Cobham plc Annual Report & Accounts 2003 Cobham’s principal activities are:
•
the design, manufacture, sale and support 
of ﬂuid and air distribution components and
systems, countermeasures, air refuelling
equipment, aviation auxiliary mission 
equipment and life support equipment 
for the aerospace and defence markets
•
the design and supply of antennas, aircraft
communication and navigation equipment,
microwave sub-systems, radomes and 
composite structures for the aerospace,
defence, homeland security, search and 
rescue and communication markets
•
the operation, modiﬁcation and maintenance 
of aircraft in the aerospace and defence markets
for military training, outsourced special mission
ﬂight operations, freight and passenger services FR-HiTEMP designs and manufactures
the engine build up equipment for the
Rolls Royce Trent engine family.
By permission of Rolls-Royce. Contents
Cobham at a Glance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Group Financial Highlights  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Chairman’s Statement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Chief Executive’s Review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Business Review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Financial Review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Directors, Ofﬁcers and Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Board of Directors  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Directors’ Report  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Directors’ Remuneration Report  . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Statement of Directors’ Responsibilities  . . . . . . . . . . . . . . . . . . . 45
Independent Auditors’ Report  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Accounting Policies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Consolidated Proﬁt and Loss Account  . . . . . . . . . . . . . . . . . . . . . 51
Consolidated Balance Sheet  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Parent Company Balance Sheet  . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Consolidated Cash Flow Statement  . . . . . . . . . . . . . . . . . . . . . . . 54
Reconciliation of Net Cash Flow to Movement in Net Debt . . . 54
Statement of Total Recognised Gains and Losses  . . . . . . . . . . . . 55
Reconciliation of Movements in Shareholders’ Funds  . . . . . . . . 55
Notes to the Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . 56
Group Financial Record  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Shareholder Information  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Mr Howard Holdsworth standing in front of a Coastwatch Islander
aircraft based in Broome, Western Australia, ﬂanked by the crew
and police who took part in his rescue.
National Air Support, a Cobham Flight Operations & Services company,
provides the Coastwatch Service which sighted a novel alert sign on
the north-west coast of Australia. 4
Cobham has consistently pursued an aggressive approach to building and managing
a diverse portfolio of aerospace and defence businesses.This strategy has generated
strong shareholder returns. The group remains in a ﬁnancial and strategic position
to sustain success.
Cobham at a Glance
AEROSPACE SYSTEMS
This new grouping has brought together Cobham’s capabilities in design and manufacture of ﬂuid and air
distribution components and systems, life support equipment and aerospace oxygen systems,
countermeasures, air refuelling, and aviation auxiliary mission equipment such as weapon carriage 
and release.
AVIONICS
Chelton has 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, microwave sub-systems, radomes and composite structures.
FLIGHT OPERATIONS & SERVICES
The FR Aviation group has developed to become a world leader in operation, modiﬁcation 
and maintenance of aircraft in the aerospace and defence markets. The group specialises in military
training, airborne surveillance, large military aircraft maintenance, and freight and passenger services. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 5
Turnover
£832.6m (2002 - £734.6m) +13.3%
Proﬁt on ordinary activities before taxation
1
£54.5m (2002 - £99.9m) – 45.4%
Underlying proﬁt on ordinary activities before taxation
2
£135.3m (2002 - £115.8m) +16.8%
Interim dividend – paid 12 December 2003
8.36p (2002 - 7.60p) +10.0%
Recommended ﬁnal dividend – payable 2 July 2004
19.80p (2002 - 18.00p) +10.0%
Recommended dividend per Ordinary Share
28.16p (2002 - 25.60p) +10.0%
Analysis of Turnover Non Military      Military
£832.6m
£415.0m : 49.8% £417.6m : 50.2%
£371.8m : 50.6% £362.8m : 49.4% £734.6m
£721.8m
2003
2002
2001
Group Financial Highlights
£405.6m : 56.2% £316.2m : 43.8%
Earnings per Ordinary Share – underlying
93.5p
86.4p
75.4p
2003
2002
2001
Dividend
28.16p
25.60p
23.23p
2003
2002
2001
Earnings per Ordinary Share – basic
17.2p (2002 - 70.7p) –75.7%
Earnings per Ordinary Share – fully diluted
17.1p (2002 - 70.2p) –75.6%
Earnings per Ordinary Share – underlying
93.5p (2002 - 86.4p) +8.2%
Notes
1 During 2003 an exceptional loss was made on the sale of the Westwind subsidiary of £64.1 million.
2 Underlying proﬁt on ordinary activities before taxation, amortisation of goodwill, integration costs and the exceptional loss on disposal.
3 For 2003 the group adopted FRS 17 as its accounting policy for pensions. All 2002 comparatives have been restated to reﬂect this change. 6
Chairman’s Statement
Results
Proﬁt on ordinary activities before taxation decreased by 45%
to £54.5m (2002 - £99.9m). Earnings per share decreased by
76% to 17.2p (2002 - 70.7p). These decreases were due to the
exceptional loss on the sale of Westwind after goodwill
previously written off to reserves in 1995 has been taken into
account.
I am delighted to be able to report another set of record
underlying results for 2003. Turnover for the year increased by
13% to £832.6m (2002 - £734.6m). Profit before tax,
integration costs, goodwill amortisation and the disposal of
Westwind rose by 17% to £135.3m (2002 - £115.8m).
Underlying earnings per share of 93.5p (2002 - 86.4p) were 8%
higher than for the comparable period last year. Your directors
have recommended a ﬁnal dividend of 19.80p (2002 - 18.00p)
per share. Together with the interim dividend of 8.36p per share
(2002 - 7.60p) which was paid in December, this represents an
increase of 10% compared to 2002. Subject to shareholders’
approval, the ﬁnal dividend will be paid on 2 July 2004 to all
shareholders on the register as at 4 June 2004.
The group generated cash from operations of £147.8m (2002 -
£135.9m). Net debt at the year end of £154.4m (2002 -
£188.8m) includes the cash cost of acquisitions completed in
2003 and represents a gearing level of 34% (2002 - 63%).
The group invested £40.4m (2002 - £31.6m) in research and
development, an increase of 28%.
Our ‘Manufacturing’ companies have been reorganised into a
single Aerospace Systems group which is expected to show
further growth in future years. Trading performance was much
stronger in the second six months of the year. Excellent results
were produced by all three business groups. Avionics has
successfully acquired and integrated nine businesses.
Corporate development
The group will continue to strengthen its leading position in
aerospace markets building on the skills and systems capability
which have been developed in recent years. A combination of
organic growth and acquisition will support this strategy which
has produced consistent growth and an increasing return for
shareholders over the past two decades.
In Cobham we have the people,
products and services to satisfy our
customers’ future requirements and the
strategy that will continue to increase 
total shareholder return  
Gordon Page
“
” COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 7
We completed a successful share placing in July.
Thirteen acquisitions were made during the year for a total
consideration of £165.4m, including £14.4m of deferred and
contingent payments. In December Westwind was sold to GSI
Lumonics Inc. for £21m.
People
In November, I became the non-executive chairman of 
Cobham plc. At the end of July, Giles Irwin retired as group
ﬁnancial director after 20 years’ service. In August, Robin Clark,
managing director of Flight Refuelling Limited, left the company
as a result of the reorganisation of the group’s structure,
mentioned above, after 22 years’ service with Flight Refuelling
Limited. My board colleagues join me in thanking them for their
long and valuable contribution to the successful development
of the group.
During the year there were two executive appointments to the
board. In July, Warren Tucker became group ﬁnancial director
and in November, Andy Stevens was appointed managing
director of the newly formed Aerospace Systems group. In
March 2004, Marcus Beresford was appointed to the board as
an independent non-executive director. I welcome each of them
and look forward to their contribution in continuing our record
of sustained proﬁtable growth.
Outlook
The breadth of Cobham group activities is such that we are now
able to manage variations in individual sectors with some
conﬁdence. Defence markets are growing in the USA and this
has directly beneﬁted the group. We have also successfully
anticipated the technologies required by military priorities.
Commercial aerospace still has some way to go before we can
be conﬁdent that a genuine recovery is in progress. However,
Cobham’s presence on the most modern commercial aircraft
and a growing aftermarket have, to some extent, mitigated the
effects of the downturn in the commercial aerospace sector.
Overall, I am conﬁdent that in Cobham we have the people,
products and services to satisfy our customers’ future
requirements and the strategy that will continue to increase
total shareholder return.
Gordon Page Chairman
18 March 2004
The proposed UK future 
strategic tanker aircraft 
Airbus A330-200 converted 
to carry Flight Refuelling’s 
centreline and wing pod 
refuelling equipment. Introduction
2003 proved to be a very successful year for Cobham.
Signiﬁcant progress was made in the implementation of our
long-term strategic plan whilst delivering excellent ﬁnancial
results. New orders worth £925m were achieved and the order
book at the end of 2003 stood at £1.2bn.
Organisation
Cobham’s business has been organised into three specific
product and service groups:
•
Aerospace Systems
•
Avionics
•
Flight Operations & Services.
Aerospace Systems, under Andy Stevens, is a new group
dedicated to the design and manufacture of fluid and air
distribution, life support, countermeasures, air refuelling and
aviation auxiliary mission equipment.
Geoff Cooper and Alex Hannam continue in their roles of group
managing director, Avionics and Flight Operations & Services
respectively.
I am conﬁdent that the executive team now in place will ensure
Cobham’s continued success in the years to come.
Strategic direction
The key tenets of Cobham strategy are:
•
to sustain earnings growth in our existing businesses and to
support further organic and acquisitive growth;
•
to strengthen our focus and retain a balanced portfolio of
companies which are leaders in their particular ﬁeld;
•
to seize opportunities as they arise with the aerospace and
defence industry consolidation; and
•
to create an environment which encourages, rewards and
motivates staff at all levels within the organisation.
The group has, throughout 2003, worked steadily towards
meeting these aims. Not least has been the achievement of
sustained earnings growth in a dynamic and challenging
business environment.
8
Chief Executive’s Review
The Cobham group enters 2004 with a
strong order book of £1.2bn, a streamlined
organisation, a balanced portfolio of
companies and its activities aligned with
priority military expenditure conﬁdent that
the business will continue its growth proﬁle
through 2004
Allan Cook
“
” COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 9
well placed for any increase in the world demand, although it is
difﬁcult to predict when this will occur.
Prospects
The Cobham group enters 2004 with a strong order book of
£1.2bn, a streamlined organisation, a balanced portfolio of
companies and its activities aligned with priority military
expenditure, confident that the business will continue its
growth proﬁle through 2004.
In January 2004, the Ministry of Defence announced that the
AirTanker consortium, in which the group has a 25%
shareholding, had been selected as the bidder which offers “the
best prospect of securing a value for money PFI service” for the
future strategic tanker aircraft (FSTA) – a 27 year programme to
supply air refuelling capability to the Royal Air Force. It is
expected that a contract will be awarded in 2005, allowing
substantial beneﬁts to the group companies engaged in the
supply and support of equipment and through the group’s
shareholding in AirTanker.
The underlying strength of Cobham is based on the key
positions which have been established in existing and future
work platforms and programmes. This in turn relies heavily on
market intelligence, excellent product technology and services
and the enthusiastic support of all employees. I am delighted
with the progress achieved in 2003 and remain conﬁdent of
sustained success in the future.
Allan Cook Chief Executive
18 March 2004
Components for Euroﬁghter Typhoon
supplied by Cobham have a ship set
value of some £800,000.
The successful acquisition of thirteen companies during this
period, coupled with organic growth, has ensured a strong
increase in revenue.
Work is being undertaken to ensure improvements in the
group’s operational performance as part of our continuous
improvement programme. The divestment of Westwind to 
GSI Lumonics in December 2003 has further balanced our
product and service portfolio and improved group underlying
proﬁtability.
The group continues to invest in new products, processes,
facilities and people development to create a positive,
challenging and productive working environment for its
employees.
The group’s success in 2003 gives us conﬁdence in our strategic
direction.
Markets
The aerospace and defence market is polarised between the
military and commercial areas. Cobham has experienced
growth in its military business, particularly in the USA. However,
growth in European defence business is subject to budgetary
pressure and there is a widening gap in research and
development spending between other NATO countries and 
the USA.
In the civil aviation market the volume of air trafﬁc has now
stabilised following the downturn after 11 September 2001, the
conﬂict in Iraq and the SARS virus epidemic. Airbus has, for the
ﬁrst time, outpaced Boeing in the supply of civil airliners.
Cobham remains a major supplier to both companies and is  Review of operations
Flight Refuelling Limited (FRL) and US sister company
Sargent Fletcher Inc (SFI) are complementary leaders in
the design and manufacture of air refuelling (AR) and
auxiliary mission equipment. Both companies have together
met an accelerated United States Marine Corps requirement
for C-130J AR capability by offering upgraded standard
equipment. FRL has also continued the development of a
refuelling pod to meet United States Air Force Special
Operations Command (AFSOC) requirements. Earlier
commitments have been met with the delivery of refuelling
pods for both German and Royal Canadian Air Force A310
tankers and to Sukhoi for integration with an AR capable 
SU-30 ﬁghter.
FRL being the AR equipment supplier to the AirTanker
consortium, which is now the UK MoD’s potential service
provider for the FSTA contract, expects to retain its position
as the premier AR provider for the foreseeable future.
SFI secured record sales and orders throughout the year.
These orders amounted to US$103m and were largely
influenced by refuelling pod orders for the C-130J and
external fuel tank orders for the F-22 and Japanese Air Self
Defence Force F-2 programmes.
FRL and SFI are also heavily engaged in the production and
supply of weapon carriage and release systems. At FRL,
bomb release unit orders were received from the Korean 
Air Force and for technology demonstration equipment in
support of the Future Offensive Air Systems (FOAS)
programme. Deliveries of Brimstone missile launchers to 
the Royal Air Force and multi-missile launchers for 
Sweden’s JAS 39 Gripen defence ﬁghters also commenced 
in 2003.
SFI further reinforced its position as a world leader in this
ﬁeld of specialised equipment by securing a contract to
supply pneumatic bomb ejection racks for the Lockheed
Martin F-16 and Boeing Small Diameter Bomb 
programmes.
FR-HiTEMP achieved satisfactory trading ﬁgures despite the
continued recession in civil aerospace. Deliveries of fuel
system equipment to Airbus have, however, been robust and
demand for spares and repairs for both civil and military
sources remain strong. The supply of replacement fuel
pumps for Boeing 747 aircraft is now underway to three
major airlines; more operators are expected to place orders
shortly.
Cobham Fluid Systems, based at Blandford, responded to a
UK MoD urgent operational requirement by supplying
tactical fuel handling equipment to support the 2003
operation in Iraq.
10
Business Review
AEROSPACE SYSTEMS
Turnover
†
– third party
Operating profit
†*
†
Includes Cobham headquarters
*
Excluding goodwill amortisation of £5.7m (2002 - £4.7m) and integration costs of £nil (2002 - £3.2m) 
£319.7m
£292.8m
£66.2m
£53.7m
2003
2002
2003
2002 With many new orders, 2003 was a successful 
year for the restructured Aerospace Systems
group. Revenue growth was 9.2% and
underlying operating proﬁt has risen 
by 23.3%.
SARGENT FLETCHER achieved record sales 
and developed key business in auxiliary mission
equipment for the US Small Diameter Bomb
programme.
CARLETON has become the market leader in 
aviation oxygen systems.
Above: Tornado GR4 with Brimstone missiles
carried on Flight Refuelling missile launchers.
Centre: F-15E with Boeing Small Diameter
Bomb mounted on a Sargent Fletcher
pneumatic weapons carriage system.
Below: Flight Refuelling Common Rail
Launcher fitted to Sea Harrier FA2. 12
Cobham’s defence pyrotechnic business is now called
Cobham Countermeasures. Within this area, Wallop
Defence Systems is presently embarked on a three-year
contract worth £23m to supply infra-red (IR)
countermeasures to an overseas customer. This work runs
alongside the company’s supply of similar products to the
UK MoD. The provision of a world-class manufacturing
facility in Milan, Tennessee, has now allowed 
FR Countermeasures to commence manufacture of 
IR ﬂares for a United States Navy order.
Stanley Aviation ﬁnished the year with a record order
intake. Long term positions were secured with Boeing on the
C-17 programme for the supply of couplings and tubing
products and with the Engine Alliance (Pratt & Whitney and
General Electric) for the Airbus A380’s GP700 engine
handling system. Equipment scheduled for the Lockheed
Martin F-35 Joint Strike Fighter will translate from the
design to the manufacturing phase in 2004. In late 2003, the
acquisition of Sierracin Harrison extended Stanley’s range
of hydraulic ﬁttings products.
Conax Florida,which supplies electro-explosive devices and
gas storage systems, had a record order intake. Strong
demand from the US military has continued for water
activated parachute release and life vest inﬂation systems.
The company’s IR sector components already being supplied
for the Javelin anti-armour missile are conﬁdently predicted
to feature on other weapon programmes.
Carleton Technologies has further enhanced its global
reputation as a prime supplier of high pressure actuation
and deployment systems. The production of kits for the
Paveway II guided bomb now exceeds 1,200 per month.
Alongside this, manufacturing has also commenced on wing
and ﬁn deployment actuators for the joint air to surface
Conax Florida, which supplies 
electro-explosive devices and gas storage
systems, had a record order intake. Strong
demand from the US Military has continued
for water activated parachute release and
life vest inﬂation systems
Left: Conax automatic life vest inﬂation device.
Far right: FR-HiTEMP Boeing 747 fuel boost pump and canister.
Below right: Conax water activated parachute release units.
Business Review continued
AEROSPACE SYSTEMS CONTINUED
“
” COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 13
standoff missile. Development contracts for other weapon
applications have also been received.
Carleton Life Support Technologies in Canada has
consolidated its position as a leading supplier of 
re-breathing apparatus. Major contracts have been received
from both the United States Navy and Royal Navy.
In June 2003 Carleton acquired Dräger Aerospace in
Germany. This company is now ﬁrmly established as the sole
source provider of emergency oxygen systems for Boeing’s
commercial aircraft. After its purchase by Carleton in 
August, Northrop Grumman Life Support Division was
renamed Carleton Life Support Systems Inc.The company
leads the ﬁeld in the supply of on board oxygen generation
and on board inert gas generation systems. 14
Business Review continued
AVIONICS
Review of operations
Chelton Electrostatics completed the first phase of a
programme to develop an anti-jam GPS antenna system and
also made the ﬁrst deliveries of a GPS signal distribution
system for the Rafale and Mirage 2000.
Contracts were received from AgustaWestland and
Eurocopter for helicopter mounted equipment which
included antennas for the Bowman radio (Apache) and wide
band direction ﬁnders (Tiger). Signiﬁcant orders were also
placed for airborne terrestrial trunked radio systems 
(TETRA) for the UK Police, upgraded communications
equipment for Turkish military helicopters, Korean T-50 and
KO-1 production items and an advanced lo-observable
communications antenna for the F-16.
European Antennas has expanded from the commercial
antenna business area and a landmark initial contract was
signed with Inmarsat for regional broadband global area
network remote antennas. In July, Thales Antennas was
acquired and renamed Racal Antennas.The company is
now supplying antennas for the UK Bowman project.
Deliveries for this £11m contract will continue until mid
2007. Racal Antennas is also the prime supplier for a
3.5GHz UK broadband network with a contract value worth
several million pounds.
Culham Electromagnetics and Lightning participated in
Eurofighter lightning trials and the completion of a
programme with major European aerospace companies
which investigated electromagnetic hazards in aircraft
structures and systems.
Omnipless received full Inmarsat approval for its high-gain
electronically steerable satcom antenna. The company’s
rugged UHF Satcom-On-The-Move antenna has now been
selected for the US forces joint tactical radio system (JTRS).
The acquisition of Orion Electronics opened the homeland
security market for Chelton Avionics. Orion’s precision
satellite tracking product base performed beyond ﬁnancial
expectations in 2003 and promises continued strength in
2004. Micromill Electronics enjoyed a record level of
business in its UK and overseas homeland security markets.
Joint product development with Orion Electronics will see
the launch of further innovative surveillance equipment.
Chelton Defence Communications delivered, during its
ﬁrst full trading year, over 2000 AN/VIC3* vehicle intercom
systems. This has equipped four brigades of the US Army’s
new Stryker light armoured vehicle.
The Chelton Composites group acquired Atlas Composites
which provides expertise in tool manufacture and rapid
Turnover – third party
Operating profit
*
*
Excluding goodwill amortisation of £8.4m (2002 - £6.3m) and integration costs of £0.8m (2002 - £nil)
£316.1m
£251.5m
£60.8m
£51.9m
2003
2002
2003
2002
* US designation for vehicle interphone communications. CHELTON has achieved a thirteenth record
year of sales performance. Revenue growth
was 25.7% and underlying operating proﬁt 
increased by 17.1%.
Worldwide demand for the group’s antenna
products has been complemented by 
further growth in its avionics, communication,
navigation and audio businesses and the 
ﬁrst sales of certiﬁed electronic ﬂight
instrument systems.
Above: Sea Tel’s model 9767 microwave
satellite communication equipment.
Centre: Slingsby Aviation Firefly supplied 
to the RBAF.
Below: Both Kevlin and Sivers produce
microwave rotary joints for air traffic 
control primary radar systems. 16
prototyping. Cobham Composites supplied structures for
the ASTOR programme and manufacture of the SAMPSON
radar array has continued. Chelton Radomes continued
deliveries for Euroﬁghter and a number of radomes for the
EH101 for the Italian Navy. Slingsby Aviation delivered the
ﬁrst propulsor duct for the Astute class submarine and was
awarded a contract for the manufacture of fuselages for
Liberty aircraft while continuing production of kits for the
Europa composite aircraft. Chelton Applied Composites
had a successful ﬁrst year under Chelton ownership, winning
contracts for shoulder launched missile canisters and also
establishing a testing facility to support the JAS 39 Gripen
radome programme.
Air Précision increased its share of the high end slip-ring
market and created a US marketing presence. The company
also received production orders for landing and searchlights
and new GPS clocks. At TEAM, the ﬁrst prototype A380 
radio and audio management system was delivered and 
the company commenced deliveries of digital audio
management units for all current Airbus and Pilatus PC9
aircraft. Sivers expanded further into air traffic control 
radar applications, principally in the Raytheon digital 
airport surveillance radar programme.
In the USA, Atlantic Microwave commenced production
deliveries of its next generation receive terminal (NGRT),
part of the US military’s global broadcast service. Atlantic
Positioning Systems,formed in 2003 from the assets
purchased from the Xybion Corporation, provides high-end
electro-optical positioning equipment that supports
Atlantic Microwave’s growing RF antenna and electro-
optical business. Continental Microwave completed
integration of the Airtron product line and won new
surveillance and weather radar ﬂat plate antenna business.
Kevlin continues to be a major supplier of microwave rotary
couplers for both civil and military radar applications. The 
air trafﬁc control ground radar market provided substantial
new business which required the upgrading of multi-channel
rotary joint/slip-ring/encoder systems.
Left: Chelton Applied Composites missile launcher.
Right: Omnipless HGA 7000 ultra thin high gain speed
data Aero H+ antenna.
Far right: ERA’s Diamond range satellite link antenna
deployed in Washington DC.
Below right: Chelton Defence Communications’
ROVIS ﬁghting vehicle intercom system.
Business Review continued
AVIONICS CONTINUED
Kevlin continues to be a major supplier 
of microwave rotary couplers for both civil 
and military radar applications. The air trafﬁc
control ground radar market provided
substantial new business.
“
” COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 17
Northern Airborne Technology maintained its growth
with the acquisition of dB Systems,a Seattle-based
manufacturer of digital intercommunications products.
Chelton Flight Systems certified their electronic flight
instrument system (EFIS), attaining supplemental type
certiﬁcation for more than 600 aircraft types and delivering
initial systems, on time, to the FAA’s Capstone programme.
Over 50 certiﬁed systems, beyond Capstone, were delivered
in the fourth quarter of 2003. Wulfsberg Electronics
division’s strong performance was driven by activity in its
APCO-25** multiband radios, by continuing demands for
the Series III product line and with manufacture of the
Chelton Flight Systems’ EFIS and autopilot products.
Development of a new FliteLine digital radio family promises
a strong performance in 2004/2005.
In a weak general aviation marketplace, Comant’s successful
range of ComDat multi-function antenna products resulted
in record sales and proﬁt levels being achieved.
Towards the end of the year Chelton acquired UK-based
ERA Technology with over 300 highly skilled professional
engineers and scientists.
Nurad received new business including contracts for
expendable decoy antennas, electronic warfare antennas
and radomes, and antennas and radomes for unmanned
aerial vehicles (UAV). The company’s technical capabilities
were increased by the completion of a compact range test
facility for radar cross section and antenna measurements
and a unique high power, high temperature, high altitude
test facility.
In the search and rescue sector, Artex and ACR performed
exceptionally well in their respective airborne and maritime
markets. The acquisition of Nauticast strengthened ACR’s
position for the pending US Coast Guard automatic
identiﬁcation system shipboard mandate. Seimac added a
maritime locator beacon product line via the acquisition of
Novatech,whilst development of its spread spectrum radio
and completion of a military personal locator beacon is
expected to enhance its performance in 2004. The
acquisition of Sea Tel expanded Chelton’s maritime market
presence into the high performance, stabilised antenna and
data transmission arenas.
** Association of Public Safety Communications Ofﬁcers. 18
Business Review continued
Turnover – third party
Operating profit
*
*
Excluding goodwill amortisation of £1.8m (2002 - £1.7m)
£179.7m
£174.8m
£21.9m
£19.3m
2003
2002
2003
2002
FLIGHT OPERATIONS & SERVICES
Review of operations
In the UK FR Aviation’s £24m Falcon 20 ﬂeet upgrade
programme contracted by the UK MoD is progressing well
with two aircraft fully converted and in operational service
as planned. The programme calls for a further six aircraft to
be converted in 2004 with the remaining six in 2005.
A company Falcon 20 aircraft is engaged in the operational
evaluation of the Euroﬁghter Typhoon Defensive Aids Sub
System (DASS) and will continue to support Typhoon’s entry
into service and ongoing development of DASS.
FR Aviation Services (FRAS), working with BAE SYSTEMS
under a partnering agreement, extended the scope and
duration of its existing Nimrod MR2 aircraft maintenance
contract at RAF Kinloss. FRAS has been nominated as the
preferred maintenance provider for the Nimrod MRA4 when
it enters service.
Tank Devils, the company’s specialist fuel tank repair
services business, has continued to expand successfully 
in the UK and mainland Europe and now actively supports
42 aircraft operators.
Flight Precision Limited (FPL) signed a ﬁve-year contract
with the Manchester International Airports group, for
Manchester International and its associated airports, to
ensure all the equipment needed to guide aircraft to and
from runways is regularly checked and calibrated. The
contract came as FPL celebrated its tenth anniversary,
during which time it has become the European leader in the
outsourced calibration of civil and military airports. In
support of the UK MoD, FPL sent an aircraft to Basra, Iraq,
on three separate occasions during 2003 to install new
navigation aids prior to the re-opening of the airport.
The group’s Australian subsidiaries produced a strong 
trading performance with some notable achievements.
National Air Support (NAS), which focuses on government
and special mission aviation opportunities in Australia and
the Asia Paciﬁc region, completed the installation of an
Inmarsat system into its ﬂeet of ﬁve Dash 8 aircraft. In so
doing it became the world’s ﬁrst civilian aerial surveillance
operator to provide such a system, transmitting real time
video, still images, radar, voice and data from patrolling
Coastwatch aircraft via satellite direct to the Customs’
national surveillance centre. It was one of the company’s
Coastwatch aircraft, operating a routine surveillance
exercise, which played a pivotal role in the recent successful
rescue of a British tourist on a remote Australian beach. NAS
also renewed a three-year contract with the developer of
the laser aerial depth sounder system to operate a 
Dash 8 aircraft in Australia and on worldwide deployments.
During the year National Jet Systems (NJS), which focuses
on freight and passenger services, entered into a new  Flight Operations & Services strong order book
extends to 2012, revenue increased by 2.8%
and underlying operating proﬁt by 13.5%.
The group operates a ﬂeet of 135 ﬁxed 
and rotary wing aircraft in the UK, Europe,
Asia Paciﬁc and Australia.
New long-term contracts have been won 
including the supply and support of aerial
targets for the UK MoD and, with Australian 
Air Express, Australia’s largest overnight 
freight service, extending existing 
air freight operations.
Above: FB Heliservices provide rotary wing
support to British Forces overseas.
Centre: FR Aviation Falcon 20 prepared 
for Eurofighter Typhoon Defensive Aids 
Sub-System trials.
Below: FR Aviation Services offer a complete
fuel tank repair and maintenance service to
42 operators. 20
five-year support contract with Minara Resources,
Australia’s largest nickel mine, and secured a two-year
contract with the giant Newcrest Telfer Gold Mine. Both
mines are located in Western Australia. Building on its
relationship with Australian Air Express in cargo operations,
NJS won a seven-year extension to its existing BAe 146
freighter contract. In addition, NJS won a new A$100m
contract to operate ﬁve Boeing 727 aircraft, acquired as part
of TransAustralian Air, consolidating its position as the
market leader in the provision of overnight freight services.
The new service will see more than 59 million kilograms of
freight delivered annually to Australia’s major cities.
FR Aviation’s joint venture with Bristow Helicopters, FBS, has
successfully completed its sixth year of a fifteen-year
support contract to the tri-service UK Defence Helicopter
Flying School at RAF Shawbury, RAF Valley, and the School 
of Army Aviation at Middle Wallop, adding a further two 
Bell 412 Grifﬁn helicopters in the year. It continues to
provide exceptional levels of aircraft availability with its ﬂeet
of 38 AS 350 Squirrel and eleven Bell 412 Grifﬁn aircraft,
training more than 200 pilots a year.
2003 also saw further expansion following the successful
introduction to service of three Bell 212 helicopters
providing support to the British Army in Belize and four Bell
412 helicopters for the British forces in Cyprus. These
contracts run for three and ﬁve years respectively.
AVdef, the French-based joint venture, had another
successful year growing its order book with the addition of
two three-year contracts with the French Navy and
Direction Générale de l’Aviation Civile. The company will
begin a new high speed target service in 2004 using its
recently acquired A4 Skyhawk aircraft.
Left: Australian operations provided
by National Jet Systems and
National Air Support.
Business Review continued
FLIGHT OPERATIONS & SERVICES CONTINUED
FR Aviation’s joint venture with Bristow
Helicopters, FBS, continues to provide
exceptional levels of aircraft availability 
with its ﬂeet of 38 AS 350 Squirrel and 
eleven Bell 412 Grifﬁn aircraft, training 
more than 200 pilots a year 
“
”
RESOURCE INDUSTRY
QANTASLINK
AUSTRALIAN AIR EXPRESS
CHRISTMAS
ISLAND
COCOS
ISLANDS
BARROW ISLAND
LEARMONTH
KARRATHA
PT HEDLAND
TELFER
NEWMAN
BARIMUNYA
WEST ANGELAS
PARABURDOO
MT KEITH
LEINSTER
LEONORA
KALGOORLIE
MURRIN MURRIN
AYERS ROCK
GOLDEN GROVE
TANAMI
THE GRANITES
ALICE SPRINGS
BALLERA
MOOMBA
GOVE
MCARTHUR
RIVER
TIMIKA
TABUBIL
PORT MORESBY
TOWNSVILLE
COOLANGATTA
LAUNCESTON
DARWIN
BROOME
PERTH ADELAIDE
CAIRNS
BRISBANE
SYDNEY
MELBOURNE
HOBART COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 21
Business Review continued
TECHNOLOGY AND PRODUCT DEVELOPMENT
Part of Cobham’s success has been from its long term
strategy of investment in innovation. In 2003 Cobham
increased the level of development expenditure by some
28% to £40.4m. This equates to 6.4% of annual revenue in
the Aerospace Systems and Avionics product areas.
Investment at this level is expected to continue.
In the Aerospace Systems group Sargent Fletcher’s
advanced technology is currently embracing a non-
pyrotechnic store ejection system and an autonomous
hook-up system for use in air vehicle docking operations. A
new control system, for use with Flight Refuelling’s 900
Series aerial refuelling pods, is now being implemented on
the AFSOC KC-130H tanker aircraft. Consistent with today’s
glass cockpit designs, it allows multiple refuelling systems to
be controlled from a single multi-function display.
Additional benefit is gained by single point access for
improved maintenance diagnostics. The lessons learned
during the development of the low-speed variable drag
drogue (VDD) for the KC-130H air refuelling pods will
signiﬁcantly assist the design of a new high-speed VDD for
use on the Future Strategic Tanker Aircraft. In the case of the
KC-130H, the VDD facilitates refuelling of multi-receivers,
i.e. helicopters, tilt-rotor and low-speed ﬁxed-wing aircraft,
during the same mission.
Chelton has focused speciﬁcally on satellite communications
systems, digital radio technology and cockpit avionics
equipment. Continued development of the electronic ﬂight
instrument system (EFIS) at Chelton Flight Systems has
led to approval for use on helicopter platforms. This
investment was rewarded by winning NASA’s prestigious
‘Turning Goals into Reality’ award. Chelton’s consolidation
as a major sub-system provider is evidenced by the ongoing
investment in interference cancellation technology and the
introduction of a range of customised high power solid state
microwave switching networks.
The addition of ERA Technology to the Chelton group has
added substantial research and development capability
across the Cobham group.
Part of Cobham’s success has been from
its long term strategy of investment in
innovation. In 2003 Cobham increased the
level of development expenditure by some
28% to £40.4m
“
”
Research and Development expenditure
£40.4m
£31.6m
£28.2m
£21.6m
£20.1m
2003
2002
2001
2000
1999 22
Cobham’s Commitment to
Corporate Social Responsibility
As a multi-national organisation, Cobham plc recognises its
corporate social responsibility (CSR) to carry out business in an
economically, environmentally and socially responsible way.
Over the past year a strategy has been developed that
incorporates many elements of CSR which were already in
place. This has resulted in a revised corporate framework that
provides a set of principles to guide behaviour and business
operations for our employees at all levels. It addresses business
ethics, anti-fraud, equal opportunity, health and safety,
environment and community involvement.
The strategy also includes the development of key indicators
and a supporting data collection infrastructure for the
measurement of CSR performance.
A CSR working group, which includes corporate, environmental,
health and safety and communication personnel has now been
established.
In 2003 a number of key performance indicators were
identified which allowed CSR performance to be
measured and a supporting data collection system
was introduced across the Cobham group.
Looking after the environment
Under the group’s environmental policy Cobham is
committed to meeting legislative requirements, to the
prevention of pollution and to the continuous improvement
of environmental performance.
In 2003:
•
A high-level environmental impact analysis was conducted
at the start of the year.
•
19 sites have developed an Environmental Management
System (EMS), six of which are certiﬁed to ISO 14001.
A further seven sites have plans to implement an EMS.
•
Energy consumption was approximately 776k gigajoules,
equating to 0.93 gigajoules per £1,000 of turnover.
•
Greenhouse gas emissions from electricity use was 
40,042 tonnes of carbon dioxide equivalent (CO
2
-e),
approximately 4 tonnes of CO
2
-e per employee.
•
Water consumption was 201,839m
3
, equating to around
22m
3
per employee.
•
136,542 tonnes of waste was generated, 60% of which 
was recycled.
Our Performance at a Glance
Left: ACR President Paul Frank and colleagues holding pallets 
of silicone compound coated circuit boards. ACR installed an
automated system for coating circuit boards in 2003. The
coating replaced a high solvent compound coating system.
Right: The source of our quality is the skills of our workforce,
typiﬁed by the assembly of a radar coolant pump shown here. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 23
Key goals in going forward
It is recognised that implementing an effective CSR strategy is a long-term challenge and work will continue towards
meeting the following goals in 2004:
•
Reﬁnement of the data collection and reporting system.
•
Veriﬁcation of CSR performance as part of the Cobham assurance process.
•
Expansion of key performance indicators and the setting of performance targets.
•
Completion of a revised organisation-wide corporate framework and the setting out of policies in the CSR area.
•
Using the Cobham internet website to communicate with stakeholders and facilitate CSR awareness and continual
improvement within the group.
Looking after our workforce
Cobham’s human resources policies seek to provide all
employees with a safe place to work, equality of opportunity
and freedom from harassment. Career and skills development
of people is the key to future growth and success, with
training an essential element of everyday business activity.
In 2003:
•
The average number of employees within the Cobham
group was 8,990. Of these 23% were women.
•
Greater than 50% of the group’s employees have more
than ﬁve years’ service.
•
Worldwide, 77 injuries and other occurrences were
recorded which were reportable under UK legislation.
Overall incidence rate, as deﬁned by the UK Health and
Safety Executive, reduced by 19% from 945 in 2002 to 769.
•
No penalties or ﬁnes were received for health and safety
matters.
•
Companies throughout the group continued to develop
leadership programmes, including the Cobham Managing
for Excellence programme.
•
Development of targeted training activity is being assisted
by enhancing the group’s appraisal and mentoring systems.
Working with the community
The maintenance of good community links is clearly
fundamental to Cobham’s long term viability and success.
In 2003 support for community issues and 
events included:
•
The support of CANTEEN, a charity for children with
cancer, by National Jet Systems in Australia. This involved
fundraising activities and providing a ﬂight on a BAe 146
for sick children.
•
The donation by Artex (USA) of time and money to a local
trust that provides activities for children with special
needs.
•
The provision by Credowan (UK) of sports kit for a local
soccer team and sponsorship of a local school.
•
The support by Cobham of Young Enterprise in Dorset, UK,
which is designed to bring business experience into
schools.
In addition, ERA Technology (UK) was awarded a contract by
the UK Department for International Development for the
development and trial of innovative hand-held mine detectors
for use in worldwide humanitarian landmine clearance
operations. 24
Financial record
•
In 2003 the share price increased by 14.4% and Cobham
delivered total shareholder returns of 16.9%.
•
Operating cash ﬂow of £108.6m (2002 - £106.9m), which is
a conversion rate of 76% (2002 - 90%) to operating proﬁt
(excluding the exceptional impact of the loss on the disposal
of Westwind, integration costs of £0.8m (2002 - £3.2m),
goodwill amortisation and proﬁts from joint ventures and
associates).
•
Free cash ﬂow £77.3m (2002 - £74.7m).
•
Underlying proﬁt before tax up 16.8% to £135.3m (2002 -
£115.8m). Underlying proﬁt excludes integration costs, the
impact of the loss on the disposal of Westwind and goodwill
amortisation.
•
Underlying earnings per share rose 8.2%.
•
Recommended dividends per share increase of 10%.
Accounting policies
The board has reviewed the accounting policies in accordance
with FRS 18 and determined they are appropriate for the group.
The board has decided to adopt FRS 17 for accounting for
pension costs. The 2002 comparative results have been restated
to reflect this change, with the main impacts being an
additional credit to 2002 proﬁts before tax of £0.5m and a
charge to 2003 proﬁts before tax of £2.5m. Shareholders’ funds
at 31 December 2003 are reduced by £70.0m (2002 - £61.8m).
Share Placing
On 9 July the company issued 9,159,560 ordinary shares by
way of a placing, raising £104.6m net of expenses. The primary
purpose was to fund the higher level of investment in
acquisitions.
Acquisitions
During the year, the group made 13 acquisitions for a total 
cash consideration of £138.8m, borrowings incurred as
consideration of £12.2m and deferred and contingent
consideration of £14.4m.
The larger of the acquired businesses were Litton Life Support,
Dräger Aerospace, ERA Technology, Sea Tel, Thales Antennas 
and the assets of TransAustralian Air. Further detail is in note 29.
Financial Review
These underlying results represent
another record for the group. They complete
a year that has also seen a successful share
placing, 13 acquisitions and the disposal 
of Westwind. I believe the group is well
positioned for the future
Warren Tucker
“
” COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 25
Disposal of Westwind
In line with the group’s strategy, Westwind Air Bearings Limited
and Westwind Air Bearings Inc. (together ‘Westwind’), were sold
on 10 December 2003 for total proceeds of £21.2m. This gave
rise to a proﬁt on disposal of tangible assets of £4.3m which
became an exceptional loss of £64.1m after the reversal of
£68.4m of goodwill originally written-off to reserves in 1995.
Results
Group turnover increased by 13.3% to £832.6m (2002 -
£734.6m). Excluding integration costs, amortisation of goodwill
of £15.8m (2002 - £12.6m), the loss on the disposal of
Westwind and the group’s share of joint venture and associate
results, operating profit increased by 20.3% to £142.5m 
(2002 - £118.5m). The share of operating proﬁt from joint
ventures and associates before goodwill amortisation of £0.1m
(2002 - £0.1m) rose from £4.9m in 2002 to £5.2m in 2003.
Selling and distribution and administration costs were 12.7% of
turnover (2002 - 12.7%).
Profit on ordinary activities before taxation decreased to
£54.5m (2002 - £99.9m). Proﬁt on ordinary activities before tax
and excluding integration costs, goodwill amortisation and 
the loss on the sale of Westwind amounted to £135.3m 
(2002 - £115.8m). This represented a 16.8% increase.
Net interest costs, including those of joint ventures, rose from
£10.2m to £11.5m as a result of higher interest rates and higher
net debt prior to the placing in July.
Turnover analysis
The table below categorises turnover into the various end
market segments, of which military remains the largest:
2003 2002
% %
Military 50 49
Commercial Aerospace 16 17
General Aviation 6 5
Outsourcing – non military 11 12
Government – non military 7 8
Industrial, excluding Westwind 4 3
Marine/ Space 4 4
Westwind (sold in December 2003) 2 2
T axation
The tax charge of £36.0m (2002 - £28.1m) on the proﬁt before
tax of £54.5m (2002 - £99.9m) represents a rate of 66.1%
(2002 - 28.1%). Excluding the exceptional loss of £64.1m 
(2002 - £nil) on the sale of Westwind, integration costs of
£0.8m (2002 - £3.2m) and goodwill amortisation of £15.9m
(2002 - £12.7m), the effective rate for the year would be 26.6%
(2002 - 24.3%). This adjusted tax charge is lower than the
prevailing tax rates across the various countries in which the
group operates, primarily because part of the goodwill charge 
is an allowable expense for taxation and a beneﬁt has arisen
from the tax credit for research and development. Further
details on the tax charge can be found in note 7 to the 
ﬁnancial statements.
Earnings per share
The basic earnings per share was 17.2p (2002 - 70.7p) whilst
the fully diluted earnings per share amounted to 17.1p 
(2002 - 70.2p). However, after adjusting for integration costs,
the amortisation of goodwill and the loss on the disposal of
Westwind, underlying earnings per share increased by 8.2% 
to 93.5p (2002 - 86.4p).
Dividends
The directors are recommending a ﬁnal ordinary dividend of
19.8p per share (2002 - 18.0p) which represents an increase of
10.0% on last year. If approved by shareholders, this will result
in a total dividend of 28.16p per share (2002 - 25.6p), also an
increase of 10.0%.
The total ordinary dividend for the year will absorb £31.3m
(2002 - £25.9m) leaving (loss)/proﬁt retained of £(13.1)m
(2002 - £45.6m).
Financing
During 2003, the group continued to generate funds and, at 
the year end, the net debt as deﬁned by FRS 1 was £154.4m
(2002 - £188.8m). 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
33.9% (2002 - 63.5%). Net interest cover is at a prudent level
of 12.8 times (2002 - 12.1). 2003 net debt is 0.9 times 2003
earnings before interest, tax, depreciation and amortisation,
excluding integration costs and the exceptional loss on the sale
of Westwind. 26
Financing continued
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 group had three main borrowings outstanding at the year
end, under the following facilities:
(a) the March 1996 private placement of Cobham guaranteed
senior notes which raised US$50m. 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$15m.
(b) the October 2002 private placement of Cobham
guaranteed senior notes which raised US$225m.The facility
comprises two series of notes repayable in seven and ten
years. As a result of an interest rate swap, the interest
expense varies with LIBOR.
(c) the £200m club multi-currency credit agreement which
was entered into in December 2002. The borrowings carry a
variable rate of interest. At the end of 2003 £42m had 
been drawn under this agreement. The facility reduced to
£150m after the ﬁrst year of operation and is repayable 
in full in January 2008.
Cash ﬂow
The group gives high priority to cash management. It is
therefore particularly pleasing to highlight the operating and
free cash flow generated in 2003 shown in the following
summary. The operating cash flow amounted to £108.6m 
(2002 - £106.9m), which is 76% (2002 - 90%) of operating
proﬁt (excluding the exceptional impact of integration costs
and profits from joint ventures and associates). £77.3m 
(2002 - £74.7m) of free cash ﬂow was generated.
Control over working capital continues to be a major focus
within the operating companies. As was the case in 2002, a
substantial amount of business was invoiced in the latter part
of 2003 due, in part, to the defence procurement cycle.
Stock turns at the end of 2003 were 3.2 (2002 - 3.3).
Notwithstanding this, trade debtor days at the end of 2003
were 54 (2002 - 57). The impact of acquisitions was to increase
debtors by £22.0m and stocks by £18.4m.
The net cash outflow in respect of capital expenditure 
on tangible and intangible fixed assets was £39.2m 
(2002 - £29.0m). As a percentage of turnover this increased
from 3.9% to 4.7%. We continue to invest in our 
operating companies at a level higher than the annual
depreciation charge.
Further detail relating to the cash ﬂows and movement in net
debt of the group is given in notes 26, 27 and 28 of the ﬁnancial
statements. A summary of the change in net debt is set 
out below:
2003 2002
£m £m
Operating proﬁt 125.9 102.7
Depreciation 33.7 26.4
Amortisation of goodwill and intangibles 16.3 13.1
Loss on sale of ﬁxed assets (0.7) (2.0)
Difference between pension charge and 
cash contributions (2.5) 1.3
Movement in provisions for liabilities and charges – (4.4)
Long term incentive plan 0.6 0.7
Increase in working capital (25.5) (1.9)
Cash inﬂow from operating activities 147.8 135.9
Net capital expenditure and ﬁnancial investment (39.2) (29.0)
Operating cash ﬂow 108.6 106.9
Net interest paid (11.0) (8.6)
Tax paid (20.3) (23.6)
Free cash ﬂow 77.3 74.7
Dividends paid (27.6) (24.2)
Net cash outﬂow for acquisitions 
less disposal proceeds (115.0) (38.8)
Issue of debt in consideration of acquisition (12.2) –
Shares issued net of expenses 105.7 4.8
Loans of subsidiary undertakings acquired (1.4) –
Exchange movements 7.6 2.4
Decrease in net debt 34.4 18.9
Financial Review continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 27
Pensions
The group has adopted FRS 17 for the 2003 financial
statements and comparative 2002 ﬁgures have been restated.
FRS 17 is a more prescriptive accounting treatment than
SSAP24, and we consider that the greater transparency and
consistency offered are signiﬁcant beneﬁts.
Under FRS 17, the group’s ﬁnancial statements reﬂect the net
surplus/deﬁcit in deﬁned beneﬁt plans, taking assets at their
market values at 31 December and evaluating liabilities by
discounting at year-end AA corporate bond interest rates.
Following actuarial reviews of the funding of the main UK
schemes in June 2003, the operating companies increased their
contribution rate. Additional contributions of £3.8m have been
made during 2003. In addition, the majority of employees have
elected to increase their contributions by 2 percentage points
from the beginning of 2004.
Foreign exchange 
The group’s aim has been 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 primarily due to the level of US dollars which
the UK and European subsidiaries expect to receive from their
business activities, as certain global aerospace and defence
contracts are denominated in US dollars. Equally, some
exposure arises from operating companies based in the USA,
offset partially by dollar denominated borrowings. All
signiﬁcant foreign exchange transactions are approved by the
parent company. In addition to the structured borrowing, a
number of ﬁnancial instruments are used to manage the foreign
exchange exposure, such as forward rate contracts and options.
Details of the most signiﬁcant of these are described in note 30
of Notes to the Financial Statements. In January 2004 the
group entered into additional forward contracts to sell US$ for
sterling and euros throughout 2004. As a consequence, the
majority of the anticipated exposure to US$ in UK and
European subsidiaries is hedged at average rates of 1.59 for
sterling and 1.23 for euros respectively.
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.
Warren Tucker Group Financial Director
18 March 2004 28
Acquisitions
Acquisition summary for the 12 month period ended 31 December 2003
Name Business description Consideration Date acquired Country Group division
Harrison division of Design and manufacture of high pressure ﬂuid US$10m Nov-03 USA Aerospace Systems
Sierracin Corporation connectors for military and commercial aircraft as well 
as tooling for aircraft manufacturers and providers.
ERA Technology Ltd Provision of specialist high value added, technology- £32m plus Oct-03 UK Avionics
based services including design and development, contingent expenses and
testing, assessment and expert advice. deferred consideration
of up to £6m
Nauticast AG Supply of maritime automatic identiﬁcation systems. c3m Oct-03 Austria Avionics
Trade and assets of Provision of a 727-based freighter service. Aus$25m Oct-03 Australia Flight Operations
TransAustralian Air
Sea Tel Inc Design and manufacture of commercial shipboard  US$27m Sep-03 USA Avionics
stabilised antenna platforms for satellite data plus deferred 
communications, television and weather data and contingent 
in the world. consideration of
up to US$8m
Litton Life Support Design and manufacture of air separation systems for US$76m Aug-03 USA Aerospace Systems
unit of Northrop military and commercial aircraft, medical and industrial 
Grumman Corp applications.
Thales Antennas Ltd Design and manufacture of tactical antennas and £6m Jul-03 UK Avionics
masts for HF, VHF and UHF applications. In addition it 
produces a range of telescopic/sectional support masts 
and ancillaries.
Novatech Designs Ltd Design and manufacture of specialised radio beacons C$1m Jun-03 Canada Avionics
and zenon ﬂashers.
Dräger Aerospace Production of a range of oxygen components and c25m plus c3m Jun-03 Germany Aerospace Systems
GmbH systems for civil and military aircraft. deferred consideration
Atlas Composites Ltd Manufacturer of complex composite components. £2m May-03 UK Avionics
dB Systems Inc Design and manufacture of aviation audio equipment. US$4m plus US$2m May-03 USA Avionics
deferred consideration
Xybion Sensor Design and manufacture of positioning systems for use US$1m Jan-03 USA Avionics
Positioning Systems with optical and radio frequency antenna sensors.
division of 
Xybion Corporation
Orion Electronics Ltd Design and manufacture of GPS tracking equipment. C$14m Jan-03 Canada Avionics COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 29
President
Sir Michael Cobham CBE, MA, Barrister, FRAeS
Secretary
J M Pope LLB, FCIS, Solicitor
Auditors
PricewaterhouseCoopers LLP
Principal Group Bankers
Barclays Bank PLC
Directors, Officers and Advisers
G F Page CBE, MA, FRAeS, DSc °
Non-executive Chairman
A E Cook BSc, CEng, FRAeS °
❑ Chief Executive 
W G Tucker BSc, ACA, MBA
❑ Group Financial Director
G C Cooper OBE, CPhys, FRAeS, MInstP
❑ Managing Director, Avionics Group
A J Hannam
❑ Managing Director, Flight Operations & Services Group
A J Stevens BSc, CEng, FIEE, FRAeS
❑ Managing Director, Aerospace Systems Group
J D M Smith BSc †
*°
Non-executive Director
J W Edington PhD, DSc, FIM, FREng †
*°
Non-executive Director
P Hooley FCA, MSc †
*°
Non-executive Director
M Beresford CBE, MAMechSc, FIEE †
*°
Non-executive Director
† Member of the remuneration committee
* Member of the audit committee
° Member of the nomination committee
❑ Member of the executive committee 30
Board of Directors
G F Page CBE, MA, FRAeS, DSc Non-executive Chairman
Appointed to the board in 1990, Gordon Page, aged 60, 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 member of the Department of Trade and Industry’s Industrial
Development Advisory Board, president of the Chartered Management Institute and chairman of the Wessex branch of the Institute
of Directors. He is also a director, and immediate past president, of The Society of British Aerospace Companies Ltd. He is chairman
of the nomination committee.
A E Cook BSc, CEng, FRAeS Chief Executive
Appointed to the board in 2001, Allan Cook, aged 54, 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. He is chairman of the
executive committee.
W G Tucker BSc, ACA, MBA Group Financial Director
Appointed to the board in 2003, Warren Tucker, aged 41, joined the group as group ﬁnancial director. Prior to joining, he qualiﬁed as
a chartered accountant, worked at Lazard, held senior ﬁnance positions at British Airways and was deputy group ﬁnancial director of
Cable and Wireless plc.
G C Cooper OBE, CPhys, FRAeS, MInstP Managing Director, Avionics Group
Appointed to the board in 1995, Geoff Cooper, aged 58, joined the group as managing director of Chelton Limited on the acquisition
of that company in 1989. He is responsible to the board for the performance of the Avionics group.
A J Hannam Managing Director, Flight Operations & Services Group
Appointed to the board in 2002, Alex Hannam, aged 57, 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 Flight Operations & Services group.
A J Stevens BSc, CEng, FIEE, FRAeS Managing Director, Aerospace Systems Group
Appointed to the board in 2003, Andy Stevens, aged 47, joined the group as managing director of the Aerospace Systems group. Prior
to joining he was managing director, defence aerospace, at Rolls-Royce plc. He is responsible to the board for the performance of the
Aerospace Systems group. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 31
J D M Smith BSc Non-executive Director
Appointed to the board as a non-executive director in 1996, Mike Smith, aged 64, is a non-executive director of P Z Cussons plc, and
a former director of BTR plc. He is chairman of the remuneration committee and senior independent director.
J W Edington PhD, DSc, FIM, FREng Non-executive Director
Appointed to the board as a non-executive director in 1996, Jeff Edington, aged 64, was, until his retirement, executive director,
technology with Corus Group plc (formerly British Steel plc) where he had responsibility for product and process technology, the
environment and information technology. Prior to joining British Steel in 1992, he was vice-president, research and technology 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 57, 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. He is chairman of the
audit committee.
M Beresford CBE, MAMechSc, FIEE Non-executive Director
Appointed to the board as a non-executive director in 2004, Marcus Beresford, aged 61, is chairman of Ricardo plc, a non-executive
director of Spirent PLC and a member of The Engineering and Technology Board. He was an executive director of GKN plc from 
1992-2002 and chief executive from 2001-2002.
J M Pope 
Company Secretary
Left to right
J D M Smith, M Beresford, P Hooley, W G Tucker, G F Page, A E Cook,
G C Cooper, A J Hannam, A J Stevens, J W Edington 32
The directors have pleasure in submitting their report together with the audited ﬁnancial statements of the group for the year ended 
31 December 2003.
Dividends
An interim dividend of 8.36p per ordinary share (2002 - 7.60p) was paid in December 2003. The directors are recommending a ﬁnal dividend
of 19.8p per ordinary share (2002 - 18.0p) payable on 2 July 2004 to ordinary shareholders on the register as at 4 June 2004, making a total
ordinary dividend for the year of 28.16p (2002 - 25.60p). It is proposed that the retained loss of £13.1m be transferred to the proﬁt and 
loss reserve.
Principal activities and business review
Cobham’s principal activities are:
the design, manufacture, sale and support of ﬂuid and air distribution components and systems, countermeasures, air refuelling
equipment, aviation auxiliary mission equipment and life support equipment for the aerospace and defence markets;
the design and supply of antennas, aircraft communication and navigation equipment, microwave sub-systems, radomes and composite
structures for the aerospace, defence, homeland security, search and rescue and communication markets;
the operation, modiﬁcation and maintenance of aircraft in the aerospace and defence markets for military training, outsourced special
mission ﬂight operations, freight and passenger services.
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 and 9, the business review on pages 10 to 21 and the ﬁnancial review on pages 24 to 27.
Board of directors 
The current directors are listed with short biographical notes on pages 29 to 31. They held ofﬁce throughout the year with the exceptions of
Warren Tucker, Andy Stevens and Marcus Beresford who were appointed on 28 July 2003, 10 November 2003 and 1 March 2004 respectively.
In addition, Giles Irwin and Robin Clark were directors until 27 July 2003 and 15 August 2003 respectively.
The directors retiring by rotation at the annual general meeting are Allan Cook and Geoff Cooper who, being eligible, will offer themselves for
re-appointment. They have service contracts with Cobham plc and Chelton Limited respectively both of which are terminable by either party
giving twelve months’ notice at any time.
Warren Tucker, Andy Stevens and Marcus Beresford will retire at the annual general meeting in accordance with article 111 and will offer
themselves for re-appointment. Warren Tucker has a service contract with Cobham plc which is terminable by the company giving 24
months’ notice if given on or before 1 May 2004 and thereafter by the company giving twelve months’ notice at any time. Andy Stevens has
a service contract with the company which is terminable by the company giving 24 months’ notice if given on or before 10 November 2004
and thereafter by the company giving twelve months’ notice at any time. Both Warren Tucker and Andy Stevens are required to give six
months’ notice of termination to the company. Marcus Beresford does not have a service contract with the company.
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 36
to 44.
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. The Code has been superseded and replaced by the revised combined code
on corporate governance published in July 2003 which takes effect for the company from 1 January 2004.
Directors: The Cobham board currently comprises a non-executive chairman, the chief executive, four other executive directors and four
other non-executive directors of whom Mike Smith is recognised as the senior member. All the non-executive directors, with the exception
of the chairman, are considered to be independent.
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.
Directors’ Report COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 33
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 these are reviewed
from time to time. 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.
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. Advice was received during the year from Egon Zehnder
International and Sciteb in connection with the recruitment of Warren Tucker and Marcus Beresford respectively. The membership of the
committee consists of Gordon Page (chairman), Allan Cook, Mike Smith, Jeff Edington, Peter Hooley and Marcus Beresford (appointed 
1 March 2004).
The executive committee, among other things, develops the group’s strategy for board approval, makes recommendations as to acquisitions
and divestments, reviews operational activities and manages the signiﬁcant risks faced by the group. Membership of the committee
comprises all the executive directors 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 director are contained in the directors’ remuneration report on pages 36
to 44. A committee of the board 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 2003 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 27 contain information relevant to an assessment of the company’s position and prospects. Statements regarding the directors’
responsibilities for preparing the company’s ﬁnancial statements and the auditors’ responsibilities for reporting on them are set out on pages
45 to 47. The directors’ going concern statement is set out on page 27.
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 mis-statement or loss. 34
Corporate governance continued
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.
The process 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. During the year the group executive committee 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. In addition, the audit committee monitors the adequacy of
internal ﬁnancial controls and compliance with group standards through a self-assessment process involving all subsidiaries, supplemented
by risk-based assurance visits and reviews.
The board receives reports on a regular basis from the executive and audit committees in relation to the effectiveness of the group’s system
of internal control and has accordingly reviewed the group’s system of internal control in respect of 2003.
The audit committee comprises Peter Hooley (chairman), Mike Smith, Jeff Edington and Marcus Beresford (appointed 1 March 2004). The
committee normally meets on three occasions during the year and the auditors attend meetings twice yearly. The group ﬁnancial director
attends meetings as required but he is not present throughout.
The audit committee reviews the group’s ﬁnancial statements, internal ﬁnancial controls and risk management. It also approves the selection
of the auditors, approves their fees and reviews their performance, independence and objectivity.
Compliance statement: Throughout the year ended 31 December 2003 the company has complied with the provisions set out in section 1
of the Code except that, with regard to Code provision B.1.7, the company did not for part of the year have as an objective the reduction of
Robin Clark’s notice period to one year or less. However, he left the company as a result of the reorganisation of the group’s structure on 
15 August 2003.
The auditors have, as mentioned in their report on page 46, 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 23 to the ﬁnancial statements.
Research and development
The group continues to invest in the important area of research and development. During the year the group expended £40.4m 
(2002 - £31.6m) 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 21.
Major interests in shares
Major interests in the issued ordinary share capital of the company appearing in the register maintained in accordance with Section 211 of
the Companies Act 1985 as at 18 March 2004 were as follows:
Percentage at
Number of Date of
Shares Notiﬁcation
AVIVA plc 5,371,368 4.83%
Sir Michael Cobham 4,998,200 4.49%
Legal and General Investment Management Limited 3,974,292 3.57%
Aegon Investment Management 3,578,854 3.22%
Scottish Widows Investment Partnership Limited 3,341,046 3.00%
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.
Directors’ Report continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 35
Employment
The group’s employment policies include a commitment to equal opportunities regardless of sex, race, colour, nationality 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.
The group encourages employee participation and consultation at all levels and also the sharing of relevant business information. Such an
approach facilitates the development of new ideas and practices that add value to the business, promotes team member commitment and
helps to focus company and employee expectations. In-house newsletters, intranet and internet communications, company announcements
and team meetings all play a part in this process.
UK employees are given the opportunity to become shareholders in the company through the Cobham Savings Related Share Option
Scheme. This scheme will, subject to shareholder approval, be replaced by a similar scheme at the forthcoming annual general meeting.
Selected UK and overseas employees may become shareholders through participation in the Cobham Executive Share Option Scheme; this
will also, subject to shareholder approval, be replaced at the annual general meeting. Further information relating to these new schemes is
contained in the circular sent to shareholders separately with this annual report.
Further information relating to employment matters is contained in the section on corporate social responsibility on pages 22 and 23.
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.
Further information relating to environmental matters is contained in the section on corporate social responsibility on page 22.
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 2003 represents
35 days’ (2002 - 36 days) worth as a proportion of the total amount invoiced by suppliers during the year ended on that date.
Political and charitable gifts
2003 2002
Charitable £36,304 £36,396
No contributions were made to political organisations.
Auditors
A resolution to re-appoint PricewaterhouseCoopers LLP 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, 16 June 2004 at Painters’ Hall, 9 Little Trinity Lane, London
EC4V 2AD. A circular containing the notice convening this meeting, together with an explanation of the business to be conducted, is sent 
to shareholders separately with this annual report.
By order of the board
John Pope Secretary
18 March 2004 36
In accordance with The Directors’ Remuneration Report Regulations 2002 (‘the Regulations’), shareholder approval of this directors’
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 three 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. It also considers the remuneration of certain senior managers. The membership of the committee consists of 
Mike Smith (chairman), Jeff Edington, Peter Hooley and Marcus Beresford (appointed 1 March 2004), each of whom is an independent 
non-executive director.
The relationship between the board and the committee is governed by formal terms of reference. Under these terms, the committee is
authorised, among other things, to obtain external legal or other professional advice at the company’s expense as required.
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 share incentive schemes which ensures that
directors’ interests are closely aligned with shareholders’ interests. In considering remuneration matters, the committee has received advice
from New Bridge Street Consultants and reports from Inbucon. New Bridge Street Consultants were appointed by the committee. None of
the foregoing provided other services to the company during the year. The committee also consulted with Gordon 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 5 on pages 40 to 44.
Basic salary
Basic salaries are reviewed annually, usually in November, to take effect from 1 January of the following year. The committee takes into
account internal and external advice and data from a range of companies, such as the total reward survey produced annually by New Bridge
Street Consultants, as well as personal performance and business responsibilities.
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 except for Gordon
Page whose bonus was capped at 100% of basic salary in view of his ineligibility, as a result of proximity to retirement, to receive an award
during the year under the Cobham Long Term Incentive Plan. Gordon Page will not be eligible for a bonus in respect of 2004 as he is now a
non-executive director. Giles Irwin’s bonus was pro-rated for the period to his retirement from the board. The policy in respect of the
payment of bonuses for 2004 is the same as for 2003.
In the cases of Gordon Page, Allan Cook and Warren Tucker 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.
In the cases of Geoff Cooper, Andy Stevens 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.
Directors’Remuneration Report COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 37
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 1998. 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 measured having regard to the size of company included 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 2003, of £100 invested in Cobham plc on 31 December 1998 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 and Corporation
Taxes Act 1988. All the executive directors, with the exception of Geoff 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 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 rate 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. 38
Directors’Remuneration Report continued
Pensions continued
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 and Alex Hannam. A scheme
is also being established for Andy Stevens. Details of company contributions made in the year are set out in table 2(b) on page 42. 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, Geoff Cooper, Alex Hannam, Warren Tucker and Andy Stevens.
The value of the awards made was limited to 100% of basic salary (two thirds of basic salary in the case of Warren Tucker). 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 2004 on the same basis as in 2003 except that the level of awards made to participants will be reduced where they
also participate in the new executive share option scheme described below.
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, the committee relies upon performance status and veriﬁcation reports
prepared by Inbucon.
Full details of all allocations under the LTIP are set out in table 5 on page 44.
LTIP performance
The following table shows the actual performance of LTIP awards to date.
Year 1997 1998 1999 2000 2001 2002 2003
Comparator Group (number of companies) 57 52 46 41 30 32 34
Ranking 9761 16
Quartile 11113
Percentage of award vesting 100% 100% 100% 100% Nil
Normal date for transfer of shares April 2002 March 2003 March 2004 March 2003 March 2004 March 2005 2006*
*March, May, December 2006
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. COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 39
Other share schemes
The company made ﬁnal grants of share options under the Cobham Executive Share Option Scheme (1994) in 2003.The scheme will, subject
to shareholder approval at the forthcoming annual general meeting, be replaced by a new scheme which is described in the circular which is
being sent to shareholders with this annual report. Executive directors will be eligible to participate in this new scheme. The maximum value
of shares a participant may receive pursuant to options granted in any ﬁnancial year under the new scheme may not exceed once times basic
salary, and the exercise of options granted will be conditional upon the company’s earnings per share growth exceeding inﬂation by a
speciﬁed margin over a three-year period. There will be no provision for retesting this performance condition if it is not met after three years.
Earnings per share growth is considered by the committee to be the most appropriate measure of the company’s underlying ﬁnancial
performance and it is proposed that the following targets will apply to options granted in 2004:
Average growth in EPS in excess of Value of shares under option which
inﬂation over three years may be exercised
Less than 3% per annum Nil
3% per annum 50% of salary
5% per annum or more 100% of salary
3%-5% per annum 50%-100% of salary (pro rata, on a straight line basis)
Certain executive directors are also participants in the Cobham Savings Related Share Option Scheme an all-employee share scheme
approved by the Inland Revenue. Under the scheme, participants save 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. This scheme has been approved by shareholders and does 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. Subject to shareholder approval, the scheme will be replaced at the forthcoming annual general meeting. Further
information is contained in the circular which is being sent to shareholders with this report.
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. There are no explicit provisions in directors’ service contracts for early termination compensation
commitments. The committee accepts and endorses the principle of mitigation of damages on early termination of a service contract.
The service contract of Gordon Page dated 15 October 1991 expired on his 60th birthday in November 2003 and he is now non-executive
chairman and does not have a service contract. Giles Irwin’s service contract dated 15 May 1987 expired on his 60th birthday in July 2003.
Robin Clark was employed under a service contract, dated 6 May 1993, containing a notice period of two years until he left the company as
a result of a reorganisation of the group’s structure on 15 August 2003. The service contracts of Allan Cook (dated 13 June 2001), Geoff
Cooper (dated 1 June 1989) and Alex Hannam (dated 13 February 2003) are terminable on one year’s notice by either party. Warren Tucker
and Andy Stevens are employed under service contracts (both of which are dated as of 1 January 2004) containing notice periods of two
years by the company which reduce to one year after twelve months’ service. It was necessary to agree to initial two-year notice periods in
order to recruit both directors. These contracts are terminable by six months’ notice to the company.
Subject to earlier termination in accordance with their terms, the service contracts of Allan Cook, Warren Tucker, Alex Hannam and Andy
Stevens will expire on their 60th birthdays. The service contract of Geoff Cooper does not contain an expiry date.
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. 40
Non-executive directors
The non-executive directors do not have service contracts. Mike Smith, Jeff Edington, Peter Hooley and Marcus Beresford have been
appointed pursuant to letters dated 14 March 1996, 12 August 1996, 10 May 2002 and 29 January 2004 respectively. Subject to
appointment or re-appointment by shareholders in the interim, the current terms will expire on 31 March 2005, 30 September 2005, 12 June
2005 and 28 February 2007 respectively. No compensation is payable in the event of their appointments being terminated. Under Gordon
Page’s letter of appointment, which is dated 22 October 2003, his current term will expire, subject as aforesaid, on 30 November 2006.
Six months’ notice of termination is required under this letter to be given by either party.
Each non-executive director, with the exception of Gordon Page, receives an annual fee of £20,000 with an additional fee of £2,000 being
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. Gordon Page receives an annual fee of £160,000 which is ﬁxed until 30 November 2006. Non-executive directors do not participate in
any of the company’s share schemes, pension schemes or bonus arrangements with the exception of Gordon Page who has received awards
in the past under the LTIP and the Cobham Savings Related Share Option Scheme. He is not, however, entitled to participate in future awards
under these schemes.
Auditable part 
The auditable part of this directors’ remuneration report is set out below on pages 40 to 44.
T able 1:
Directors’ emoluments
The remuneration of the directors, including the chairman and the highest paid director, was as follows:
Salary, fees and Termination Beneﬁts Total
other payments Bonus payments excluding pension excluding pension
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
G F Page 389 400 376 400 – – 27 27 792 827
A E Cook 359 350 215 210 – – 22 22 596 582
A G Irwin 
1
146 250 90 250 – – 12 20 248 520
R H L Clark 
2
139 190 – 104 539 – 19 20 697 314
G C Cooper 
3
324 285 150 132 – – 23 17 497 434
A J Hannam 
4
213 94 120 43 – – 73 1 406 138
G E Roe 
5
– 95 – – – – – 7 – 102
W J Tucker 
6
139 – 62 – – – 9 – 210 –
A J Stevens 
7
42 – 52 – – – 11 – 105 –
The Lord Rockley 
8
– 10 – – – – – – – 10
J D M Smith 22 22 – – – – – – 22 22
J W Edington 20 20 – – – – – – 20 20
P Hooley 
9
22 12 – – – – – – 22 12
Total Remuneration 1,815 1,728 1,065 1,139 539 – 196 114 3,615 2,981
Beneﬁts relate to the provision of company cars, fuel, medical/health insurance and telephones. Robin Clark’s beneﬁts also include a payment in respect of 
legal fees. Geoff Cooper also received golf and country club membership and vouchers. Andy Stevens also received relocation beneﬁts but not telephone.
Warren Tucker’s beneﬁts relate to relocation, medical/health insurance and telephones only. Alex Hannam’s beneﬁts relate to relocation and medical/health
insurance.
Directors’Remuneration Report continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 41
T able 1:
Directors’ emoluments continued
1
Emoluments for 2003 are for the period until his retirement as a director on 27 July 2003. He continues to be employed by the company and his emoluments
in respect of the period to the end of the year amounted to £111,000.
2
Robin Clark left the company on 15 August 2003 as a result of a reorganisation of the group’s structure. He was paid a total of £539,000 compensation for
early termination being a discounted sum having regard to his entitlement to 24 months’ notice under his service contract and related employment rights.
3
Emoluments include – under salary, fees and other payments – a payment of £58,000 (2002 - £47,000) made in lieu of additional pension provision. Such
payment is not taken into account in calculating bonus and share scheme entitlements.
4
Emoluments for 2002 are for the period from his appointment on 15 July 2002. Emoluments for 2003 include – under salary, fees and other payments – a
cash allowance of £13,000 in respect of the provision of a car and fuel. Such payment is not taken into account in calculating bonus and share scheme
entitlements.
5
Emoluments for 2002 are for the period until his retirement on 30 June 2002.
6
Emoluments are for the period from his appointment on 28 July 2003. They include – under salary, fees and other payments – cash payments totalling
£26,000 in lieu of payments into a funded unapproved retirement beneﬁt scheme and a cash allowance of £5,000 in respect of the provision of a car and
fuel. Such payments are not taken into account in calculating bonus and share scheme entitlements.
7
Emoluments are for the period from his appointment on 10 November 2003. Additional payments of £30,000 in connection with his accepting ofﬁce will
become payable in 2004 and 2005 subject to his employment with the company continuing.
8
Emoluments are for the period until his retirement on 12 June 2002.
9
Emoluments for 2002 are for the period from his appointment on 12 June 2002.
T able 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
31.12.03 Inﬂation) during 2003 during 2003 31.12.02 31.12.03 during 2003
£ p.a.
1
£ p.a. £ p.a. £ £ £ £
2
G F Page 45,650 3,530 3,530 61,030 696,912 964,401 253,944
A E Cook 9,625 3,415 3,309 30,729 66,753 132,360 50,825
A G Irwin 167,438 9,105 9,105 178,986 2,736,932 3,482,315 735,023
R H L Clark 148,333 35,595 33,679 681,743
3
1,649,324
3
2,693,579 1,035,673
3
A J Hannam 4,675 3,325 3,302 49,961 19,094 81,454 54,789
W J Tucker 2,200 2,200 2,200 11,127 – 15,747 11,127
A J Stevens 275 275 275 1,127 – 1,704 1,127
1
Accrued pension information for Messrs Page, Irwin and Clark is based on service to 17 November, 27 July and 15 August respectively. As Messrs Page and
Irwin reached normal retirement age during the year their accrued pensions did not receive an inﬂationary increase before retirement.
2
The transfer basis was amended during the year following guidance issued by the Institute and Faculty of Actuaries and this has had the effect of increasing
the additional transfer values to a greater extent than if the original basis had applied throughout the year.
3
These values, other than in respect of the position at 31 December 2002, are higher than would otherwise be the case because of understatements of
accrued pension entitlements in prior years resulting from assumptions in respect of ﬁnal pensionable salary and ﬁnal remuneration. Had the transfer value
of accrued pension at 31 December 2002 been calculated using assumptions consistent with the calculation in respect of the position at 31 December 2003,
the sum of £1,649,324 would have been £1,999,714. Consequently, £681,743 would have reduced to £256,426 and £1,035,673 would have reduced 
to £685,283.
The accrued pension shown is that which would be paid annually on retirement based on service to the end of the ﬁnancial year. The transfer
values represent the present value of future payments from the pension plan rather than remuneration currently due to the individual and
cannot be meaningfully aggregated with annual remuneration. Members of the pension plan have the option of paying additional voluntary
contributions. Neither the contributions nor the resulting beneﬁts are included in the above.
Under Inland Revenue regulations, members’ retirement benefits may be reduced on account of retained benefits from previous
employments.
Inﬂation during 2003 has been taken to be 1.7% being the statutory increase to deferred pensions from 2002 to 2003.
Transfer values payable are calculated in accordance with Section 4 ‘Minimum Cash Equivalent’ of Guidance Note 11 issued by the Institute
and Faculty of Actuaries. 42
T able 2(b):
Gordon Page, Allan Cook, Alex Hannam and Andy Stevens are subject to the Inland Revenue capping rules and the following company
contributions, which are taxable beneﬁts, relate to funded unapproved retirement beneﬁt schemes:
2003 2002
£000 £000
G F Page 291 268
A E Cook 112 88
A J Hannam 68 17
A J Stevens 9 –
G E Roe* – 43
*For the period until his retirement on 30 June 2002.
In the case of Geoff Cooper, contributions totalling £34,000 (2002 - £33,000) were made into his personal money purchase pension scheme.
T able 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 1.1.03* At 31.12.03 † At 1.1.03* At 31.12.03 †
G F Page 229,221 209,042 4,434 4,483
A E Cook 63,395 98,555 1,660 2,038
A G Irwin 145,093 145,884 3,614 2,823
R H L Clark 131,668 137,137 2,939 2,939
G C Cooper 206,918 219,140 1,754 1,754
A J Hannam 2,000 22,526 – 742
W G Tucker 956 17,173 – –
A J Stevens – 25,381 – –
J D M Smith 3,000 3,000 – –
J W Edington – – – –
P Hooley – – – –
*At date of appointment if later.
†
At date of retirement if earlier.
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 participants in the Cobham
Savings Related Share Option Scheme. As at 31 December 2003, 3,422 (2002 - 233,927) ordinary shares were held within the QUEST.
Interests at 18 March 2004, 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 2003 save that the interests of Gordon Page had increased by 1,727 ordinary shares upon the exercise of
options under the Cobham Savings Related Share Option Scheme on 9 February. In addition, the number of ordinary shares held within the
QUEST had reduced to two as at 18 March 2004. Also, shares awarded under the Cobham Long Term Incentive Plan in 1999 vested 
absolutely on 17 March 2004 as follows: Gordon Page - 21,132 shares and Geoff Cooper - 12,845 shares.
Directors’Remuneration Report continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 43
T able 3(b):
Directors’ share options
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
1.1.03 Granted Exercised 31.12.03* – pence – pence exercisable date
G F Page 268 – 268 – 320 964 – –
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
– 317 – 317 939 – 1.2.09 1.8.09
A E Cook 1,660 –– 1,660 840 – 1.2.09 1.8.09
– 378 – 378 939 – 1.2.11 1.8.11
A G Irwin 292 – 292 – 320 976 – –
1,727 –– 1,727 483 – 1.2.04 1.8.04
564 –– 564 495 – 1.2.06 1.8.06
499 – 499 – 691 981 – –
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 – 742 – 742 939 – 1.2.09 1.8.09
* At date of retirement if earlier.
The market price of Cobham ordinary shares as at 31 December 2003 was 1,167.0p per share and the closing price range during the year was
927.5p to 1,261.0p.
T able 4:
Gains made on directors’ share options
Exercise Options Gain
date exercised £000
G F Page 20.2.03 268 2
A G Irwin 4.2.03 499 1
10.3.03 292 2
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 £5,000 (2002 - £34,000).
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 been retained by directors. 44
T able 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 1.1.03 the year
1
the year the year
2
at 31.12.03 £
6
date
5
G F Page 105,558 –– 53,040 52,518 456,758 30.3.04
A E Cook 58,818 35,160 – – 93,978 – 27.3.06
A G Irwin 52,191 –– 37,275 14,916 321,605 18.3.04
R H L Clark 74,750 19,601 36,635
4
57,716
3
– 546,623 –
G C Cooper 81,825 24,501 – 31,881 74,445 274,832 27.3.06
A J Hannam – 19,601 – – 19,601 – 27.3.06
W J Tucker – 16,217 – – 16,217 – 1.5.06
A J Stevens – 25,381 – – 25,381 – 4.12.06
1
The market price of a Cobham plc ordinary share on 27 March, 1 May and 4 December 2003, being the dates of the awards made during the year, was
1082.5p, 1137.5p and 1164p respectively.
2
Save in respect of Robin Clark, shares in this column are those awarded on 19 March 1998, which vested absolutely on 18 March 2003, and those awarded
on 21 March 2000, which vested absolutely on 21 March 2003.
The market price of the 1998 shares at the date of award was 978.5p. At the date of vesting it was 1000p.
The market price of the 2000 shares at the date of the award was 805p. At the date of vesting it was 1065p.
The awards are subject to the performance conditions speciﬁed on page 38.
Top quartile performance was achieved in respect of the 1998 and 2000 awards with the result that 100% of the awards vested.
3
This ﬁgure comprises shares awarded in 1998 and 2000, as to which see footnote 2, shares awarded on 18 March 1999 (which vested on 15 August 2003)
and shares awarded on 30 March 2001, 25 March 2002 and 27 March 2003 all of which vested on 18 August 2003. In determining the extent to which shares
should vest, the remuneration committee took into account the performance of the group to the date of leaving and/or the unexpired award periods. The
market prices of these shares at the dates of award were 905p, 1157.5p, 1125p and 1082.5p respectively. On the dates of vesting the market price of the
1999 shares and of the remaining shares was 1170p and 1185p respectively.
4
Lapsed shares comprise a proportion of the shares awarded in 2001, 2002 and 2003. The remuneration committee considered that a proportion only of such
shares should vest following Robin Clark’s departure.
5
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.
6
Monetary values are calculated by multiplying the numbers of shares by their market prices as at the award dates.
By order of the board
J D M Smith Chairman of the Remuneration Committee
18 March 2004
Directors’Remuneration Report continued COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 45
The following statement, which should be read in conjunction with the report of the auditors set out overleaf, 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 48 to 80 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 46
To the members of Cobham plc
We have audited the ﬁnancial statements which comprise the consolidated proﬁt and loss account, the balance sheets, the consolidated 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
directors’ remuneration report (‘the auditable part’).
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the annual report and the ﬁnancial statements in accordance with applicable United Kingdom law
and accounting standards are set out in the statement of directors’ responsibilities. The directors are also responsible for preparing the
directors’ remuneration report.
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 report,
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 review, the ﬁnancial review, 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, issued in June 1998, speciﬁed for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We
are not 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 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 47
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 2003 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 properly
prepared in accordance with the Companies Act 1985.
PricewaterhouseCoopers LLP 
Chartered Accountants and Registered Auditors
Southampton
18 March 2004
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 published in this annual report and accounts on the website.
b) Legislation in the United Kingdom governing the preparation and dissemination of ﬁnancial statements may differ from legislation of
other jurisdictions. 48
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. Those disposed of are accounted for up until
the point of their disposal.
Turnover
Turnover is measured at the fair value of the right to consideration and excludes inter-company sales, value added tax and other sales taxes.
In the case of long term contracts, turnover is recognised based upon the fair value of work performed to date.
Pensions
The group has changed its accounting policy from SSAP 24 ‘Accounting for Pension Costs’ to FRS 17 ‘Retirement Beneﬁts’. Prior year results
have been restated to reﬂect this change and its impact is shown in note 3 to the ﬁnancial statements.
For deﬁned beneﬁt schemes the amounts charged to operating proﬁt are the current service costs and gains and losses on settlements and
curtailments. They are included as part of staff costs. Past service costs are recognised immediately in the proﬁt and loss account if the
beneﬁts have vested. If the beneﬁts have not vested immediately, the costs are recognised over the period until vesting occurs. The interest
cost and expected return on assets are shown as a net amount of other ﬁnance costs or credits adjacent to interest. Actuarial gains and losses
are recognised immediately in the statement of total recognised gains and losses.
Deﬁned beneﬁts schemes are funded, with the assets of the scheme held separately from those of the group, in separate trustee
administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected
unit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and
term to the scheme liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The
resulting deﬁned beneﬁt asset or liability, net of the related deferred tax, is presented separately after other net assets on the face of the
balance sheet.
For deﬁned contribution schemes the amount charged to the proﬁt and loss account in respect of pension costs and other post-retirement
beneﬁts is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are
shown as either accruals or prepayments in the balance sheet.
Deferred taxation
Deferred taxation is 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 taxation 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.
Accounting Policies COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 49
T angible 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.
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. 50
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.
Financial instruments
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 ﬁnancial 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.
Accounting Policies continued 51 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003
Consolidated Profit and Loss Account 
for the year ended 31 December 2003
Restated
Before
goodwill Goodwill Before
amortisation, amortisation, goodwill Goodwill
integration integration amortisation amortisation
costs & costs & Total & integration & integration Total
disposals disposals 2003 costs costs 2002
Notes £m £m £m £m £m £m
Group Turnover
Turnover (including share of joint ventures)
Continuing operations 794.1 752.4
Acquisitions 54.2 –
848.3 752.4
Discontinued operations 17.1 15.5
865.4 767.9
Less: Share in turnover of joint ventures (32.8) (33.3)
1 832.6 832.6 734.6 734.6
Cost of sales (584.5) (0.8)† (585.3) (522.9) (3.2) (526.1)
Gross Profit 248.1 (0.8) 247.3 211.7 (3.2) 208.5
Selling and distribution costs (48.2) (48.2) (36.8) (36.8)
Administrative expenses (57.4) (15.8)* (73.2) (56.4) (12.6)* (69.0)
Group Operating Profit
Continuing operations 135.7 (16.6) 119.1 120.0 (15.8) 104.2
Acquisitions 8.0 8.0––
143.7 (16.6) 127.1 120.0 (15.8) 104.2
Discontinued operations (1.2) (1.2) (1.5) (1.5)
2 142.5 (16.6) 125.9 118.5 (15.8) 102.7
Share of operating profit in joint ventures 5.8 (0.1)* 5.7 5.5 (0.1)* 5.4
Share of operating loss in associates (0.6) (0.6) (0.6) (0.6)
147.7 (16.7) 131.0 123.4 (15.9) 107.5
Exceptional loss on disposal of subsidiary
undertakings – discontinued operations 5 (64.1)≠ (64.1)
Net Interest 6
Group (9.3) (9.3) (8.7) (8.7)
Joint ventures (2.2) (2.2) (1.5) (1.5)
(11.5) (11.5) (10.2) (10.2)
Other finance (charges)/income 12 (0.9) (0.9) 2.6 2.6
Profit on Ordinary Activities before T axation 135.3 (80.8) 54.5 115.8 (15.9) 99.9
Tax on profit on ordinary activities 7 (36.0) (28.1)
Profit on Ordinary Activities after T axation 
before Minority Interest 18.5 71.8
Minority interest (0.3) (0.3)
Profit on Ordinary Activities after T axation 
attributable to Shareholders 18.2 71.5
Dividends 9 (31.3) (25.9)
Retained (loss)/profit for the year 24 (13.1) 45.6
Earnings per Ordinary Share 10
– basic 17.2p 70.7p
– fully diluted 17.1p 70.2p
– underlying 93.5p 86.4p
The 2002 figures have been restated following the adoption of FRS 17 ‘Retirement Benefits’ (note 3).
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 4.
*Amortisation of goodwill.
≠Loss on disposal of Westwind after writeback of £68.4m of goodwill previously written-off to reserves (note 5). 52
Consolidated Balance Sheet 
as at 31 December 2003
2003 2002
Restated
Notes £m £m £m £m
Fixed Assets
Intangible assets 13 345.9 250.3
Tangible assets 14 228.1 194.2
Investments in joint ventures:
Share of gross assets 71.6 60.1
Share of gross liabilities (58.0) (49.4)
Goodwill 1.3 1.4
15 14.9 12.1
Investment in associates 15 1.6 1.0
Investment in own shares 16 – 1.4
590.5 459.0
Current Assets
Stocks 17 190.0 154.8
Debtors:
Amounts falling due within one year 18 190.6 177.9
Amounts falling due after more than one year 18 0.2 0.4
Investments 19 0.1 0.1
Cash at bank and in hand 106.1 71.9
487.0 405.1
Creditors:
Amounts falling due within one year
Borrowings 20 (80.4) (65.6)
Other creditors 20 (259.8) (211.5)
(340.2) (277.1)
Net Current Assets 146.8 128.0
Total Assets less Current Liabilities 737.3 587.0
Creditors:
Amounts falling due after more than one year
Borrowings 21 (180.2) (195.2)
Other creditors 21 (11.7) (10.4)
(191.9) (205.6)
Provisions for Liabilities and Charges 22 (39.3) (36.6)
Net assets excluding pension liabilities 506.1 344.8
Deficit on group pension schemes 12 (49.2) (46.6)
Net assets including pension liabilities 456.9 298.2
Capital and Reserves including non equity interests
Called up share capital 23 27.8 25.4
Share premium account 24 76.8 76.3
Revaluation reserve 24 1.7 1.7
Other reserve 24 0.7 1.3
Profit and loss account 24 348.8 192.7
Shareholders’ Funds 455.8 297.4
Minority interest (equity) 25 1.1 0.8
456.9 298.2
Approved by a duly appointed and authorised committee of the board on 18 March 2004:
Gordon Page
Warren Tucker
Directors
The 2002 figures have been restated following the introduction of FRS 17 ‘Retirement Benefits’ (note 3). Parent Company Balance Sheet
as at 31 December 2003
2003 2002
Notes £m £m £m £m
Fixed Assets
Tangible assets 14 4.3 4.3
Investment in group undertakings 15 246.8 32.0
Investment in own shares 16 – 1.4
251.1 37.7
Current Assets
Debtors:
Amounts falling due within one year 18 208.2 372.6
Amounts falling due after more than one year 18 310.8 291.7
Investments 19 0.1 0.1
Cash at bank and in hand 3.1 46.8
522.2 711.2
Creditors:
Amounts falling due within one year
Borrowings 20 (59.4) (143.2)
Other creditors 20 (49.8) (31.9)
(109.2) (175.1)
Net Current Assets 413.0 536.1
Total Assets less Current Liabilities 664.1 573.8
Creditors:
Amounts falling due after more than one year
Borrowings 21 (139.7) (161.5)
Provisions for liabilities and charges 22 (0.4) –
524.0 412.3
Capital and Reserves including non equity interests
Called up share capital 23 27.8 25.4
Share premium account 24 76.8 76.3
Special reserve 24 43.6 43.6
Other reserve 24 0.7 1.3
Profit and loss account 24 375.1 265.7
Shareholders’ Funds 524.0 412.3
Approved by a duly appointed and authorised committee of the board on 18 March 2004:
Gordon Page
Warren Tucker
Directors
53 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 Consolidated Cash Flow Statement
for the year ended 31 December 2003
2003 2002
Notes £m £m
Cash inflow from operating activities 26 147.8 135.9
Returns on investments and servicing of finance 28a (11.0) (8.6)
Taxation (20.3) (23.6)
Capital expenditure and financial investment 28b (39.2) (29.0)
Acquisitions and disposals 28c (115.0) (38.8)
Equity dividends paid (27.6) (24.2)
Net cash (outflow)/inflow before use of liquid resources and financing (65.3) 11.7
Management of liquid resources 28d – 0.8
Financing 28e 105.1 22.0
Increase in Cash 27 39.8 34.5
Reconciliation of Net Cash Flow to
Movement in Net Debt
2003 2002
Notes £m £m
Increase in cash in the year 39.8 34.5
Decrease/(Increase) in debt and lease financing 0.6 (17.2)
Borrowings on purchase of subsidiary (12.2) –
Decrease in liquid resources† – (0.8)
Loans of subsidiary undertakings acquired (1.4) –
Exchange movements 7.6 2.4
Movement in Net Debt in the year 34.4 18.9
Net Debt at 1 January (188.8) (207.7)
Net Debt at 31 December 27 (154.4) (188.8)
†Liquid resources includes short term deposits of less than one year and corporate investments.
54 Statement of Total Recognised 
Gains and Losses
for the year ended 31 December 2003
Group Parent Company
2003 2002 2003 2002
Restated
Notes £m £m £m £m
Profit Attributable to Shareholders 18.2 71.5 140.7 48.0
Currency translation differences on foreign  
currency net investments 24 2.1 (3.9) – –
Actuarial loss on pensions 12 (7.5) (61.1) – –
Movement on deferred tax relating to pension liability 1.1 17.9 – –
Total recognised (Losses)/Gains relating to the year 13.9 24.4 140.7 48.0
Prior year adjustment 3 (61.8)
Total (Losses)/Gains recognised since last annual report (47.9)
Reconciliation of Movements in
Shareholders’ Funds
for the year ended 31 December 2003
Group Parent Company
2003 2002 2003 2002
Restated
Notes £m £m £m £m
Profit Attributable to Shareholders 18.2 71.5 140.7 48.0
Dividends 9 (31.3) (25.9) (31.3) (25.9)
Retained (loss)/profit for the year (13.1) 45.6 109.4 22.1
Release of goodwill previously written-off against reserves 68.4 – – –
Actuarial loss on pension scheme (net of deferred tax) 12 (5.3) (42.8) – –
Currency translation differences on foreign currency 
net investments 24 2.1 (3.9) – –
New share capital subscribed:
nominal value 23 0.1 0.2 0.1 0.2
premium on share issues 24 1.0 4.6 1.0 4.6
New share capital issued by private placing:
nominal value 23 2.3 – 2.3 –
merger reserve on share issues 24 104.0 – – –
share issue costs 24 (1.7) – (1.7) –
Long-term incentive plan 24 0.6 0.7 0.6 0.7
Contribution to the QUEST 16 – (0.9) – (0.9)
Net addition to shareholders’ funds 158.4 3.5 111.7 26.7
Shareholders’ funds as at 1 January (originally £359.2m
before deducting prior year adjustment of £61.8m) 297.4 293.9 412.3 385.6
Shareholders’ Funds at 31 December (which include
non-equity interests of £19,700) (2002 – £19,700) 455.8 297.4 524.0 412.3
55 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 56
Notes to the Financial Statements
1  Segmental Analysis
Aerospace Systems Flight Operations Westwind
and Group Avionics & Services (Discontinued) Total
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
By Class of Business £m £m £m £m £m £m £m £m £m £m
Turnover 320.5 297.6 317.0 252.2 212.2 208.5 17.1 15.5 866.8 773.8
Less share of joint ventures – – (0.5) – (32.3) (33.3) – – (32.8) (33.3)
Less inter-segmental (0.8) (4.8) (0.4) (0.7) (0.2) (0.4) – – (1.4) (5.9)
Turnover to third parties 319.7 292.8 316.1 251.5 179.7 174.8 17.1 15.5 832.6 734.6
Operating Profit/(Loss) 60.5 45.8 51.6 45.6 15.0 12.8 (1.2) (1.5) 125.9 102.7
Group share of joint ventures 
and associates – ––– 5.1 4.8 – – 5.1 4.8
Group Operating Profit/(Loss) 60.5 45.8 51.6 45.6 20.1 17.6 (1.2) (1.5) 131.0 107.5
Goodwill amortisation 5.7 4.7 8.4 6.3 1.8 1.7 – – 15.9 12.7
Integration costs – 3.2 0.8 – – – – – 0.8 3.2
Underlying Operating 
Profit/(Loss) 66.2 53.7 60.8 51.9 21.9 19.3 (1.2) (1.5) 147.7 123.4
Net Operating Assets 267.4 181.2 227.6 208.0 116.3 82.0 – 15.8 611.3 487.0
Net Debt (154.4) (188.8)
Net Assets 456.9 298.2
United Other EU United Rest of the 
Kingdom Countries States World Total
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
By Geographical Segment £m £m £m £m £m £m £m £m £m £m
Turnover to Third Parties
By destination – group 
– continuing activities 210.8 205.6 161.7 127.5 291.9 224.7 183.9 194.6 848.3 752.4
By destination – group 
– discontinued activities 0.3 0.2 4.4 5.0 2.8 3.9 9.6 6.4 17.1 15.5
Less share of joint ventures (26.0) (28.4) (6.3) (4.7) (0.5) (0.2) – – (32.8) (33.3)
Total 185.1 177.4 159.8 127.8 294.2 228.4 193.5 201.0 832.6 734.6
By origin – group 
– continuing activities 364.8 339.7 85.4 62.4 255.1 218.0 143.0 132.3 848.3 752.4
By origin – group 
– discontinued activities 11.3 11.7 – – 2.4 2.5 3.4 1.3 17.1 15.5
Less share of joint ventures (26.0) (28.4) (6.3) (4.7) (0.5) (0.2) – – (32.8) (33.3)
Total 350.1 323.0 79.1 57.7 257.0 220.3 146.4 133.6 832.6 734.6
Operating Profit
– continuing activities 71.3 57.0 7.0 6.5 37.2 31.5 11.6 9.2 127.1 104.2
Operating profit/(loss)
– discontinued activities (1.7) (1.6) – – 0.2 0.1 0.3 – (1.2) (1.5)
Group share of joint ventures 
and associates 5.0 4.5 0.1 0.3 – – – – 5.1 4.8
Group Operating Profit 74.6 59.9 7.1 6.8 37.4 31.6 11.9 9.2 131.0 107.5
Net Operating Assets 274.1 246.6 51.1 22.5 219.2 151.2 66.9 66.7 611.3 487.0
Net Debt (154.4) (188.8)
Net Assets 456.9 298.2
The segmental analysis excludes the impact of the exceptional loss on the disposal of Westwind which was predominantly in the UK.
In the tables above, the 2002 figures have been restated to reflect the change in accounting policy for pensions. 57 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003
2  Operating Profit
2003 2002
Restated
£m £m
The operating profit of £125.9m (2002 - £102.7m restated) is after charging:
Depreciation – owned assets 33.5 26.1
– assets under finance leases 0.2 0.3
Amortisation – goodwill 15.8 12.6
– other intangible assets 0.5 0.5
Hire of plant and machinery – aircraft 20.4 24.9
– other 3.0 1.3
Other operating lease rentals 4.0 3.6
Research and development costs 40.4 31.6
Auditors’ remuneration in respect of audit services to the group amounted to £0.8m (2002 - £0.7m) and in respect of the parent company amounted to
£55,000 (2002 - £54,700).
Remuneration payable to the auditors for non-audit services provided to the parent company and its UK subsidiaries amounted to £1.0m (2002 - £0.8m) being
for taxation services. Non-audit fees payable to the group auditors in respect of taxation services provided outside of the UK amounted to £0.1m (2002 - £0.1m).
Cost of sales, gross profit and other operating expenses:
Continuing operations Acquired Continuing Discontinued
owned at 1 January operations operations operations Total
2003 2003 2003 2002 2003 2002 2003 2002
Restated Restated
£m £m £m £m £m £m £m £m
Turnover 761.3 54.2 815.5 719.1 17.1 15.5 832.6 734.6
Cost of sales 532.4 38.2 570.6 512.6 14.7 13.5 585.3 526.1
Gross profit 228.9 16.0 244.9 206.5 2.4 2.0 247.3 208.5
Selling and distribution costs 42.8 3.9 46.7 35.8 1.5 1.0 48.2 36.8
Administrative expenses 67.0 4.1 71.1 66.5 2.1 2.5 73.2 69.0
Operating profit/(loss) 119.1 8.0 127.1 104.2 (1.2) (1.5) 125.9 102.7
Operating profit excludes the group share in Joint Venture and Associate companies.
Administrative expenses for acquired operations include amortisation of goodwill totalling £1.3m (2002 - £nil).
3Prior Y ear Adjustment
In the period the group has adopted FRS 17. In prior periods the group had accounted for pension costs under SSAP 24. The resulting restatement to group
profit and loss account reserve is as follows:
Group profit and loss 
account reserve
£m £m
At 31 December 2002 as previously stated 254.5
On removing SSAP 24 prepayment at 1 January 2002 (14.6)
On creating FRS17 liability at 1 January 2002 (4.7)
Adjustment to profit retained in the year 0.3
Actuarial loss in the year (net of tax) (42.8)
Net effect of restatement (61.8)
At 31 December 2002 as restated 192.7
This change in accounting policy has resulted in an increase in staff costs of £1.6m (2002 - £2.1m) and other finance (charges)/income of £(0.9)m (2002 - £2.6m),
an decrease/(increase) in the tax charge of £0.7m (2002 - £(0.2)m), a decrease in profit for the year by £1.8m (2002 - increase of £0.3m) and a decrease in total
recognised gains and losses of £8.2m (2002 - £43.5m). Other debtors at December 2002 have been reduced by £21.7m, together with related deferred tax of
£6.5m.
If stated on a SSAP 24 basis, profit on ordinary activities before taxation would have been £2.5m greater (2002 - £0.5m less) at £57.0m (2002 - £99.4m)
giving a basic earnings per share of 18.8p (2002 - 70.4p) and an underlying earnings per share of 95.2p (2002 - 86.2p). Notes to the Financial Statements continued
4Integration Costs
Connected with the acquisition of the Thales Antennas business of Thales in July 2003, costs of £0.8m have been incurred in respect of restructuring the
business.
Following the acquisition of the Power and Control business of BAE Systems at the end of 2002, costs of £3.2m were incurred in that year in respect of the
integration of the business with various parts of Aerospace Systems.
5 Disposal of Group Undertakings
In line with the group’s strategy to focus on its core aerospace and defence markets, Westwind Air Bearings Limited and Westwind Air Bearings Inc. (together
‘Westwind’), were sold on 10 December 2003 for total proceeds of £21.2m. This gave rise to a profit on disposal of tangible assets of £4.3m which became
an exceptional loss of £64.1m after the reversal of £68.4m of goodwill originally written-off to reserves. There was no tax payable or recoverable in relation
to this disposal.
This business has been treated as a discontinued operation in the financial statements.
6 Net Interest 
2003 2002
£m £m £m £m
Group
Interest receivable 3.4 2.7
Interest payable:
Bank loans and overdrafts (12.2) (8.5)
Other borrowings (0.5) (2.9)
(12.7) (11.4)
Net interest (9.3) (8.7)
Joint V entures
Interest receivable 0.4 0.4
Interest payable (2.6) (1.9)
(2.2) (1.5)
7T ax on Profit on Ordinary Activities
2003 2002
Restated
£m £m
Current tax:
UK corporation tax on profits of the year 18.1 14.1
Share of joint ventures’ and associates’ tax 1.0 0.7
Overseas tax on profits of the year 14.7 10.0
Adjustments in respect of previous years (0.5) (1.5)
Total current tax 33.3 23.3
Deferred tax:
Origination and reversal of timing differences 5.1 7.8
Adjustments in respect of previous years (2.4) (3.0)
Total deferred tax 2.7 4.8
Tax on profit on ordinary activities 36.0 28.1
Excluding the exceptional loss of £64.1m (2002 - £nil), goodwill amortisation of £15.9m (2002 - £12.7m) and the prior year tax credit of £2.9m
(2002 - £4.5m), the effective rate for the year is 28.9% (2002 - 29.0% restated). This adjusted tax charge is lower than the prevailing rates principally because
part of the goodwill charge is an allowable expense for tax purposes and some group expenditure on research and development qualifies for additional
tax deduction.
58 7T ax on Profit on Ordinary Activities continued
The tax assessed for the year is different to the standard rate of corporation tax in the UK of 30% (2002 - 30%). The differences are explained below:
2003 2002
Restated
£m £m
Profit on ordinary activities before tax 54.5 99.9
Profit on ordinary activities multiplied by standard rate in the UK 30% (2002 - 30%) 16.3 30.0
Effects of:
Tax disallowed items (primarily exceptional loss and goodwill amortisation) 21.3 2.1
Capital allowances for year in excess of depreciation (0.2) (6.2)
Other timing differences (4.9) (1.6)
Overseas tax rates higher than UK rates 2.0 1.6
Expenditure qualifying for additional R&D tax deduction (0.7) (0.8)
Contribution to the QUEST – (0.3)
Adjustments to tax charge in respect of prior years (0.5) (1.5)
Current tax charge for the year 33.3 23.3
Factors that may affect future tax charges:
The group’s effective rate of current tax on underlying profits is expected to be lower than the standard rate of corporation tax in the UK primarily because
of timing differences arising on fixed assets and because some of the goodwill amortisation is an allowable deduction for tax purposes. 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.
8Profit 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 £140.7m
(2002 - £48.0m)
9 Dividends
2003 2002
£m £m
Dividends on ordinary shares
Interim paid of 8.36p per share (2002 - 7.6p) 9.3 7.6
Proposed final of 19.8p per share (2002 - 18.0p) 22.0 18.3
31.3 25.9
Dividends include £1,182 (2002 - £1,182) paid in respect of non equity second cumulative preference shares (note 23).
10 Earnings per Ordinary Share
2003 2002 Restated
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 18.2 105.9 17.2 71.5 101.1 70.7
Effect of dilutive securities
Options – 0.7 – 0.6
Long term incentive plan –– – 0.2
Fully Diluted EPS
Adjusted earnings 18.2 106.6 17.1 71.5 101.9 70.2
59 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 Notes to the Financial Statements continued
10 Earnings per Ordinary Share continued
In addition to the information required by FRS14, the directors believe that it is helpful to calculate an underlying earnings per share figure excluding loss on
disposal of subsidiary undertakings, goodwill amortisation and integration costs:
2003 2002 Restated
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 18.2 105.9 17.2 71.5 101.1 70.7
Loss on disposal of subsidiary undertakings 64.1 60.5
Effect of goodwill amortisation 15.9 15.0 12.7 12.5
Effect of integration costs 0.8 0.8 3.2 3.2
Underlying EPS
Adjusted earnings 99.0 105.9 93.5 87.4 101.1 86.4
The calculation of earnings per ordinary share has been based on £18.2m (2002 - £71.5m restated), being the profit after taxation, minority interests and
preference dividend, and on the weighted average number of ordinary shares in issue during the year, being 105,941,221 (2002 - 101,113,784, excluding the
weighted effect of 229,350 which were issued to the QUEST). The weighted average number of ordinary shares used for the fully diluted earnings per share
is 106,622,128 (2002 - 101,875,012, excluding the weighted effect of 229,350 which were issued to the QUEST).
11 Directors’ Emoluments
Details of directors’ remuneration and share options are set out in the directors’ remuneration report on pages 36 to 44.
12 Employees
2003 2002
Number Number
Average number of employees
United Kingdom 4,052 3,864
Other EU countries 1,010 772
United States 2,342 1,788
Rest of the world 1,586 1,488
8,990 7,912
2003 2002
Restated
£m £m
Employment costs
Wages and salaries 231.8 197.9
Social security costs 23.8 18.9
Other pension costs 14.6 13.6
270.2 230.4
60 12 Employees continued
Pensions
The group’s pension arrangements comprise various defined benefit and defined contribution schemes throughout the world with assets held in separate
trustee administered funds.
From 1 January 2003, new employees in the UK have only been able to join the defined contribution scheme. In the USA, both the Carleton Technologies and
Stanley Aviation defined benefit schemes have been closed to new members from 31 December 2003 and 31 January 2004 respectively. Since the majority
of the defined benefit schemes operated by the group are closed to new entrants, the age profile of the schemes’ in service membership will increase over
time. Under the funding method prescribed by FRS 17, the current service cost will increase as a percentage of pensionable salaries as members approach
retirement.
In the year, the group assumed the defined benefit schemes of Dräger Aerospace in Germany and ERA Technology in the UK. Both of these schemes have been
included in the assessment of the FRS 17 liability and in the tables below.
FRS 17 assumptions
The group operates a number of defined benefit schemes, the most significant being the Cobham Pension Plan (‘CPP’). A full valuation of the CPP scheme was
undertaken as at 1 April 2001 and updated to 31 December 2003 by a qualified independent actuary. During the period, employer contributions for the period
were raised to 17.3%.
The major assumptions used by the actuaries of the group schemes as at 31 December 2003 in respect of FRS 17 were as follows:
UK Schemes USA Schemes
At At At At At At
31 December 31 December 31 December 31 December 31 December 31 December
2003 2002 2001 2003 2002 2001
Rate of increase in salary costs 3.50% 3.25% 4.00% 4.00%-5.00% 4.00% 4.00%
Discount rate 5.50% 5.60% 6.00% 6.00%-6.25% 7.00% 7.00%
Inflation assumption 2.75% 2.25% 2.50% 2.50%-3.00% 2.50% 2.50%
Pensions increase 2.75% 2.25% 2.50% 3.00% 3.00% 3.00%
For the Dräger Aerospace scheme in Germany the following assumptions were used for 2003: rate of increase in salaries 4.00%, discount rate 5.50%,
inflation 1.00% and rate of pensions increase 1.5%.
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
2003 and the expected rates of return are as follows:
Expected long term Expected long term Expected long term
rate of return Value rate of return Value rate of return Value
at 31 December at 31 December at 31 December at 31 December at 31 December at 31 December
2003 2003 2002 2002 2001 2001
£m £m £m
UK US UK US UK US UK US UK US UK US
Equities 8.00% 8.00% 181.7 8.0 8.00% 9.00% 117.9 7.4 8.00% 9.00% 145.5 8.1
Bonds 5.10% 4.50% 42.3 4.0 5.00% 7.00% 28.7 3.6 5.50% 7.00% 30.1 4.8
Other 3.75% 3.20% 19.4 0.4 4.00% 4.00% 7.5 0.2 4.00% 4.00% 8.3 0.7
Total fair value of assets 243.4 12.4 154.1 11.2 183.9 13.6
The German scheme is unfunded and has no assets.
61 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 Notes to the Financial Statements continued
12 Employees continued
The funding position of the schemes in the group as calculated under FRS 17 as at 31 December 2003 was as follows:
2003 2002 2001
£m £m £m
Total fair value of assets 255.8 165.3 197.5
Present value of scheme liabilities (326.1) (231.9) (204.3)
Deficit in the scheme (70.3) (66.6) (6.8)
Related deferred tax asset 21.1 20.0 2.1
Net pension deficit (49.2) (46.6) (4.7)
The amounts in respect of the performance of the scheme are:
2003 2002
Restated
Analysis of the amount charged to operating profit £m £m
Current service cost 8.2 8.0
Past service cost – –
Total operating charge 8.2 8.0
2003 2002
Analysis of the amount (charged)/credited to other finance income £m £m
Expected return on pension scheme assets 12.7 14.8
Interest cost (13.6) (12.2)
Net return (0.9) 2.6
2003 2002
Restated
Analysis of the amount recognised in the statement of total recognised gains and losses (STRGL) £m £m
Actual return less expected return on pension scheme assets 20.3 (50.0)
Changes in assumptions underlying the scheme liabilities (29.7) (2.9)
Experience gains and losses arising on the scheme liabilities 1.9 (8.2)
Actuarial (loss) recognised in the STRGL (7.5) (61.1)
2003 2002
Restated
Movement in deficit during the year £m £m
Deficit in scheme at beginning of the year (66.6) (6.8)
Current service cost (8.2) (8.0)
Contributions 10.7 6.7
Gain from acquisitions during the year 2.2 –
Past service cost – –
Other finance (charges)/income (0.9) 2.6
Actuarial loss (7.5) (61.1)
Deficit in scheme at the end of the year (70.3) (66.6)
Amounts for 2002 in the tables above for current service cost, contributions and actuarial loss have been restated to reflect the correction of a misclassification
between these components of the deficit. The value of the deficit in the schemes at the end of 2002 was not affected.
62 12 Employees continued
History of experience gains and losses
2003 2002
Difference between expected and actual return on scheme assets: Restated
Amount (£m) 20.3 (50.0)
Percentage of scheme assets 7.9% (30.2%)
Experience gains and losses on scheme liabilities:
Amount (£m) 1.9 (8.2)
Percentage of the present value of the scheme liabilities 0.6% (3.5%)
Total amount recognised in the STRGL
Amount (£m) (7.5) (61.1)
Percentage of the present value of the scheme liabilities (2.3%) (26.3%)
Defined contribution schemes
Contributions paid by the group to defined contribution schemes in the year amounted to £6.4m (2002 - £5.6m). There were no significant contributions
outstanding at the end of either 2002 or 2003.
Parent company
The contributions paid by the company are accounted for as a defined contribution scheme, as the company is unable to identify its share of the underlying
assets and liabilities of the scheme. The cost of contributions to the group scheme for 2003 amounted to £927,000 (2002 - £225,000), being 58% (2002 -
23%) of pensionable salaries. No contributions to the scheme were outstanding at the end of either 2002 or 2003.
13 Intangible Fixed Assets
Goodwill Other Total
Group £m £m £m
Cost
At 1 January 2003 280.3 4.6 284.9
Foreign exchange adjustments –(0.2) (0.2)
Additions – 1.2 1.2
Disposals 0.6 – 0.6
Adjustments to contingent consideration in respect of prior year acquisitions (note 22) (2.3) – (2.3)
Undertakings acquired (note 29) 112.6 – 112.6
At 31 December 2003 391.2 5.6 396.8
Accumulated amortisation
At 1 January 2003 33.3 1.3 34.6
Charge for the year 15.8 0.5 16.3
At 31 December 2003 49.1 1.8 50.9
Net book amount
At 31 December 2003 342.1 3.8 345.9
At 1 January 2003 247.0 3.3 250.3
Other intangible fixed assets are purchased patents, licences and trade marks.
63 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 Notes to the Financial Statements continued
14 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 2003 – cost –65.1 17.7 1.5 280.8 50.7 4.0 419.8
At 1 January 2003 – valuation 4.1 –––––– 4.1
Foreign exchange adjustments –(0.6) 0.2 (0.3) 6.3 0.3 (0.6) 5.3
Additions – 3.9 – 0.5 20.7 5.2 9.6 39.9
Undertakings acquired –14.3 – 0.8 20.7 2.2 0.4 38.4
Disposals –(2.3) – – (5.3) (1.7) – (9.3)
Undertakings disposed –(0.8) (1.0) (0.1) (11.7) (1.1) – (14.7)
Reclassifications – 0.8 – 1.9 0.8 (0.3) (3.2) –
At 31 December 2003 4.1 80.4 16.9 4.3 312.3 55.3 10.2 483.5
Accumulated depreciation
At 1 January 2003 –14.9 3.4 0.8 175.6 35.0 – 229.7
Foreign exchange adjustments –(0.4) – (0.1) 2.3 0.1 – 1.9
Charge for the year – 1.3 0.3 0.3 26.4 5.4 – 33.7
Undertakings acquired ––– 0.2 4.9 1.1 – 6.2
Disposals –(1.5) – – (5.4) (1.0) – (7.9)
Undertakings disposed –(0.1) (0.1) – (7.4) (0.6) – (8.2)
Reclassifications –––– 0.3 (0.3) – –
At 31 December 2003 – 14.2 3.6 1.2 196.7 39.7 – 255.4
Net book amount
At 31 December 2003 4.1 66.2 13.3 3.1 115.6 15.6 10.2 228.1
At 1 January 2003 4.1 50.2 14.3 0.7 105.2 15.7 4.0 194.2
Investment properties are shown at open market value based upon a directors’ valuation. The historic cost of these investment properties is £2.4m 
(2002 - £2.4m).
Assets capitalised held under finance leases included mainly in plant and machinery:
2003 2002
£m £m
Cost 0.7 0.7
Accumulated depreciation (0.6) (0.4)
Net book amount 0.1 0.3
2003 2002
£m £m
Capital commitments
Contracts placed 4.3 4.2
64 14 T angible Fixed Assets continued
Plant and
Machinery
(including
Investment Aircraft
Properties & Vehicles) Total
Parent Company £m £m £m
Cost or valuation
At 1 January 2003 4.1 0.5 4.6
Additions – 0.1 0.1
Disposals –(0.1) (0.1)
At 31 December 2003 4.1 0.5 4.6
Accumulated amortisation
At 1 January 2003 – 0.3 0.3
Charge for the year – 0.1 0.1
Disposals –(0.1) (0.1)
At 31 December 2003 – 0.3 0.3
Net book amount
At 31 December 2003 4.1 0.2 4.3
At 1 January 2003 4.1 0.2 4.3
Investment properties are shown at open market value based upon a directors’ valuation which equates to cost.
The parent company had no capital commitments at 31 December 2003 (2002 - £nil).
15 Fixed Asset Investments
Group
2003 2002
£m £m
Investments in joint ventures
At 1 January 12.1 9.2
Goodwill amortisation (0.1) (0.1)
Share of profit after tax for the year 2.9 3.0
At 31 December 14.9 12.1
Goodwill at cost of £1.8m (2002 - £1.8m) and net book amount of £1.3m (2002 - £1.4m) relating to joint ventures is included within interests in joint ventures
at 31 December 2003. Related amortisation of £0.1m (2002 - £0.1m) has been charged during the year.
Group
2003 2002
£m £m
Investment in associates
At 1 January 1.0 1.4
Additional investment in year 0.4 –
Undertakings acquired 0.9 –
Foreign exchange 0.1 –
Share of loss after tax for the year (0.8) (0.4)
At 31 December 1.6 1.0
Details of joint ventures and associates are included in note 38.
65 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 Notes to the Financial Statements continued
15 Fixed Asset Investments continued
Parent Company
Shares Loans 2003
£m £m £m
Investment in group undertakings
At 1 January 35.4 (3.4) 32.0
Additions 228.2 – 228.2
Acquired by placing of shares (note 23) 2.3 – 2.3
Disposal following placing of shares (note 23) (2.3) – (2.3)
Disposals (13.4) – (13.4)
At 31 December – cost 250.2 (3.4) 246.8
16 Investment in Own Shares
Parent Company
and Group
2003 2002
£m £m
Investment in own shares
At 1 January 1.4 1.4
Additions – 1.4
Disposals (1.4) (1.4)
At 31 December – 1.4
The investment in own shares of £1.4m in 2002 relates to 233,927 ordinary shares held by the group’s qualifying employee share ownership trust (‘QUEST’).
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 230,505, leaving 3,422 shares remaining at 31 December 2003 which have subsequently been distributed.
Under the terms of the trust deed, dividends have been waived on the shares held by the QUEST and all costs relating to the above scheme are dealt with
in the consolidated profit and loss account as they accrue.
17 Stocks
Group
2003 2002
£m £m
Raw materials and consumables 72.4 64.0
Work in progress 96.6 83.2
Finished goods and goods for resale 28.4 14.6
Payments on account (7.4) (7.0)
190.0 154.8
There is no significant difference between the replacement cost and the value of stocks shown.
66 67 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003
18 Debtors
Group Parent Company
2003 2002 2003 2002
Restated
£m £m £m £m
Amounts falling due within one year
Trade debtors 157.1 145.3 – –
Amounts owed by subsidiary undertakings – – 204.2 369.2
Amounts owed by joint ventures and associates (note 37) 0.6 0.7 0.4 0.3
Other debtors 8.5 9.1 – –
Prepayments and accrued income 21.4 21.0 3.6 3.1
Amounts recoverable on contracts 1.5 0.5 – –
Taxation recoverable 1.5 1.3 – –
190.6 177.9 208.2 372.6
Amounts falling due after more than one year
Amounts owed by subsidiary undertakings – – 310.8 291.7
Other debtors 0.2 0.4 – –
0.2 0.4 310.8 291.7
19 Current Investments
Group Parent Company
2003 2002 2003 2002
£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 Britain and their market value
at 31 December 2003 amounted to £0.2m (2002 - £0.1m).
20 Creditors: Amounts Falling Due Within One Y ear
Group Parent Company
2003 2002 2003 2002
£m £m £m £m
Borrowings
Bank loans and overdrafts 65.1 61.5 53.8 140.1
Senior notes 5.6 3.1 5.6 3.1
Other borrowings 9.6 0.8 – –
Finance leases 0.1 0.2 – –
80.4 65.6 59.4 143.2
Further details concerning borrowings are given in note 21.
Other borrowings include a loan of £8.0m (2003 - £nil) from joint venture companies.
Group Parent Company
2003 2002 2003 2002
£m £m £m £m
Other creditors
Payments received on account 26.5 14.7 0.1 0.1
Trade creditors 95.7 84.9 0.6 0.2
Bills of exchange payable 1.4 1.8 – –
Amounts owed to subsidiary undertakings – – 15.6 0.8
Amounts owed to joint ventures and associates (note 37) – 5.3 – –
Other creditors 20.5 21.5 – –
Taxation payable 33.8 23.1 6.3 8.3
Payroll and other taxes, including social security 18.2 15.5 1.7 1.8
Accruals and deferred income 41.4 26.1 3.5 2.4
Proposed dividends – group 22.0 18.3 22.0 18.3
Dividends payable to minority interests 0.3 0.3 – –
259.8 211.5 49.8 31.9
T axation payable
UK corporation tax 26.9 18.6 6.3 8.3
Overseas tax 6.9 4.5 – –
33.8 23.1 6.3 8.3 68
Notes to the Financial Statements continued
21 Creditors: Amounts Falling Due After More Than One Y ear
Group Parent Company
2003 2002 2003 2002
£m £m £m £m
Borrowings
Senior notes 139.7 161.5 139.7 161.5
Bank loans 28.2 30.6 – –
Loan notes 0.2 0.9 – –
Other borrowings 12.0 2.1 – –
Finance leases† 0.1 0.1 – –
180.2 195.2 139.7 161.5
†Comprising obligations payable between one and two years.
Group Parent Company
2003 2002 2003 2002
£m £m £m £m
Other creditors
Other 11.0 9.4 – –
Accruals and deferred income 0.7 1.0 – –
11.7 10.4 – –
Group Parent Company
2003 2002 2003 2002
£m £m £m £m
Borrowings
Senior notes, debenture loans, bank loans, loan notes and other 
borrowings are repayable as follows:
Between one and two years 19.9 11.1 5.6 6.2
Between two and five years 26.2 36.1 8.4 12.4
After five years 134.1 148.0 125.7 142.9
180.2 195.2 139.7 161.5
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
after seven years and the other for US$170m which has a bullet repayment after 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 have been swapped into rates that vary with LIBOR.
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$15m 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 three years, carry a fixed interest rate of 4.25%. 69 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003
22 Provisions for Liabilities and Charges
Deferred
Taxation Contingent Total
Restated Consideration Other Restated
£m £m £m £m
Group
At 1 January 2003 as previously stated 22.8 7.7 12.6 43.1
Prior year adjustment on adoption of FRS 17 (6.5) – – (6.5)
At 1 January 2003 as restated 16.3 7.7 12.6 36.6
Provisions created 2.7 – 2.2 4.9
On acquisitions in the year 0.5 4.7 0.3 5.5
On disposal of subsidiary undertakings (1.0) – – (1.0)
Adjustment to contingent consideration in respect of
prior year acquisitions (note 13) –(2.3) – (2.3)
Provisions released –– (0.6) (0.6)
Expenditure charged against provisions –(2.8) (3.7) (6.5)
Foreign exchange adjustments (0.1) – 0.8 0.7
Re-analysis from creditors – 0.3 1.7 2.0
At 31 December 2003 18.4 7.6 13.3 39.3
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 4.0
Onerous trading contracts Over the next three years 8.3
Warranty claims Within one year 1.0
Contingent consideration Within one year 2.2
Contingent consideration Over one to two years 0.4
Contingent consideration Over two to three years 0.2
Contingent consideration Over three to four years 1.3
Contingent consideration Over four to five years 3.5
20.9
Group Parent Company
2003 2002 2003 2002
Restated
£m £m £m £m
Deferred taxation
The amount provided for represents:
Accelerated capital allowances 14.2 16.9 – 0.4
Other timing differences 4.2 (0.6) 0.4 (0.4)
Deferred tax provision 18.4 16.3 0.4 –
Deferred tax asset on pension liability (see note 12) (21.1) (20.0) – –
(2.7) (3.7) 0.4 – 70
22 Provisions for Liabilities and Charges continued
Deferred taxation continued
Group Parent Company
2003 2003
£m £m
At 1 January 2003 as previously stated 22.8 –
Prior year adjustment on adoption of FRS 17 (26.5) –
At 1 January 2003 as restated (3.7) –
Provisions created 2.7 0.4
On acquisitions in the year 0.5 –
On disposal of subsidiary undertakings (1.0) –
Amount credited to Statement of Total Recognised Gains and Losses (1.1) –
Foreign exchange adjustments (0.1) –
At 31 December 2003 (2.7) 0.4
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.
23 Called Up Share Capital
2003 2002
£m £m
Authorised
Equity
147,920,000 (2002 - 147,920,000) 25p ordinary shares 37.0 37.0
Non equity
20,000 (2002 - 20,000) 6% second cumulative preference shares of £1 – –
37.0 37.0
Allotted and fully paid
Equity
110,970,790 (2002 - 101,490,684) 25p ordinary shares 27.8 25.4
Non equity
19,700 (2002 - 19,700) 6% second cumulative preference shares of £1 – –
27.8 25.4
On 9 July 2003 the company completed a private placing of 9,159,560 ordinary shares of 25p each in exchange for 11% of the equity and entire preference
share capital of Lockman Capital Limited (LCL), a company incorporated in Jersey. LCL was incorporated to undertake the private placing. Prior to the private
placing Cobham plc owned 89% of the share capital of LCL. The placing was made to a number of institutional investors. The market price on 9 July 2003 was
£11.92.
In accordance with the provisions of merger relief under section 131 of the Companies Act 1985, the company recorded the cost of investment in LCL at the
nominal value of the shares issued. On consolidation, the excess of the fair value over the nominal value of the shares issued has been recorded as a merger
reserve. Also in 2003 the preference shares in LCL have been redeemed and £104.0m has been transferred to the profit and loss reserve. LCL is now 
in dissolution.
In addition to the placing, during the year 163,407 ordinary shares were issued in connection with the executive share option schemes, 18,303 were issued in
connection with the Cobham Savings Related Share Option Scheme and 138,836 were issued in connection with the Cobham Long Term Incentive Plan. The
aggregate nominal value of such shares was £0.1m and the cash consideration received net of costs was £1.1m. In addition £1.2m was transferred from other
reserves to called up share capital and share premium account in relation to the Cobham Long Term Incentive Plan.
Notes to the Financial Statements continued 71 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003
23 Called Up Share Capital continued
The following options over ordinary shares were outstanding as at 31 December 2003:
Dates normally
Dates granted Number of Shares Prices – pence exercisable
Cobham Savings Related
Share Option Scheme
1996 – 2003 1,824,778 (2002 - 1,702,901) 483 to 939 2004 – 2011
Cobham Executive
Share Option Scheme
1996 – 2003 1,477,639 (2002 - 1,317,457) 315 to 1,186 1998 – 2013
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 9). 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.
24 Reserves
Profit
Share and Loss
Premium Merger Revaluation Other Account Total
Account Reserve Reserve Reserve Restated Restated
£m £m £m £m £m £m
Group
At 1 January 2003 as previously stated 76.3 – 1.7 1.3 254.5 333.8
Prior year adjustment – FRS 17 (note 3) – ––– (61.8) (61.8)
At 1 January 2003 as restated 76.3 – 1.7 1.3 192.7 272.0
Premium on share issues 1.0 104.0 – – – 105.0
Share issue costs (1.7) –––– (1.7)
Long term incentive plan – issue of shares 1.2 – – (1.2) – –
Long term incentive plan – charge –– – 0.6 – 0.6
Retained loss for the year – ––– (13.1) (13.1)
Goodwill resurrected on disposal of subsidiary undertaking – ––– 68.4 68.4
Release of merger reserve – (104.0) – – 104.0 –
Actuarial loss on defined benefit pension schemes* – ––– (5.3) (5.3)
Foreign exchange – ––– 2.1 2.1
At 31 December 2003 76.8 – 1.7 0.7 348.8 428.0
*Net of deferred tax
Share Profit
Premium Special Other and Loss
Account Reserve Reserve Account Total
£m £m £m £m £m
Parent Company
At 1 January 2003 76.3 43.6 1.3 265.7 386.9
Premium on share issues 1.0––– 1.0
Share issue costs (1.7) – – – (1.7)
Long term incentive plan – issue of shares 1.2 – (1.2) – –
Long term incentive plan – charge –– 0.6 – 0.6
Profit retained for the year ––– 109.4 109.4
At 31 December 2003 76.8 43.6 0.7 375.1 496.2
Reserves are attributable to equity interests.
The cumulative goodwill written off directly to reserves on acquisitions, net of disposals, totals £108.5m from 1954 to 31 December 2003 (2002 - £176.9m).
The group’s share of the post acquisition reserves of joint ventures and associates at 31 December 2003 was £11.3m (2002 - £9.2m).
The other reserve relates to provisions made in accordance with UITF 17 for shares allocated under the long term incentive plans.
The profit and loss account reserves include £49.2m (2002 - £46.6m) stated after deferred taxation of £21.1m (2002 - £20.0m) in respect of pension scheme
liabilities of group pension funds. 72
25 Minority Interest
Group
£m
At 1 January 2003 0.8
Undertakings acquired 0.3
Share of profit 0.3
Dividend (0.3)
At 31 December 2003 1.1
26 Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities
2003 2002
Restated
£m £m
Operating profit 125.9 102.7
Depreciation 33.7 26.4
Amortisation of goodwill and intangibles 16.3 13.1
Profit on sale of fixed assets (0.7) (2.0)
Difference between pension charge and cash contribution (2.5) 1.3
Provisions for liabilities and charges – (4.4)
Long term incentive plan 0.6 0.7
Increase in stocks (22.0) (10.8)
Decrease in debtors 1.2 2.2
(Decrease)/increase in creditors (4.7) 6.7
Net cash inflow from operating activities 147.8 135.9
27 Analysis of Net Debt
At Other At
1 January Cash non-cash Exchange 31 December
2003 Flow changes movements 2003
£m £m £m £m £m
Cash at bank and in hand 71.9 39.8 – (5.6) 106.1
Current asset investments 0.1 – – – 0.1
Debt due within one year (65.4) (10.5) (1.9) (2.5) (80.3)
Debt due after one year (195.1) 11.0 (11.7) 15.7 (180.1)
Finance leases (0.3) 0.1 – – (0.2)
0.6
Total (188.8) 40.4 (13.6) 7.6 (154.4)
Other non-cash changes comprise borrowings on purchase of subsidiary and loans of subsidiary undertakings acquired.
2003 2002
£m £m
Senior notes, loans, other borrowings, debenture loans and finance leases 260.6 260.8
Cash at bank and in hand including short term deposits (106.1) (71.9)
Current investments (0.1) (0.1)
Net debt 154.4 188.8
Included in group and parent company cash at bank and in hand at 31 December 2003 is £3.0m held in an escrow account which relates to the disposal of
Westwind. It is expected that this cash will be released from escrow in June 2005 and until then release is subject to the purchaser’s approval.
Notes to the Financial Statements continued 28 Analysis of Cash Flows for Headings Netted in the Consolidated Cash Flow Statement
2003 2002
£m £m
a. Returns on Investments and Servicing of Finance
Interest received 2.4 1.8
Interest paid (13.4) (10.4)
Net cash outflow from returns on investments and servicing of finance (11.0) (8.6)
b. Capital Expenditure and Financial Investment
Payments to acquire tangible fixed assets (39.3) (32.5)
Payments to acquire intangible fixed assets other than goodwill (1.2) (0.4)
Receipts from sales of fixed assets 1.3 3.9
Net cash outflow for capital expenditure and financial investment (39.2) (29.0)
c. Acquisitions and Disposals
Purchase of subsidiary undertakings (138.8) (32.8)
Net cash/(overdraft) acquired with subsidiary undertakings 8.1 (0.8)
Deferred and contingent consideration (3.6) (3.8)
Investment in associate (0.4) (1.4)
Sale of subsidiary undertaking 21.2 –
Net cash balances disposed of with subsidiary undertakings (1.5) –
Net cash outflow for acquisitions and disposals (115.0) (38.8)
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 107.4 4.8
Expenses on issue of ordinary share capital (1.7) –
Debt due within a year:
increase/(repayment) of short term loans 0.5 (51.9)
increase/(repayment) of debenture loans and other borrowings 10.0 (4.1)
Debt due beyond a year:
(decrease)/increase in long term borrowings (9.3) 77.2
repayment of debenture loans and other borrowings (1.7) (3.7)
Capital element of finance lease rentals (0.1) (0.3)
Net cash inflow from financing 105.1 22.0
29 Purchase and Disposal of Undertakings
The acquisitions during the year were as follows:
By the Avionics division
•Orion Electronics Limited in Canada in January for C$14m 
•Xybion Sensor Positioning Systems Division of Xybion Corporation in the USA in January for US$1.4m cash  
• dB Systems Inc in the USA in May for $3.8m cash and $1.8m deferred consideration, payable up to 2008 
•Atlas Composites Limited in the UK in May for £1.7m cash
•Novatech Designs Limited in Canada in June for C$1.4m cash
•Thales Antennas Limited (now renamed Racal Antennas Limited) in the UK in July for £5.5m cash
• Sea Tel Inc in the USA in September for $27.2m cash, $1.5m deferred consideration payable up to 2005 and $6.4m contingent consideration, payable up
to 2008 and dependent on performance
• Nauticast AG of Austria in October for 13.0m cash
• ERA Technology Limited in the UK for £20.1m cash, £12.2m borrowings incurred in consideration, £4.2m deferred consideration payable up to 2004 and
£1.8m contingent expenses payable up to 2008 and dependent on performance.
By the Aerospace Systems division
•Dräger Aerospace GmbH in Germany in June for 124.9m cash and 13.5m deferred consideration, payable June 2006 
•Litton Life Support Unit of Northrop Grumman Corp in the USA in August for $76.0m cash
• Harrison Division of Sierracin Corporation in the USA in November for $10.4m cash, subject to a net asset adjustment
73 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 74
Notes to the Financial Statements continued
29 Purchase and Disposal of Undertakings continued
By the Flight Operations & Services division
•Trade and assets of TransAustralian Air in Australia in October for A$25.1m.
The amount accrued in the financial statements in respect of deferred and contingent consideration and expenses payable in future years in respect of
acquisitions made in 2003 is £14.4m (2002 - £3.2m). The £14.4m 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.
A summary of all the undertakings acquired showing book values and fair value adjustments is as follows:
Fair V alue Adjustments
Book Accounting
Values Revaluations Policies Total
£m £m £m £m
Tangible fixed assets 32.5 (0.1) (0.2) 32.2
Intangible fixed assets 7.5 – (7.5) –
Investment in associates 0.9 – – 0.9
Stocks 20.7 (0.2) (2.1) 18.4
Debtors 22.0 – – 22.0
Cash at bank and in hand 8.1 – – 8.1
Creditors and provisions (28.4) (1.6) 0.7 (29.3)
Loans (1.4) – – (1.4)
Pension asset/(liability) (1.3) – 3.5 2.2
Minority interests (0.3) – – (0.3)
60.3 (1.9) (5.6) 52.8
Goodwill (note 13) 112.6
165.4
Satisfied by:
Cash and borrowings undertaken including expenses of acquisition (note 28c) 138.8
Borrowings incurred in consideration 12.2
Deferred and contingent consideration and expenses 14.4
165.4
Fair value adjustments
Revaluations
The adjustments to tangible fixed assets and stocks represent the write-off of assets that had no economic benefit. The adjustment to creditors reflects
additional losses on contracts and development costs not previously recognised.
Accounting policies
The adjustment in respect of tangible fixed assets relates to the harmonisation of depreciation rates in line with group policy.The adjustment to intangible
fixed assets reflects the write off of items in line with group policy. The adjustment to stocks represents amendments to stock obsolescence provisions to align
them with group policy. The adjustment to creditors and provisions reflects adjustments to warranty provisions offset by the deferred tax impacts of the fair
value adjustments made. The adjustment to the pension asset/(liability) represents the impact of accounting for the acquired defined benefit schemes in line
with the group’s accounting policy for pensions.
Disposal of Westwind
£m
Tangible fixed assets 6.5
Current assets 13.6
Creditors (3.7)
Other 0.5
Goodwill previously written off to reserves 68.4
85.3
Loss on disposal (64.1)
Cash consideration (note 28c) 21.2 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 exchange dollars for sterling at a rate of £1: US$1.6263 over the period to 2012 with US$82m of this commitment being
outstanding at 31 December 2003. Approximately US$13m of the commitment applies to 2004, US$53m from 2005 to 2008 with the balance of US$16m
over the remaining four 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 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.
75 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 76
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 – (71.8) 0.7 0.5 (0.7) (71.3)
US dollars 0.4 – – (2.6) 0.7 (1.5)
Australian dollars (0.9) 1.6 – – 2.0 2.7
EU currencies (excluding sterling) (17.3) 4.2 – – (0.3) (13.4)
Other currencies (1.9) 4.7 – (1.5) – 1.3
At 31 December 2003 (19.7) (61.3) 0.7 (3.6) 1.7 (82.2)
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)
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 in which they are incurred.
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
2003 2002 2003 2002 2003 2002 2003 2002
Restated Restated
Currency £m £m £m £m £m £m £m £m
Sterling 46.1 42.3 8.3 0.1 7.4 7.6 61.8 50.0
US dollars 144.0 149.5 19.8 27.7 5.4 6.2 169.2 183.4
Australian dollars 0.1 0.7 17.8 18.7 0.7 – 18.6 19.4
EU currencies 
(excluding sterling) 16.4 14.1 5.9 7.3 8.7 0.9 31.0 22.3
Other currencies 1.8 0.4 – – 0.2 0.6 2.0 1.0
At 31 December 208.4 207.0 51.8 53.8 22.4 15.3 282.6 276.1
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 £23.3m (2002 - £23.3m) and long term
creditors of £5.7m (2002 - £8.4m) have been excluded as they do not meet the definition of a financial liability under FRS 13.
In order to reflect the associated interest rate swap, the US dollar senior notes issued in 2002 have been classified as floating rate financial liabilities. The 2002
comparatives have been restated to reflect this classification.
Notes to the Financial Statements continued 77 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003
32 Interest Rate Risk continued
Interest rate risk and profile of financial liabilities 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
2003 2002 2003 2002 2003 2002
Currency Restated Restated
Sterling 7.0 4.4 1.6 4.1 4.0 1.8
US dollars 6.3 6.6 2.2 2.9 4.8 2.5
Australian dollars 6.6 2.3 0.8 1.7 1.0 –
EU currencies (excluding sterling) 4.8 5.0 2.1 2.6 1.5 1.5
Other currencies – – – – 1.0 0.5
At 31 December 6.1 4.9 1.6 2.4 3.1 2.0
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
2003 2002
Currency £m £m
Sterling 23.1 13.3
US dollars 64.5 43.0
Australian dollars 8.6 8.2
EU currencies (excluding sterling) 6.1 3.5
Other currencies 4.0 4.4
At 31 December 106.3 72.4
Floating rate 100.7 68.0
Fixed rate 1.1 0.7
No interest paid 4.5 3.7
At 31 December 106.3 72.4
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. Of the fixed rate financial assets, £1.1m (2002 - £0.7m) is denominated
in US dollars and the interest rate applied is 1.2%, fixed for approximately three years. Of the long term debtors of £0.2m (2002 - £0.4m), £0.1m (2002 - £nil)
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
2003 2002 2003 2002 2003 2002 2003 2002
£m £m £m £m £m £m £m £m
Within one year, or on demand 80.3 65.4 0.1 0.2 5.0 3.2 85.4 68.8
Between one and two years 19.8 11.0 0.1 0.1 7.2 2.4 27.1 13.5
Between two and five years 26.2 36.1 – – 9.8 9.7 36.0 45.8
Over five years 134.1 148.0 – – – – 134.1 148.0
At 31 December 260.4 260.5 0.2 0.3 22.0 15.3 282.6 276.1 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:
2003 2002
£m £m
Expiring within one year 45.3 92.5
Expiring between one and two years – –
Expiring between two and five years 21.6 –
Expiring in over five years 108.1 119.7
At 31 December 175.0 212.2
34 Fair values
Fair 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 V alue Fair V alue
2003 2002 2003 2002
31 December £m £m £m £m
Primary financial instruments held or issued 
to finance the group’s operations:
Short term borrowings (80.4) (65.6) (80.6) (65.8)
Long term borrowings (180.2) (195.2) (184.1) (201.6)
Other long term creditors (6.0) (2.0) (6.0) (2.0)
Provisions for liabilities and charges (16.0) (13.3) (16.0) (13.3)
Cash in hand 106.1 71.9 106.1 71.9
Current asset investments 0.1 0.1 0.2 0.1
Other long term debtors 0.1 0.4 0.1 0.4
Derivative financial instruments held to manage the currency profile:
Interest rate swaps – – 1.8 4.2
Currency swaps – – – (3.0)
Of the unrecognised profits and losses on interest rate swaps at 31 December 2002, a profit of £4.2m (2002 - £nil) was recognised in the profit and 
loss account in the year. At 31 December 2003, a profit of £4.0m is expected to be recognised in the profit and loss account in the forthcoming year.
The instrument disclosed as a currency swap in 2002 has been reclassified as a forward foreign currency contract in 2003 to reflect its nature.
Book V alue Fair V alue
2003 2002 2003 2002
31 December £m £m £m £m
Derivative financial instruments held to hedge the currency
exposure on expected future sales:
Forward foreign currency contracts 6.0 (4.8) 12.8 3.0
Of the unrecognised profits in forward foreign currency contracts at 31 December 2002, no material gain or loss (2002 - £0.8m loss) was recognised in the
profit and loss account in the year. At 31 December 2003 a profit of £0.8m (2002 - £0.1m loss) is expected to be recognised in the profit and loss account in
the forthcoming year.
78 35 Operating Leases
The following annual operating lease commitments existed at the year end:
Group
Land and Buildings Other
2003 2002 2003 2002
£m £m £m £m
Annual commitments which expire:
Within one year 0.5 0.5 4.9 3.6
Between one and five years 1.7 1.3 11.7 18.1
In five years or more 0.9 1.0 2.6 0.5
3.1 2.8 19.2 22.2
36 Contingent Liabilities
As at 31 December 2003 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:
2003 2002
£m £m
Increase/(reduction) in short term loan movements 2.7 (2.9)
Net sales of goods, contracts and services 0.4 0.7
Investment in associates (note 15) 1.3 1.4
The following balances relating to joint ventures and associates were included in the consolidated balance sheet at the year end:
2003 2002
£m £m
Receivable balances:
Trading balances (note 18) 0.6 0.7
Payable balances:
Amounts owed to joint ventures and associates (note 20) – 5.3
Other borrowings (note 20) 8.0 –
79 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 80
38 Principal Interests in Undertakings
All subsidiary undertakings have been included in the consolidation. Excluding the discontinued Westwind operation, 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 Percentage of
Registration/Incorporation Class of Nominal Value of
Undertaking and Operation Shares/stocks Shares Held
Aerospace Systems
Carleton Technologies Inc. USA Common 100
Carleton Life Support Systems Inc. USA Common 100
Cobham Fluid Systems Limited* England Ordinary 100
Conax Florida Corporation USA Common 100
Dräger Aerospace GmbH Germany Ordinary 100
Flight Refuelling Limited* England Ordinary 100
FR Countermeasures Inc. USA Common 100
FR-HiTEMP Limited England Ordinary 100
Sargent Fletcher Inc. USA Common 100
Stanley Aviation Corporation USA Preferred & Common 100
Avionics
ACR Electronics Inc. USA Common 100
Air Précision S.A. France Ordinary 100
Applied Composites A.B. Sweden Ordinary 100
Artex Aircraft Supplies Inc. USA Common 100
Atlantic Microwave Corporation USA Common 100
Atlas Composites Limited England Ordinary 100
Chelton Antennas S.A. France Ordinary 100
Chelton Avionics Inc. USA Common 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 100
Chelton Inc. USA Common 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 100
Continental Microwave & Tool Co. Inc. USA Common 100
Credowan Limited England Ordinary 100
Culham Electromagnetics and Lightning Limited England Ordinary 100
ERA Technology Limited England Ordinary 100
European Antennas Limited England Ordinary 100
Hyper Technologies S.A. France Ordinary 100
Kevlin Corporation USA Common 100
Label S.A. France Ordinary 100
Micromill Electronics Limited England Ordinary 100
Nauticast AG Austria Ordinary 100
Northern Airborne Technology Limited Canada Common 99.1
Novatech Design Limited Canada Common 100
Nurad Technologies Inc. USA Common 100
Omnipless Manufacturing (Proprietary) Limited* South Africa Ordinary 100
Orion Electronics Limited Canada Common 100
Racal Antennas Limited England Ordinary 100
Salies S.A. France Ordinary 100
Sea Tel Inc. USA Common 100
Seimac Limited Canada Common 100
Sivers Lab A.B. Sweden Ordinary 100
Slingsby Aviation Limited England Ordinary 100
TEAM S.A. France Ordinary 98.7
Flight Operations & Services
Aviation Défense Service S.A. (joint venture) France Ordinary 45
Bournemouth Aviation Services Company Limited (associate) England Ordinary 40
FB Heliservices Limited (joint venture) England Ordinary 50
FBS Limited (joint venture) 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
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.
Notes to the Financial Statements continued 81 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003
1999 2000 2001 2002 2003
Restated Restated
£m £m £m £m £m
Turnover 435.2 568.4 721.8 734.6 832.6
Underlying Profit before T axation 72.6 90.2 103.5 115.8 135.3
Profit before T axation 69.7 89.0 87.5 99.9 54.5
Taxation (21.7) (26.4) (27.7) (28.1) (36.0)
Profit after T axation 48.0 62.6 59.8 71.8 18.5
Minority interest (0.2) (0.2) (0.2) (0.3) (0.3)
Attributable to Shareholders 47.8 62.4 59.6 71.5 18.2
Dividends (17.3) (20.2) (23.6) (25.9) (31.3)
Profit/(Loss) Retained 30.5 42.2 36.0 45.6 (13.1)
Net Assets Employed
Intangible assets 62.2 165.3 243.9 250.3 345.9
Tangible assets 136.5 186.6 191.0 194.2 228.1
Investments 4.4 5.6 10.6 14.5 16.5
Current assets 252.0 306.1 385.0 405.1 487.0
455.1 663.6 830.5 864.1 1,077.5
Current liabilities (168.3) (277.8) (318.0) (277.1) (340.2)
Long term liabilities (64.9) (114.9) (198.5) (242.2) (231.2)
Net assets excluding pension liabilities 221.9 270.9 314.0 344.8 506.1
Pension liabilities – – – (46.6) (49.2)
Net assets including pension liabilities 221.9 270.9 314.0 298.2 456.9
Financed by
Ordinary share capital 24.7 24.8 25.2 25.4 27.8
Reserves 196.8 245.5 288.0 272.0 428.0
Shareholders’ Funds 221.5 270.3 313.2 297.4 455.8
Minority interest 0.4 0.6 0.8 0.8 1.1
221.9 270.9 314.0 298.2 456.9
pppp p
Dividend per ordinary share 17.55 20.20 23.23 25.60 28.16
Earnings per ordinary share – underlying 51.4 64.2 75.4 86.4 93.5
Earnings per ordinary share – basic 48.5 63.0 59.4 70.7 17.2
Earnings per ordinary share – fully diluted 48.0 62.3 58.8 70.2 17.1
Net assets per ordinary share 225 273 311 294 412
£m £m £m £m £m
Market capitalisation 765 1,040 1,086 1,035 1,295
Notes: Underlying profit before taxation represents the profit on ordinary activities before taxation, amortisation of goodwill, integration costs and
exceptional items.
In 2001 long term liabilities and reserves were restated to reflect the impact of adopting FRS 19 ‘Deferred Tax’ in 2002.
In 2002 current assets, long term liabilities, pension liabilities and profit/(loss) retained have been restated to reflect the adoption of FRS 17 ‘Retirement
Benefits’. Years prior to 2002 have not been restated for this adoption of FRS 17.
Group Financial Record 82
Analysis of Shareholders
(a) At 31 December 2003 5,149 ordinary shareholders were on the register compared with 5,496 at 31 December 2002.
(b) Analysis of ordinary shareholders on the register at 31 December 2003:
Number of Percentage Number of Percentage
registered of registered ordinary of ordinary
holders holders shares held shares
Size of holding % (000’s) %
Up to 1,000 3,760 73.02 976,196 0.88
1,001 – 10,000 940 18.26 2,836,744 2.56
10,001 – 50,000 221 4.29 5,378,354 4.85
50,001 – 250,000 141 2.74 16,289,249 14.68
250,001 – 1,000,000 65 1.26 31,642,881 28.51
1,000,001 and above 22 0.43 53,847,366 48.52
5,149 100 110,970,790 100
Category
Private persons 3,935 76.42 7,566,583 6.82
Nominees 1,120 21.75 100,318,991 90.40
Insurance companies 2 0.04 1,100,778 0.99
Pension funds 2 0.04 206 0.01
Other corporate bodies 90 1.75 1,984,232 1.78
5,149 100 110,970,790 100
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 information on investments including balance
movements, indicative share prices and information on recent dividends and also enables address and mandate details to be amended on line. For further
information and practical help on transferring shares or updating your details, please visit www.shareview.co.uk. The share dealing service enables shares to be
sold by UK shareholders by telephone or over the internet. For telephone sales please call 0870 850 0852 between 8.30 a.m. and 4.30 p.m. For internet sales
please visit www.shareview.co.uk/dealing.
Shareholder Information 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,
details can be requested via e-mail: cobham@share.co.uk.
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 16 June 2004
Final dividend (if approved) 2 July 2004
Interim results September 2004
Interim dividend December 2004
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
83 COBHAM PLC ANNUAL REPORT & ACCOUNTS 2003 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