12/97 31/12/98
Cobham
FTSE 350
31/12/99 31/12/00 31/12/01 31/12/02
Value £ 44
Directors’ Remuneration Report continued
Pensions continued
where applicable to the earnings cap. The rate at which members are required to contribute to the Plan is 7% of pensionable earnings.
Annual bonus payments are not taken into account when calculating pensionable earnings.
Retirement pension accrues at 1/30th of pensionable earnings for each year of service in the Plan with, where applicable, a further
1/60th of pensionable earnings for each year of pensionable service within the main Cobham pension plan. At retirement, members may
commute a portion of their pension for a cash sum.
All pensions in payment relating to post April 1997 rights are increased in line with the retail price index, subject to a minimum of 3%
per annum and a maximum of 5% per annum, with the balance of pension being increased at 3% per annum.
On death in service, a lump sum of four times pensionable earnings is payable together with a spouse’s pension of two thirds of the
member’s prospective pension. On death after retirement, a spouse’s pension is paid at the same rates as applied to the member’s pre
commutation pension. Similar spouse’s pensions are payable on the death of a deferred pensioner prior to retirement.
The company establishes funded, unapproved retirement benefit schemes by which additional retirement provision is made on money
purchase principles for each member whose entitlement under the Plan is restricted by the earnings cap. Payments are made to these
schemes on the basis of actuarial advice. Currently, schemes have been established for Gordon Page, Allan Cook, Geoff Roe and Alex
Hannam. Details of company contributions made in the year are set out in table 2(b) on page 47 . The policy in respect of newly appointed
directors is that contributions should normally be 2% of annual basic salary per month.
Long Term Incentive Plan
The Cobham Long Term Incentive Plan (“LTIP”) was operated again during the year under review. Under the LTIP – which has been
approved by shareholders – Cobham ordinary shares may be conditionally awarded to participants. However , they will normally only be
entitled to these shares in full at the end of a three year period – known as the restricted period – if, and to the extent that, certain
company performance conditions are achieved. 
Awards under the LTIP were made during the year to Allan Cook, Robin Clark and Geoffrey Cooper . The value of the awards made was
limited to 100% of basic salary. The performance measure applicable to these awards is total shareholder return subject to a minimum
level of absolute growth in earnings per share of an average of at least 3% (2% in respect of awards made prior to 2000) per annum
above the rate of inflation. It is intended that awards will be made under the LTIP in 2003 on the same basis as in 2002.
With regard to total shareholder return, each participant will be entitled to 100% of his awards if the company’s return over the
performance period results in it being ranked in the top quartile of a comparator group comprising companies included in the FTSE
engineering sector index (in respect of awards made prior to 2000) and in the FTSE All Share aerospace and defence sector and the
engineering and machinery sector (in respect of awards made after 1999). If the company’s performance is at the median, 30% of the
awarded shares will vest (40% in respect of awards made prior to 2000). Between these two levels, the award will vest on a straight-line
scale. Participants will lose their awards if the company’s performance is below the median.
Earnings per share and total shareholder return are considered by the committee to be the most fair and appropriate measures of the
company’s performance relative to the performance achieved by other comparable companies and of the company’s underlying
performance.
In assessing whether performance conditions have been met, which they have in the cases of the awards made in 1997 , 1998, 1999 and
2000, the committee relies upon performance status and verification reports prepared by Inbucon Administration.
Full details of all allocations under the LTIP are set out in Table 5 on page 49.
L TIP Performance
The following table contains shareholder return performance information in respect of awards made under the LTIP up to and including
2000. All data is correct as at 31 December 2002.
Year 1997 1998 1999 2000 2001 2002
Comparator Group (number of companies) 57 52 46 41 32 32
Ranking 9761
Quartile 1111
Percentage of award vesting 100% 100% 100% 100%
Normal date for transfer of shares April March March March March March
2002 2003 2004 2003 2004 2005
Source: Inbucon Administration. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 45
L TIP Performance continued
The rules of the LTIP were amended at the company’s 2000 annual general meeting in various ways including the removal of a
requirement for the awarded shares to be held in trust for a period of up to two years after the expiry of the restricted period and the
removal of the ability for participants to receive shares on a matching basis pro rata to investments made by them in Cobham shares.
Other Share Schemes
The company grants share options from time to time under the Cobham Executive Share Option Scheme (1994). Participants in the L TIP
are not eligible to receive grants of options under this scheme.
Certain executive directors are also participants in the Cobham Savings Related Share Option Scheme and/or the Cobham Share
Incentive Scheme, both of which are all employee share schemes approved by the Inland Revenue. Under the former , participants s ave
a fixed monthly sum for three or five years and may use the sum generated by their savings contracts to exercise options which are
granted at a 20% discount to market price. Depending upon the option period chosen, exercise can normally take place after three, five
or seven years. Under the latter , the total value of shares which may be allocated to any one employee in any financial year must not
exceed £3,000. As a consequence of changes in the Inland Revenue regulations, no further allocations of shares will be made under the
Cobham Share Incentive Scheme. The company is considering alternative schemes now permitted by the Inland Revenue. The above-
mentioned share schemes have been approved by shareholders and do not contain performance conditions, since the Inland Revenue
requires that they must be offered to all eligible employees on the same basis without such conditions.
Service Contracts
The board’s policy on setting notice periods for new directors is that these should not normally exceed one year . It recognises, however ,
that it may be necessary in the case of new executive appointments to offer a longer initial notice period which would subsequently
reduce to one year after the expiry of that period.
The service contract of Gordon Page dated 15 October 1991 is due to expire on his 60th birthday in November 2003. It is the board’s
current intention that he will become non-executive chairman from that date. It has been agreed that Giles Irwin’s service contract dated
15 May 1987 will expire on his 60th birthday in July 2003 and that he will continue thereafter as an employee, but not a director , of the
company with responsibility for corporate development. Robin Clark is employed under a service contract, which is dated 6 May 1993,
containing a notice period of two years. The service contracts of Allan Cook (dated 13 June 2001) and Geoffrey Cooper (dated 1 June
1989) are terminable on one year’s notice. Alex Hannam is employed under a service contract (dated 13 February 2003) containing a
notice period of two years which reduces to one year after twelve months’ service. The board takes the view that the current notice
period for Robin Clark, which reflects the position agreed with him in 1993, and for Alex Hannam remain appropriate having regard to
all the circumstances.
Subject to earlier termination in accordance with their terms, the service contract of Robin Clark will expire on his 65th birt hday and the
service contracts of Allan Cook and Alex Hannam will expire on their 60th birthdays. The service contract of Geoffrey Cooper does not
contain an expiry date. The service contract of Geoff Roe expired by agreement with the company on 30 June 2002 at which time he
resigned his executive directorship.
The committee accepts and endorses the principle of mitigation of damages on early termination of a service contract. There are no
explicit provisions in directors’ service contracts for early termination compensation commitments.
Personal Shareholding
The committee’s approach with regard to personal shareholding is to encourage executive directors to acquire and hold, over time,
Cobham ordinary shares to the value of at least one year’s salary.
Non-executive Directors
Fees paid to non-executive directors are determined by a committee of the board comprising Gordon Page, Allan Cook and Giles Irwin.
During the year under review each non-executive director received a basic fee at the rate of £20,000 per annum. An additional fee of
£2,000 is paid to the chairmen of the audit and remuneration committees. Fees in respect of the services of Peter Hooley are paid to
Smith & Nephew plc.
Non-executive directors do not participate in any of the company’s share schemes, pension schemes or bonus arrangements nor do they
have service contracts. 46
Directors’ Remuneration Report continued
Auditable Part 
The auditable part of this directors’ remuneration report is set out below on pages 46 to 49.
Table 1:
Directors’ Emoluments
The remuneration of the directors, including the chairman and the highest paid director, was as follows:
Salary Benefits Total
and Fees Bonus excluding Pension excluding Pension
2002 2001 2002 2001 2002 2001 2002 2001
£000 £000 £000 £000 £000 £000 £000 £000
Sir Michael Knight 
1
– 124 – – – 13 – 137
G F Page 400 350 400 210 27 22 827 582
A E Cook 350 300 210 180 22 17 582 497
A G Irwin 250 225 250 225 20 17 520 467
R H L Clark 190 180 104 90 20 13 314 283
G C Cooper 285* 235* 132 114 17 17 434 366
A J Hannam 
2
94 – 43 – 1 – 138 –
G E Roe 
3
95 180 – 99 7 13 102 292
The Lord Rockley 
4
10 19 – – – – 10 19
J D M Smith 22 19 – – – – 22 19
J W Edington 20 17 – – – – 20 17
P Hooley 
5
12 – – – – – 12 –
T otal Remuneration 1,728 1,649 1,139 918 114 112 2,981 2,679
Benefits relate to the provision of company cars, petrol, personal telephone facilities, life assurance, subscriptions and medical cover . 
The highest paid director was Gordon Page, the aggregate of whose emoluments, gains on share options exercised and company
contributions to his funded unapproved retirement benefit scheme was £1,111,232 (2001 – £7 42,000). All shares resulting from the
exercise of options have been retained.
* The salary of Geoffrey Cooper includes a payment amounting to £47 ,000 (2001 – £30,000) made in lieu of additional pension provision. Such payment is
not taken into account in calculating bonus and share scheme entitlement.
1 Salary and fees for the period as chairman until retirement on 28 November 2001.
2 Salary and fees for the period from his appointment on 15 July 2002.
3 Salary and fees for the period until his retirement on 30 June 2002.
4 Fees for the period until his retirement on 12 June 2002
5 Fees for the period from his appointment on 12 June 2002.
Table 2(a):
Directors’ Pensions
Transfer value
Increase in of pension Additional
accrued Additional accrued transfer value
pension from pension in excess of Transfer Transfer accrued in
previous year earned in inflation and value of value of excess of
Accrued end (with no excess of members’ accrued accrued members’
pension at adjustment for inflation contributions pension at pension at contributions
31.12.02 Inflation) during 2002 during 2002 31.12.01 31.12.02 during 2002
£ p.a. £ p.a. £ p.a. ££££
G F Page 42,120 3,960 3,311 38,525 621,686 696,912 60,713
A E Cook 6,210 3,295 3,245 20,373 37,121 66,753 15,119
A G Irwin 158,333 23,333 21,038 341,821 2,272,003 2,736,932 447,866
R H L Clark 112,738 10,882 9,150 116,638 1,536,356 1,649,324 99,843
A J Hannam 1,350 1,350 1,350 12,444 – 19,094 12,444
G E Roe 
*
16,200 1,890 1,647 19,472 227,830 255,249 20,944
* Accrued pension is at 30 June 2002 being the date of his retirement.
Under Inland Revenue regulations, members’ retirement benefits may stand to be reduced on account of retained benefits from
previous employments.
Inflation during 2002 has been taken to be 1.7% being the statutory increase to deferred pensions from 2001 to 2002.
Transfer values payable from the Plan are calculated in accordance with Section 4 “Minimum Cash Equivalent” of Guidance Note 11
issued by the Institute and Faculty of Actuaries. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 47
Table 2(b):
Gordon Page, Allan Cook, Alex Hannam and Geoff Roe are subject to the Inland Revenue capping rules and the following company
contributions, which are taxable benefits, relate to funded unapproved retirement benefit schemes:
2002 2001
£000 £000
G F Page 268 131
A E Cook 88 88
A J Hannam 17 –
G E Roe 
*
43 38
* For the period until his retirement on 30 June 2002.
In the case of Geoffrey Cooper , contributions totalling £33,000 (2001 – £28,000) were made into his personal money purchase pension
scheme.
Table 3(a): 
Directors’ Share Interests
The interests of the directors and their families in Cobham plc’s ordinary shares were:
Options over
Ordinary Shares Ordinary Shares
At 1.1.02 At 31.12.02 At 1.1.02 At 31.12.02
G F Page 227,321 229,221 6,125 4,434
A E Cook 31,480 63,395 1,660 1,660
A G Irwin 142,936 145,093 5,592 3,614
R H L Clark 114,258 131,668 2,939 2,939
G C Cooper 186,781 206,918 1,695 1,754
A J Hannam –* 2,000 –* –
G E Roe 61,399 – 2,465 2,465 †
The Lord Rockley 11,000 – – – †
J D M Smith 3,000 3,000 – –
J W Edington – – – –
P Hooley –* – – –
* At date of appointment.
†
At date of retirement and at the year end. G E Roe is currently an employee of Cobham plc.
The above interests are all beneficial and include interests in shares provisionally allocated under the Cobham Long Term Incentive Plan. 
The executive directors, in common with all UK employees of the group, are interested in the shares held within the Cobham plc
Qualifying Employee Share Ownership Trust (“QUEST”). The QUEST is used in connection with the transfer of shares to participant s in
the Cobham Savings Related Share Option Scheme. As at 31 December 2002, 233,927 ordinary shares were held within the QUEST.
Interests at 20 March 2003, being a date not more than one month prior to the date of the notice convening the annual general meeting,
were the same as at 31 December 2002 save that the interests of Gordon Page and Giles Irwin had increased by 268 and 791 ordinary
shares respectively upon the exercise of options under the Cobham Savings Related Share Option Scheme on 20 February in the case
of Gordon Page and on 4 February and 10 March in the case of Giles Irwin. In addition, the number of ordinary shares held within the
QUEST had reduced to 26,961 as at 17 March 2003. Also, shares awarded under the Cobham Long T erm Incentive Plan in 1998 vested
absolutely on 19 March 2003 as follows: Gordon Page – 17 ,168 shares, Giles Irwin – 12,416 shares, Geoffrey Cooper – 10,484 shares and 
Robin Clark – 9,130 shares. 48
Directors’ Remuneration Report continued
Table 3(b):
Details of directors’ interests in options over Cobham plc’s ordinary shares granted under the Cobham Savings Related Share Option
Scheme were:
Market
price at
Number of Options Exercise date of Date from
At During the year At price exercise which Expiry
1.1.02 Granted Exercised 31.12.02 – pence – pence exercisable date
G F Page 1,827 – 1,827 – 239 1,110 – –
268 – – 268 320 – 1.2.03 1.8.03
1,727 – – 1,727 483 – 1.2.04 1.8.04
623 – – 623 495 – 1.2.06 1.8.06
840 – – 840 691 – 1.2.05 1.8.05
121 – – 121 836 – 1.2.06 1.8.06
719 – – 719 840 – 1.2.09 1.8.09
– 136 – 136 769 – 1.2.08 1.8.08
A E Cook 1,660 – – 1,660 840 – 1.2.09 1.8.09
A G Irwin 2,056 – 2,056 – 239 1,110 – –
292 – – 292 320 – 1.2.03 1.8.03
1,727 – – 1,727 483 – 1.2.04 1.8.04
564 – – 564 495 – 1.2.06 1.8.06
499 – – 499 691 – 1.2.03 1.8.03
74 – – 74 836 – 1.2.04 1.8.04
380 – – 380 840 – 1.2.05 1.8.05
– 78 – 78 769 – 1.2.06 1.8.06
R H L Clark 2,019 – – 2,019 495 – 1.2.06 1.8.06
920 – – 920 836 – 1.2.06 1.8.06
G C Cooper 1,695 – – 1,695 836 – 1.2.06 1.8.06
– 59 – 59 769 – 1.2.08 1.8.08
A J Hannam – –––––––
G E Roe
†
1,854 – – 1,854 495 – 1.2.04 1.8.04
611 – – 611 691 – 1.2.03 1.8.03
†
At date of retirement.
The market price of Cobham ordinary shares as at 31 December 2002 was 1,020.0p per share and the closing price range during the year
was 897 .5p to 1,195.0p.
Table 4:
Gains made on Directors’ Share Options
Exercise Options Gain
date exercised £000
G F Page 4.2.02 1,827 16
A G Irwin 4.2.02 2,056 18
All options were granted for nil consideration under the Cobham Savings Related Share Option Scheme.
The aggregate gain made by the directors on the exercise of share options was £34,000 (2001 – £64,000).
Gains are calculated by reference to the middle market value of a Cobham ordinary share on the date of exercise. All shares resulting
from the exercise of share options during the year have in fact been retained by directors. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 49
Table 5: 
Allocations under The Cobham Long Term Incentive Plan
Monetary
Conditionally value of
awarded Lapsed Vested vested
Allocations during during during Allocations awards Expiry
at 1.1.02 the year
2
the year the year
3
at 31.12.02 £ date
4
G F Page 132,452 – – 26,894 105,558 174,483 18.3.04
A E Cook 26,903 31,915 – – 58,818 – 25.3.05
A G Irwin 72,420 – – 20,229 52,191 131,994 18.3.04
R H L Clark 73,699 17,325 – 16,274 74,750 106,188 25.3.05
G C Cooper 78,452 20,061 – 16,688 81,825 108,889 25.3.05
A J Hannam – ––––– –
G E Roe 
1
56,930 – – – 56,930 – 30.3.04
1 Position stated as at date of retirement as an executive director .
2 The market price of a Cobham plc ordinary share on 25 March 2002, being the date of the awards made during the year , was 1,125p.
3 Shares in this column are those awarded on 16 April 1997 , which vested absolutely on 16 April 2002.
The market price of the 1997 shares at the date of award was 652.5p. At the date of vesting it was 1,195p.
The awards are subject to the performance conditions specified on page 44.
Top quartile performance was achieved in respect of the 1997 awards with the result that 100% of the awards vested.
4 The expiry date is the last date by which qualifying conditions in respect of any outstanding interests under the LTIP have to be fulfilled. 
This date may either be the expiry of any relevant holding period or (where applicable) of any restricted period.
Table 6: 
Allocations under The Cobham Share Incentive Scheme
Locked-in
value per
Allocated share
during year £
†
G F Page 53 10.25
A G Irwin 80 10.25
R H L Clark 85 10.25
†
The “locked-in” value is the market value on 3 July 2002 being the date of allocation.
By order of the board
J D M Smith Chairman of the Remuneration Committee
20 March 2003 50
The following statement, which should be read in conjunction with the report of the auditors set out opposite, is made with a view to
distinguishing for shareholders the respective responsibilities of the directors and of the auditors in relation to the financial statements.
The directors are required by the Companies Act 1985 to prepare financial statements for each financial year which give a true and fair
view of the state of affairs of the company and the group as at the end of the financial year and of the profit or loss for the financial year .
The directors consider that in preparing the financial statements on pages 53 to 84 the company has used appropriate accounting
policies, consistently applied and supported by reasonable and prudent judgements and estimates and that all accounting standards
which they consider to be applicable have been followed. The financial statements have been prepared on a going concern basis.
The directors have responsibility for ensuring that the company keeps accounting records which disclose with reasonable accuracy the
financial position of the company and which enable them to ensure that the financial statements comply with the Companies Act 1985.
The directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company
and to prevent and detect fraud and other irregularities.
Statement of Directors’ Responsibilities COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 51
To the members of Cobham plc
We have audited the financial statements which comprise the profit and loss account, the balance sheets, the cash flow statement, the
statement of total recognised gains and losses and the related notes and the accounting policies set out in the statement of accounting
policies. We have also audited the disclosures required by Part 3 of Schedule 7A to the Companies Act 1985 contained in the dir ectors’
remuneration report (“the auditable part”).
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the annual report, the directors’ remuneration report and the financial statements in
accordance with applicable United Kingdom law and accounting standards are set out in the statement of directors’ responsibilities. 
Our responsibility is to audit the financial statements and the auditable part of the directors’ remuneration report in accordance with
relevant legal and regulatory requirements and United Kingdom Auditing Standards issued by the Auditing Practices Board. This r eport,
including the opinion, has been prepared for and only for the company’s members as a body in accordance with Section 235 of the
Companies Act 1985 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent
in writing.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and
the auditable part of the directors’ remuneration report have been properly prepared in accordance with the Companies Act 1985. We
also report to you if, in our opinion, the directors’ report is not consistent with the financial statements, if the company has not kept
proper accounting records, if we have not received all the information and explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and transactions is not disclosed.
We read the other information contained in the annual report and consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial statements. The other information comprises the chairman’s
statement, the chief executive’s review, the business and financial reviews, the directors’ report including the corporate governance
statement, and the unaudited part of the directors’ remuneration report. 
We review whether the corporate governance statement reflects the company’s compliance with the seven provisions of the Combined
Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are no t required
to consider whether the board’s statements on internal control cover all risks and controls, or to form an opinion on the effectiveness of
the company’s or group’s corporate governance procedures or its risk and control procedures. 
Basis of audit opinion
We conducted our audit in accordance with auditing standards issued by the Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the auditable part of the directors’
remuneration report. It also includes an assessment of the significant estimates and judgements made by the directors in the
preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the financial statements and the auditable part of the directors’
remuneration report are free from material misstatement, whether caused by fraud or other irregularity or error . In forming our opinion
we also evaluated the overall adequacy of the presentation of information in the financial statements.
Independent Auditors’ Report 52
Independent Auditors’ Report continued
Opinion
In our opinion:
•
the financial statements give a true and fair view of the state of affairs of the company and the group at 31 December 2002 and of
the profit and cash flows of the group for the year then ended;
•
the financial statements have been properly prepared in accordance with the Companies Act 1985; 
and
•
those parts of the directors’ remuneration report required by Part 3 of Schedule 7A to the Companies Act 1985 have been properl y
prepared in accordance with the Companies Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Southampton
20 March 2003
Notes
(a) The maintenance and integrity of the Cobham plc website is the responsibility of the directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 53
Accounting Convention
The financial statements have been prepared in accordance with applicable accounting standards under the historical cost convention,
as modified by the revaluation of certain fixed assets. Compliance with SSAP 19 “ Accounting for Investment Properties” requires
departure from the requirements of the Companies Act 1985 relating to depreciation and an explanation of the departure is given in the
tangible fixed assets accounting policy note below.
Basis of Consolidation
The group financial statements include the financial statements of the parent company and of all its subsidiaries made up to the end of
the financial year . Joint ventures are accounted for using the gross equity method in accordance with FRS 9 “Associates and Joint
Ventures”. Associates are accounted for using the equity method of accounting.
Businesses acquired are accounted for as acquisitions, with effect from the date control passes. 
Turnover
Turnover represents sales value exclusive of value added tax together with the sales value of work done on long term contracts. Sales
within the group are excluded. 
Deferred Taxation
The company has changed its accounting policy in accordance with FRS 19 “Deferred Tax”. Deferred tax is now recognised on a full
provision basis on all timing differences which have originated, but not reversed, at the balance sheet date calculated at rates of tax
expected to apply, based on current tax rates and law. Timing differences represent accumulated differences between the company’s
taxable profit and its financial profit and arise primarily from the difference between accelerated capital allowances and depreciation.
Deferred tax liabilities are not discounted.
Intangible Fixed Assets
Goodwill arising on acquisitions of subsidiary undertakings and joint ventures made after 1 January 1998 and expenditure on other
intangible fixed assets comprising patents, licences and trade marks is capitalised and amortised on a straight line basis over estimated
useful lives of up to 20 years. These periods have been determined after taking into account the nature of the intangible assets acquired
and the markets in which these intangible assets operate.
In accordance with the group’s accounting policy prior to the introduction of FRS 10, goodwill arising on acquisitions prior to 1 January
1998 has been written off to reserves, but will be charged to the profit and loss account on any subsequent disposal of the business to
which it is related.
Tangible Fixed Assets
Freehold land and investment properties are not depreciated. Other fixed assets are depreciated on a straight line basis to their
estimated residual values over their estimated useful lives. These lives are as follows:
Freehold buildings – 50 years
Leasehold properties – The period of the lease
Other fixed assets – 3 to 15 years
Investment properties are included in the balance sheet at open market value. In accordance with SSAP 19, investment properties are
revalued annually and the aggregate surplus or deficit is transferred to revaluation reserve, and no provision is made for depreciation
of freehold properties. This departure from the requirements of the Companies Act 1985, which requires all properties to be depreciated,
is, in the opinion of the directors, necessary for the financial statements to show a true and fair view in accordance with applicable
accounting standards.
The depreciation (which would, had the provisions of the Act been followed, have reduced profit for the year) is only one of the factors
reflected in the annual valuation and the amount attributable to this factor cannot reasonably be separately identified or quantified.
Accounting Policies 54
Investments
Investments are stated at cost less any provision for permanent diminution in value.
Investment in Own Shares
Investment in own shares represents shares held in the Qualifying Employee Share Ownership Trust (QUEST), which are shown at their
estimated recoverable amount, being the option price of the shares payable by the employee. The amounts contributed to the QUEST
in excess of the option price are charged against reserves. The excess of the option price over the nominal value of the shares has been
taken to the share premium account.
Aircraft Engine Overhaul Expenditure
Expenditure is capitalised when it is incurred on aircraft engine overhauls and this fixed asset addition is depreciated over its useful
economic life.
Research and Development
Research and development expenditure not chargeable to customers is written off as incurred.
Finance Leases
Where assets are financed by lease agreements that give rights approximating to ownership (finance leases), the assets are treated as
if they had been purchased outright and the corresponding leasing commitments are shown as an obligation under finance leases. The
relevant assets are depreciated on the basis of expected utilisation over the shorter of the life of the contract on which they are
employed or the life of the lease. Lease payments are treated as consisting of capital and interest elements and the interest is charged
to the profit and loss account.
Operating Leases
Operating lease payments for assets leased from third parties are charged to the profit and loss account as incurred.
Stocks
Stocks and work in progress are stated at the lower of cost, which includes an appropriate proportion of productive overheads, and net
realisable value.
Payments received and receivable on account of work in progress are deducted from the cost of the work carried out at the balance
sheet date to the extent of the valuation of the work done.
Foreign Currencies
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction or , where forward cover
contracts have been arranged, at the contracted rate. Monetary assets and liabilities denoted in foreign currencies are retranslated at
the exchange rate ruling at the balance sheet date or at a contractual rate if applicable and any exchange differences arising are taken
to the profit and loss account. 
For consolidation purposes the assets and liabilities of overseas subsidiary undertakings and joint ventures are translated at the closing
exchange rates. Profit and loss accounts of such undertakings are consolidated at the average rates of exchange during the year .
Exchange differences arising on these translations are taken to reserves. 
Pensions
The cost of pensions in respect of the group’s defined benefit schemes is charged to the profit and loss account so as to spread the cost
of pensions over the service lives of employees. Actuarial surpluses and deficits are spread forward over the average remaining service
life of employees. The pension cost is assessed in accordance with the advice of qualified actuaries.
Financial Instruments
The group uses derivative financial instruments to manage its exposures to fluctuations in interest and foreign exchange rates.
Derivative instruments utilised by the group include currency and interest rate swaps, interest rate caps, forward rate agreements and
forward currency contracts. Receipts and payments on interest rate instruments are recognised on an accruals basis, over the life of the
instruments. Finance costs associated with debt issuances are charged to the profit and loss account over the life of the instruments.
The more significant financial instruments of the group are disclosed in note 30 of the financial statements.
Accounting Policies continued Consolidated Profit and Loss Account
for the year ended 31 December 2002
COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 55
Before Before
goodwill Goodwill goodwill Goodwill
amortisation amortisation* amortisation amortisation*
& integration & integration & integration & integration
costs costs† T otal 2002 costs costs† Total 2001
£m £m Notes £m £m £m £m £m £m
Turnover: group and share of joint
ventures 767.9 767.9 750.7 750.7
Less: share of joint ventures’
turnover (33.3) (33.3) (28.9) (28.9)
Group Turnover
(continuing operations £730.8m, 
acquisitions £3.8m) 734.6 – 1 734.6 721.8 – 721.8
Cost of sales (522.9) (3.2)† (526.1) (517.4) (4.1)† (521.5)
Gross profit 211.7 (3.2) 208.5 204.4 (4.1) 200.3
Selling and distribution costs (36.8) – (36.8) (36.0) – (36.0)
Administrative expenses (54.3) (12.6)* (66.9) (56.3) (11.8)* (68.1)
Group Operating Profit
Continuing operations 120.3 (15.8) 104.5
Acquisitions 0.3 – 0.3
120.6 (15.8) 2 104.8 112.1 (15.9) 96.2
Share of operating profit in
joint ventures 5.5 (0.1)* 5.4 5.1 (0.1)* 5.0
Share of operating loss in associate (0.6) – (0.6) –– –
125.5 (15.9) 109.6 117.2 (16.0) 101.2
Interest receivable:
Group 4 2.7 3.1
Joint ventures 0.4 0.4
3.1 – 3.1 3.5 – 3.5
Interest payable:
Group 4 (11.4) (15.4)
Joint ventures (1.9) (1.8)
(13.3) – (13.3) (17.2) – (17.2)
Profit on Ordinary Activities
before T axation 115.3 (15.9) 99.4 103.5 (16.0) 87.5
Tax on profit on ordinary activities 5 (27.9) (27.7)
Profit on Ordinary Activities after
T axation before Minority Interest 71.5 59.8
Minority interest (equity interest) (0.3) (0.2)
Profit on Ordinary Activities after
T axation attributable to Shareholders 71.2 59.6
Dividends (including non equity) 7 (25.9) (23.6)
Profit Retained for the Y ear 22 45.3 36.0
Earnings per Ordinary Share
– basic 8 70.4p 59.4p
– fully diluted 8 69.9p 58.8p
– underlying 8 86.1p 75.4p
There is no material difference between the results disclosed above and the results on an unmodified historical cost basis.
† Integration costs are described in note 3. Consolidated Balance Sheet
as at 31 December 2002
56
2002 2001
Notes £m £m £m £m
Fixed Assets
Intangible assets 11 250.3 243.9
Tangible assets 12 194.2 191.0
Investments in joint ventures:
Share of gross assets 60.1 46.2
Share of gross liabilities (49.4) (38.5)
Goodwill 1.4 1.5
13 12.1 9.2
Investment in associate 13 1.0 –
Investment in own shares 14 1.4 1.4
459.0 445.5
Current Assets
Stocks 15 154.8 143.6
Debtors:
Amounts falling due within one year 16 177.9 176.5
Amounts falling due after more than one year 16 22.1 21.0
Investments 17 0.1 0.1
Cash at bank and in hand 71.9 43.8
426.8 385.0
Creditors:
Amounts falling due within one year
Borrowings 18 (65.6) (120.2)
Other creditors 18 (211.5) (197.8)
(277.1) (318.0)
Net Current Assets 149.7 67.0
T otal Assets less Current Liabilities 608.7 512.5
Creditors:
Amounts falling due after more than one year
Borrowings 19 (195.2) (131.4)
Other creditors 19 (10.4) (12.3)
(205.6) (143.7)
Provisions for Liabilities and Charges 20 (43.1) (54.8)
360.0 314.0
Capital and Reserves including non equity interests
Called up share capital 21 25.4 25.2
Share premium account 22 76.3 71.0
Revaluation reserve 22 1.7 1.7
Other reserve 22 1.3 1.3
Profit and loss account 22 254.5 214.0
Shareholders’ Funds 359.2 313.2
Minority interest (equity) 23 0.8 0.8
360.0 314.0
These financial statements were approved by a duly appointed and authorised committee of the board on 20 March 2003 and were signed
on the board’s behalf by:
Gordon Page
Giles Irwin
Directors
Note: The 2001 figures have been restated following the introduction of FRS 19 “Deferred Tax”, details of which are contained in note 20. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 57
Parent Company Balance Sheet
as at 31 December 2002
2002 2001
Notes £m £m £m £m
Fixed Assets
Tangible assets 12 4.3 4.5
Investment in group undertakings 13 32.0 65.4
Investment in own shares 14 1.4 1.4
37.7 71.3
Current Assets
Debtors:
Amounts falling due within one year 16 372.6 35.1
Amounts falling due after more than one year 16 291.7 525.2
Investments 17 0.1 0.1
Cash at bank and in hand 46.8 7.8
711.2 568.2
Creditors:
Amounts falling due within one year
Borrowings 18 (143.2) (126.6)
Other creditors 18 (31.9) (28.3)
(175.1) (154.9)
Net Current Assets 536.1 413.3
T otal Assets less Current Liabilities 573.8 484.6
Creditors:
Amounts falling due after more than one year
Borrowings 19 (161.5) (99.0)
412.3 385.6
Capital and Reserves including non equity interests
Called up share capital 21 25.4 25.2
Share premium account 22 76.3 71.0
Special reserve 22 43.6 43.6
Other reserve 22 1.3 1.3
Profit and loss account 22 265.7 244.5
Shareholders’ Funds 412.3 385.6
These financial statements were approved by a duly appointed and authorised committee of the board on 20 March 2003 and were signed
on the board’s behalf by:
Gordon Page
Giles Irwin
Directors 58
Consolidated Cash Flow Statement
for the year ended 31 December 2002
2002 2001
Notes £m £m
Cash inflow from operating activities 24 135.9 90.2
Returns on investments and servicing of finance 26a (8.6) (12.4)
Taxation (23.6) (23.0)
Capital expenditure and financial investment 26b (29.0) (27.8)
Acquisitions and disposals 26c (38.8) (62.8)
Equity dividends paid (24.2) (21.2)
Management of liquid resources 26d 0.8 –
Financing 26e 22.0 72.0
Increase in Cash 25 34.5 15.0
Reconciliation of Net Cash Flow to
Movement in Net Debt
2002 2001
Notes £m £m
Increase in cash in the year 34.5 15.0
Increase in debt and lease financing (17.2) (68.7)
Decrease in liquid resources † (0.8) –
Loans of subsidiary undertakings acquired – (1.1)
Exchange movements 2.4 (1.1)
Movement in Net Debt in the year 18.9 (55.9)
Net Debt at 1 January (207.7) (151.8)
Net Debt at 31 December 25 (188.8) (207.7)
† Liquid resources includes short term deposits of less than one year and corporate investments. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 59
Statement of Total Recognised 
Gains and Losses
for the year ended 31 December 2002
Group Parent Company
2002 2001 2002 2001
Notes £m £m £m £m
Profit Attributable to Shareholders 71.2 59.6* 48.0 40.1
Currency translation differences on foreign currency 
net investments 22 (3.9) (3.2) – –
T otal Recognised Gains relating to the year 67.3 56.4* 48.0 40.1
Prior year adjustment 22 (2.9)
T otal Gains and Losses recognised since 
last annual report 64.4
* The effect of the adoption of FRS 19 “Deferred Tax”
on the results for 2001 is £nil.
Reconciliation of Movements in
Shareholders’ Funds
for the year ended 31 December 2002
Group Parent Company
2002 2001 2002 2001
Notes £m £m £m £m
Profit Attributable to Shareholders 71.2 59.6* 48.0 40.1
Dividends 7 (25.9) (23.6) (25.9) (23.6)
Profit retained for the year 45.3 36.0* 22.1 16.5
Currency translation differences on foreign currency 
net investments 22 (3.9) (3.2) – –
New share capital subscribed:
nominal value 21 0.2 0.4 0.2 0.4
premium on share issues 22 4.6 13.7 4.6 13.7
Long term incentive plan 22 0.7 1.0 0.7 1.0
Contribution to the QUEST 14 (0.9) (2.1) (0.9) (2.1)
Net addition to shareholders’ funds 46.0 45.8* 26.7 29.5
Shareholders’ funds as at 1 January (originally £316.1m
before deducting prior year adjustment of £2.9m) 313.2 267.4 385.6 356.1
Shareholders’ Funds at 31 December (which include
non equity interests of £19,700) (2001 – £19,700) 359.2 313.2 412.3 385.6
* The effect of the adoption of FRS 19 “Deferred Tax” 
on the results for 2001 is £nil. 60
Notes to the Financial Statements
1  Segmental Analysis
Manufacturing Flight Operations
and Group Avionics and Services Total
2002 2001 2002 2001 2002 2001 2002 2001
By Class of Business £m £m £m £m £m £m £m £m
Turnover
Total 313.1 322.3 252.2 225.9 208.5 224.5 773.8 772.7
Less share of joint ventures – – – – (33.3) (28.9) (33.3) (28.9)
Less inter-segmental (4.8) (12.4) (0.7) (1.6) (0.4) (8.0) (5.9) (22.0)
Turnover to third parties 308.3 309.9 251.5 224.3 174.8 187.6 734.6 721.8
Operating Profit
Group 46.4 41.5 45.6 42.1 12.8 12.6 104.8 96.2
Share of joint ventures and associates – – – – 4.8 5.0 4.8 5.0
Group Operating Profit 46.4 41.5 45.6 42.1 17.6 17.6 109.6 101.2
Goodwill amortisation 4.7 4.7 6.3 5.6 1.7 1.6 12.7 11.9
Integration costs 3.2 4.1 – – – – 3.2 4.1
Underlying Operating Profit 54.3 50.3 51.9 47.7 19.3 19.2 125.5 117.2
Net Operating Assets 258.8 314.4* 208.0 141.0* 82.0 66.3 548.8 521.7*
Net Debt (188.8) (207.7)
Net Assets 360.0 314.0*
United Other EU United Rest of the 
Kingdom Countries States World Total
2002 2001 2002 2001 2002 2001 2002 2001 2002 2001
By Geographical Segment £m £m £m £m £m £m £m £m £m £m
Turnover to Third Parties
By destination – group 205.8 206.1 132.5 120.9 228.6 235.0 201.0 188.7 767.9 750.7
Less share of joint ventures (28.4) (24.8) (4.7) (3.7) (0.2) (0.4) – – (33.3) (28.9)
Total 177.4 181.3 127.8 117.2 228.4 234.6 201.0 188.7 734.6 721.8
By origin – group 351.4 349.4 62.4 54.2 220.5 221.3 133.6 125.8 767.9 750.7
Less share of joint ventures (28.4) (24.8) (4.7) (3.7) (0.2) (0.4) – – (33.3) (28.9)
Total 323.0 324.6 57.7 50.5 220.3 220.9 133.6 125.8 734.6 721.8
Operating Profit
Group 57.5 53.8 6.5 5.8 31.6 28.7 9.2 7.9 104.8 96.2
Share of joint ventures
and associates 4.5 4.8 0.3 0.2 – – – – 4.8 5.0
Group Operating Profit 62.0 58.6 6.8 6.0 31.6 28.7 9.2 7.9 109.6 101.2
Net Operating Assets 308.4 300.2* 22.5 28.7* 151.2 138.4 66.7 54.4 548.8 521.7*
Net Debt (188.8) (207.7)
Net Assets 360.0 314.0*
Note: The net assets at 31 December 2001 marked with an asterisk have been restated for the prior year 
adjustment totalling £2.9m in respect of deferred tax. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 61
2  Operating Profit
2002 2001
£m £m
The operating profit of £104.8m (2001 – £96.2m) is after charging:
Depreciation – owned assets 26.1 25.9
Depreciation – under finance leases 0.3 0.2
Amortisation  – goodwill 12.6 11.8
Amortisation – other intangible assets 0.5 0.5
Hire of plant and machinery – aircraft 24.9 27.3
Hire of plant and machinery – other 1.3 1.7
Other operating lease rentals 3.6 2.4
Research and development expenditure 31.6 28.2
Continuing Acquired Total
Operations Operations 2002 2001
£m £m £m £m
Turnover 730.8 3.8 734.6 721.8
Cost of sales 523.1 3.0 526.1 521.5
Gross profit 207.7 0.8 208.5 200.3
Selling and distribution costs 36.6 0.2 36.8 36.0
Administrative expenses 66.6 0.3 66.9 68.1
Administrative expenses for acquired operations include amortisation of goodwill totalling £nil (2001 – £3.0m).
Auditors’ remuneration in respect of audit services to the group amounted to £0.7m (2001 – £0.6m) and in respect of the parent company
amounted to £54,700 (2000 – £54,000).
Remuneration payable to the auditors for non audit services provided to the parent company and its UK subsidiaries amounted to £0.8m
(2001 – £0.5m). This comprised taxation services £0.8m (2001 – £0.4m) and acquisition/disposal related services £nil (2001 – £0.1m).
3 Integration Costs
Following the acquisition of the Power and Control business of BAE SYSTEMS at the end of 2000, costs of £3.2m (2001 – £4.1m) have been
incurred in respect of the integration of the business with various parts of the Flight Refuelling sub-group.
4 Net Interest (group)
2002 2001
£m £m £m £m
Interest receivable 2.7 3.1
Interest payable:
Bank loans and overdrafts (8.5) (12.7)
Other borrowings (2.9) (2.7)
(11.4) (15.4)
(8.7) (12.3) 62
Notes to the Financial Statements continued
5 T ax on Profit on Ordinary Activities
2002 2001
£m £m
Current tax
UK corporation tax on profits of the year 13.9 13.8
Share of joint ventures’ and associate’s tax 0.7 1.1
Overseas tax on profits of the year 10.0 9.2
Adjustments in respect of previous years (1.5) (0.5)
Total current tax 23.1 23.6
Deferred tax
Origination and reversal of timing differences 7.8 4.2
Adjustments in respect of previous years (3.0) (0.1)
Total deferred tax 4.8 4.1
Tax on profit on ordinary activities 27.9 27.7
The company has adopted FRS 19 “Deferred Tax” in the current year. The full impact on reserves is detailed in note 22. The effect of the
adoption of FRS 19 on the tax charge for the year ended 31 December 2002 is £nil (2001 – £nil).
Excluding the goodwill amortisation of £12.7m (2001 – £11.9m) and the prior year tax credit of £4.5m (2001 – £0.6m), the effective rate for
the year would be 28.9% (2001 – 28.5%). This adjusted tax charge is lower than the prevailing rates because part of the goodwil l charge is
an allowable expense for tax purposes and also because of the tax deduction on the contribution to the Qualifying Employee Shar e Trust,
which is described in more detail in note 14 to the financial statements. In 2002 agreement was received from the Inland Revenue concerning
a previously outstanding matter for which the group had not taken benefit.
The tax assessed for the year is different to the standard rate of corporation tax in the UK of 30% (2001 – 30%). The differences are
explained below:
2002 2001
£m £m
Profit on ordinary activities before tax 99.4 87.5
Profit on ordinary activities multiplied by standard rate in the UK 30% (2001 – 30%) 29.8 26.2
Effects of:
Tax disallowed items (primarily goodwill amortisation) 2.1 2.4
Capital allowances for year in excess of depreciation (6.2) 2.6
Other timing differences (1.6) (6.8)
Overseas tax rates higher than UK rates 1.6 0.3
Expenditure qualifying for additional R&D tax deduction (0.8) –
Contribution to the QUEST (0.3) (0.6)
Adjustments to tax charge in respect of prior years (1.5) (0.5)
Current tax charge for the year 23.1 23.6
Factors that may affect future tax charges:
The group’s effective rate of current tax is lower than the standard rate of corporation tax in the UK primarily because of tim ing differences
arising on fixed assets. Based on present capital investment plans the group expects that this will remain broadly unchanged in the
foreseeable future. 
No provision has been made for deferred tax on gains recognised on revaluing property to its market value. Also, no deferred tax is
recognised on the unremitted earnings of overseas subsidiaries, associates and joint ventures as no tax is expected to be payable on them
in the foreseeable future.
6 Profit Attributable to Shareholders
In accordance with the concession granted under Section 230(1) of the Companies Act 1985, the profit and loss account of Cobham plc has
not been separately presented in these financial statements. The profit attributable to shareholders dealt with in the financial statements
of Cobham plc is £48.0m (2001 – £40.1m).  COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 63
7 Dividends
2002 2001
£m £m
Dividends on ordinary shares
Interim paid of 7.6p per share (2001 – 6.9p) 7.6 7.0
Proposed final of 18.0p per share (2001 – 16.33p) 18.3 16.6
25.9 23.6
Dividends include £1,182 (2001 – £1,182) paid in respect of non equity second cumulative preference shares (note 21).
8 Earnings per Ordinary Share
2002 2001
Weighted Weighted
average average
number of Per-share number of Per-share
Earnings shares amount Earnings shares amount
£m million pence £m million pence
Basic Earnings per Share (EPS)
Earnings attributable to ordinary shareholders 71.2 101.1 70.4 59.6 100.3 59.4
Effect of dilutive securities
Options – 0.6 – 0.8
Long term incentive plan – 0.2 – 0.3
Fully Diluted EPS
Adjusted earnings 71.2 101.9 69.9 59.6 101.4 58.8
Underlying earnings per share excluding goodwill amortisation and integration costs:
2002 2001
Weighted Weighted
average average
number of Per-share number of Per-share
Earnings shares amount Earnings shares amount
£m million pence £m million pence
Basic EPS 71.2 101.1 70.4 59.6 100.3 59.4
Effect of goodwill amortisation 12.7 12.5 11.9 11.9
Effect of integration costs 3.2 3.2 4.1 4.1
Underlying EPS
Adjusted earnings 87.1 101.1 86.1 75.6 100.3 75.4
The calculation of earnings per ordinary share has been based on £71.2m (2001 – £59.6m), being the profit after taxation, minority interests
and preference dividend, and on the weighted average number of ordinary shares (excluding the weighted effect of the 229,350 (2 001 –
323,390), which were issued to the QUEST in December of each year) in issue during the year, being 101,113,784 (2001 – 100,288,47 4).
For fully diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion o f all dilutive
potential ordinary shares. The group has two categories:
(i) those share options granted to employees where the exercise price is less than the average market price of the company’s ordinary
shares during the year, and
(ii) shares contingently allocated to directors under the Cobham Long Term Incentive Plan.
The calculation of fully diluted earnings per share has been based on £71.2m (2001 – £59.6m) being the profit after taxation, minority
interests and preference dividend and on the weighted average number of the dilutive potential ordinary shares (excluding the w eighted
effect of the 229,350 which were issued to the QUEST on 17 December 2002) being 101,875,012 (2001 – 101,433,396).
In addition to the information required by FRS 14, the directors believe that it is helpful to calculate an underlying earnings per share figure.
The earnings per share on an underlying basis has been based on £87.1m (2001 – £75.6m), being the profit after taxation, minority interest
and preference dividend, adjusted by the exclusion of amortisation of goodwill, integration costs and on the weighted average number of
ordinary shares (excluding the weighted effect of the 229,350 which were issued to the QUEST on 17 December 2002) in issue duri ng the
year, being 101,113,784 (2001 – 100,288,47 4). 64
Notes to the Financial Statements continued
9 Directors’ Emoluments
Details of directors’ remuneration and share options are set out in the directors’ remuneration report on pages 42 to 49.
10 Employees
2002 2001
Number Number
Average number of employees
United Kingdom 3,864 4,149
Other EU countries 772 658
United States 1,788 1,665
Rest of the world 1,488 1,351
7,912 7,823
Employment costs
Wages and salaries 197.9 198.8
Social security costs 18.9 18.5
Other pension costs 11.4 8.4
228.2 225.7
Pensions
The group’s pension arrangements comprise various defined benefit and defined contribution schemes throughout the world with as sets
held in separate trustee administered funds.
The principal UK scheme is valued by an independent qualified actuary every three years. The most recent valuation of the scheme was at
1 April 2001 using the attained age funding method. The principal actuarial assumptions adopted in the valuation were that the long term
annual rate of return would be 7 .0%, dividend growth would be 4.25% per annum and the average annual increase to pensionable sa laries
and price inflation would be 5.0% and 2.5% respectively. The market value of the assets of this scheme as at the date of the va luation was
£150.6m. The actuarial value of the assets at the valuation date was sufficient to cover 106% of the liabilities that have accr ued to members,
after allowing for expected future increases in pensionable salaries. The next triennial valuation of the scheme is due to take place in 2004.
The scheme comprises both defined benefit and defined contribution sections. From 1 January 2003, new employees may only join the
defined contribution scheme.
The actuarial method used to determine the pension cost in the financial statements for the scheme is the attained age method. The
principal actuarial assumptions adopted to determine the pension cost were that the long term annual rate of return would be 7 . 5%, dividend
growth would be 4.75% per annum, the average increase in pensionable salaries would be 4.5% per annum and increases to pensions in
payment would be 2.5% per annum or in accordance with the rules.
The pension charge for the year in respect of defined benefit schemes was £5.9m (2001 – £3.8m). This included £0.8m (2001 – £2. 5m) in
respect of experience surpluses that are being recognised over future service periods.
The cumulative amount by which the main UK schemes have been funded in excess of the SSAP 24 charge is carried as a prepayment in the
balance sheet (see note 16). 
The main overseas schemes are in the USA and were assessed by qualified actuaries as at 1 January 2001. The actuarial value of the assets
of the schemes was sufficient to cover 106% of the liabilities that had accrued to members, after allowing for expected future increases in
pensionable salaries. The policy is to make contributions equal to or greater than the minimum based on USA pension law.
FRS 17 disclosures
The transitional disclosure requirements of FRS 17 “Retirement Benefits” are given below. The group operates a number of define d benefit
schemes, including the Cobham Pension Plan (“CPP”). A full valuation of the CPP scheme was undertaken as at 1 April 2001 and up dated to
31 December 2002 by a qualified independent actuary.
The major assumptions used by the actuaries of the group schemes as at 31 December 2002 in respect of FRS 17 were as follows:
UK Schemes USA Schemes
At At At At
31 December 31 December 31 December 31 December
2002 2001 2002 2001
Rate of increase in salaries 3.25% 4.00% 4.00% 4.00%
Discount rate 5.60% 6.00% 7.00% 7.00%
Inflation assumption 2.25% 2.50% 2.50% 2.50% COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 65
10 Employees continued
FRS 17 disclosures continued
The assets of the various schemes are held in managed and segregated funds held with various companies. The fair value of the assets held
at 31 December 2002 and the expected rates of return are as follows:
Expected long term Expected long term
rate of return Value rate of return Value
at 31 December at 31 December at 31 December at 31 December
2002 2002 2001 2001
£m £m
UK US UK US UKUS UKUS
Equities 8.00% 9.00% 117.9 7.4 8.00% 9.00% 145.5 8.1
Bonds 5.00% 7.00% 28.7 3.6 5.50% 7.00% 30.1 4.8
Other 4.00% 4.00% 7.5 0.2 4.00% 4.00% 8.3 0.7
Total fair value of assets 154.1 11.2 183.9 13.6
The funding position of the schemes in the group, as calculated under FRS 17 as at 31 December 2002, was as follows:
2002 2001
£m £m
Total fair value of assets 165.3 197.5
Present value of scheme liabilities (231.9) (204.3)
Deficit in the scheme (66.6) (6.8)
Related deferred tax asset 20.0 2.1
Net pension liability (46.6) (4.7)
The amounts required to be disclosed by FRS 17 in respect of the performance statements were:
2002
a. Analysis of the amount that would have been charged to operating profit £m
Current service cost 10.1
Past service cost –
Total operating charge 10.1
2002
b. Analysis of the amount that would have been credited to other finance income £m
Expected return on pension scheme assets 14.8
Interest cost (12.2)
Net return 2.6
2002
c. Analysis of the amount that would have been recognised in the statement of total recognised gains and lo sses (STRGL) £m
Actual return less expected return on pension scheme assets (50.0)
Changes in assumptions underlying the scheme liabilities (2.9)
Experience gains and losses arising on the scheme liabilities (11.4)
Actuarial loss that would have been recognised in the STRGL (64.3) 66
Notes to the Financial Statements continued
10 Employees continued
FRS 17 disclosures continued
2002
d. Movement in deficit during the year £m
Deficit in scheme at beginning of the year (6.8)
Current service cost (10.1)
Contributions 12.0
Past service cost –
Other finance income 2.6
Actuarial loss (64.3)
Deficit in scheme at the end of the year (66.6)
History of experience gains and losses
a. Difference between expected and actual return on scheme assets 2002
Amount (£m) (50.0)
Percentage of scheme assets (30%)
b. Experience gains and losses on scheme liabilities 2002
Amount (£m) (11.4)
Percentage of the present value of the scheme liabilities (5%)
c. Total amount recognised in the STRGL 2002
Amount (£m) (64.3)
Percentage of the present value of the scheme liabilities (28%)
If FRS 17 had been adopted in the financial statements, the group’s net assets and reserves would be as follows:
2002 2001
£m £m
Consolidated net assets (Restated)
Net assets 360.0 314.0
Prepaid pension contributions, as calculated under SSAP 24 (note 16) (21.7) (20.9)
Related deferred tax liability 6.5 5.8
344.8 298.9
Net liability, as calculated under FRS 17 (46.6) (4.7)
Net assets, including liability as calculated under FRS 17 298.2 294.2
2002 2001
£m £m
Consolidated reserves (Restated)
Reserves (note 22) 333.8 288.0
Prepaid pension contributions net of deferred tax, as calculated under SSAP 24 (15.2) (15.1)
318.6 272.9
Net liability as calculated under FRS 17 (46.6) (4.7)
Reserves, including liability as calculated under FRS 17 272.0 268.2 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 67
11 Intangible Fixed Assets
Goodwill Other T otal
Group £m £m £m
Cost
At 1 January 2002 260.9 4.5 265.4
Foreign exchange adjustments – (0.3) (0.3)
Additions – 0.4 0.4
Adjustments to contingent consideration in respect of prior year acquisitions (note 20) (10.4) – (10.4)
Undertakings acquired (note 27) 29.8 – 29.8
At 31 December 2002 280.3 4.6 284.9
Accumulated amortisation
At 1 January 2002 20.7 0.8 21.5
Charge for the year 12.6 0.5 13.1
At 31 December 2002 33.3 1.3 34.6
Net book amount
At 31 December 2002 247.0 3.3 250.3
At 1 January 2002 240.2 3.7 243.9
Other intangible fixed assets are purchased patents, licences and trade marks.
12 T angible Fixed Assets
Plant and Payments
Land and Buildings Machinery Fixtures on Account
(including Fittings and Assets
Investment Long Short Aircraft & Tools and Under
Properties Freehold Leases Leases Vehicles) Equipment Construction Total
Group £m £m £m £m £m £m £m £m
Cost or valuation
At 1 January 2002 – cost – 62.7 17.5 1.4 263.2 46.4 1.3 392.5
At 1 January 2002  – valuation 4.1–––––– 4.1
Foreign exchange adjustments – (2.2) 0.2 (0.1) (2.5) (1.3) – (5.9)
Additions – 0.6 – 0.1 19.4 5.2 6.1 31.4
Undertakings acquired – 0.9 – 0.1 4.2 1.5 0.5 7.2
Disposals – (0.4) – – (3.9) (1.1) – (5.4)
Reclassifications – 3.5 – – 0.4 – (3.9) –
At 31 December 2002 4.1 65.1 17.7 1.5 280.8 50.7 4.0 423.9
Accumulated depreciation
At 1 January 2002 – 13.9 2.9 0.7 157.8 30.3 – 205.6
Foreign exchange adjustments – (0.6) – (0.1) (1.5) (0.8) – (3.0)
Charge for the year – 1.1 0.5 0.2 19.1 5.5 – 26.4
Undertakings acquired – 0.5 – – 3.1 0.9 – 4.5
Disposals –––– (2.9) (0.9) – (3.8)
At 31 December 2002 – 14.9 3.4 0.8 175.6 35.0 – 229.7
Net book amount
At 31 December 2002 4.1 50.2 14.3 0.7 105.2 15.7 4.0 194.2
At 1 January 2002 4.1 48.8 14.6 0.7 105.4 16.1 1.3 191.0
Investment properties are shown at open market value based upon a directors’ valuation. The historic cost of these investment properties
is £2.4m (2001 – £2.4m). 68
Notes to the Financial Statements continued
12 T angible Fixed Assets continued
Assets capitalised held under finance leases included mainly in plant and machinery:
Group
2002 2001
£m £m
Cost 0.7 1.0
Accumulated depreciation (0.4) (0.4)
Net book amount 0.3 0.6
Land and Buildings
Investment Plant and
Properties Freehold Machinery Total
Parent Company £m £m £m £m
Cost or valuation
At 1 January 2002 4.1 0.3 0.4 4.8
Additions – – 0.1 0.1
Disposals – (0.3) – (0.3)
At 31 December 2002 4.1 – 0.5 4.6
Accumulated depreciation
At 1 January 2002 – 0.1 0.2 0.3
Charge for the year – – 0.1 0.1
Disposals – (0.1) – (0.1)
At 31 December 2002 – – 0.3 0.3
Net book amount
At 31 December 2002 4.1 – 0.2 4.3
At 1 January 2002 4.1 0.2 0.2 4.5
Investment properties are shown at open market value based upon a directors’ valuation which equates to cost.
2002 2001
£m £m
Capital commitments
Contracts placed 4.2 8.5
The parent company had no capital commitments at 31 December 2002 (2001 – £nil).
13 Fixed Asset Investments
Group
2002 2001
£m £m
Investments in joint ventures
At 1 January 9.2 5.6
Additional investment in year – 1.1
Goodwill amortisation (0.1) (0.1)
Share of profit after tax for the year 3.0 2.6
At 31 December 12.1 9.2 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 69
13 Fixed Asset Investments continued
Goodwill at cost of £1.8m (2001 – £1.8m) and net book amount of £1.4m (2001 – £1.5m) relating to joint ventures is included within interests
in joint ventures at 31 December. Related amortisation of £0.1m (2001 – £0.1m) has been charged during the year. 
Group
2002 2001
£m £m
Investment in associate
Shares at cost 1.4 –
Share of loss after tax for the year (0.4) –
1.0 –
Details of joint ventures and associates are included in note 38. 
Parent Company
Shares Loans 2002 2001
£m £m £m £m
Investment in group undertakings
At 1 January 68.8 (3.4) 65.4 27.2
Additions ––– 38.2
Reduction on transfer of assets (30.4) – (30.4) –
Disposals (3.0) – (3.0) –
At 31 December – cost 35.4 (3.4) 32.0 65.4
The reduction on transfer of assets arose as a result of an internal reorganisation during which there was a transfer of the ownership of
certain assets between group members. The net assets of the group and company were unaffected by the transfer .
The disposal represents the purchase of shares by a subsidiary company.
14 Investment in own shares
Parent Company
and Group
2002 2001
£m £m
Investment in own shares
At 1 January 1.4 –
Additions 1.4 1.4
Disposals (1.4) –
At 31 December 1.4 1.4
The investment in own shares of £1.4m relates to 233,927 ordinary shares held by the group’s qualifying employee share ownership trust
(“QUEST”). The QUEST was established during 2001 to acquire new shares in the company for the benefit of employees and director s of the
group. On 17 December 2002, the company provided £2.3m for this purpose of which £0.9m was by way of gift and £1.4m was by way of
loan. On the same date, the QUEST subscribed at market value for 229,350 of the company’s ordinary shares. The shares rank pari passu in
all respects with the existing ordinary shares. They will be transferred to employees and directors in satisfaction of options granted to them
under the Cobham Savings Related Share Option Scheme. The cost of the gift has been transferred by the company directly to the profit
and loss account reserve. The excess of the subscription price over the nominal value of the shares issued, which amounts to £2.3m, 
has been taken to the share premium account. The shares held by the QUEST at 31 December 2002 have been included in the group 
balance sheet, as investment in own shares, at a value of £1.4m, which is equivalent to the amounts receivable from employees on exercise
of their options. The disposal of £1.4m relates to the sums received by the QUEST on the exercise of share options by participants in the 
above-mentioned scheme: the number of shares involved was 318,813. The market value of the shares at 31 December 2002 was £2.4m .
Under the terms of the trust deed, dividends have been waived on the shares held by the QUEST and all costs relating to the abo ve scheme
are dealt with in the consolidated profit and loss account as they accrue. 70
Notes to the Financial Statements continued
15 Stocks
Group
2002 2001
£m £m
Raw materials and consumables 64.0 70.4
Work in progress 83.2 67.7
Finished goods and goods for resale 14.6 15.5
Payments on account (7.0) (10.0)
154.8 143.6
There is no significant difference between the replacement cost and the value of stocks shown.
16 Debtors
Group Parent Company
2002 2001 2002 2001
£m £m £m £m
Amounts falling due within one year
Trade debtors 145.3 146.3 – –
Amounts owed by subsidiary undertakings – – 369.2 33.4
Amounts owed by joint ventures and associates (note 37) 0.7 0.3 0.3 0.2
Other debtors 9.1 7.6 – –
Prepayments and accrued income 21.0 21.2 3.1 1.5
Amounts recoverable on contracts 0.5 0.8 – –
Taxation recoverable 1.3 0.3 – –
177.9 176.5 372.6 35.1
Amounts falling due after more than one year
Prepaid pension contributions (note 10) 21.7 20.9 – –
Amounts owed by subsidiary undertakings – – 291.7 525.1
Other debtors 0.4 0.1 – –
Deferred taxation – – – 0.1
22.1 21.0 291.7 525.2
17 Current Investments
Group Parent Company
2002 2001 2002 2001
£m £m £m £m
Listed investments 0.1 0.1 0.1 0.1
Investments above are stated at the lower of cost and market value. They are quoted on a recognised stock exchange in Great Bri tain and
their market value at 31 December 2002 amounted to £0.1m (2001 – £0.2m). 18 Creditors: Amounts falling due within one year
Group Parent Company
2002 2001 2002 2001
£m £m £m £m
Borrowings
Bank loans and overdrafts 61.5 115.4 140.1 123.2
Senior notes 3.1 3.4 3.1 3.4
Other borrowings 0.8 1.2 – –
Finance leases 0.2 0.2 – –
65.6 120.2 143.2 126.6
Further details concerning borrowings are given in note 19.
Group Parent Company
2002 2001 2002 2001
£m £m £m £m
Other creditors
Payments received on account 14.7 17.3 0.1 0.1
Trade creditors 84.9 74.1 0.2 0.4
Bills of exchange payable 1.8 1.4 – –
Amounts owed to subsidiary undertakings – – 0.8 2.4
Amounts owed to joint ventures and associates (note 37) 5.3 8.2 – –
Other creditors 21.8 18.2 – –
Taxation payable 23.1 23.5 8.3 6.4
Payroll and other taxes, including social security 15.5 13.3 1.8 1.2
Accruals and deferred income 26.1 25.2 2.4 1.2
Proposed dividends 18.3 16.6 18.3 16.6
211.5 197.8 31.9 28.3
T axation payable
UK corporation tax 18.6 18.5 8.3 6.4
Overseas tax 4.5 5.0 – –
23.1 23.5 8.3 6.4
19 Creditors: Amounts falling due after more than one year
Group Parent Company
2002 2001 2002 2001
£m £m £m £m
Borrowings
Senior notes 161.5 27.4 161.5 27.4
Bank loans 30.6 96.8 – 71.6
Loan notes 0.9 1.7 – –
Other borrowings 2.1 5.1 – –
Finance leases† 0.1 0.4 – –
195.2 131.4 161.5 99.0
† Comprising obligations of £0.1m (2001 – £0.5m) less finance charges of £nil (2001 – £0.1m).
COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 71 72
Notes to the Financial Statements continued
19 Creditors: Amounts falling due after more than one year continued
Group Parent Company
2002 2001 2002 2001
£m £m £m £m
Other creditors
Other 9.4 9.8 – –
Accruals and deferred income 1.0 2.5 – –
10.4 12.3 – –
Group Parent Company
2002 2001 2002 2001
£m £m £m £m
Loans
Senior notes, debenture loans, bank loans, loan notes and other 
borrowings are repayable as follows:
Between one and two years 11.0 80.0 6.2 75.0
Between two and five years 36.1 44.0 12.4 17.1
After five years 148.0 7.0 142.9 6.9
195.1 131.0 161.5 99.0
Senior notes, repayable on maturity, were issued in October 2002. The facility comprises two series of notes, one for US$55m which has a
bullet repayment in seven years and the other for US$170m which has a bullet repayment in ten years. The notes carry a fixed interest rate
of 5.14% in respect of the seven year notes and a rate of 5.58% in respect of the ten year notes. These fixed rates were swapped into rates
that vary with LIBOR and for the first six months the rates are 2.7 4% and 2.73% respectively.
Senior notes, repayable by instalments, were issued in March 1996 and comprise two series of notes for US$25m, one with an average life
of seven years and the other an average life of ten years. Repayments totalling US$10m have been made to date. The notes carry a fixed
interest rate of 6.28% for the seven year notes and 6.42% for the ten year notes.
Loan notes, repayable in four years, carry a fixed interest rate of 4.75%.
Included in creditors payable after five years is £142.9m (2001 – £6.9m) in respect of the senior notes referred to above. 
Group
2002 2001
£m £m
Finance leases
Obligations are as follows:
In one year or less 0.2 0.2
Between one and two years 0.1 0.2
Between two and five years – 0.2
0.3 0.6
Amounts falling due in one year or less (note 18) (0.2) (0.2)
0.1 0.4 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 73
20 Provisions for Liabilities and Charges
Deferred
Taxation Contingent Total
(Restated) Consideration Other (Restated)
£m £m £m £m
Group
At 1 January 2002 as previously stated 14.5 20.4 17.0 51.9
Prior year adjustment (note 5) 2.9 – – 2.9
At 1 January 2002 (as restated) 17.4 20.4 17.0 54.8
Provisions created 4.8 – 2.4 7.2
Adjustment to contingent consideration in respect of
prior year acquisitions (note 11) – (10.4) – (10.4)
Provisions released – – (1.5) (1.5)
Expenditure charged against provisions – (2.6) (5.3) (7.9)
Foreign exchange adjustments 0.6 – – 0.6
Re-analysis from creditors – 0.3 – 0.3
At 31 December 2002 22.8 7.7 12.6 43.1
The provisions for liabilities and charges, excluding deferred taxation, represent:
Amount
Class of provision Estimated repayment period £m
Liabilities arising under operating leases Over the next five years 3.7
Onerous trading contracts Over the next four years 5.5
Warranty claims Over the next three years 3.4
Contingent consideration Within one year 0.9
Contingent consideration Over one to two years 0.9
Contingent consideration Over two to three years 4.9
Contingent consideration Over three to four years 1.0
20.3
Group Parent Company
2002 2001 2002 2001
(Restated)
£m £m £m £m
Deferred taxation
The amount provided for represents:
Accelerated capital allowances 16.9 10.7 0.4 0.3
Other timing differences 5.9 6.7 (0.4) (0.3)
22.8 17.4 – –
In the parent company there is a debtor of £nil (2001 – £0.1m) for deferred tax in respect of an “other timing difference”.
No provision has been made for additional taxation which might become payable in the event of a distribution of profits retained by overseas
subsidiaries. No provision has been made for the deferred taxation attributable to the revaluation reserve as no liability is expected to arise. 21 Called Up Share Capital
2002 2001
£m £m
Authorised
Equity
147,920,000 (2001 - 123,920,000) 25p ordinary shares 37.0 31.0
Non equity
20,000 (2001 - 20,000) 6% second cumulative preference shares of £1 – –
37.0 31.0
Allotted and fully paid
Equity
101,490,684 (2001 - 100,895,897) 25p ordinary shares 25.4 25.2
Non equity
19,700 (2001 - 19,700) 6% second cumulative preference shares of £1 – –
25.4 25.2
During the year 89,279 ordinary shares were issued in connection with the Cobham Share Incentive Scheme, 170,175 were issued in
connection with the executive share option schemes, 229,350 were issued in connection with the QUEST, 33,058 were issued in connection
with the Cobham Savings Related Share Option Scheme and 72,925 were issued in connection with the Cobham Long Term Incentive Plan.
The aggregate nominal value of such shares was £0.2m and the cash consideration received net of costs was £4.8m. In addition £0.7m was
transferred from other reserves to called up share capital and share premium account in relation to the Cobham Long Term Incentive Plan.
The following options over ordinary shares were outstanding as at 31 December 2002:
Dates normally
Dates granted Number of Shares Prices – pence exercisable  
Cobham Savings Related
Share Option Scheme
1995 – 2002 1,702,901 (2001 – 1,361,646) 320 to 840 2003 – 2010
Cobham Executive
Share Option Scheme (1994)
1995 – 2002 1,317,457 (2001 – 1,228,425) 315 to 1,083 1998 – 2012
The 6% second cumulative preference shareholders are entitled to receive a fixed cumulative preference dividend at the rate of 6% per
annum in priority to the payment of dividends on the ordinary shares (note 7). In addition, on a return of assets on the liquidation or
otherwise of the company, the assets available for distribution are to be applied first in repaying to the holders of the 6% second cumulative
preference shares the amounts paid up on their shares. On a show of hands every member holding 6% second cumulative preference shares
who is present in person has one vote and on a poll every member has one vote for every £1 in nominal amount of the shares of which he
is the holder. The 6% second cumulative preference shares are non-redeemable.
74
Notes to the Financial Statements continued 22 Reserves
Profit
Share and Loss
Premium Revaluation Other Account Total
Account Reserve Reserve (Restated) (Restated)
£m £m £m £m £m
Group
At 1 January 2002 as previously stated 71.0 1.7 1.3 216.9 290.9
Prior year adjustment – FRS 19 (note 20) – – – (2.9) (2.9)
At 1 January 2002 as restated 71.0 1.7 1.3 214.0 288.0
Premium on share issues 4.6––– 4.6
Long term incentive plan – issue of shares 0.7 – (0.7) – –
Long term incentive plan – charge – – 0.7 – 0.7
Profit retained for the year – – – 45.3 45.3
Contribution to the QUEST – – – (0.9) (0.9)
Foreign exchange – – – (3.9) (3.9)
At 31 December 2002 76.3 1.7 1.3 254.5 333.8
Share Profit
Premium Special Other and Loss
Account Reserve Reserve Account Total
£m £m £m £m £m
Parent Company
At 1 January 2002 71.0 43.6 1.3 244.5 360.4
Premium on share issues 4.6––– 4.6
Long term incentive plan – issue of shares 0.7 – (0.7) – –
Long term incentive plan – charge – – 0.7 – 0.7
Profit retained for the year – – – 22.1 22.1
Contribution to the QUEST – – – (0.9) (0.9)
At 31 December 2002 76.3 43.6 1.3 265.7 386.9
Reserves are attributable to equity interests.
The cumulative goodwill written off directly to reserves on acquisitions, net of disposals, totals £176.9m from 1954 to 31 December 2002
(2001 – £176.9m).
The group’s share of the post acquisition reserves of joint ventures and associates at 31 December 2002 was £9.2m (2001 – £6.6m).
The other reserve relates to provisions made in accordance with UITF 17 for shares allocated under the long term incentive plans.
23 Minority Interest
Group
2002
£m
At 1 January 2002 0.8
Share of profit 0.3
Dividend (0.3)
At 31 December 2002 0.8
COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 75 24 Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities
2002 2001
£m £m
Operating profit 104.8 96.2
Depreciation 26.4 26.1
Amortisation of goodwill and intangibles 13.1 12.3
Profit on sale of fixed assets (2.0) (0.8)
Provisions for liabilities and charges (4.4) (3.5)
Long term incentive plan 0.7 1.0
Increase in stocks (10.8) (10.8)*
Decrease/(increase) in debtors 1.4 (38.9)*
Increase in creditors 6.7 8.6*
Net cash inflow from operating activities 135.9 90.2
*These figures have been restated to include the foreign exchange movement of £0.6m which was previously shown separately.
The net cash inflow from operating activities is arrived at after incurring integration costs of £3.2m (2001 – £4.1m).
25 Analysis of Net Debt
At At
1 January Cash Other Exchange 31 December
2002 Flow changes movements 2002
£m £m £m £m £m
Cash at bank and in hand 43.0 34.5 – (5.6) 71.9
Current asset investments 0.1––– 0.1
Short term deposits 0.8 (0.8) – – –
Debt due within one year (120.0) 56.0 (3.3) 1.9 (65.4)
Debt due after one year (131.0) (73.5) 3.3 6.1 (195.1)
Finance leases (0.6) 0.3 – – (0.3)
(17.2)
Total (207.7) 16.5 – 2.4 (188.8)
2002 2001
£m £m
Senior notes, loans, other borrowings, debenture loans and finance leases 260.8 251.6
Cash at bank and in hand including short term deposits (71.9) (43.8)
Current investments (0.1) (0.1)
Net debt 188.8 207.7
76
Notes to the Financial Statements continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 77
26 Analysis of Cash Flows for Headings Netted in the Consolidated Cash Flow Statement
2002 2001
£m £m
a. Returns on Investments and Servicing of Finance
Interest received 1.8 3.0
Interest paid (10.4) (15.4)
Net cash outflow from returns on investments and servicing of finance (8.6) (12.4)
b. Capital Expenditure and Financial Investment
Payments to acquire tangible fixed assets (32.5) (30.6)
Payments to acquire intangible fixed assets other than goodwill (0.4) (1.4)
Receipts from sales of fixed assets 3.9 4.2
Net cash outflow for capital expenditure and financial investment (29.0) (27.8)
c. Acquisitions and Disposals
Purchase of undertakings (note 28) (33.6) (61.2)
Deferred and contingent consideration (3.8) (0.5)
Investment in joint venture – (1.1)
Investment in associate (1.4) –
Net cash outflow for acquisitions and disposals (38.8) (62.8)
d. Management of Liquid Resources
Net sale of short term deposits 0.8 –
Net cash inflow from management of liquid resources 0.8 –
e. Financing
Issue of ordinary share capital 4.8 3.3
Debt due within a year:
(repayment)/increase of short term loans (51.9) 12.0
repayment of debenture loans and other borrowings (4.1) (1.5)
Debt due beyond a year:
increase in long term borrowings 77.2 52.0
(repayment)/increase of debenture loans and other borrowings (3.7) 6.6
Capital element of finance lease rentals (0.3) (0.4)
Net cash inflow from financing 22.0 72.0
27 Purchase of Undertakings
The acquisitions during the year were as follows:
In April 2002, National Air Support bought the business and name from Aerolec Pty in Australia for A$0.6m.
In May 2002 Coefi SA was purchased in France for a cash consideration of e0.8m.
In July 2002 Conax Florida acquired a product from Universal Propulsion Company Inc in the USA for a consideration of $0.4m, of which
$0.3m is deferred.
In November 2002 Applied Composites AB was purchased in Sweden for a cash consideration of SEK 24.8m, including expenses. In addition
deferred and contingent consideration of up to SEK 16.0m is payable in under one year, dependent upon the award of certain contracts.
In December 2002 the LPC ROVIS
(R)
product line was purchased in the UK from BAE SYSTEMS for a cash consideration of £30.3m, including
expenses, and deferred consideration payable under one year of £1.8m.
The amount accrued in the financial statements in respect of deferred and contingent consideration payable in future years in respect of
acquisitions made in 2002 is £3.2m (2001 – £22.6m). The £3.2m is the maximum amount and represents the directors’ best estimate of the
liabilities which are expected to arise as a result of entering into the contracts to acquire the above businesses. 78
Notes to the Financial Statements continued
27 Purchase of Undertakings continued
A summary of all the undertakings acquired showing book values and fair value adjustments is as follows:
Fair Value
Adjustments –
Book Accounting
Values Policies Total
£m £m £m
Tangible fixed assets 3.3 (0.6) 2.7
Stocks 3.9 (0.3) 3.6
Debtors 6.5 – 6.5
Cash at bank and in hand 0.1 – 0.1
Bank overdrafts (0.9) – (0.9)
Creditors (5.6) (0.2) (5.8)
7.3 (1.1) 6.2
Goodwill (note 11) 29.8
36.0
Satisfied by:
Cash, including expenses of acquisition (note 28) 32.8
Deferred and contingent consideration 3.2
36.0
F air value adjustments
The fair value accounting policy adjustment in respect of tangible fixed assets relates to the harmonisation of depreciation rates to those
of the group. The fair value adjustment in respect of stock relates to items written off. The adjustment in respect of creditors relates to
additional warranty costs on a contract.
28 Analysis of Cash in Respect of the Purchase of Undertakings
2002 2001
£m £m
Cash consideration (note 27) 32.8 60.7
Overdrafts assumed and cash acquired in subsidiary undertakings 0.8 0.5
Net outflow of cash in respect of the purchase of undertakings (note 26c) 33.6 61.2
29 Analysis of the Balances of Cash as shown in the Balance Sheet
2002 2001
£m £m
Cash at bank and in hand 71.9 43.8
Less short term deposits not classified as cash under FRS 1 – (0.8)
71.9 43.0 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 79
30 Derivatives and Other Financial Instruments
Set out below are the narrative disclosures relating to financial instruments. The numerical disclosures are set out in notes 31 to 34. 
The group has taken advantage of the exemption available under FRS 13 “Derivatives and other financial instruments” not to provide
numerical disclosures in relation to short term debtors and creditors, other than currency risk disclosures.
Financial instruments
The group finances its operations through a mixture of retained profits and borrowings. The group does not use complex derivative financial
instruments. Where it does use financial instruments these are mainly to manage the currency risks arising from normal operations and to
raise finance for the group’s operations. The group’s financial instruments, other than derivatives, comprise borrowings, cash and various
items such as trade debtors and trade creditors that arise directly from its operations. The group also uses forward foreign currency
contracts to manage transactional currency risks arising from the group’s operations and interest rate swaps to manage interest rate risks.
It is, and has been throughout the period under review, the group’s policy that no trading in financial instruments shall be undertaken.
Foreign currency risk is the most significant aspect for the group in the area of financial instruments. It is exposed to a lesser extent to other
risks such as interest rate risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are
summarised below. The policies have remained unchanged throughout the year.
Foreign currency risk
The group, which is based in the UK and reports in sterling, has significant investment in overseas operations in the USA, with further
investments in other EU countries, Australia, Canada, South Africa and Asia. As a result, the group’s balance sheet can be affected by
movements in these countries’ exchange rates. The group’s policy is to reduce, or eliminate where practicable, both structural and
transactional foreign exchange risk. Where significant, currency denominated net assets are partially hedged by currency borrowings.
Currency exposures are reviewed regularly and all significant foreign exchange transactions are approved by the parent company.
The pound/US dollar exchange rate is the most important as far as Cobham is concerned, particularly given the level of US dollars which
the subsidiaries expect to receive from their normal business activities. In addition to the longer term borrowing structure, a number of
financial instruments are used to manage the foreign exchange position, such as forward contracts. The most significant of these
instruments is a foreign exchange contract, which was entered into in 1997, whereby the group has agreed to swap dollars for sterling at a
rate of £1 : US$1.6263 over the period to 2012 with US$95m of this commitment being outstanding at 31 December 2002. Approximately
US$13m of the commitment exists in 2003, US$53m from 2004 to 2007 with the balance of US$29m over the remaining five years. It is the
group’s current belief that the net dollar receipts from its subsidiaries will exceed the level of the outstanding commitment.
The group also has transactional currency exposures. Such exposures arise from sales and purchases by operating units in currencies other
than the unit’s functional currency. The group’s policy is to minimise trading in subsidiaries’ non operating currencies. However, where this
is impractical the group will seek to reduce its exposure through the use of forward contracts.
The group does not hedge balance sheet and profit and loss translation exposures. Generally, borrowings are arranged in local currencies
to provide a natural hedge against overseas assets.
Interest rate risk
The group has various long and short term borrowings principally in sterling and US dollars at fixed and floating rates of interest. 
The group is continually monitoring its exposure to movements in interest rates in order to bring greater stability and certainty with respect
to borrowing costs. Group policy is to assess borrowings with regard to fixed or variable rates of interest depending on prevailing market
conditions, including instances where interest rate swaps are used.
Surplus funds are placed on short term deposit. These deposits have floating rates of interest, and thus there is some modest exposure to
interest rates.
Liquidity risk
The group has a strong cash flow and where practicable the funds generated by operating companies are managed on a regional basis. For
short term working capital purposes in the UK, most operating companies utilise local bank facilities within an overall group arrangement.
In the USA a central treasury function is maintained which all US subsidiaries use. These practices allow a balance to be maintained between
continuity of funding, security and flexibility.
As regards liquidity, the group’s policy has throughout the year been to maintain a mix of short, medium and long term borrowings with their
lenders. The private placement of Cobham guaranteed senior notes which raised US$225m in October 2002 enabled the group to reduce
short term borrowings and increase long term borrowings. Short term flexibility is achieved by overdraft facilities. Details of the year end
position, which is in accordance with this policy, are given in note 33. It is, in addition, the group’s policy to maintain undrawn committed
borrowing facilities in order to provide flexibility in the management of the group’s liquidity; details are also given in note 33. 31 Foreign Currency Risk
The table below shows the extent to which group companies have monetary assets and liabilities in currencies other than their local
currency. Foreign exchange differences on retranslation of these assets and liabilities are taken to the profit and loss account of the group
companies and the group.
Net foreign currency monetary (liabilities)/assets
Australian EU Other
Sterling US dollars dollars currencies currencies Total
£m £m £m £m £m £m
Functional currency of group operation:
Sterling – (134.9) 10.9 4.3 1.4 (118.3)
US dollars 0.3––– (0.3) –
Australian dollars (0.5) (1.1) – – 2.0 0.4
EU currencies (excluding sterling) (14.7) 3.7––– (11.0)
Other currencies (2.1) 4.6––– 2.5
At 31 December 2002 (17.0) (127.7) 10.9 4.3 3.1 (126.4)
Australian EU Other
Sterling US dollars dollars currencies currencies Total
£m £m £m £m £m £m
Functional currency of group operation:
Sterling – (28.0) 4.9 3.2 1.3 (18.6)
US dollars (1.2) – – – 0.3 (0.9)
Australian dollars (0.8) (24.3) – – 0.4 (24.7)
EU currencies (excluding sterling) (11.0) 7.6 – – 0.1 (3.3)
Other currencies (1.7) 0.9––– (0.8)
At 31 December 2001 (14.7) (43.8) 4.9 3.2 2.1 (48.3)
The amounts shown in the table above take into account the effect of any forward currency contracts entered into for the purpose of
managing these currency exposures.
Hedges of foreign currency transactions
As described above, it is the group’s policy to partially hedge foreign currency denominated net assets by currency borrowings. As these are
not formally matched, the group recognises all gains and losses on these in the period they are incurred. As at 31 December 2002 and
31 December 2001 the group had no unrecognised or deferred gains or losses on forward contracts.
32 Interest Rate Risk
Interest rate risk and profile of financial liabilities
The interest rate risk profile of the group’s financial liabilities was:
Financial
Floating Fixed liabilities on
rate rate which no
financial financial interest is
liabilities liabilities paid Total
2002 2001 2002 2001 2002 2001 2002 2001
Currency £m £m £m £m £m £m £m £m
Sterling 42.3 106.9 0.1 0.2 7.6 11.5 50.0 118.6
US dollars 9.7 80.8 167.5 37.4 6.2 16.7 183.4 134.9
Australian dollars 0.7 1.2 18.7 1.9 – – 19.4 3.1
EU currencies 
(excluding sterling) 14.1 16.6 7.3 6.2 0.9 4.7 22.3 27.5
Other currencies 0.4 – – 0.4 0.6 1.7 1.0 2.1
At 31 December 67.2 205.5 193.6 46.1 15.3 34.6 276.1 286.2
All the group’s short term creditors (other than borrowings) are excluded from the above tables either due to the exemption granted to short
term items or because they do not meet the definition of a financial liability. In addition provisions for liabilities and charges of £29.8m
(2001 – £24.4m) and long term creditors of £8.4m (2001 – £5.2m) have been excluded as they do not meet the definition of a financial
liability under FRS 13.
80
Notes to the Financial Statements continued 32 Interest Rate Risk continued
Fixed rate Financial liabilities
financial liabilities on which no
Weighted interest is paid
Weighted average average period Weighted average
interest rate for which rate period until
% is fixed – years maturity – years
Currency 2002 2001 2002 2001 2002 2001
Sterling 4.4 11.2 4.1 2.3 1.8 2.4
US dollars 5.6 6.5 7.7 2.8 2.5 2.9
Australian dollars 2.3 6.8 1.7 2.2 – –
EU currencies (excluding sterling) 5.0 5.1 2.6 4.1 1.5 4.0
Other currencies – 8.0 – 0.7 0.5 1.5
At 31 December 5.3 6.2 4.2 2.9 2.0 2.9
The floating rate liabilities comprise borrowings and overdrafts that bear interest at rates based on the appropriate LIBOR and base rates.
Interest rate risk and profile of financial assets
2002 2001
Currency £m £m
Sterling 13.3 5.0
US dollars 43.0 27.7
Australian dollars 8.2 1.4
EU currencies (excluding sterling) 3.5 6.7
Other currencies 4.4 3.2
At 31 December 72.4 44.0
Floating rate 68.0 39.7
Fixed rate 0.7 1.1
No interest paid 3.7 3.2
72.4 44.0
The financial assets comprise cash, short term deposits and current investments at short term money market rates applicable to the
currency together with certain long term debtors that meet the definition of financial assets under FRS 13. £0.7m (2001 – £1.1m)
is denominated in US dollars and the interest rate applied is 1.2%, fixed for approximately four years. Of the long term debtors of £22.1m
(2001 – £21.0m), £21.7m (2001 – £20.9m) has been excluded as it does not meet the definition of a financial asset under FRS 13.
33 Liquidity Risk
Maturity of financial liabilities
The maturity profile of the carrying amount of the group’s financial liabilities, other than short term creditors, was as follows:
Provisions and
long term
Debt Finance leases creditors Total
2002 2001 2002 2001 2002 2001 2002 2001
£m £m £m £m £m £m £m £m
Within one year, or on demand 65.4 120.0 0.2 0.2 3.2 1.6 68.8 121.8
Between one and two years 11.0 80.0 0.1 0.2 2.4 8.3 13.5 88.5
Between two and five years 36.1 44.0 – 0.2 9.7 21.7 45.8 65.9
Over five years 148.0 7.0 – – – 3.0 148.0 10.0
At 31 December 260.5 251.0 0.3 0.6 15.3 34.6 276.1 286.2
COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 81 82
Notes to the Financial Statements continued
33 Liquidity Risk continued
Borrowing facilities
The group has the following undrawn committed borrowing facilities in various currencies available in respect of which all conditions
precedent had been met. These facilities are at floating interest rates:
2002 2001
£m £m
Expiring within one year 92.5 55.0
Expiring between one and two years – 42.4
Expiring in over five years 119.7 –
At 31 December 212.2 97.4
34 F air values
F air values of financial assets and financial liabilities
The following table provides a comparison by category of the carrying amounts and the fair values of the group’s financial assets and
liabilities. Fair value is the amount at which a financial instrument could be exchanged in an arm’s length transaction between informed and
willing parties, other than a forced or liquidation sale, and excludes accrued interest. Where available, market values have been used to
determine fair values. Where market values are not available, fair values have been calculated by discounting expected cash flows at
prevailing interest and exchange rates. For floating rate loans, fair values closely approximate to cost.
Book Value Fair Value
2002 2001 2002 2001
31 December £m £m £m £m
Primary financial instruments held or issued 
to finance the group’s operations:
Short term borrowings (65.6) (120.2) (65.8) (120.2)
Long term borrowings (195.2) (131.4) (201.6) (132.2)
Other long term creditors (2.0) (7.1) (2.0) (7.1)
Provisions for liabilities and charges (13.3) (27.5) (13.3) (27.5)
Cash in hand 71.9 43.0 71.9 43.0
Short term deposits – 0.8 – 0.8
Current asset investments 0.1 0.1 0.1 0.1
Other long term debtors 0.4 0.1 0.4 0.1
Derivative financial instruments held to manage the currency profile:
Interest rate swaps – – 4.2 –
Currency swaps – – (3.0) (7.2)
Of the unrecognised profits and losses on currency swaps at 31 December 2001, a loss of £0.8m (2001 – loss £1.3m) was recognised in the
profit and loss account in the year. At 31 December 2002, a loss of £0.1m (2001 – loss £0.8m) is expected to be recognised in the profit and
loss account in the forthcoming year. There was no material impact on the profit and loss account in 2002, nor is there expected to be in
2003, from previously unrecognised gains on interest rate swaps.
Book Value Fair Value
2002 2001 2002 2001
31 December £m £m £m £m
Derivative financial instruments held to hedge the currency
exposure on expected future sales:
Forward foreign currency contracts (4.8) (3.6) 3.0 (4.9)
There was no material impact on the profit and loss account in 2002, nor is there expected to be in 2003, from unrecognised gains or losses
on forward foreign currency contracts. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 83
35 Operating Leases
The following annual operating lease commitments existed at the year end:
Group
Land and Buildings Other
2002 2001 2002 2001
£m £m £m £m
Annual commitments which expire:
Within one year 0.5 0.5 3.6 3.8
Between one and five years 1.3 1.2 18.1 23.8
In five years or more 1.0 0.5 0.5 0.3
2.8 2.2 22.2 27.9
36 Contingent Liabilities
As at 31 December 2002 the parent company had contingent liabilities in respect of bank and contractual performance guarantees and other
matters arising in the ordinary course of business entered into for or on behalf of certain group undertakings. It is not expected that any
material liability will arise in respect thereof.
37 Related Party Transactions
Directors
The directors of Cobham plc had no material transactions with the company during the year, other than as a result of service agreements.
Details of the directors’ remuneration are disclosed in the remuneration report.
Joint Ventures and Associates
The following transactions took place between the group and its joint venture and associate companies during the year:
2002 2001
£m £m
(Reduction)/increase in short term loan movements (2.9) 2.4
Net sales of goods, contracts and services 0.7 5.7
Additional investment in joint venture – 1.1
Investment in associate (note 13) 1.4 –
The following balances relating to joint ventures and associates were included in the consolidated balance sheet at the year end:
2002 2001
£m £m
Receivable balances:
Trading balances (note 16) 0.7 0.3
Payable balances:
Short term loan (note 18) 5.3 8.2 84
38 Principal Interests in Undertakings
All subsidiary undertakings have been included in the consolidation. The undertakings which, in the opinion of the directors, principally
affected the results for the year or the net assets of the group were:
Country of
Registration/ Percentage of
Incorporation Class of Nominal Value of
Undertaking and Operation Shares Shares Held
Manufacturing
Carleton Technologies Inc. USA Common Stock 100
Cobham Fluid Systems Limited* England Ordinary 100
Conax Florida Corporation USA Common Stock 100
Flight Refuelling Limited* England Ordinary 100
FR Countermeasures Inc. USA Common Stock 100
FR-HiTEMP Limited England Ordinary 100
Sargent Fletcher Inc. USA Common Stock 100
Stanley Aviation Corporation USA Common Stock 100
Preferred Stock 100
Westwind Air Bearings Limited* England Ordinary 100
Deferred 100
Avionics
ACR Electronics Inc. USA Common Stock 100
Air Précision S.A. France Ordinary 100
Applied Composites A.B. Sweden Ordinary 100
Artex Aircraft Supplies Inc. USA Common Stock 100
Atlantic Microwave Corporation USA Common Stock 100
Chelton Antennas S.A. France Ordinary 100
Chelton Avionics Inc. USA Common Stock 100
Chelton Avionics (Proprietary) Limited South Africa Ordinary 100
Chelton Defence Communications Limited England Ordinary 100
Chelton (Electrostatics) Limited England Ordinary 100
Chelton Flight Systems Inc. USA Common Stock 100
Chelton Inc. USA Common Stock 100
Chelton Limited* England Ordinary 100
Chelton Radomes Limited England Ordinary 100
Chelton Radomes Witney Limited England Ordinary 100
Cobham Composites Limited England Ordinary 100
Comant Industries Inc. USA Common Stock 100
Continental Microwave & Tool Co. Inc. USA Common Stock 100
Credowan Limited England Ordinary 100
Culham Electromagnetics and Lightning Limited England Ordinary 100
European Antennas Limited England Ordinary 100
Hyper Technologies S.A. France Ordinary 100
Kevlin Corporation USA Common Stock 100
Label S.A. France Ordinary 100
Micromill Electronics Limited England Ordinary 100
Northern Airborne Technology Limited Canada Common Stock 99.1
Nurad Technologies Inc. USA Common Stock 100
Omnipless Manufacturing (Proprietary) Limited* South Africa Ordinary 100
Salies S.A. France Ordinary 100
Seimac Limited Canada Common Stock 100
Sivers Lab A.B. Sweden Ordinary 100
Slingsby Aviation Limited England Ordinary 100
TEAM S.A. France Ordinary 98.7
Flight Operations and Services
Aviation Défense Service S.A.# France Ordinary 45
Bournemouth Aviation Services Company LimitedØ England Ordinary 40
Corporate Air Spares Limited England Ordinary 100
FB Heliservices Limited# England Ordinary 50
FBS Limited# England Ordinary 50
Flight Precision Limited England Ordinary 51
FR Aviation Group Limited* England Ordinary 100
FR Aviation Limited England Ordinary 100
FR Aviation Services Limited England Ordinary 100
FRA Airmotive Limited England Ordinary 100
National Air Support Pty Limited Australia Ordinary 100
National Jet Systems Pty Limited Australia Ordinary 100
Surveillance Australia Pty Limited Australia Ordinary 100
In the case of the companies marked*, the stated percentage nominal value of issued shares is held by, or by a nominee for, 
Cobham plc. Otherwise, shares are held by, or by a nominee for, a subsidiary undertaking of Cobham plc.
# Joint ventures. Ø Associate.
84
Notes to the Financial Statements continued 1998 1999 2000 2001 2002
(Restated) (Restated)
£m£m£m£m £m
Turnover 384.1 435.2 568.4 721.8 734.6
Underlying Profit before T axation 63.2 72.6 90.2 103.5 115.3
Profit before T axation 63.6 69.7 89.0 87.5 99.4
Taxation (19.9) (21.7) (26.4) (27.7) (27.9)
Profit after T axation 43.7 48.0 62.6 59.8 71.5
Minority interest (0.1) (0.2) (0.2) (0.2) (0.3)
Attributable to Shareholders 43.6 47.8 62.4 59.6 71.2
Dividends (15.1) (17.3) (20.2) (23.6) (25.9)
Profit Retained 28.5 30.5 42.2 36.0 45.3
Net Assets Employed
Intangible assets 39.1 62.2 165.3 243.9 250.3
Tangible assets 133.0 136.5 186.6 191.0 194.2
Investments 5.1 4.4 5.6 10.6 14.5
Current assets 236.8 252.0 306.1 385.0 426.8
414.0 455.1 663.6 830.5 885.8
Current liabilities (137.5) (168.3) (277.8) (318.0) (277.1)
Long term liabilities (86.0) (64.9) (114.9) (198.5) (248.7)
190.5 221.9 270.9 314.0 360.0
Financed by
Ordinary share capital 24.6 24.7 24.8 25.2 25.4
Reserves 165.7 196.8 245.5 288.0 333.8
Shareholders’ Funds 190.3 221.5 270.3 313.2 359.2
Minority interest 0.2 0.4 0.6 0.8 0.8
190.5 221.9 270.9 314.0 360.0
pppp p
Dividend per ordinary share 15.25 17.55 20.20 23.23 25.60
Earnings per ordinary share – underlying 44.7 51.4 64.2 75.4 86.1
Earnings per ordinary share – basic 45.1 48.5 63.0 59.4 70.4
Earnings per ordinary share – fully diluted 44.7 48.0 62.3 58.8 69.9
Net assets per ordinary share 194 225 273 311 355
£m £m £m £m £m
Market capitalisation 675 765 1,040 1,086 1,035
Notes: (i) Underlying profit before taxation represents the profit on ordinary activities before taxation, amortisation of goodwill,
integration costs and exceptional items.
(ii) In 1998 fixed assets, current liabilities and long term liabilities have been restated to reflect the change in accounting policy
in 1999 for aircraft engine overhaul expenditure.
(iii) In 2001 long term liabilities and reserves have been restated to reflect the impact of adopting FRS 19 “Deferred Tax”.
COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 85
Group Financial Record Analysis of Shareholders
(a) At 31 December 2002 5,496 ordinary shareholders were on the register compared with 5,387 at 31 December 2001.
(b) Analysis of ordinary shareholders on the register at 31 December 2002:
Number of Percentage Number of Percentage
registered of registered ordinary of ordinary
holders holders shares held shares
Size of holding %%
Up to 1,000 4,085 74.33 1,103,212 1.09
1,001 – 10,000 985 17.92 2,893,907 2.85
10,001 – 50,000 222 4.04 5,169,945 5.09
50,001 – 250,000 125 2.27 14,190,101 13.98
250,001 – 1,000,000 51 0.93 22,203,439 21.88
1,000,001 and above 28 0.51 55,930,080 55.11
5,496 100 101,490,684 100
Category
Private persons 4,100 74.60 7,822,409 7.70
Nominees 1,310 23.83 90,636,020 89.31
Insurance companies 2 0.04 1,098,878 1.08
Pension funds 1 0.02 1 –
Other corporate bodies 83 1.51 1,933,376 1.91
5,496 100 101,490,684 100
Source: Lloyds TSB Registrars.
Registrars
Enquiries concerning shareholdings or dividends should, in the first instance, be addressed to the company’s registrars, Lloyds TSB
Registrars, The Causeway, Worthing, West Sussex BN99 6DA (telephone: +44 (0)870 600 3970). Shareholders should promptly notify the
registrars of any change of address or other particulars.
The registrars now provide a range of shareholders’ services on line. The portfolio service provides access to more information on
investments including balance movements, indicative share prices and information on recent dividends. For further information and practical
help on transferring shares or updating your details, please visit www.shareview.co.uk. Through Shareview, the company hopes in due course
to give shareholders the opportunity to receive information electronically and to submit proxy instructions on line in connection with voting
at general meetings.
86
Shareholder Information COBHAM PLC ANNUAL REPORT & ACCOUNTS 2002 87
Individual Savings Accounts (ISAs)
The company has introduced corporate sponsored ISAs through The Share Centre Limited, an independent stockbroker. Further information
may be obtained from The Share Centre Limited on +44 (0)1296 414444 or by writing to The Share Centre Limited, PO Box 2000, Aylesbury,
Bucks HP21 8ZB. Alternatively, you can request details via e-mail: cobham@share.co.uk giving your full name and address (including
postcode).
Capital Gains T ax
For the information of shareholders who held Cobham plc ordinary shares on 31 March 1982, the market value, adjusted for capitalisation
and rights issues, of the company’s ordinary shares on that date for capital gains tax purposes was 86.02p.
Financial Calendar
Annual general meeting 11 June 2003
Final dividend (if approved) 4 July 2003
Interim results September 2003
Interim dividend December 2003
Registered Office
Brook Road, Wimborne, Dorset BH21 2BJ
Telephone: +44 (0)1202 882020
Facsimile: +44 (0)1202 840523
Internet: www.cobham.com
Registered in England No. 30470 PRODUCED BY ROYLE FINANCIAL PRINT LIMITED, LONDON  Cobham plc
Brook Road
Wimborne
Dorset
BH21 2BJ
United Kingdom
Telephone 
+44 (0)1202 882020
Facsimile
+44 (0)1202 840523
Internet
www.cobham.com